2019 is a pivotal year for energy and climate change: six insights for the New Year
2018 was a mixed bag for energy and climate policy. On the plus side, unbeknown to most of its millions of consumers, the UK’s power sector provided a third of the country’s electricity from renewable sources, over twice as much as five years ago. But progress in other sectors like buildings and transport was either weak or non-existent. The Committee on Climate Change’s (CCC’s) latest annual report to parliament highlights a worrying gap between government action and the legal targets set under the Climate Change Act. Meanwhile, Brexit presents an evolving threat to domestic and international climate ambitions. The IPCC has set alarm bells ringing on the drastic emission reduction emissions needed to keep global warming within 1.5 degrees.
So, what does 2019 have in store? Here are six areas we think are worth watching:
Future co-operation with the EU
As Brussels and London continue to negotiate, the UK is about to start trading electricity across borders with Belgium through a new 1GW interconnector (NEMO). The efficiency of trading across these sub-sea cables, expected to quadruple in capacity by 2025, will depend on how closely both sides co-operate and agree on common rules. Similarly, a robust carbon pricing and trading mechanism will be critical to send the right signals to industry to decarbonise and this requires either the UK to stay in the EU’s Emissions Trading Scheme or establish a new link through a domestic system.
The Environment Bill on climate change
The draft clauses on environmental principles and governance, published last month, institutes the creation of an Office for Environmental Protection that will oversee and enforce the provisions under the proposed Environment Act. The glaring gap however is that it ignores climate change and the distinct overlaps between environment and climate policy. Climate change is a significant threat to the UK’s environment and its biodiversity and leaving it out of the future governance mechanism would render the government’s proposals unfit for purpose. On the wider provisions of the Environment Bill, the government must ensure long term climate objectives, particularly in the agriculture and forestry sectors, are established and ways to meeting them are introduced in the bill.
A new push on home energy efficiency
As Carbon Brief highlighted last week, ecodesign policies have encouraged efficient appliances and cut energy use in the UK. But there is still significant untapped potential for further cost effective demand reduction, particularly in home energy efficiency. This year we expect the government to announce how it will deliver its intention to retrofit and upgrade all homes to EPC band C by 2035. To be successful, and not end up like the failed Green Deal scheme, the solutions it proposes should also stimulate innovation and scale up the domestic retrofit industry, as opposed to the existing piecemeal approach which is costly and can be seen as too much hassle by householders.
The rise of electric vehicles
A combination of EU regulation on vehicle emission standards to 2021 and a rush to access the depreciating levels of government subsidies before they fall will contribute towards a big growth in electric vehicles in the UK. It could potentially reach five per cent of 2019 car and van sales. But the long term picture is still not in line with what is needed to meet climate targets. And the post-Brexit approach to emissions and vehicle testing regulation is unclear. The majority of plug-in hybrids that have benefited from subsidies still largely run on polluting fuel, so more support will be needed for pure battery electric vehicles and to guarantee that more electric miles are driven by plug-in vehicles. Clean air zones in dense parts of the UK can address the twin challenges of decarbonising transport and reducing air pollution. As a follow up to 2018’s Road to Zero strategy from the Department for Transport, local authorities should now be supported to introduce such measures.
Smart transition of the power sector
A new round of offshore wind auctions in 2019 could see further reductions in prices and keep the UK on course to meeting 85 per cent of electricity from low carbon sources by 2032. Large scale solar could also see a small but significant growth this year as more Power Purchase Agreements are signed. The proposed Energy Bill this year should factor in the rapid changes in the sector and support small players like community energy groups that can bring new value to the energy system. A new policy framework is urgently needed to support small scale renewables to replace the recent loss of feed-in tariffs, so households and communities aren’t discouraged from take up. A smarter transition also means providing new routes to market for onshore wind, as it is the cheapest energy source, and ensuring the benefits of more decentralised energy are better captured and transferred to end consumers.
The Committee on Climate Change’s next report
The CCC’s report, due in the spring, on a net zero pathway for the UK will spark an important conversation on how and when the UK should raise the targets under the Climate Change Act. Sectors like land use, aviation, shipping and other hard to treat sectors will come sharply into focus. Solving these challenges needs a mix of technology innovation, appropriate market incentives, demand management and long term policy direction. But thinking of deep decarbonisation comes alongside short term action. As we have shown, rapid progress towards a net zero goal before mid-century could be achieved cost effectively if we act now rather than wait.
It is no longer a matter of ‘if’ but a question of ‘how quickly’ the UK will decarbonise its economy and 2019 is an important year for setting the pace through domestic policy and the relationship we establish with our neighbours.