UK energy transition in 2020 – what to expect?

intext-energy-transition-windThis will be a big year for climate change in the UK and around the world. The UK is set to host the all-important UN conference on climate change, COP26 in Glasgow, where countries are expected to put forward enhanced ambition on mitigation and financing to deal with the crisis. It is a fantastic opportunity for us to showcase our domestic and international leadership on the issue.

We witnessed many firsts for the UK in 2019. Legislating for net zero by 2050, running without coal power for over 3,000 hours straight, offshore wind prices crashing beyond expectations, electric vehicle users being paid to charge their vehicles and the world’s first climate leaders debate.

Here are our ten things to look out for in 2020:

1. Electric vehicle (EV) sales revving up: EV registrations have grown by 30 per cent year on year since 2016. But recent tightening of EU vehicle emissions regulations and falling battery prices, coupled with sustained support for rapid EV charging infrastructure, could result in growth almost doubling this year. Having said that, EVs are still a miniscule proportion of vehicles, but exponential growth curves can change this in a matter of a decade.

2. More subsidy-free solar: 2019 saw the UK’s largest solar farm come online without a subsidy contract and this trend is set to continue. The subsidy free market is expected to be 5GW by 2030, much lower than most known pathways to net zero. More renewables is clearly the least regrets option and solar advocates will push for a better policy environment for solar.

3. Onshore wind still in limbo: the Conservative party manifesto made no mention of onshore wind development, even though it is by far the cheapest energy source and planning applications have fallen over 90 per cent since 2015. Subsidy-free onshore wind is coming online in Scotland but progress in England has stalled, despite overwhelming public support.

4. Community energy could start to grow again: the Smart Export Guarantee (SEG) scheme starts on 1 January, with micro generators (<5MW) of clean power receiving a fixed tariff payment for exporting electricity to the grid. In an optimistic scenario, suppliers will realise the true value of distributed generation and offer competitive incentives for community energy groups to participate in the energy market.

5. Energy efficiency back on the agenda: the Conservative manifesto has placed much needed new emphasis on energy efficiency, with a commitment to double investment in home efficiency upgrades from £0.7 billion a year to £1.5 billion a year, predominantly focused on social housing and low income households. This still leaves a significant majority of the ‘able-to-pay’ homes that needing to invest in efficiency measures. We should expect to see further detail on how to meet carbon targets and the government’s aim to get all homes to EPC band C rating by 2035.

6. More local authority action: over 270 local authorities have declared a climate emergency and many are developing plans to making them a reality. At least ten authorities are expected to introduce Clean Air Zones, primarily to meet legally binding air pollution targets, but with opportunities to modify and extend those zones for mitigating carbon emissions.

7. Divergence from EU rules: the UK will leave the EU on the 31 January and negotiations on the future relationship will begin immediately. Assuming a deal is manageable by the end of the year. Keeping zero tariffs on electricity and gas trading will be easily achievable. However, the risk of inefficient (and therefore high cost) trading across interconnectors remains. The UK is expected to set up its own emissions trading scheme but important questions remain on the scale, scope and timelines for such a system.

Given the significant benefits of a close partnership with the EU, early negotiation on energy and climate change in the first phase of the trade talks would allow both sides to start off on a positive note.

8. The Committee on Climate Change’s advice will be especially critical this year: important documents re anticipated in the form of the CCC’s annual progress report, the sixth carbon budget recommendation (for 2032-2037) and a report on UK land use and agriculture (23 January). Alongside these, the committee’s relationship with the proposed enforcer of climate change law, the Office of Environmental Protection (OEP), will need to be established.

9. Treasury net zero review: the cost of tackling climate change has been a contentious issue and this review, expected in late summer, will be vital in laying out how the costs could be shared across society, how a just transition can be achieved and how costs square with the benefits of rapid transition.

10. COP26: finally, there will be a lot at stake at this major UN climate summit hosted by the UK in Glasgow in November, especially after the disappointing result of COP25 in Madrid. It will test the UK’s diplomatic strengths and put its domestic policies under the scanner. But delivering a successful COP will be paramount to maintain the momentum gained at Paris in 2015.

The world will be counting on the UK not to fail. This conference will come round fast. So despite the Brexit distractions early in the year, the UK should also sort out its positioning and strategy as early as possible. Acting on net zero now will be vital.

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