Net zero: an update from the business, energy and industrial strategy committee

Green Alliance is tracking the UK’s net zero policy progress in key areas of government throughout this year. This week we are featuring a series of daily blogs in which we hear from the chairs of five parliamentary select committees, who answer our questions about the progress being made in their committee’s area of interest. This post is by Darren Jones MP, chair of the Business, Energy and Industrial Strategy Select Committee.

Is your select committee holding any inquiries which are relevant to the UK’s net zero ambitions?
We are undertaking a series of inquiries relating to the UK’s 2050 net zero target. We’re carrying out scrutiny of the Glasgow climate summit (COP26), with an inquiry for this parliament on the UK’s net zero target and the UN climate summit and we’ve already held sessions examining the Climate Change Committee’s (CCC) 2020 Progress report to parliament, the Climate Assembly UK’s interim report, and the government’s Energy White Paper, as well as progress to COP26.

The heating of homes is a major contributor to UK greenhouse gas emissions and decarbonising heating will need to form a central plank of our efforts to achieve net zero by 2050. On the BEIS Committee, we’ve been carrying out an inquiry on decarbonising heating in homes. In the autumn we anticipate producing a report and recommendations for government in this area. We look forward to examining the government’s heat and buildings strategy and how far it delivers on the urgent need for long term heat policy for the challenges ahead. Crucial issues, around cost and technology, on protecting consumers and the fuel poor, and ensuring the UK can seize the potential for new jobs and industries, are also integral to this inquiry.

We’ve recently published the terms of reference for our Climate Assembly inquiry and we are also building net zero into wider committee work. For example, we will be looking at the potential for a green recovery in our inquiries on post-pandemic economic growth, the opportunities and challenges of net zero in our inquiry on Liberty Steel and the future of the steel industry.

Where do you believe the government has done well in decarbonising power?
Since the introduction of Climate Change Act in 2008, the carbon intensity of Britain’s electricity grid has fallen by 63 per cent, decarbonising at a faster rate than any other major economy worldwide. The supply of electricity from renewables has grown from six per cent to 42 per cent of British electricity, whilst coal power has fallen from 34 per cent to just two per cent.

This transformation has been driven by supportive policy, with carbon taxes designed to make coal less economically attractive, and subsidies to speed up the development of renewable technologies. Offshore wind has been a particular success, with phenomenal growth powered by innovation support during the technology’s earliest stages, and then ringfenced Contracts for Difference. Installed wind capacity in the UK has doubled since 2010, and prices plummeted from £114.30 per MWh in 2015 to just £39.65 per MWh in 2019.

Cheaper renewables have been excluded from much of this support, but it’s encouraging that the government has moved to include onshore wind and solar in future Contracts for Difference auctions. This will help the UK to deliver a net zero grid at the lowest possible cost. 

The government must harness the industrial and jobs potential that the transition to renewables could – and should – bring for the UK economy, by creating conditions that are attractive for companies across the supply chain to invest in the UK, including in emerging areas such as flexibility technologies and carbon capture and storage. As part of this, it is crucial the government supports training and education to help workers and communities to reskill, taking advantage of the long term growth opportunities of the green economy.

What do you see as the greatest challenge for decarbonising power on the path to net zero?
The scale and pace of infrastructure required in the next decade and keeping costs affordable and equitably apportioned is a huge challenge. The CCC estimates that the net zero transition will cost around one per cent of GDP annually, and many of the expected changes, such as the switch to electric vehicles, increased uptake of heat pumps and the decarbonisation of industry, will have implications for the power sector. 

The Climate Assembly UK recommended that “informing and educating everyone” and “fairness within the UK” should be the top policy principles to guide the net zero transition, but the government has yet to engage with the majority of the public about what decarbonisation might mean for their daily lives and how these changes can be made fair.  The government should tackle these challenges head on in its Net Zero Review and by ramping up engagement with the public on these issues.

The move from gas boilers to low carbon heating sources, such as electric heat pumps, brings high upfront costs.  These can be offset, to a large extent and at the household level, if energy efficiency measures are installed in all homes to reduce the amount of electricity that consumers need to buy. But, so far, government action on this has been slow. The government set a target for all new homes to be ‘zero carbon’ by 2016, but this date has been repeatedly pushed back and the current government is merely aiming for new homes to be ‘zero carbon ready’ from 2025. The result? For at least nine years, new homes will have been sold with a built-in but invisible future bill for upgrading their energy efficiency and heating method. Unnecessary additional costs have been created as a result of the government lacking the courage to stick to their original ambitions.

The scale and pace of change required means that investment in transmission, distribution, storage and flexibility of power is a crucial delivery priority. If we’re going to make hydrogen via electrolysis, heat our homes using heat pumps and drive electric vehicles, we’re going to need to see a real transformation of the power sector in the next decade. That will require a mix of different generation technologies in different areas but a scale of change that will require government to step up its role alongside the private sector, especially for higher risk investments.

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