On 28 April, the Business and Trade (BEIS) Select Committee published the report based on its inquiry on progress in decarbonising the power system, which was opened in May last year. The power sector is responsible for the UK’s largest source of emissions and the inquiry was launched to scrutinise government proposals to meet its ambition to decarbonise all electricity generation by 2035.
Evidence was gathered from representatives across the energy sector, including academics, think-tanks, non-departmental public bodies, independent centres of expertise, energy generators and suppliers, network operators and the regulator, Ofgem.
Cleantech for UK has summarised their findings and policy recommendations below, to which the government is obliged to respond within 2 months.
The Select Committee establishes that:
- The government will miss its 2035 target to decarbonise the power system if the current pace of change is not rapidly increased.
- Policy is siloed in the power sector without adequate consideration on how different policy fields interact and fit together.
- The UK investment proposition for the electricity sector has deteriorated since the launch of subsidy schemes in other countries, such as the Inflation Reduction Act and the Green Deal Industrial Plan in the US and EU, respectively.
- Developers of renewable energy projects in the UK are facing substantial cost inflation and windfall tax exemptions less generous than those given to the oil and gas sector.
Based on these findings, the BEIS Select Committee presents the following recommendations:
- To unlock private investment, the government is urged to provide a response to competition from overseas for investment in low-carbon energy.
- The government is asked to provide an overall delivery plan for the decarbonisation of power, with clear milestones and contingencies, which the Permanent Secretary of the Department for Energy Security and Net Zero (DESNZ) has promised to deliver by autumn.
- The government should deliver the required upgrades to transmission and distribution networks and speed up the process for planning consents and grid connections.
- The government must prioritise work to support long-duration energy storage, decide on the use of hydrogen across the economy, and clarify where private finance for nuclear energy projects will come from.
- Ofgem should be given a net-zero mandate which would give them an explicit duty to deliver on the statutory net zero target.
- The parameters set for the Government’s fifth round of Contracts for Difference should be reviewed to ensure that they accurately reflect the cost pressures, inflation included, facing the sector.
- Developers should receive an investment allowance rate equivalent to that received by the oil and gas sector.
- A target for onshore wind should be set, and the existing de facto ban should be removed.
Impact on cleantech:
The power sector is responsible for the UK’s largest source of emissions, decarbonising it is fundamental the government’s net zero strategy, and it must be largely decarbonised by 2030 if the UK is to reduce emissions consistent with its statutory carbon budgets.
Several recommendations made by the Select Committee are similar to those in the “Independent Review of Net Zero” carried out by Chris Skidmore MP. The UK cleantech community would benefit from a comprehensive, strategic response by the government, in the wake of increased global cleantech competition, such as the Inflation Reduction Act and the Green Deal Industrial Plan. The government will now have to respond to the Select Committee’s feedback, a response Cleantech for UK will be sure to analyse as it comes out.
