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On Thursday 30 March the UK government released new plans to clarify its ambition to make the UK net-zero by 2050. Its Powering Up Britain and Carbon Budget Delivery plans come in response to a High Court ruling last year that its Net-Zero Strategy lacked detailed policies on how carbon emission targets will be met.
The government also wants to enhance the UK’s energy security - namely access to reliable, affordable energy - using the same set of net-zero polices. However, there is a risk that the policies are not fit for purpose to tackle both at the same time.
There is no question that to achieve net-zero emissions by 2050 the UK has to dramatically reduce its over 75% reliance on fossil fuel energy1, and decarbonise emission-intensive transport and industrial processes.
Powering Up Britain restates many previous policies but it also supports net-zero ambitions through new commitments that include:
- The launch of Great British Nuclear to lead delivery on new innovations
- Eight new carbon capture, usage and storage (CCUS)2 projects
- Identification of 20 potential green hydrogen projects for due diligence
- The launch of a Floating Offshore Wind Manufacturing Investment Scheme to reduce the cost of offshore wind
However, these initiatives have drawbacks. New nuclear technologies include small modular reactors (SMR) that are faster and cheaper to build but are not likely to be commercialised before 2030. They will be an important solution but are not likely to help medium-term energy security or decarbonisation plans. CCUS is an energy-intensive and inefficient process and there are fears it encourages further use of fossil fuels. In a similar vein, the production of hydrogen from water with the use of renewable energy (‘green hydrogen’) is currently expensive and less than 50% efficient.3
Moreover, the benefits of developing new wind power are limited by battery technology and grid connections, areas Powering Up Britain does not cover in detail.
Since Russia’s invasion of Ukraine last year, the subsequent reduction in gas supply and soaring energy prices have caused a sharp focus on energy security and highlighted the risks of being dependent on foreign fuel.
The most readily available way to alleviate energy security concerns is to use domestic, cheap fossil fuels. In recognition of this, Powering Up Britain intends ‘maximising the vital production of UK oil and gas as the North Sea basin declines’. However, this is at odds with the UK’s net-zero ambitions and is likely to draw criticism.
Powering Up Britain also aims to tackle energy security through the new initiatives for independent and clean power sources outlined previously. However many of these technologies (SMR, CCUS and green hydrogen) are relatively new and have long lead times, undermining their usefulness to protect near-term energy security. The plan appears to favour these technologies over solutions that are readily available and cheaper, particularly on-shore wind; here Powering Up Britain makes no indication that the ban for on-shore farms will be lifted.
Key to providing energy security is a reduction of energy demand but there are worries that the Powering Up Britain policies make little progress on areas such as building insulation and heat pumps - solutions that would also aid progress towards the net-zero 2050 goal. Powering Up Britain rebranded an existing £1bn scheme into the Great British Insulation scheme that will only support 300,000 of the UK’s least energy-efficient homes. It also extended the £5,000 grant for homes to replace existing gas boilers with heat pumps, but in February the government’s independent climate change advisor, the Climate Change Committee, described this scheme as seriously failing.
The plans tread a fine line between protecting national energy security and achieving net-zero by 2050. In doing so, it has already received backlash from non-governmental organisations claiming that the details are not far-reaching enough to be consistent with the required decarbonisation pathway.4
Indeed, the government admitted in their Carbon Delivery Budget Plan that the quantified polices only meet 92% of their 2030 emission commitments.5 It remains to be seen whether further legal action will be taken on the government’s new strategy and we will continue to monitor the situation closely in order to identify any investment opportunities that may arise.
- CCUS is a process that involves capturing the carbon emissions from power generation and industrial processes, and either utilising or storing them underground.
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