Utility Week

UTILITY WEEK | 12TH - 18TH JULY 2019 | 7 Utility of the future: climate change Towards net zero H ow do utility firms navigate the complex and unknown terri- tory that is the future? Global conflict and political upheaval, at home and abroad, the acceleration of new technologies and the existential threat of climate change adds up to a rapidly changing world. Utilities of today – if they are to become utilities of tomorrow – will need to antici- pate and adapt to the challenges and oppor- tunities thrown at them. Are they up to the stretch? This is where our new campaign Utility of the Future fits in. Over the next few months – leading up to the Utility Week Live Conference and Exhi- bition in Birmingham on 19-20 May 2020 – Utility Week will be exploring the chang- ing landscape. In a series of five key themes we'll be looking at what's coming down the tracks – and what may be over the horizon. We'll be talking to those in the business, of course, but we'll also be looking for wider input, talking to experts drawn from further afield to present the facts, debate the issues and answer some of the questions. These five key pillars are: climate change; customers; business models and workforce; regulation; and technology. For each of these we will be running in-depth articles, research, podcasts and events. We kick off with climate change in this issue, with a big picture look at what it means for utility firms to meet the newly minted and stretching target of delivering net zero greenhouse gas emissions by 2050, and what the public thinks of it and how much support utilities can expect in their quest to decarbonise and conserve water. As you'll see from the results of our survey (p10) – car- ried out exclusively for Utility Week by Harris Interactive, it's a mixed picture. The good news is utilities don't have to convince the public of its importance; they already know – but getting people to change behaviours won't be easy. Nor, sadly, will it be easy to convince them of the part utilities are playing in the transition. For a utility of the future – the journey starts here. Denise Chevin, intelligence editor denisechevin@fav-house.com Zeroing in on emissions Catherine Early kicks off our series on delivering net zero with an overview of the big challenges, solutions and timescale. This week The challenge for utilities 7 Consumer attitudes survey 10 Michael Roberts, chief executive, Water UK 10 Phil Graham, chief executive, NIC 11 Is regulation fit for purpose? 12 Mike Foster, chief executive, EUA 12 A s the science on climate change becomes ever clearer and more alarming, countries, states and cities have lined up to declare that they will become "net zero". In June, the UK became the first major econ- omy to set this in legislation, with a target date of 2050. Net zero means that all emissions of greenhouse gases will have to end by mid-century, or be balanced by schemes to offset an equivalent amount, such as through planting trees or using technology like carbon capture and storage (CCS). It is a sig- nificant tightening from the previous target of an 80 per cent reduction on 1990 levels by 2050. It follows advice from the Commit- tee on Climate Change (CCC) in May, which stated that a net zero target was achievable, both with known technol- ogies and for the same economic cost as the existing target for an 80 per cent reduction by 2050. The energy sector has been working on decarbonisation for some time. Lat- est government figures show that coal contributes only 3.5 per cent to the UK's electricity mix, while renewable technologies generate 35.8 per cent. But the latest report from CCC pub- lished this week says policy is woe- fully inadequate to deliver this target. But what does the new deadline mean and can utility firms rise to the challenge? Mike Thompson eloquently set the bar for energy companies, speaking at Utility Week Live, in Bir- mingham, in May. The head of carbon budgets at the CCC, said: "On power, we're doing quite well. But we still have a lot of emissions from buildings, transport and from industry, so we need more low-carbon power to ser- vice those sectors." Demand for electricity would be doubled, with all power produced from low-carbon sources, compared with 50 per cent today. This equates to some 600TWh by 2050, he estimated. Many decisions need to be taken by the mid-2020s to ensure that infra- structure is ready in time, he noted. The committee recommended the creation of a hydrogen economy to fuel energy-intensive industrial processes and electricity, and heating at peak times. By 2050, hydrogen production capacity will need to be a comparable size to the UK's current fleet of gas- fired power stations, it says. The UK currently produces around 27TWh of hydrogen, and this must rise tenfold to 270TWh by 2050. "You could produce a bit more, or a bit less, but that gives a sense of scale," Thompson said. Carbon capture and storage The committee has brought forward the timing for some of its previous recommendations. On carbon capture and storage (CCS), it had said that the first CCS cluster – where a number of industrial emitters are sited in the same area – should be operational by 2026, with two clusters capturing 10MtCO2 operating by 2030. The CCC now believes that CCS will be neces- sary both for industry and very likely for hydrogen and electricity produc- tion. This will lead to a need for annual capture and storage of 75-175MtCO2 in 2050, and at least five CCS clusters. EVs On electric vehicles, the committee proposes that the government target to end sales of internal combustion engine cars by 2040 should be acceler- ated to 2035, or even 2030 if possible. This would require the upgrading of many electricity networks to support charging infrastructure. The CCC points out that anticipatory investments will be needed through the 2023-28 regula- tory period for the distribution network continued overleaf

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