Utility Week

UTILITY WEEK | 19TH - 25TH JULY 2019 | 13 Utility of the Future: climate change Coming up in 'climate change' in future issues of Utility Week: • Energy efficiency – the missing link • Should we be going faster to net zero? • Can nuclear fusion get us there? • More people, enough water? government replacing all other green fund- ing mechanisms, such as CfDs (contract for difference). Josh Burke, a fellow at the London School of Economics Grantham Institute, argues that carbon prices can be "carefully designed" to ensure the burden doesn't fall unduly on those who can least afford it". "A carbon tax can be designed in a way that is progressive," he says, claiming other countries have been "more canny" about how they use the proceeds from carbon taxes. Of the 29 countries that operate a carbon tax, the UK is one of only eight that doesn't hypothecate the revenues raised from the levy, he says. (This means linking the rev- enue to decarbonisation measures.) The Canadian state of British Columbia, for example, gives the public a breakdown of how carbon tax revenues have been spent. Getting the message clear is key to selling such levies to the general public, says Burke: "You need to communicate that these taxes are there to correct a market fail- ure and the money is being spent on some- thing associated with that." The Grantham Institute recently pub- lished a report that advocated increasing carbon prices for businesses to achieve net zero emissions by 2050. The revenue would then be used to pay for things such as CCUS (carbon capture use and storage) plants and tree-planting programmes. Blunt instrument Carbon taxes are too blunt a tool to rely on to achieve the transition to a net zero soci- ety, argues Dustin Benton, policy director at Green Alliance. "We've moved past the point where a single price of carbon for the econ- omy makes sense "Policies that might in theory seem less efficient are more efficient and dynamic," he says, pointing to the success of the CfD regime in helping to drive down the costs of offshore wind power. Instead, he believes, carbon levies are a "useful adjunct", giving as an example how they have helped to drive coal off the elec- tricity generation system. "We have a stock of coal and gas plants that are fundamentally very similar and do almost exactly the same thing. The carbon price has been extremely effective at telling operators to use gas and not coal. In place of a one-size-fits-all carbon price, the Grantham Institute recommends setting different carbon prices for differ- ent sectors of the economy. For example, it proposes that the carbon price for the power sector should be raised to £40/tCO2e by next year, up from around £35/tCO2e today, rising to £120/tCO2e in 2050. "It is economically sound but politically challenging, so let's have different prices across different sectors to reflect the dif- ferent technological costs and economic concerns," says Burke, who until recently headed energy research at the influential right of centre Policy Exchange think-tank. This differentiated approach would be "more practical and politically feasible". The potential prizes are enormous, he argues. Even a carbon price of £40/tonne would raise £40 billion a year, which could subsidise the next wave of renewable tech- nologies like wave and tidal. Those kind of figures could whet the appetite of Philip Hammond's successor as Chancellor of the Exchequer. 2020s 2030s 2040s Source: Committee on Climate Change How can the UK reach net zero GHGs? The Committee on Climate Changes has set out the following scenario in its report Net Zero – The UK's Contribution to Stopping Global Warming published in May 2019. It says to meet the target, radical changes need to be made across the board – the question is how it will it be paid for. Infrastructure Co-benefits Greenhouse gas removals F-gases Waste Shipping Aviation Agriculture Land use Industry Road transport Buildings Hydrogen Electricity Largely decarbonise electricity: renewables, flexibility, coal phase-out Start large-scale hydrogen production with CCS Efficiency, heat networks, heat pumps (new-build, off-gas, hybrids) Reduce waste, increase recycling rates, landfill ban for biodegradable waste Develop options and policy framework Industrial CCS clusters, decisions on gas grid and HGV infrastructure, expand vehicle charging and electricity grids Ramp up EV market, decisions on HGVs Establish industrial CCS and hydrogen clusters; improve energy and resource efficiency Expand electricity system, decarbonise mid-merit/peak generation (eg using hydrogen), deploy bioenergy with CCS Widespread deployment in industry, use in back-up electricity generation, heavier vehicles (eg HGVs, trains) and potentially heating on the coldest days Widespread electrification, expand heat networks, gas grids potentially switch to hydrogen Turn over fleets to zero-emission vehicles: cars and vans before HGVs Further CCS, widespread use of hydrogen, some electrification Move almost completely away from F-gases Limit emission from combustion of non-bio wastes (eg deploy measures to reduce emission from wastewater) Operational measures, new ship fuel efficiency, use of ammonia Operational measures, new plane efficiency, contained demand growth, limited sustainable biofuels Healthier diets, reduced food waste, tree growing and low-carbon farming practices Afforestation, peat land restoration Deployment of BECCS in various forms, demonstrate direct air capture of CO2, other removals depending on progress Hydrogen supply for industry and potentially buildings, rollout of infrastructure for hydrogen/electric HGVs, more CCS infrastructure, electricity network expansion Health benefits due to improved air quality, healthier diets and more walking and cycling. Clean growth and industrial opportunities

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