Utility Week

Utility Week 20th October 2017

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10 | 20TH - 26TH OCTOBER 2017 | UTILITY WEEK Policy & Regulation Analysis I t has certainly been a long time coming, but the clean growth strategy was finally unveiled last week. Along the way the name has changed from emissions reduction plan to clean growth plan before settling on its current title. When she announced the latest delay to the strategy, which is designed to show how the government will meet the targets outlined in the fih carbon budget, climate change minister Claire Perry said she wanted the end result to be an "ambitious" one. Liberal Democrat leader Vince Cable was quick to dismiss the strategy, dubbing it a "damp squib", which failed to match the scale of the task needed to meet the UK's emissions reductions targets. The Lib Dem leader criticised the govern- ment for not embracing a more radical plan including a diesel scrappage scheme, allow- ing new onshore windfarms and giving the immediate go-ahead to the proposed tidal lagoon in Swansea Bay. However, the strategy marks a change of tone from two years ago when the low- carbon energy sector was reeling from a series of post-election cuts. Richard Black, director of the Energy & Climate Intelligence Unit, says: "Under [for- mer chancellor of the exchequer] George Osborne, the language was always about the costs, about Britain not doing more than other countries, as though every wind tur- bine came clothed in a hair shirt. By con- trast, Theresa May's government evidently sees developing a low-carbon economy as good for jobs, good for issues such as air pol- lution, and a route to growth for UK plc." However, the figures outlined in the strat- egy suggest that over the long term the meas- ures proposed will not in themselves deliver the government's targets. They predict that emissions will decline more rapidly than they need to in order to meet the UK's emissions reductions over the next five years when the fourth carbon budget kicks in. At this point, it estimates that the UK will have beaten its target for greenhouse gas emissions by 223 million tonnes (mT). This primarily reflects how emissions had declined 42 per cent by last year com- pared with the 1990 baseline used to assess the carbon budget targets, thanks largely to dramatic reductions in coal-fired generation and the recent increase in the use of renew- able energy. However, from this point on, the reduc- tion goes into reverse. During the period of the fih carbon budget, which runs from 2028 to 2032, cumulative emissions will be 60mT higher than they should be. Total emissions during this period will be nearly 10 per cent higher than the budget stipulates. Simon Virley, partner and head of power and utilities at KPMG, says: "Even with the 50 policy measures announced today, the government's own figures show them miss- ing the fourth and fih carbon budgets." The big gaps, he says, surround energy efficiency and the decarbonisation of heat (see boxes, right). The Climate Change Act provides the gov- ernment with some flexibility when assess- ing whether the carbon budget targets have been met. If emissions savings targets are exceeded in earlier carbon budget periods, the surplus can be carried forward. The rules also state that the government can "borrow" up to 1 per cent from a future budget. However, Lord Deben, chair of the Com- mittee on Climate Change, warns the govern- ment against going down this route. He says: "This should not be the plan. The clear intention of the UK's fourth and fih carbon budgets is that they are deliv- ered through domestic action to keep the UK on the lowest cost path to the 2050 target to reduce emissions by at least 80 per cent com- pared to 1990 levels. That should be the goal, without the use of accounting flexibility or reliance on international carbon credits." So, has the strategy been worth the wait and does it meet Perry's ambitions? Utility Week examines how the key changes announced in strategy measure up. Clean Growth? The government has published its long- awaited Clean Growth Strategy. So was it worth waiting for? David Blackman reports. "This strategy is a year late and is a damp squib. It is an inadequate response to tack- ling climate change, one of the greatest threats to our economy and our planet." SIR VINCE CABLE, LIBERAL DEMOCRAT LEADER "It is startling that cheap, popular onshore wind and solar PV are excluded once again from plans for the UK's energy future." CLAIRE MACK, CHIEF EXECUTIVE, SCOTTISH RENEWABLES "The biggest gaps remain on energy efficiency and heat. Even with the 50 policy meas- ures announced today, the government's own figures show them missing the fourth and fifth carbon budgets." SIMON VIRLEY, PARTNER AND HEAD OF POWER AND UTILITIES, KPMG "Government policy needs to set out the strategic role for the gas network, alongside the electricity grid, in meeting our climate change targets." DAVID SMITH, CHIEF EXECUTIVE, ENA "Although many of the policies have been announced before, and there remains a gap between the expected outcome of current policies and legally-mandated carbon targets, reaffirming dedication to cutting emissions across the country shows that the UK is not willing to give up its role as climate leader, despite recent political shocks." JONATHAN MARSHALL, ENERGY ANALYST, ECIU

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