Energy and infrastructure sectors welcome government green energy commitments but say ‘significant questions remain’
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The UK’s energy and infrastructure sectors have shown positivity towards the government’s latest tranche of commitments to drive investment in green energy, but stress that “significant questions remain” and it is just a step on the long journey to net zero.
The Department for Net Zero and Energy Security’s newly published Powering Up Britain – Energy Security Plan outlines how the government plans to scale up clean homegrown power, build the UK’s green industries and boost the country’s energy security. Measures include commitment to the development of Carbon Capture Usage and Storage (CCUS) technologies, kickstarting the UK’s floating offshore wind industry, launching Great British Nuclear, backing green hydrogen production projects, speeding up the planning process to attract investment and measures to improve properties’ energy efficiency.
However, the plan also affirms the government’s commitment to “maximising the vital production of UK oil and gas as the North Sea basin declines”.
Prime minister Rishi Sunak said the measures will “power Britain and ensure our energy security in the long term with more affordable, clean energy from Britain, so we can drive down energy prices and grow our economy”.
Commentators from the energy, housing and infrastructure sectors have been more reserved in their assessment of what the Powering Up Britain policies will achieve.
ICE head of policy Chris Richards was damning in his assessment: “In the face of calls for certainty and urgency from the Climate Change Committee, the Intergovernmental Panel on Climate Change and the National Infrastructure Commission in recent weeks the UK government has chosen today to largely restate existing policy and missed the opportunity to set out the additional detail needed to enable sectors to ramp up the transition to net zero.
“There are still not enough clear policy frameworks, disparate funding pots and questions on technology choices are still unanswered.
“Even the government admits that today’s measures don’t go far enough – they expect to miss the 6th Carbon Budget.
“As the ICE said at the Budget, with other countries incentivising huge levels of investment into new technology and the infrastructure needed to support the net zero transition, global competition for talent and resources has never been greater – without a similar degree of certainty the UK risks getting left behind.”
National Infrastructure Commission chair Sir John Armitt was more balanced in his appraisal: “Today’s set of announcements includes steps forward in some areas, but in others, based on what we’ve seen so far significant questions remain as to whether the scale of interventions will be sufficient to drive change quickly enough. We need to move from setting targets to delivering on the ground, making it easier for every household to make the greener choices necessary to meet our climate commitments.
“We welcomed the investment in CCUS when it was first announced and it is good to see further steps in forming carbon capture clusters. We must keep up this pace to ensure the UK regains pace in this internationally competitive sector.
“We look forward to seeing the promised draft national policy statements for energy. Once finalised, these should speed up decision making and help provide greater certainty to developers, investors and communities.
“The commission will continue to monitor delivery of infrastructure commitments made as a result of our own recommendations. Shortly we will publish a report on the planning regime for major infrastructure projects, and later this year we will publish our second National Infrastructure Assessment to look ahead to the next phase of the net zero journey, including the infrastructure networks needed to underpin CCUS and hydrogen technologies.”
Energy and Climate Intelligence Unit head of energy Jess Ralston bemoaned the government’s continued commitment to fossil fuels. She said: “The gas crisis has made it clear that real energy security comes from moving away from oil and gas, particularly as the North Sea inevitably declines. With bills still high, no new money for insulation will leave many households in the cold.
“The chancellor pushing back the response to the US Inflation Reduction Act and EU Net Zero Industry Act to the autumn could be the final nail in the coffin for businesses and offshore wind investors who will simply move investment to where there is long term policy and regulatory certainty.
“If government doesn’t create a level playing field for renewables compared to oil and gas, with inflation running high, this could see new wind farms still much cheaper than gas, but not as cheap as the last round approved. The International Energy Agency, UN Secretary General and Climate Change Committee are all clear that more oil and gas in the UK isn’t aligned with net zero, and won’t help to lower bills or improve energy security.”
Association of Consultancy and Engineering (ACE) head of policy Guto Davies also pointed out the holes. He added: “Today’s newly published strategy sets out some important steps to reach net zero by 2050 through clarifying finance, the UK’s role in international leadership and influence, strategic policy aims and the future direction of innovation and research.
“But there remain many unanswered questions. This has already been a lengthy process, so implementation is now crucial given our 2030 and 2050 targets.”
Royal Academy of Engineering president Sir Jim McDonald greeted the policy warmly, but pointed out some other omissions. He said: “We welcome the inclusion of a home insulation scheme in these plans, as home retrofit is a vital low-regrets measure that can reduce energy demand while improving people’s wellbeing. However, retrofit measures must be coupled with efforts to ensure that the skills, supply chains, governance and assurance mechanisms are in place if we are to succeed in future-proof UK housing.
“The issue of skills to support the net zero transition is continually missed from the conversation. Just as the demand for engineering skills is increasing within the key sectors of the future clean economy, the supply of engineering skills in the UK is failing to keep up with demand. New ways of learning and training must be developed locally and supported by individuals, employers, education, and training providers. We urge government to implement the recommendations from the Green Jobs Taskforce.
“We would also like to see the introduction of a formal system of governance for translating high-level targets to national and local levels. A government delivery body, such as the Office for Net Zero proposed in the Skidmore Review, is needed to lead and coordinate climate strategies across different sectors and spheres of society. And urgent action is required if we are to achieve the vital goal of a fully decarbonised electricity grid by 2035. We agree with the objectives set out by Ofgem, addressing the scale and range of factors affecting the future development of our gas and electricity networks. Experts from our National Engineering Policy Centre are actively looking at the actions and barriers that need to be addressed to implement a net zero electricity grid.”
The University of Edinburgh chair of carbon capture and storage Stuart Haszledine praised the backing of CCUS technology, saying “guarantees of £20bn provide confidence for tens of commercial investors, partnering in multiple projects, to build a climate-saving CO2 storage ambition unequalled in the world”. However, Haszeldine was critical of the government’s continued commitment to oil and gas, saying: “The government is trying to ride a green industrial CCUS horse and a black oil and gas stallion simultaneously, making this a long overdue start to carbon clean up, but an incomplete carbon transition.”
Mineral Products Association director for energy and climate change Diana Casey highlighted holes in the government’s plans when it comes to carbon leakage. She said: “High carbon and energy costs faced by UK cement manufacturers puts them at a significant disadvantage compared to cheaper imported products from countries where these costs are lower.
“While consultation in the UK is welcome, the EU has already taken action and a UK Carbon Border Adjustment Mechanism (CBAM) is now urgently needed to reduce the risk of carbon leakage, protect jobs and help the UK remain competitive.
“There remains a significant shortcoming in UK net zero legislation because emissions targets can be met, or partially met, by buying more imported goods in place of domestic production. This simply moves responsibility for emissions to other countries. Ignoring these offshores UK responsibility for the emissions in the goods it consumes, leaving the problem out of sight and out of mind.”
Pinsent Masons energy partner Stacey Collins was positive about the plans regarding CCUS: “The government had already committed to £20bn of funding for the CCUS industry but today we have a clearer pathway for development of the projects that will actually deliver on the promise of that funding. It’s long-awaited news for the successful Track-1 Phase 2 projects. Those projects that weren’t selected, and other projects already in development, will now set their sights on the confirmed Track-1 expansion process (to be launched later this year) and the announced Track-2 process.
“It’s certainly going to be the busy 2023 for the sector, but there’s still a lot of work needed to get the required CCUS projects to financial close and into the construction phase. This is not the end of the journey, but an important milestone nonetheless.”
Collins also sees green shoots for hydrogen technologies: “The announced shortlisted Hydrogen Business Model/Net Zero Hydrogen Fund Round 1 projects, and the commitment to Round 2 opening later this year is important to those across the market who are investing time and money in bringing the promise of low-carbon hydrogen to life. The government has restated its commitment to funding the development of low-carbon hydrogen for power, energy storage, transportation, heating, fuel-switching and industrial use. We have an opportunity in the UK to be world leaders in low-carbon hydrogen deployment, today’s commitments keep the industry on that pathway.”
Stantec UK climate solutions leader Lucy Wood was positive about the UK’s prospects of rising to the net zero challenge. She said: “Tackling climate change and energy security will always go hand in hand with improving economic stability and growth. So, it’s encouraging to see the government positioning energy, consumer, climate, and economic security to be delivered together.
“As an island nation, we must further accelerate the delivery of renewable energy through the likes of offshore wind and floating windfarms. We should be making the most of our extensive and unique port and coastal infrastructure while bolstering the supply chains and communities that support them.
“The same can be said in the roll-out of green hydrogen and there is a huge opportunity here to position the UK as a global leader in innovation.
“It should be noted, however, that a core consideration to the delivery and distribution of renewable energy is our ability to connect the necessary infrastructure to the grid, and the ability of the grid to adapt to the added challenges posed by this generation. Allowing for the intermittency of renewables requires a strategic rethink. Clear enabling behaviours from government supporting proven methods like pump hydro storage would help industry commit to schemes with confidence and pace.
“It is positive to see the government acknowledging the need to accelerate the transformation of the grid, so we can realise the potential we have as an island nation.
“It is also promising to see the link made to international climate action and our contribution to the global climate finance goal.
“This will help build on the UK’s reputation as a climate leader, enhancing our credibility when exporting our expertise and further driving investment and economic growth.”
Further reaction
British Property Federation chief executive Melanie Leech said: “Today’s report is another statement of intent when what we need is urgent action.
“If government is serious about achieving net zero by 2050 there must be more recognition of the challenges in decarbonising the built environment, which accounts for around 25% of UK emissions.
“While the report acknowledges the planning ‘bottleneck’ in updating historic and listed buildings, there must be more urgency in aligning the planning system to the net zero agenda and a national retrofit strategy that supports and incentivises green refurbishment.
“We also need clarity on minimum energy efficiency standards and regulation that establishes a clear and consistent methodology for measuring the environmental performance of a building over its full life cycle, which will guide the property sector in how to approach development and refurbishment.
“The property sector is fully committed to net zero but government must seize the moment and deliver bolder and more ambitious policies that will support the rapid change needed.”
WSP executive director Rachel Skinner said: “Many of the measures announced today are welcome and we support the Government’s ambition and focus. Progress towards a diverse, clean energy supply and decarbonisation of our housing stock are clear priorities, so continued support for offshore wind and nuclear power, acceleration of carbon capture and hydrogen and provision for increased home energy efficiency is all positive.
“What we must not lose sight of, however, is the pace, direction and scale of change required and the twinned complexity of decarbonisation and climate resilience when set against the ever-shorter time to act, not only in the UK but globally. The recent IPCC and Climate Change Committee reports could not be more clear: we are losing the battle to limit global warming to 1.5°C and we are unprepared for the impact this change will have on our infrastructure, natural resources, supply chains and daily lives.
“The slower we are to respond to these immense challenges, the higher the cost and risk will be as we try to cope with the issues they create in the years to come. Focused action and investment at a faster pace will help to unlock the full economic potential of net zero for the UK.
“The reality of the climate crisis gives us no choice but to act – it is an imperative. The nature of global existential threats means that we should expect fierce international competition for green projects and skills. Relative lack of action will see crucial investment and jobs go elsewhere. Long-term certainty from government and a systems-thinking approach to regulation, funding and skills is key to building confidence, ensuring that the UK realises the many economic opportunities, also the wider social and environmental benefits, of a green economy.”
Turner & Townsend net zero director James Hardy said: “The government has been faced with the unenviable task of setting out the nation’s overall path to net zero. While the overarching nature of the strategy is welcome, we need more detail on how the UK closes the gap in policy and funding to move it closer to meeting its legally binding carbon targets.
“The approach to net zero has too long felt piecemeal, with pockets of good new funding and exciting schemes, but little overarching strategy to draw it together. Today’s announcements mostly summarise the government’s existing pledges and projects, but the move to bring them together, supported by a new dedicated Department for Energy Security and Net Zero, goes some way to responding to the calls for joined-up thinking in Chris Skidmore’s recent review. This approach was underlined by the commitment to Great British Nuclear as a coordinating delivery body, and a promise to use that model as an example for other green sectors too.
“We were not expecting new funding following the recent Budget and it is positive that growing sectors like CCUS and green hydrogen are receiving the investment they need, as well as a renewed approach to private green finance. In addition, innovative programmes that have yet to be proven such as small modular reactors and floating wind power will be driven forward by new competitions. However, these investments are unlikely to increase our energy security and reduce bills overnight.
“Perhaps the most quietly bold policy announced is the consultation on carbon border taxes. Charging for goods’ and materials’ carbon footprint from overseas would radically reshape the global supply chain, and potentially boost domestic manufacture and local skills, but we will need to see the full detail on this as it emerges.”
“The main question we’ll all be asking is how industry and government can come together to keep this strategy evolving. We need commitments as well as competitions. There is more to be done to move beyond a policy summary towards offering more long-term clarity and future funding milestones – this will give the sector the additional confidence they need to deliver green investment, build skills and capacity, and develop innovative technologies that will transform the UK and protect the planet.”
Atkins Nuclear & Power managing director Christophe Junillon said: “Today’s announcement by government on ‘Powering Up Britain’ is positive progress in the right direction to accelerate the pace of power decarbonisation.
“GBN and its focus on SMR technology is particularly welcome and will help the industry to maintain momentum in the development and commercialisation of SMR and help realise its potential in our future energy mix alongside larger reactors.
“Wind, solar, nuclear, carbon capture, hydrogen and storage technologies are all essential contributors to a future system to be deployed in parallel. We will need all of them, in the right locations, to achieve energy security and affordability as well as reach net zero. Yet the critical path for deployment lies in the creation of the connecting infrastructure and streamlining of the planning system.
“The report rightly reiterates a high level of ambition and recognises the urgent need for detailed policies and mechanisms to create the confidence that will bring forward investment and increase the build rate of new generation and infrastructure.
“This build rate must be a defining reference point of our energy transition: with just 12 years until the 2035 target to decarbonise power, the rate at which new generation and infrastructure is moving through the planning pipeline, being built and coming online is the main indicator as to whether the UK is on track to meet its ambitious targets.
“The creation of near term milestones against which progress to the long term goals can be measured must be included in the government’s net zero strategy. The interdependency of the many ambitions means there is a critical need for an overall deployment strategy and plan: we have consistently recommended the creation of an Energy System Architect accountable for the delivery of such a plan and thus the urgency for the definition and creation of the Future System Operator cannot be understated.”
J Murphy & Sons chief executive John Murphy said: “At J Murphy & Sons, we are fully committed to supporting the government’s Energy Security Strategy, working with our partners to deliver the sustainable infrastructure that the UK needs and we welcome the government’s initiatives to boost investment in clean growth sectors, including reforming the planning process to enable the building of more energy infrastructure, CCUS and the Net Zero Hydrogen Fund.
“We believe that the development of renewable energy sources such as wind power, low carbon technologies and efficient power plants are essential to the country achieving its net zero ambitions, while also ensuring that we continue to meet current energy demands by safely maintaining existing infrastructure. Measures like those announced today provide us and our industry partners with a clear direction of travel, though the challenge of course will be to translate these plans into reality.
“We remain ready to support the government in the delivery of critical national infrastructure and are looking forward to continuing to play a key role in helping the UK to achieve its net-zero emissions target and help build a stable environment for the future.”
Welsh Affairs Committee chair Stephen Crabb MP said: “I welcome the government’s announcements today around floating offshore wind and nuclear energy: representing steps to enhance home-grown energy.
“On the back of last week’s announcement on freeports, it is very welcome that the government has now launched a funding scheme to encourage investment in infrastructure to support Floating Offshore Wind. This could turbocharge efforts to see open up the Celtic Sea to the green energy revolution, offering enormous economic opportunities for Welsh communities. It is essential that Welsh ports receive a fair share of the £160M package.”
“For some time the nuclear sector has called for greater clarity on the government’s ambitions, and the policy announcements today on nuclear energy is in line with what we have been calling for. The full launch of GBN should go some way to reassure the sector and motivate them to invest. I wish its interim chair and chief executive the best in their endeavours, and look forward to seeing the detail of the SMR technology competition when it launches. It is absolutely right that the Government is looking to match global competitors so we are not left behind in establishing and reaping the benefits of gigawatt scale nuclear, as well as from small modular reactors.”
Amey chief executive Andy Milner said: “Amey’s capabilities from design to delivery across transport and the built environment makes us well placed to speed up the transition to net zero, and we welcome the government’s renewed focus on creating the policy and regulatory landscape required to drive competition and unlock the investment required to ensure energy security while achieving net zero commitments.
“The development of innovative and resilient infrastructure solutions is critical for the UK, and we are pleased that the government has listened to the National Infrastructure Commission who called for more targeted initiatives to deliver the infrastructure needed to reach the government’s long-term net zero and economic goals.
“Following public policy interventions in the EU and US, it was crucial for the government to act quickly to ensure the UK’s competitiveness in a global market, and the decisions today clearly set the foundations for Amey and wider industry to deliver on the UK’s energy transition. It is now key that our industry works collaboratively with government to deliver new green jobs and skills to create a positive impact in the communities we serve. Amey stands ready to do just that and will continue to play a leading role in supporting our clients in their transition to net zero, while providing the services and infrastructure that millions across the UK rely on every day.”
A Stop Sizewell C spokesperson said: “The government has reiterated its intention to provide state support for nuclear energy but given no indication on how it intends to pay for it. Given nuclear energy’s massively expensive track record, promising GBN ‘the funding it needs’ amounts to a blank cheque, likely at the expense of other technologies and initiatives.
“Ministers have backed themselves into a corner becoming co-owners of Sizewell C given that it’s not yet financed. When are they going to come clean about how much it will really cost? And if investors say “no”, just how much taxpayers’ money will the government have to pour into this widening black hole? With our urgent need for energy solutions that are low cost and deliverable quickly and reliably, Sizewell C stands out like a sore thumb.
“As Hinkley Point C and other disastrous EPR builds show, Sizewell C would be a slow, expensive mistake and EDF would likely still be struggling to build this unproven reactor in 2035, while other technologies were either racing away, or strapped for investment.
“The government is adamant that nuclear’s inclusion in the green taxonomy is necessary for investors to consider Sizewell C, but if the consultation is not held until the Autumn, would they begin a capital raise for Sizewell C before that concludes? This seems unlikely and could affect the timing for a Final Investment Decision.
“If Sizewell C was ever eventually completed, the electricity would be far more expensive than renewables – hardly “cheap” as the Energy Security Secretary claims. Questions about uranium supply and the long term nuclear waste problems show that it is certainly neither green nor clean.”
Octopus Energy Group chief executive and founder Greg Jackson said: “We’re delighted the government is looking to remove outdated levies from electricity bills. A cheaper, greener, more secure future is an electrified future – and ending these taxes on increasingly clean electricity is essential.
“The government redoubling its commitment to heat pumps is hugely welcome. These are the most efficient way to heat a home and the UK could create hundreds of thousands of clean jobs as we make our homes warmer, more comfortable and cheaper to heat.”
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