Last month the latest report from the Committee on Climate Change (CCC) reset the bar on tackling greenhouse gas emissions. It concluded that plummeting costs of offshore wind and solar mean that a net zero carbon target is now achievable by the middle of the century without costing any more than the 1 to 2 per cent of GDP to meet the current target of an 80 per cent carbon reduction by 2050.
The CCC said the foundations are in place throughout the UK and the policies required to deliver key pillars of a net-zero economy are already active or in development. Business and energy secretary Greg Clark has pledged to transpose this target into law, although not immediately. The CCC also said Scotland should aim to become carbon neutral five years earlier in 2045. Shortly afterwards, the Scottish government unveiled draft legislation to set this as a legally binding target.
Policymakers and industry are in no doubt about the challenges and choices that lie ahead. Evidently, they will have to ramp up their policies significantly for a net-zero emissions target to be credible, and for that to happen, public engagement is paramount.
Before his talk about the report at next week’s summit, we asked one of the report’s authors, Dr David Joffe, team leader at the UK Committee on Climate Change, about some of these challenges.
How can the costs be spread fairly?
The CCC recommends that the Treasury reviews how the remaining costs of achieving net zero can be managed in a fair way for consumers and businesses. The tumbling costs of renewables and electric car takeup should save the country money by 2030. The problem will be decarbonising heat in a way that means those on the lowest incomes don’t suffer disproportionately, and similarly with the cost of transition.
Says Joffe: “Traditionally the cost of decarbonisation has gone into fuel bills. But that’s a choice – we don’t have to do that, that’s just how we’ve done it so far. We don’t have the answer, and we don’t think it’s up to us to come up with the answer.”
He points to heating as an especially thorny issue: the costs are relatively high, and the technologies are unfamiliar to people and who will pay for it. “Those three things mean that the more we’ve looked at it, the more difficult it’s become. It’s probably the biggest single challenge across the energy system,” he says.
One of the financial mechanisms that has been floated by the CCC to drive the decarbonisation of heat is to put a tax on natural gas. But, again, this could load costs on those who can least afford it. “If we can get our act together on energy efficiency, it may be that although the price of energy will be higher, people will end up with the same or even lower bills by 2030 or 2035.
“We need to be very careful of the impact on consumers. If it was replaced by hydrogen, that’s a more expensive gas, and it’s difficult to see how we could make that as cheap as natural gas for consumers.”
What is the challenge of hydrogen?
Switching from natural gas to hydrogen is seen as one of the more practicable means of decarbonising heat because it could harness existing infrastructure – but the CCC does not underestimate the challenge, particularly around perception.
Says Joffe: “Hydrogen, you’d imagine, could be embraced by people as simply a low-carbon version of the natural gas already in your home, or it could be thought of as this dangerous new gas. Previous research shows there’s quite a big generational gap on opinions on hydrogen. All it would take to hinder progress would be a media campaign saying we were advocating a dangerous gas, even though it’s no more so than natural gas.”
Joffe says that disruption of switching over could be minimised if new boilers installed by the mid-2020s could change over to the gas. However, it’s not clear yet from the prototypes if that’s possible, both from an efficiency and commercial perspective.
What part does energy efficiency play in reducing emissions?
The government has set ambitious targets for energy efficiency of new and existing building stock in its Clean Growth Strategy, which the CCC has factored into its report. But the demise of the Green Deal and the reduction by the Department for Business, Industry and Industrial Strategy of budgets for insulating homes has created, as Joffe puts it, “an area of weakness”.
Joffe says that even if heat and power are decarbonised, it makes huge sense to reduce energy consumption as part of reaching that zero target, as a means of addressing fuel poverty. “Once you decarbonise the energy supply, it becomes about cost, and we don’t think it’s sensible to just burn loads of hydrogen in 2050.”
He acknowledges that insulating the building stock again is not straightforward and there are particular difficulties for tackling properties built with solid walls – 28 cent of the building stock. “It is expensive to do, and it’s not going to save you that money on your energy bill. And so that is a thorny one. I think there is potential for some new, innovative solutions that are either less invasive or lower cost.”
What is the role of decentralised energy supply and nuclear power?
One of the criticisms levelled against the report is its focus on centralised generation. Joffe says this perceived leaning is a misconception. The report, he says, was demonstrating that zero carbon could be met by 2050 with the same costs, rather than prescribing how it should be done. “You could definitely imagine doing it with more decentralised renewables, and less offshore wind or whatever,” he says.
“We’re not wedded to the scenario we presented, and there are aspects I would say we didn’t get quite right. The numbers add up, but I think we’ve got too much fossil generation, too much fossil hydrogen production, and I think we could probably use more renewables.”
Is Ofgem a help or hindrance?
The recent announcement that the rate of return on investment for networks is to be set at 4.3 per cent for RIIO2 has been poorly received by the networks. Some have accused Ofgem of being out of touch with the demands and risks that lie ahead as we move towards net zero carbon.
Joffe says he can’t comment on whether they’re in tune, or whether the rate of return is the correct one. “What I would say is that as part of the work we’ve done, we’ve identified a real opportunity for saving the country money by rolling out electric vehicles as quickly as we can – and by 2030 we think that’s going to be saving us money.
“But if we don’t strengthen the electricity networks and put in place the charging infrastructure, we’re not going to be able to have as many electric vehicles, and we’ll be saving ourselves less money. We need to make progress in the 2020s on strengthening electricity networks, and when we’re doing that, we ought to future proof them, so we don’t have to dig up the roads again in 15 years’ time.
“So there’s a real opportunity to get it right now, but it’s not clear to me if that opportunity is embraced by Ofgem. I don’t know what their position is, and we think there’s a significant role for a more proactive approach to making investments, rather than justifying exactly how many people happen to have an electric vehicle in a given area. If we know that we’re going to have to upgrade by 2050, there’s a case for doing it sooner rather than later.”
So is hitting the net-zero target feasible?
As the CCC report makes clear, hitting the target is feasible and the costs are manageable, yet Joffe reiterates: “It’s possible, but to achieve it we need to take action now, and that means government not only setting the target but really embracing the challenge, and grasping the thornier areas where they don’t have the answers. There needs to be clear action on better infrastructure to support decarbonisation, whether that’s hydrogen or stronger electricity supply.”
He adds: “There’s a huge amount to do across a wide range of areas, so let’s take action in every area that we can think of, and work it out as we go along – rather than waiting for the right answer to drop into our lap. In some areas, just need to start making progress and see where we go from there.”
David Joffe will be speaking at the 2019 Utility Week Energy Summit, now established as the leading energy event for UK policymakers and industry leaders. The event will take place in London on 13 June and will bring together 150+ key stakeholders to debate these key issues and more. To find out more read our preview piece here. To book, visit our event website.