In Whitehall, Ministers and their advisers are wrestling with a policy conundrum like no other. It’s one that will be make-or-break for the UK economy. And it will define the UK’s standing on the world stage for decades to come.
But it’s not Brexit I’m talking about. It’s how to set the UK on course to climate change leadership and to leverage that as a central plank of our industrial growth strategy.
Almost ten years on from passing the Climate Change Act, the UK has so far met its statutory carbon targets. Emissions are now 42% lower than the 1990 baseline.
Coal use has bombed as quickly as the price of renewable energy technologies. There can be days now on which coal plays no role in the UK. Wind and solar provided 14% of the UK’s electricity last year; on some days, this can double.
While some mistakes have been made, and the cost of subsidies has never been far from the headlines, this progress has been achieved in parallel with economic growth – in fact GDP has grown by 60% over the same period.
But you don’t need to look far into the future to see trouble ahead.
Ministers have accepted an emission reduction target of 57% by 2030 but have so far offered no means of achieving this. Aside from giving a costly government guarantee for Hinkley Point C nuclear power station, policy has largely been on hold since the Brexit vote.
More than three quarters of the Energy Institute’s professional members, surveyed for the annual Energy Barometer, currently believe the UK will fall short of this target.
But a Clean Growth Plan is expected to be published within weeks. And it couldn’t be better timed. As the UK faces the economic realities of Brexit, clean energy could just become the ‘get out of jail free’ card the country needs.
The same Energy Barometer points to two big opportunities that must be grasped.
First, being smarter with energy would significantly increase the resource efficiency of UK plc.
Energy efficiency is the lowest hanging fruit but it remains the neglected Cinderella of energy policy. Energy Institute members don’t only see it as a priority for meeting emissions targets, they also rate it as lowest risk in terms of investment, and believe it offers the biggest opportunity for the UK’s future economy.
Britain’s homes and commercial properties still offer significant scope for smarter use of energy and the Conservative manifesto promised an industrial energy efficiency scheme to help large companies reduce their energy use.
Greater resource efficiency can only be good for the competitiveness of an economy in which productivity is some 18% below the OECD average.
Second, clean energy innovation could offer a major trade dividend for post Brexit Britain.
Technology transformations often take a long time to arrive – and then move at high speed. All too often in the UK they’ve been treated with suspicion until it’s too late and the commercial advantage has gone elsewhere.
Energy Institute members believe the UK should support emerging clean energy technologies – such as smart technologies and energy storage – at an early stage, capitalising on the UK’s strengths in research, academia and our ability to nurture technology-based start-ups.
The UK has already accumulated considerable exportable expertise. But we need to be faster at commercialisation and better at protecting intellectual property to grab a share of huge potential global markets. Small scale battery storage alone will be worth an estimated $250bn by 2040.
And whilst energy demand plateaus in the OECD, there is still a huge need to improve access to energy in developing nations – which will more than double the energy they source from renewables, gas and nuclear combined by 2040 – all fields where UK capability is already significant.
Clean energy research, innovation and early stage technology piloting are vital. If smaller British innovators are to succeed, government funding needs to flow more quickly, calculated risk-taking is needed in backing early stage innovators and the rules of the game need to be simpler and more predictable.
Withdrawal from the EU block, with whom we committed to the Paris Agreement, must not mean a retreat from Britain’s climate ambition.
Now is the time to plant the seeds from which the UK can develop substantial domestic supply chains and become one of the world’s leading exporters of clean energy skills, services and products, helping to improve access to energy in developing nations and building the global low carbon energy system demanded by the Paris Agreement.
The Energy Institute’s Energy Barometer is available to view here.
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