Response to Government’s Energy White Paper, Powering our Net Zero Future

Peter Kydd, SWIP Chair and Energy Sector representative, said:

“SWIP welcomes the publication of the Government’s Energy White Paper and its focus on delivering net zero energy by 2050 whilst encouraging consumers to take advantage of the proposed reforms in the supply market to maintain affordable electricity bills. We also welcome the clear policy signals on the different technology support mechanisms and the cross departmental collaboration proposed to deliver net zero. 

“The White Paper appears to envisage a transition to net zero by 2050 which will disappoint many local authorities in the South West who have declared climate emergencies with a 2030 target.  However, it is likely that a tipping point will occur where consumers and businesses alike will want to progress to the future as quickly as possible now that the Government has declared its policy intentions.  As a consequence, it is likely to be market forces rather than Government targets that will dictate when net zero is actually achieved. Nevertheless, the White Paper is well evidenced, particularly in the context of modelling future demand scenarios and represents a strong forward looking evidence base.”

Peter commented further:

“The Energy White Paper is a comprehensive document running to 170 pages. Interestingly, its first chapter focuses on consumers before covering the electricity and gas networks, power generation, transport, buildings, industrial energy and oil and gas. It covers the UK as a whole although it does reference working with devolved administrations where appropriate.

“The White Paper promises consumers a fair deal, protection of the fuel poor and providing opportunities to make savings on energy bills.  It confirms that over the next 30 years, electricity will become a significant proportion of the energy we use, including domestic transport and heat.  It is proposing a number of consultations in 2021 to review how our energy is managed and billed, including use of smart tariffs, reforming switching/renewals and providing greater transparency on carbon emissions.  The paper is not anticipating any rise in the average household dual fuel bill to 2030, partly through enhanced energy efficiency measures and changing consumer behaviours.  These proposals will affect all consumers in the UK but particular issues for those in the South West will be the transition to electric cars and heating.

How quickly will those in the South West be able to take advantage of these changes and will the infrastructure be in place to facilitate this? 

“The proposed transformation of electricity generation and supply in the UK was covered in summary by the Prime Minister’s Ten Point Plan. However, the Energy White Paper goes into more detail. Underpinning this is the goal that transformation of the electricity system will support new UK jobs and new business opportunities. One billion pounds is to be invested in innovation programmes to accelerate advanced nuclear and clean hydrogen.  The major contributors will be offshore wind and a second nuclear plant to supplement Hinkley C to which end the Government has restarted negotiations on the proposed Sizewell C plant.

“The White paper is underpinned by a significant amount of modelling undertaken by the Department for Business, Energy and Industrial strategy (BEIS) with over 700,000 unique scenarios for different levels of demand, flexibility and 27 different technology/cost options.  BEIS forecasts a doubling of electricity demand by 2050 as transport and heat are electrified, consistent with the Sixth Carbon budget recommendations published by the Climate Change Commission last week.  Interestingly, they are not targeting a particular generation mix by 2050, only that the policy objectives should aim for a decarbonised electricity sector by 2050 with the final mix determined by the market on the basis of low emissions, low cost, and reliable supply.

“There are some technology targets, predominantly 40GW of offshore wind, 1GW of floating wind and the expansion of other renewables providing they are low cost. Tidal energy, unlike the 2006 Energy White Paper is scarcely mentioned with no commitments other than the potential for a ring-fenced Contracts for Difference (CfD) auction to incentivise further development.  A Ministerial  Delivery Group will be formed to drive cross-government collaboration in the roll out of renewables run by BEIS, Defra and HMT.  Other generation commitments include at least one power CCUS plant to be operational by 2030, funded by a variant of the CfD mechanism. 

“The White Paper acknowledges that the hydrogen economy requires support and is intending to work with industry to achieve 5GW of hydrogen production by 2030, backed up by a new £240m Net Zero Hydrogen Fund.  A key issue is to transition those engaged in, or supported by, the oil and gas industry to the new low carbon opportunities to ensure their expertise can be used. 

“The White Paper also confirms that a UK Emissions Trading Scheme will also be set up from 1 January 2021 to replace the current EU ETS at the end of the transition period.

“As with the Climate Change Committee report on the Sixth Carbon Budget, there is a significant amount of detail to absorb – this is a strength as both reports are pointing in the same policy direction and with similar objectives.  We will be exploring the detail in the coming months and the evidence base used within these reports will feed directly into our forthcoming decarbonisation workshop.”