Energy Security Strategy: UK targets 95% low-carbon electricity mix by 2030, but will increase oil and gas production
The UK Government has finally published its highly anticipated Energy Security Strategy, including increased targets for offshore wind, hydrogen and nuclear power generation.
Published after almost a month of delays, the Strategy is designed to help the UK respond to the energy price crisis, which is being worsened by Russia’s war in Ukraine. The Government is promising a “major acceleration of homegrown power generation” – both low-carbon and fossil-fuelled – in the first sweeping update to energy security policy in a decade.
The Government expects the measures detailed in the Strategy to result in an electricity generation mix that is 95% low-carbon by 2030. It had already pledged to ensure a 100% low-carbon mix by 2035.
On renewable energy, the Government has increased the UK’s 2030 target for installed offshore wind capacity from 40GW to 50GW. Around 5GW should be accounted for by floating turbines. Planning rules will be reformed to help reduce the approval times for large offshore wind projects from four years to one.
Onshore wind, meanwhile, has reportedly been the centre of a rift within the Conservative Party in recent weeks. While Prime Minister Boris Johnson and Business and Energy Secretary Kwasi Kwarteng supported a relaxing of planning rules, opposition means the final Strategy is watered down. Rather than making changes at a UK level, the Government will partner with local communities wishing to host new onshore wind capacity, promising them lower energy bills.
On solar energy, the Government has stated that it believes the UK’s installed capacity could grow fivefold by 2035 – but has stopped short of making this a target. Before setting targets, the Strategy confirms, the Government wishes to consult on planning regulations, including those for rooftop solar.
As expected, the Strategy details plans to accelerate the development of renewable power generation. It targets 24GW of installed capacity by 2050, meaning that nuclear will provide 25% of the UK’s electricity demands by mid-century. The Government has stated that it will support the delivery of up to eight large plants this decade, including Wylfa, Hinkley Point C and Sizewell C. It will also support small modular reactors (SMRs).
It has been reported that Johnson has pushed hard for these targets on nuclear, despite opposition from the Treasury.
There are also new ambitions for Britain’s nascent “low-carbon” hydrogen sector. Last year’s Hydrogen Strategy included an ambition for the UK to host 5GW of green and blue hydrogen by 2030. This has now been increased to 10GW, in a move that has been called for by many major energy players. The Government has also clarified that its “twin-track” approach should involve equal deployment of green hydrogen – made using renewable electricity – and blue hydrogen – made from natural gas co-located with carbon capture. This has raised eyebrows, as the Government has repeatedly been warned that blue hydrogen may not truly be a low-carbon solution across its lifecycle.
Cabinet Ministers have stated repeatedly in recent weeks that the Strategy will contain measures to increase North Sea oil and gas production, despite warnings from green groups about this potentially being incompatible with net-zero by 2050, and an inefficient way to lower energy bills in the short-term.
The Department for Business, Energy and Industrial Strategy (BEIS) has, using the Strategy, confirmed plans to launch a new task force to support new developments. The task force will be formed ahead of a new licencing round this Autumn.
Kwarteng said: “Scaling up cheap renewables and new nuclear while maximising North Sea production is the best and only way to ensure our energy independence over the coming years.”
The efficiency elephant in the room
Energy efficiency was not mentioned in the outline statement issued to media representatives on Wednesday evening (6 April). The final Strategy documents do include a chapter dedicated to energy efficiency, but this chapter largely repeats existing funding commitments and targets rather than increasing ambiitons.
Media reports from earlier this week suggested that Johnson wanted to expand the Energy Company Obligation (ECO) home energy efficiency scheme by £200m, but that the Treasury was not supportive. The expansion has, ultimately, survived into the final Strategy. BEIS expects the expansion, which will apply from 2022 to 2026, will support 133,000 low-income households annually to improve their energy efficiency.
There is also little ambition for accelerating the transition to low-carbon heat. All that has been detailed at this stage is a £30m Heat Pump Investment Accelerator Competition, designed to increase manufacturing within the UK. The Heat and Buildings Strategy – particularly its £450m boiler upgrade scheme – are highlighted.
Green groups have argued that the wrong choices are being made to cut bills in the short term while also putting the UK on course for net-zero by 2050.
The IPPR’s research fellow Joshua Emden said: “Instead of a big boost to investment in energy efficiency and low-carbon heating that would cut hundreds of pounds off bills now, the government has set out vague commitments for the most expensive and slow-to-build energy technologies. After the failure to offer any meaningful support in the Spring Statement, this was yet another missed opportunity to help people who are feeling the squeeze from soaring energy bills.”
The Energy and Climate Intelligence Unit’s (ECIU) deputy director Sepi Golzari-Munro added: “Soaring gas prices are responsible for adding at least £500 to energy bills, forcing another 2.5 million households into fuel poverty. Without help to insulate their homes to bring down gas bills, there may be little prospect they can afford to keep their homes warm.
“Rumours that Chancellor Rishi Sunak blocked moves to boost the successful ECO energy efficiency scheme that has saved low-income households £1.2bn their energy bills this year, could raise tough questions as the gas price crisis continues to bite. It’s all the more striking, since insulation is the public’s top priority in the current gas crisis, with 84% backing it as the best way to cut our reliance on gas and cut bills.
“With any extra UK gas production having no effect on prices, it begs the question of whether having gas that households can’t afford to use counts as ‘energy security’ to them.”