UK's Covid-19 recovery package for energy 'not net-zero aligned', report finds

The UK Government has earmarked £3.8bn of stimulus funding for legacy fossil fuel and nuclear generation, compared to just £121m for renewables, a damning new report has claimed.

Collectively, G20 nations have allocated 33% more funding to fossil fuels than low-carbon generation since March

Collectively, G20 nations have allocated 33% more funding to fossil fuels than low-carbon generation since March

Published by global technology company Wärtsilä’s energy arm, the analysis concludes that the UK Government’s short-term plans for helping the energy sector recover from the financial impacts of Covid-19 are not aligned with the 2050 net-zero target or the interim carbon budgets.

It maps out the benefits to the economy and the climate if the UK were to invest all of its energy stimuli in renewables through to the end of 2025, claiming that this scenario would bring the generation share of renewables up to 60%. In comparison, the share in 2019 was 37%.

Wärtsilä Energy believes that wind would account for the majority of renewable generation in this scenario and energy storage capacity would be scaled up dramatically.

The report also outlines how almost 124,000 jobs could be created or saved in this scenario. Using the same calculations for a scenario in which all energy stimulus is allocated to fossil fuels, it sees the renewable scenario positively affecting 175% more jobs.

This finding is in line with recent research from McKinsey, which concluded that for every $10m (£8m) invested by a Government in energy efficiency, 77 jobs could be created. For investment in renewable generation technologies, the figure stands at 75 jobs. In comparison, funnelling $10m into fossil fuels would create just 27 jobs.

Calculations made for the UK do not account for the funding provided under the Offshore Wind Sector Deal, as this was ratified pre-Covid-19. The £160m pot for the wind sector unveiled by Boris Johnson in October is also omitted, because it is intended for turbine manufacturers rather than generators.

Going stateside

The Wärtsilä Energy report also takes a broader look at approaches to energy sector stimulus across all G20 nations. It finds that almost every nation in this cohort is disproportionately providing funding for fossil fuels over renewables. Collectively, nations have allocated 33% more funding to fossil fuels than low-carbon generation.

The skew towards fossil fuels is believed to be most pronounced in the US. Some $72bn of stimulus funding has been earmarked for legacy fossil fuel generation assets by the Trump Administration, the report reveals.

If this amount of funding were handed to renewable generators and companies working to scale up flexible power systems, the report states, more than 100GW of new wind and solar capacity could be brought online.

The energy transition is proving a key sticking point in the US Election. Democratic candidate Joe Biden has said he would plan a “just” transition away from oil and coal, while Trump has made efforts to appeal to states whose regional economies are highly dependent on fossil fuel extraction and generation. Trump has pulled the US out of the Paris Agreement, while Biden has committed to re-renter the Accord if he is elected in November.

Wärtsilä Energy used its own Atlas of Renewable Energy to inform its calculations, as well as the Energy Policy Tracker. This digital database provides up-to-date information on more than 200 individual public funding commitments related to the production and consumption of energy in the G20 countries since the beginning of the pandemic.

Sarah George



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