The 10 clean growth policy ‘shortfalls’ and how to address them, according to MPs

edie summarises the 10 key shortfalls and recommendations for UK clean growth

The Committee’s ‘Clean Growth: Technologies for meeting the UK’s emissions reduction targets’ report welcomes the Government’s recent announcements that it will strengthen the existing Climate Change Act in order to reach net-zero emissions by 2050.

However, the report warns that existing policies and progress put the UK off-course to meet existing and legally binding carbon budgets. In response, the report has highlighted 10 policy “shortfalls” and the measures that should be taken to address them in order to deliver a Clean Growth Strategy aligned to the needs of net-zero emissions.

The shortfalls

1) The report criticises the decision to reduce the ‘plug-in grant’ for the lowest-emission vehicles in October 2018, with financial incentives cut completely for some low-emission vehicles.

2) Despite public transport fares for trains and buses being allowed to increase year-on-year over a nine-year period, fuel duty has been frozen over that timeframe.

3) The closure of the feed-in tariff for low-carbon power generation has been criticised by many, and the report lists the closure as another key shortfall.

4) The Energy Companies Obligation scheme was restricted to vulnerable households in November 2018, despite the Government conceding that this would result in lower carbon emissions reductions being achieved, the report notes.

5) In 2017, the Government launched a consultation on how to build a market for those able to pay for their own domestic energy efficiency improvements. However, the report states that this has still not been announced as a new policy framework.

6) No consultation has been launched on improving energy efficiency in relation to building regulations, despite the Government claiming it would do so after the zero-carbon homes policy was axed in 2015.

7) Business rates on solar panels have increased between three to eight-fold since 2017, according to the report, creating thousands of pounds in additional costs for businesses, schools, SMEs and hospitals each year.

8) Both onshore wind and large-scale solar have been excluded from the Contract for Difference (CfD) financial support mechanism since 2017. In the same time, planning permission for onshore wind farms has become “more difficult to obtain”, the report states.

9) The ‘Renewable Heat Incentive’ scheme is due to close in 2021 but no replacement scheme has yet been announced

10) The Government’s White Paper on ‘The future of the energy market’ was due to be published in the early months of this year, but is still yet to be published as we approach autumn.

The recommendations

To remedy the shortfalls, the report includes 10 key policy recommendations:

1) A Strategy for decarbonising heat: The report calls for the urgent development a clearer strategy for decarbonising heat that includes large-scale trials of different heating technologies, such as heat pumps and hydrogen gas heating, operating in homes and cities to build the evidence base required for long-term decisions.

2) Incentive scheme for energy efficiency home improvements: previous energy efficiency initiative for households have failed because of “narrow” financial support. The MPs suggest that the Government should consider adjusting Stamp Duty so that it varies according to the energy performance of the home as well as the price paid for it. A ‘Help to Improve’ scheme should also be introduced by July 2020.

3) Plan for reducing vehicle emissions: The report urges the Government to bring forward the proposed ban on the sales on new conventional cars and vans to 2035 and reconsider financial incentives to assist the uptake of low-carbon transport. Increased uptake of public chargers and considerations into the emissions from the manufacturing of low-carbon vehicles should also be explored.

4) Support for onshore wind and solar power: The Government must ensure that there is strong policy support for new onshore wind power and large-scale solar power projects. The Government should ensure that national planning policy facilitates the re-powering of existing sites, with a clear planning permission framework for re-powering existing onshore wind farms in place by the end of 2020.

5) Review of the Smart Export Guarantee: The Government must review the Smart Export Guarantee― which has been named as the replacement for the Feed-in Tariff scheme ―by the end of 2020, and should be ready to include a minimum price floor if there is evidence of a lack of market competitivity.

6) Sustain nuclear power without growing the industry: The Government must make a decision on the future finance framework for new nuclear power by the end of 2019 in a way that sustains the market but doesn’t grow it. Consideration of the energy generation gap should be examined and renewables prioritised to fill the gap.

7) Removal of greenhouse gases: The Government should launch a consultation to inform the development of a future framework for managing and incentivising greenhouse gas removal on the scale required for net-zero emissions. This would include substantial private funding, so incentives and encouragement of the private sector should be prioritised.

8) Clear action on carbon capture, usage and storage (CCUS): The Government should provide clarity on its CCUS plan, which could have the first plant live by 2021. Definitions on “deployment at scale”, “cost-effective” and what the milestones of the plan need to be ironed out.

9) Clean growth regulation of the energy market: The Government should consider amending Ofgem’s principal objective so that it includes ensuring that regulations align with the emissions reduction targets set out in climate policies such as the Climate Change Act.

10) Support for local authorities: The Government should support local authorities and members of the public in contributing to the UK’s net-zero target, including access to long-term finance, and central guides and an advice service for the public.

Industry reaction

Commenting on the report, Dr Nina Skorupska, chief executive at the Renewable Energy Association (REA) said:

“Amongst a number of valuable recommendations, the report accurately highlights the need to focus on the hard to decarbonise areas of heat and transport. With the RHI ending in 2021 and no alternative route to market in place, we wholeheartedly support the view that decarbonising heat should be a top priority for the Government.

“As well as this, emphases on ramping up the switch to electric vehicles through incentives and a review of the Smart Export Guarantee after a year of operation are policies that will benefit not only the industry but the wider public. We also recommend the introduction of E10 to further tackle the concerning levels of vehicle emissions highlighted in the report.”

David Smith, chief executive of Energy Networks Association said:

“Today’s report highlights how our system of private investment has helped make Britain a superpower of renewable energy, with carbon emissions now at their lowest level since 1888. We need to build on that to ensure our country takes the smartest, most innovative and fairest approach to deliver net-zero.

“We support the Committee’s recommendations for government to develop a heat strategy including large scale technology trials including both heat pumps and hydrogen gas heating, to make further commitments on CCUS and provide further clarity and support around decarbonising transport. We also welcome the Committee’s recognition of the work that the networks have already been doing particularly to develop smarter energy systems and committing to increase flexibility, and it will be vital for Ofgem to keep their focus on innovation into the next price control period.”

Bean Beanland, chairman of the Ground Source Heat Pump Association said: 

“We are pleased that the Commons Committee has urged the Government not to delay further the tightening up of Building Regulations to reflect both the reduction in the carbon intensity of grid electricity and the tighter emissions standards that are necessary for homes in a fabric-first approach.

“As well as wanting to see Building Regulations that better deliver the low carbon homes of the future, the GSHPA urges the Government to bring in a new support framework for low carbon heating beyond 2021, including a capital grant for the installation of heat pumps, with a target of 1 million installations a year by 2035. It is also necessary for Government to recognise that the energy efficiency retrofit of existing homes is a national infrastructure priority, and to bring forward policies to facilitate this.

STA Chief Executive Chris Hewett, chief executive of the Solar Trade Association said:

“This report is a welcome addition to the growing body of literature that is calling on the government to bring down barriers to solar and energy storage in the UK. With a legally-binding commitment to reach net-zero by 2050, urgent action is needed now. The solar industry is ready to deliver on a scale and must be recognised as part of the solution.”

Matt Mace