Green Recovery Plan for the UK energy sector
This is Prospect’s 10-point plan setting out how we can bounce back from the COVID-19 crisis while generating much-needed jobs and decarbonising our energy supply.
Progress towards our climate goals is faltering, and a lack of strategic leadership and clear policy direction means we are on track to miss our legally-binding decarbonisation targets.
The coronavirus pandemic threatens to further derail our efforts to reach net zero, at the very moment when action needs to be ramped up. Yet, given the right mix of policy measures, the UK could be a global decarbonisation trailblazer, creating new green jobs and engines of clean growth in the process.
10 steps to a green recovery
1. Publish a comprehensive net zero roadmap
Successive governments have taken a short-term approach to climate and energy policy in the UK, frequently restricting the planning horizon to the length of the electoral cycle.
This chronic short-termism has meant that, despite some positive steps, progress towards net zero has been much more limited in the UK than it might otherwise have been.
As a matter of urgency the government should map out, in detail, how it will make progress as part of a comprehensive net zero roadmap.
2. Accelerate deployment of low carbon infrastructure
The government roadmap for net zero should aim to deliver by 2030:
- 40GW of offshore wind
- an additional 15GW of onshore wind and solar
- an additional 10GW of new nuclear
- at least one operational tidal energy demonstration project, and
- at least one operational Carbon Capture Utilisation and Storage (CCUS) demonstration project.
3. Embed a whole-systems approach
The UK’s recent approach to energy policy has focused on offering varying levels of piecemeal support to particular technologies, but without a coherent vision for how our future, decarbonised energy system will fit together in a way that is secure, stable and cost effective.
This whole-systems approach should include a strong mandate for the energy regulator, Ofgem, to incentivise much greater investment in more flexible energy grids, especially at the local and regional level. It should also include support for projects that integrate different clean energy technologies in the most efficient and cost-effective ways, such as the proposed nuclear-focused energy clusters at Sizewell and Moorside.
4. Develop a fair funding formula
Leaving the private sector to finance and assume all the risk involved in new projects has meant higher costs for consumers, fewer projects being delivered, and left new technologies like CCUS and tidal generation at the prototype stage.
Without a more supportive financing system that can marshal greater resources for the fight against climate change, the pace and scope of green infrastructure deployment will remain inadequate to the challenge we face.
We also need to avoid an ever-increasing burden on the bill payer. This could be done by, for example, issuing new sovereign green bonds, new progressive tax mechanisms, and by re-establishing a public Net Zero Investment Bank.
5. A strategy for energy conservation
The UK still has some of the ‘leakiest’ housing stock in Europe but annual installations of energy efficiency measures have fallen to a fraction of earlier levels.
A strategy for energy efficiency and conservation is an urgent priority, and it needs to include the right mix of support and incentives for households and businesses, as well as a plan for creating a skilled workforce that can help retrofit millions of homes and offices.
6. Maximise the benefits for UK PLC
The journey to net zero could provide immense opportunities to generate prosperity and create new, good quality green jobs. Crucially, it could also contribute to a levelling-up agenda that promotes strong regional economic growth in parts of the UK that have been left behind in recent decades.
But, in order to realise these opportunities, we will need a proper green industrial strategy with a comprehensive plan for how we will maximise the local benefits to the UK of the drive to net zero.
7. Net zero workforce plan
In the wake of the COVID-19 crisis there is a real opportunity to change course and begin developing a comprehensive plan for a net zero workforce that embeds diversity and inclusion at its core.
This needs to focus on expanding the pipeline of new entrants into the energy sector, in part by developing a properly funded national retraining scheme, but also needs to look at ways to more effectively retain existing talent within the industry.
Taking action on issues such as equal pay and flexible working will be a key component of this, and will be critical to making the industry a welcoming and inclusive environment for all workers.
8. Ramp up research and development
Early results from the official UK Innovation Survey suggest R&D spending by UK energy utilities has fallen to the lowest level since the financial crash, while data from the International Energy Agency shows that real UK spending on renewables R&D fell by 60% between 2010 and 2018.
These deep cuts to innovation funding need to be reversed. We need a properly funded strategy to expand the UK’s energy research and development community. This strategy needs to have a strong focus on sustaining a skilled R&D workforce, as well as maintaining close linkages with European and international research networks.
9. Just transition
The UK has a history of poorly managing industrial change, leaving workers and communities to deal with the devastating consequences of abrupt economic upheaval.
Just transition must be at the heart of our strategy for achieving net zero. This requires a clear and funded pathway, access to skills funding and must put workers at the heart of decision-making to create good quality jobs. and
10. A net zero energy commission
To provide the necessary strategic leadership and oversight, build popular consensus, and ensure decisions are grounded in technical realities, the government should establish a Net Zero Energy Commission comprised of key stakeholders, including trade unions.
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