July has been a busy month for the sustainability agenda. As stories emerged of extreme weather, forest fires and flooding from Lincolnshire to Manavgat to Zengzhou, the need for climate action became increasingly evident.
But July also brought an array of policy and net-zero legislation, particularly in the UK and Europe. We have collated a review of some of the key announcements of the month.
- Transport Decarbonisation Strategy
The first announcement of the month came from the Department of Transport. The Department had previously announced plans for phasing our internal combustion engine vehicles by 2030 and hybrid vehicles by 2035. The Strategy was anticipated to outline further steps to achieving net-zero. Instead, it offered a ban on HGV vehicles and cautious incentives to move away from emitting vehicles, including further support for motorcycle drivers to transition to low carbon transport. For key takeaways from the strategy, read Jade Pallister’s blog on the PLMR website.
- Jet Zero Strategy
Acknowledging the need for a combination of technologies to decarbonise aviation, the Jet Zero Strategy consultation includes commitments from Government to consider if further policy mechanisms are needed to develop UK Sustainable Air Fuel (SAF) or if using SAF on UK Public Service Obligation routes may be feasible. In line with promises of a Global Britain, the UK Government will participate in International Civil Aviation Organisation negotiations for comprehensive sustainability standards and will even work towards a future global objective on SAF.
- Fit for 55
The EU’s ‘Fit for 55’ climate package covered a broad range of measures affecting energy efficiency, the source and use of alternative fuels, carbon pricing, land use, taxation, and renewable energy. This package notably proposes that the EU will reduce greenhouse gas emissions across the bloc by at least 55% by 2030 in comparison to 1990 levels. New legislative proposals include the controversial carbon border adjustment mechanism have the potential to address what is known as ‘carbon leakage’, which could tackle the carbon footprint of imports and prevent companies from ‘offshoring’ emissions by moving their operations to parts of the world with little to no climate regulation. Revisions of current directives even offer the opportunity to tax polluting fuels in the shipping industry and make changes to the EU Emissions Trading Scheme, including a proposal to lower the overall emissions cap and increase the annual reduction rate.
- Energy Digitalisation Strategy
At the end of the month the Government turned to energy, and to energy data. The digitalisation strategy outlines a plan to tackle barriers in collecting and accessing high-quality energy data and to ensure this data is interoperable and visible for millions of assets with different owners, organisations and infrastructure in the energy system. Priorities include creating market incentives for the open sharing of data and shared digital infrastructure, incorporating cyber security, privacy, ethics and inclusion from the start. The UK Government plans to have standards and regulation in place for data collection and open and accessible data assets by the mid-2020s, making it easier for system actors to know what datasets exist and how they access it. By 2030, all energy assets will be visible to system operators to speed up and reduce the cost of planning, forecasting and operations.
- Smart Systems and Flexibility Plan
Before the plan’s launch, the Government had already begun work to develop storage and flexibility programmes, including a £100 million fund as part of the Net Zero Innovation Portfolio. The new Smart Systems and Flexibility Plan includes a commitment to consider the Green Jobs Taskforce’s recommendations to close the smart skills gap and implement a four-year smart meter policy framework with fixed minimum installation targets for energy suppliers in January 2022. The plan also reaffirms commitment to a mandate for all private electric vehicle chargepoints to have smart functionality and meet minimum device requirements, and crucially legislating for this mandate later in 2021. New calls for evidence were even published, including one on facilitating deployment of large scale, long duration storage and another on the role of vehicle-to-x technology in a net zero energy system.
- Proposals for a future system operator
Promised in the Energy White Paper of December 2020, the Government published its proposal for all functions and roles carried out by National Grid ESO to be transferred to the new Future System Operator. Like the Energy Digitalisation Strategy and Smart Systems and Flexibility Plan, this is part of plans to create a future system which is increasingly decentralised and digitalised. The FSO will balance supply and demand of electricity while taking on a role in network planning and other areas for gas, too.
- Energy Retail Market Strategy for the 2020s
Focused on important consumer issues, the Retail Strategy outlines plans to tackle the ‘loyalty penalty’ for not switching supplier or maintain a price cap criticised for constraining profits in an industry with low margins. Opt-in switching is aimed at increasing much-needed consumer engagement with the market as part of the net-zero transition; consumers could be prompted to switch to tariffs that support decarbonisation at the end of their contract. A call for evidence on energy consumer funding could start a discussion on fairness and affordability in the energy system, maintaining crucial public support for net zero and addressing price distortions on low carbon energy products to incentivise consumers to make net-zero choices.
Amongst all of these announcements, the Government also published a series of important consultations throughout July, including consultations on the UK Emissions Trading Scheme, a net-zero capacity market, low carbon heat, energy code reform, and carbon capture usage and storage. Get in touch with our experts to see how these opportunities could be relevant to you.
Policies yet to be published
The business of July provides a signal of what is to come. With Parliament in recess until 6 September and just over three months to go until COP26, there is not much time left for expected publications to demonstrate the leading role of Global Britain on climate action. Public reaction to reports of hydrogen levies on gas bills or ambitious targets for the phaseout of gas boilers have pushed the Heat and Buildings Strategy and Hydrogen Strategy back to this summer and autumn. This is in addition to an expected Net Zero Strategy, Net Zero Review and other policy frameworks for delivering the 2050 target.