“Re-announcements, reheated policy, and no new investment”

Labour’s condemnation of the Government’s ‘Green Day’ was swift, but is it fair? Rishi Sunak believes the new Powering Up Britain strategy will “create good jobs across the country, provide new opportunities for British businesses… and maintain our world-leading action to reach net zero”.

After much anticipation, the Government has published forty-four documents covering plans across a broad scope of green policy areas, sectors and technologies. Originally dubbed ‘Green Day’, PLMR has analysed and outlined the main announcements below.

Relevant links

·      Powering Up Britain can be read here.

·      The Energy Security Plan can be read here.

·      The Net Zero Growth Plan can be read here.

·      The Government response to the Net Zero Review can be read here.

Powering Up Britain

Released fifty-one days after the creation of the Department for Energy Security and Net Zero, ‘Powering Up Britain’ sets out the Government’s approach to delivering those agendas. It contains two complementary strategies, the Energy Security Plan and the Net Zero Growth Plan.

The ESP focuses on the resilience of the UK’s energy system, setting out plans to reduce reliance on foreign fossil fuels and expand domestic generation. The goal remains to achieve energy independence by doubling the country’s electricity generation capacity by the late 2030s.

Additionally, the Government also wants to decarbonise the power sector by 2035 and ensure the UK has the cheapest wholesale electricity prices by 2035. This overall ambition of a “secure, low-cost and low-carbon” energy system reflects the resolution of the energy trilemma.

The NZGP outlines the Government’s decarbonisation pathway and its progress towards the country’s net zero commitments. It addresses the benefits the Government believes net zero can bring to Britain, including competitiveness boosts, industrial growth and regional prosperity. The document also responds to the recommendations made in Chris Skidmore’s Net Zero Review.

Clean, Secure Energy Supply

• Carbon Capture Usage and Storage – announced initial projects to receive funding from the £20bn pot pledged in the Spring Budget.
• Hydrogen – announced successful projects in the Low Carbon Hydrogen Supply Competition, funded by the existing £240m Net Zero Hydrogen Fund.
• Nuclear – launched previously announced Great British Nuclear to help the UK reach an ambition of 25% electricity from nuclear sources by 2050. The new body will begin with a competition to develop small modular reactors.
• Wind – opened the latest Contracts for Difference round for electricity generators. The £160m Floating Offshore Wind Manufacturing Scheme, first announced in 2021, has also launched to invest in port infrastructure projects.
• Solar – accepted the need to establish a taskforce to examine the installation of solar panels on commercial, industrial and domestic properties. There will not be any changes to the categorisation of agricultural land that would impede solar development.

Demand Reduction

• Energy Efficiency – rebranded the Energy Company Obligation+ scheme into the Great British Insultation Scheme, the details remain the same, a £1bn investment into energy efficiency upgrades by March 2026. Legislation is expected to progress the scheme before summer.
• Clean Heat – launched the £30m Heat Pump Investment Accelerator, first announced in 2022. Extended the Boiler Upgrade Scheme till 2018, following lacklustre consumer response, the scheme provides a grant for those buying heat pumps.
• Fuel Price Rebalancing – accepted the need to outline, by the end of 2023/24, an approach to rebalance electricity and gas costs to encourage consumers to switch to environmentally friendly products.

Other Decarbonisation

• Electric Vehicles – launched the existing Local Electric Vehicle Infrastructure Fund, which will provide £381m towards the installation of EV chargers.
• Sustainable Aviation Fuels – launched the second round of the £165m Advanced Fuels Fund.
• Green Skills – committed to the production of a Net Zero and Nature Workforce Action Plan in 2024. Highlighted plans to run 35 green skills bootcamps by the end of 2023.

Consultations

• Carbon Leakage – consultation on measures to address the displacement of emissions outside the UK. This will primarily examine two options; a CBAM (carbon border adjustment mechanism), which places a carbon price on imported products, and MPS (mandatory product standards), which cap the emissions allowed for products on the internal market.
• UK ETS – the Government will set out a long-term pathway for the Emissions Trading Scheme in 2023. It will also confirm the timeline to phase-out free allocations in the aviation sector, with changes to take effect from 2024.
• The future trajectory will be confirmed as part of the government response and changes will take effect from 2024
• Carbon Offsets – consultation on the integrity of voluntary carbon markets. The Government does not plan to allow carbon credits to contribute towards a CBAM or MPS.
• Planning – consultation on revised Energy National Policy Statements to speed up planning approvals for solar power and offshore wind, which will be considered as “critical national infrastructure”. A separate consultation will examine how communities can benefit from new local energy infrastructure such as onshore wind.
• Grid – announced a review of the acceleration of grid delivery, with the Electricity Networks Commissioner to publish recommendations in June. The Government will respond with an action plan this year.
• Networks – announced the publication of a connections action plan in summer. A further consultation on electricity market reforms will also take place in autumn as part of REMA.
• Zero Emission Vehicles – consultation on the zero emission vehicle mandate which will require an increasing percentage of manufacturer sales to be zero emission from 2024.
• Sustainable Aviation Fuels – second consultation the SAF mandate will set out full policy details including target trajectories and incentives.

Political Analysis

When the Chancellor of the Exchequer delivered his Spring Budget statement earlier this month, observers were dismayed by the lack of green investment announced. The Biden administration’s Inflation Reduction Act has thrown governments across the West into disarray amid concerns that green industries will move to the US to take advantage of generous subsidies.

After the EU has begun to announce its own plan, the UK Government has faced increasing pressure to respond as well. However, Jeremy Hunt has hit back arguing the country should not enter a “distortive global subsidy race” with the two larger powers. This is why after the publication nearly three thousand pages today, only one statistic has captured the attention.

The amount of new Treasury funding:

£0.

The Government insists further investment will come in autumn, but it is treading a precarious path. By delaying its response to the IRA it has presented Labour with the opportunity to seize the narrative. The party has already begun to refer to its Green Prosperity Plan as the true response to the IRA and frame itself as a government in waiting.

There is clear blue water emerging between the parties, as Shadow Secretary of State for Climate Change and Net Zero, Ed Miliband criticised the Conservatives for “sore loser syndrome” and praised the US. He wants the UK to match their ambition and frames Labour’s position as “patriotism not protectionism”.

Time will tell which party has taken the right approach.

For now, ‘Green Day’ has left many energy-intensive industries feeling blue.