As the goal to reach net zero in the UK rapidly approaches, we examine Boris Johnson’s 10-point plan for a green industrial revolution.
The race to reach net zero by 2050 has begun. From China to the US, governments are heeding scientists’ warnings that decisions and actions – or lack of both – taken this decade will heavily impact the chances of meeting the internationally agreed Paris Climate Change target. Yet, despite having decades to figure it out, nobody really knows what a clear pathway to net zero looks like; not all the technology is commercially developed and, as governments are all too aware, some policy changes will be politically tricky.
Nevertheless, time is of the essence, and after a string of delays, UK Prime Minister Boris Johnson in November finally presented his opening gambit in the decarbonisation race: a £12bn-backed 10-point plan for a green industrial revolution. The plan was widely welcomed as the first phase to putting the country on a pathway to achieving net zero by 2050, even if the overarching Net Zero Strategy is still AWOL and not expected until sometime before Glasgow hosts the COP26 in November 2021. However, as it stands today, how achievable are the individual aims and what more is needed to kickstart the new green economy?
Advancing offshore wind
Offshore wind is already a UK success story; Britain boasts the largest installed base and project costs are falling rapidly. Its perhaps unsurprising, therefore, first on Johnson’s list is quadrupling capacity to 40GW by 2030. To achieve this the government will ‘aim’ to double capacity procured through the Contract for Difference auction set for next year to 12GW, including 1GW floating wind.
The investment appetite for the sector is strong, says Daniel Grosvenor, head of infrastructure at Deloitte: “Offshore wind is a now opportunity, with a well-known pipeline of projects”. According to September data from Renewable UK, there are 10GWs operating already, with a further 30GW either under construction, with planning permission, in the planning process or under development.
However, a key challenge will be managing the extra electricity capacity into the grid, more about which should be explained in the Offshore Transmission Network Review expected in 2021. In the delayed Energy White Paper (EWP) published in December, the government highlight the potential of using wind power for hydrogen electrolysis and for electric heat for homes. However, as Emma Champion, analyst at BloombergNEF, notes: “That’s not really a bridge that’s been crossed yet.”
Driving the growth of low-carbon hydrogen
The government is aiming for 5GW of blue hydrogen production capacity by 2030, produced with carbon capture, usage and storage (CCUS) which will make it ‘low carbon’. Currently a handful of extremely early-stage projects are underway, mostly centred around the government’s net zero industrial clusters initiative. If final investment decisions are made they could possibly start producing between 2024-2026. However, while there is faith in the various technologies and their cost reduction potential, lack of clarity on business models and direction of deployment is a much-highlighted stumbling block.
It’s hoped the long delayed – now expected in 2021 – Hydrogen Strategy will provide some answers. Key points of uncertainty are: where will the hydrogen be used – for transport, heating, in the aerospace and maritime sector or in all of them – and crucially, when will it arrive? What are the pathways to deployment? Time is running out if the UK is to keep up with its competitors, such as Germany. As a recent Deloitte report notes, financial decisions need to be made now: ‘In the absence of a nationally coordinated effort hydrogen development might be fragmented and limit cost reduction’.
This is especially true for the UK’s heating needs and industrial players, says Dr Mark Burrows, strategic client lead at npower Business, “They will struggle to convert their processes and plants without a firm understanding of when hydrogen will come online,” he says.
Delivering new and advanced nuclear power
To meet the expected rise in demand for low-carbon electricity in sectors like heat and transport, the government is pursuing options that include large-scale nuclear, small modular reactors (SMRs), which are about 40 times smaller than conventional light water reactor sites, and novel advanced modular reactors (AMRs).
The Energy White Paper (EWP) outlines an aim to bring at least one large-scale nuclear project to the point of final investment decision by the end of this parliament, and the government is already in talks with EDF about the construction of a nuclear plant at the Sizewell C site.
For both SMRs and AMRs the government says it wants to have demonstrator plants by early 2030. However, Ian Griffiths, partner, construction and infrastructure lawyer at Shakespeare Martineau, and formerly of Horizon Nuclear Power, says that while SMR technology is feasible – Rolls Royce has announced early-stage plans to build up to 16 SMRs in the UK – AMRs are considered within the industry as merely ‘Powerpoint reactors’ and probably not feasible in this timeframe.
Other challenges include, he says, the low levels of funding, siting issues, high cost of licensing, and delays to the EWP and Regulated Asset Base (RAB), which have already caused a lag in understanding government funding structures, plus skills shortages and regulatory capacity post Brexit.
In the future, the Office for Nuclear Regulation will take over some work from the European regulator, Euratom, and there are questions over ‘regulatory bandwidth’ says Griffiths. Time is running out, he adds: “We can’t wait for a demonstrator; we need something now.” However, the National Nuclear Laboratory says the first SMR won’t be seen until at least 2029, but that others are likely to follow soon after.
Accelerating the transition to electric vehicles
Encompassing national EV infrastructure and manufacturing, this point in the plan is geared towards getting the country ready for the 2030 ban of the sale of new petrol and diesel cars and vans (except some hybrids). James McKemey, head of insights team at EV charging firm Pod Point says the deadline effectively ‘de-risks’ EV investment decisions in the automotive space and follows trends already happening. Huge reductions in battery costs means EVs “will probably be cheaper to manufacture than an internal combustion engine car by the mid-2020s,” he adds.
However, challenges remain: range, building infrastructure ahead of demand, and supply of EVs. While the government funds levied (£2.8bn) are broadly ‘appropriate and well targeted’, according to McKemey, there is still a ‘chicken and egg’ problem: “We think a priority should be an allocation of EV stock from manufacturers,” he says. Part of the government’s ambition is to establish an EV manufacturing base in the UK – the Nissan Leaf is already produced here – however, this will be trickier post-Brexit.
“The last-minute nature of manufacturing supply chains means we will need to very rapidly make free trade agreements to partake in the global automotive trade,” adds Tim Chapman, ICE fellow and director at Arup Group.
Green public transport, cycling and walking
Surface transport is the UK’s biggest emitter. The government’s plan to reduce emissions includes shifting travel to more active and sustainable transport by investing in rail and bus services, along with measures to help pedestrians and cyclists. However, the detail is as yet missing because the transport decarbonisation plan due in December is delayed until spring 2021. The Committee for Climate Change’s (CCC) Sixth Carbon Budget published in December, however, assumes that approximately 9 per cent of car miles can be reduced or shifted to lower-carbon modes by 2035, increasing to 17 per cent by 2050.
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