Monday 19/03 – The government issues a consultation on potential actions that can be taken during the 2020s to phase out the use of high carbon fossil fuel heating in buildings located off the gas grid. Research by the Green Alliance think tank calls for a strategy to accelerate the roll-out of electric vehicles in the UK, highlighting the potential benefits that EVs may bring. The International Energy Agency finds that current and planned policies fall “well short” of achieving energy related sustainability goals.
Tuesday 20/03 – Speaking at an industry event in Oxford, BEIS Minister Claire Perry confirms that the government will undertake a formal review of the Capacity Market “later this year”. The government is defeated in the Lords over its plans for nuclear cooperation after Brexit. The Offshore Wind Industry Council puts forward the industry’s vision for 2030, which includes £48bn of investment in UK infrastructure and a £2.4bn/ year reduction in total electricity system costs. The latest Business Outlook report from Oil and Gas UK predicts production from the North Sea will increase by 5% in 2018.
Wednesday 21/03 – Appearing before the Lords EU Energy and Environment Sub-Committee, Energy and Clean Growth Minister Claire Perry confirms the government intends for the UK to remain in the EU Emissions Trading System until at least the end of 2020. Ofgem publishes its Renewables Obligation Annual Report covering the 2016-17 obligation period, finding that 86.2mn Renewable Obligation Certificates (Rocs) were issued in that time compared to 90.4mn Rocs in 2015-16. The Scottish government consults on changes to the Renewables Obligation (Scotland) which would allow certain large hydro-electric stations to increase their capacity.
Thursday 22/03/08 – The International Energy Agency finds that global energy demand grew by 2.1% in 2017 but that a slowdown in energy efficiency improvements meant that energy-related CO2 emissions also increased by 1.4%, the first increase in emissions since 2014.
Friday 23/03 – The Ministry of Housing, Communities and Local Government confirms that Secretary of State Sajid Javid has blocked the development of the Druridge Bay coal mine in Northumberland, partly on climate grounds.
Clean Growth and Energy Minister Claire Perry has confirmed that the government plans for the UK to stay in the EU carbon trading scheme (ETS) until the end of 2020.
Perry made the comments when speaking before the Lords EU Energy and Environment Sub-Committee on Wednesday, 21 March as it took evidence on the impact of Brexit on UK action to tackle climate change.
Perry was joined by BEIS Director: EU Energy and Climate Change, Jonathan Holyoak, who said the government were currently working through the details on how the EU ETS would work through the Brexit implementation period. Perry added that this was with the intent of giving certainty through to at least the end of the current phase three, which concludes in 2020. However, longer-term, Perry suggested that the UK could pursue other avenues to improve carbon trading.
Perry explained that if the UK wanted to be in a cap and trade system, then it needs to be one that delivers a strong carbon price signal. This is something that she said historically, the EU ETS has failed to do, leading to the UK creating its own Carbon Price Floor. While stating that the reforms for phase four – which the UK has been involved in – are improvements, Perry said that it would be a “dereliction of duty” not to look how to send stronger carbon pricing signals in the UK. If there was a long-term opportunity to do this by changing the relationship with the ETS, Perry said it would be “short-sighted” not to take it.
This was also relevant to treatment of Energy Intensive Industries (EIIs), Perry explained. Drawing on how the Carbon Price Escalator – a mechanism for pushing up the UK’s own carbon price – had been frozen, Perry said that EIIs in the UK were already facing a “tilted playing field” as they were dealing with carbon pricing that was higher than in Europe. She said that it was right that at a time where the government was aiming to maximising British competitiveness that some of the country’s most fundamental industries were not overburdened and consideration was taken as to how a longer-term scheme can be designed. Perry gave assurance that the government was not looking to create uncertainty and disruption, but had a duty to see if there was a “better and deeper scheme” out there.
Perry also stated that leaving the EU should not impact the UK’s efforts to combat climate change. Perry said the government’s key aims for preserving and enhancing climate action were threefold during the withdrawal process – maintaining ongoing leadership within the area, continuing to be a helpful member of European shared efforts and raising ambition to 2020.
Reflecting after the session, Committee Chair Lord Teverson, welcomed Perry’s comments – noting how during a previous evidence session on Wednesday, 14 March, the committee had heard that industry had been waiting for clarity on the EU ETS. Teverson added: “It’s now imperative that the Government agrees the specifics with the EU as soon as possible, and then quickly moves on to setting out its plans for carbon pricing and funding action on climate change post-Brexit.”
A report by the Green Alliance has called for a fleet-led strategy to accelerate the roll-out of electric vehicles (EVs) in the UK and highlighted the potential benefits EVs may bring.
Published on Monday, 19 March, research conducted by the think tank found that Britain was “falling behind the global shift to EVs” and suggested that the government’s forthcoming “Road to Zero” strategy was a “prime opportunity to shift gear”.
The Green Alliance recognised fleet vehicles as a top priority to accelerate the EV roll-out – making up over half of new vehicle sales in the UK. The report outlined a range of benefits associated with accelerating the EV uptake through a “comprehensive fleet-led strategy”, suggesting public fleet procurement of EVs offers an immediate chance to raise domestic demand.
The report found that an accelerated uptake of EV as a result of a comprehensive fleet-led strategy would cut costs quicker – over a lifetime basis EV are already cheaper than conventional vehicles and are estimated to reach an upfront cost parity as early as 2022.
In order to support the growth of large private EV fleets, Green Alliance recommended that the government implements a range of tax incentives, emissions standards, production targets and develops new charging infrastructure. The report proposed two main tax changes, as although steadily rising the UK’s EV sales are still less than 1% of the UK’s total vehicle fleet.
The Green Alliance suggested the government should reduce company car tax early to 2% for vehicles with zero emission mileage for at least 130 miles, until 2022-23. Currently, zero emission vehicles have a tax rate of 9%, which is expected to rise to 16% by 2019 before falling to 2% in 2020. Secondly policy makers were urged to commit to maintaining zero rated vehicle excise duty for zero emission vehicles until 2022 and consider extending this over plug-in hybrids with emissions below 50gCO2/km. This is expected to lead to around 50% of private fleet sales being electric and plug in hybrids by 2022.
Sustained tax incentives, the development of longer range electric models and greater public-sector procurement of electric vans has resulted in a 162% rise in low carbon vehicles since 2012. The report predicts over 16% of sales could be electric by 2022.
The report also suggested that the government should bring forward its ban on the sale of fossil-fuel vehicles from 2040 to 2030, in order to “reduce the current gap in meeting the UK’s carbon budgets by 60-85%”.
The Green Alliance particularly highlighted the UK’s £5bn trade deficit in conventional vehicles, suggesting slow EV uptake will only prolong this. But, supporting an increasing uptake will give the UK the opportunity to become a net vehicle exporter.
The government is seeking evidence and views on potential ways to cut out the use of high carbon fossil fuel heating in buildings situated off the gas grid through the 2020s.
It published its consultation on Monday, 19 March, suggesting that the work done to decarbonise buildings off the gas grid could pave the way for future decarbonisation of the wider building stock. It said that the UK’s heating industry must retain its position as a world leader and should see this process as an opportunity to lead the change that is necessary, rather than letting the world change without them.
The department outlined how phasing out high carbon fossil fuel heating was an opportunity for new jobs, skills and investment in innovation, as well as bringing to both households and businesses. The document examined a range of topics, including how best to smooth the transition from the Renewable Heat Incentive (RHI) after 2021 and how to support industry in leading the delivery of the energy transition. It also looked into clean heating technologies and the future potential for regulation that may be necessary to ensure the transition happens
The government said it will use the evidence received to design and implement a clear framework to follow on from the RHI for domestic and non-domestic buildings through to the 2020s. Furthermore, government plans to publish a report on heating technologies in summer 2018.
Responses are invited by 11 June.
The government will conduct a formal review of the Capacity Market scheme “later this year”, according to Energy and Clean Growth Minister, Claire Perry
Perry made the comments on Tuesday, 20 March, labelling the Capacity Market a “key part” of the evolution of the UK towards a secure, low-carbon and low-cost energy system. The review is set to assess key questions, including penalties, contract lengths and potentially opening the auction to renewables.
It followed Ofgem publishing seven new rule change proposals for the Capacity Market on Wednesday, 14 March. Proposed changes include an amendment which would enable new capacity market units (CMUs) to be connected to the transmission system through private wires or via a shared connection. Other proposals include a requirement for distribution connection agreements for new CMUs to be firm – this takes away the option for an interruptible connection where units are able to avoid paying for necessary upgrades to the network to ensure they can export. A further proposal was published on Thursday, 15 March, introducing new Demand Side Response technology classes. Ofgem explained that this would obligate the EMR Delivery Body to consult on the de-rating factors to be applied.
The majority of proposals Ofgem intend to take forward will be implemented ahead of the 2018 prequalification round. However, four proposals, which require substantial changes to systems, will be implemented at a later date. Ofgem intends to consult on its minded-to position on de-rating for DSR in 2019 as this proposal was not submitted late.
The International Energy Agency (IEA) has found that increases in oil production in the United States, Brazil, Canada and Norway will be able to more than meet global demand until 2020, but that investment will be required to boost production from then on.
In its latest annual Oil Market Report, published on Monday, 5 March, the IEA found that this additional investment will be needed, despite falling costs, as the oil industry has yet to fully recover from the “unprecedented” drop in investment in 2015-16. Since, the report indicated little to no increase in upstream investment outside of the United States in 2017-18.
According to IEA data, global oil demand is forecast to increase by 6.9mb/d by 2023 to 104.7mb/s as a result of boosted economic growth in Asia and a resurgent petrochemicals industry in the United States, accounting for 25 % of oil-demand growth. Collectively China and India will contribute nearly 50% of total of global oil demand and are expected to remain the main driver behind future growth.
However, the development of more stringent pollution policies and the increasing penetration of electric vehicles is expected to slow demand growth. In addition, the implementation of a new marine fuel rule with lower sulphur content in 2020 will create uncertainty within the market.
Global oil production capacity is projected to grow by 6.4mb/d to 107mb/d by 2023 due to increasing shale production led by the US. IEA data suggested by 2023 the US total liquid production will rise from 13.2mb/d in 2017 to 17mb/d in 2023, led by the Permian Basin where output is expected to double. IEA’s report indicated the need for further investments in pipelines and associated infrastructure to increase the future availability of oil to world markets.
IEA analysis revealed that discoveries of new oil resources fell to record low in 2017, with less than 4bn barrels of crude, condensate and NGLs found as a result of decreased investment. The report suggests lower investments resulted in a combined reduction of 1.7mb/d in oil production from China, Mexico and Venezuela.
The report found record oil supply from non-OPEC countries can cover expected demand growth. However, if investments remain insufficient by 2023, the effective global spare capacity cushion will fall to only 2.2% of demand, the lowest number since 2007, increasing the possibility of oil prices becoming more volatile until sufficient supplies become available.
Research by CDP has identified a “clear gap” between companies’ awareness of climate risks and their actions towards tackling them.
The findings of the study, published on Monday, 19 March, revealed that a majority of companies recognise in some way the physical and transition risks and opportunities of climate change. However, there are clear differences in the ways in which firms are integrating them into their wider governance and risk management processes.
The CDP said that “owning” climate related risks, rather than simply being aware of them, would help companies become more resilient to the risks of climate change. It added that firms that are able to assess and understand climate-related risks and opportunities will be in a better position to make decisions on the future of their businesses. They will also be able to assist with the transition to a low-carbon economy.
The research found that while there are differences between countries and sectors, there were some recurring gaps identified for companies to embed climate change into their strategies. It was revealed that three out of four companies were considering the short-term (less than six years) financial risks and opportunities of climate risks, but that they do not currently align with the long-term action that will be required to meet the goals of the Paris Agreement. Half of firms said they disclosed physical and transition risks over a timeframe of more than six years. This, CDP said, means that investors will have an incomplete view of the potential future performance and resilience of their portfolios.
It was also revealed that while oversight of climate-related issues lies with board members in eight out of 10 companies, the direct consequences for progress against climate related targets does not. Only one in 10 boards have monetary or non-monetary incentives linked to progress against these targets.
Carbon pricing was identified as useful tool for assessing climate risks and opportunities. While the report acknowledged that carbon pricing was “in its infancy”, it has quickly become a widely-used tool. A fifth (21%) of firms said they currently used carbon pricing and a further 16% said they would be doing so in the next two years. It was also found that more than eight out of ten companies already disclose the financial impacts from the physical and transition risks of climate change.
The report concluded that in the future it will become “critical” for companies’ strategic advantage, and the wider world, for them to review their climate reporting processes.
Jane Stevensen, Task Force Engagement Director at CDP, said: “Overall, we see there is a surface level of preparedness from companies globally to have board level oversight of climate risk and opportunity. Key drivers are investor action, company reputation and consumer reaction to climate risk. What we are not seeing is increased governance translating into climate change mitigation. 2018 is the year when companies need to step up climate action as we approach a tipping point. Fundamental to this is driving board level engagement with climate risk throughout the organization.”
The latest Gas Future Operability Planning (GFOP) report from National Grid has found that future gas demand varies significantly depending on the given scenario.
Under the Two Degrees, Slow Progression and Steady State National Grid expects to be able to meet demand with favourable gas supply patterns allowing demand to be met, while keeping the system broadly unconstrained. This is due to an overall reduction in gas fired generation demand across Great Britain.
However, under the Consumer Power scenario import dependency is at its lowest and it predicts to have potential regional operability challenges, particularly in areas including Scotland, the East of England and the North West. Lower supply flows at Bacton and Isle of Grain import terminals combined with high gas-fired generation demand in this region would result in low net gas flow in the south and south-east. At peak gas demand levels, this could cause minimum pressures agreed with customers at South-East and East Midlands Distribution Network offtakes to not be met. Furthermore, the report noted with overall gas fired generation demand higher in the steady state than consumer power scenario, that it will not be demand alone that is the main driver of these operability challenges, but instead a combination of supply and demand patterns leading to customer agreed contractual pressures not being met at specific offtakes.
The Offshore Wind Industry Council has put forward the industry’s vision for 2030, which includes £48bn of investment in UK infrastructure and a reduction in overall electricity system costs by 9%.
The plan published on Tuesday, 20 March, also includes a £2.4bn/ year reduction in total electricity system costs, the creation of 27,000 skilled jobs in the UK and a five-fold increase in export value, to £2.6bn/ year.
In a statement, RenewableUK announced that the offshore wind industry has committed to work alongside the UK government to develop a transformative sector deal, through which it aims to generate a third of the UK’s electricity from offshore wind by 2030. To achieve this goal and deliver clean affordable energy the industry is set to more than double its current capacity to 30GW. On Saturday, 17 March, National Grid confirmed a record 13.9GW of wind output, close to meeting 37% if the UK’s electricity demand.
In addition, the trade association also announced that the sector’s engagement with the government on the development of the deal will be led by Baroness Brown of Cambridge, who is currently the UK’s Low Carbon Business Ambassador and Vice Chair of the Committee on Climate Change. Baroness Brown said: “With an ambitious Sector Deal, we have the opportunity to take the next transformative steps together, enabling the offshore wind industry to help Government to achieve its clean growth ambitions in a way that boosts productivity and growth throughout the UK.”
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