Balancing the books

Renewable energy exists to tackle climate change, and the UK's carbon budgets spell out what we have to do to make that aim a reality. Michael Rieley reflects on SR's response to an ongoing review into the Committee on Climate Change's Fifth Carbon Budget.

The Committee on Climate Change’s Fifth Carbon Budget, released at the end of 2015 amid the hype of the Paris climate talks, placed a ceiling on the level of economy-wide emissions that can be emitted by the UK between 2028 and 2032.

A week earlier (on the day of the hotly-anticipated ‘energy policy reset speech’) Energy Secretary Amber Rudd admitted that despite hitting carbon budgets one to three, the UK was now highly unlikely miss its fourth.
High hopes, then, for the fifth.

First, some background on what the Fifth Carbon Budget laid out.

The 128-page report detailed the actions the UK needs to take across electricity, heat and transport in order to continue the decarbonisation of our energy system.
Looking solely at the power sector, the advice is clear - if we are to replace generation from retiring coal and nuclear capacity and meet increases in demand, a further 200TWh of new generation will be required through the 2020s.

While the CCC’s power sector forecast says 66–93GW of renewables must be deployed in order to deliver an energy system in line with our 2030 carbon budgets, DECC’s own forecasts predict renewable generation will account for just 50GW of overall capacity by 2030. Natural gas, nuclear, interconnection and CCS will make up the remainder.

Recent policy decisions by the UK Government have effectively closed the market for new, large-scale renewable energy capacity from April 2016 (without sight of a future allocation round of Contracts for Difference), and despite pleas from CCC Chairman Lord Deben to the Energy Secretary, DECC has so far failed to

“set out the level of low-carbon generation required to meet carbon budgets and define a long-term strategy to deliver that capacity”.

The Energy and Climate Change Committee is now holding an inquiry into the setting of that Fifth Carbon budget, before Government legislate in the spring.

Scottish Renewables’ response to that consultation looks across electricity, heat and transport and sets out areas the industry feel must be addressed if the UK is to proceed on a viable path to meeting its 2050 commitment to reduce emissions by 80% from 1990 levels.

Reflecting the views of members, we have called for (among other things – and you can read the whole response here):

DECC should commit to setting out the level of low-carbon generation required to meet carbon budgets and define a long-term strategy to deliver that capacity. This should include a clear definition of what constitutes a subsidy.

• Increased system flexibility, and a commitment to removing the market and regulatory barriers that currently threaten the contribution storage and demand-side response are able to make to increasing flexibility over the short, medium and long term;
• An increased uptake of renewable heat (highlighting that low-carbon heating and cooling already bring significant economic benefit to Scotland, with an estimated turnover of £694 million and 7,390 people employed);
• Clarity on proposed changes to the Renewable Heat Incentive, specifically on the Chancellor’s commitment to “[reform] the scheme to deliver better value for money”;
• The introduction of a tariff guarantee to help stimulate investment in large-scale projects and provide certainty to projects already in development, similar to the Enhanced Preliminary Accreditation first proposed by DECC in its July 2012 consultation. That would be in recognition of the fact that large, complex projects required a guarantee of tariff in order to attract equity investment and raise debt finance.
• An assessment of the contribution solar thermal systems can make in meeting our heating needs, and full support for the technology under the RHI;
• Increased efforts to decarbonise transport, citing the Norwegian Government’s efforts on electric vehicles (which are exempt from import tax, registration tax, road tolls, company car tax, ferry tolls and VAT, among other benefits).