Key Policy Implications
CCS – support programmes
There is an overwhelming consensus that Carbon Capture and Storage will need to be used in some form for the UK to have any chance of meeting its 2050 decarbonisation goals. It will support certain industrial sectors and hydrogen uptake as well as, potentially, enable Bioenergy with CCS (BECCS). Investment and development of CCS, therefore, needs to be supported now and in the 2020s for it to be deployed at scale in the 2030s. It is important to note that industrial CCS cannot substitute for genuine low carbon innovation in industrial materials but, as noted above, there will still be residual emissions from industry even in 2050. We therefore recommend the Liberal Democrats consider supporting a CCS programme in some form. The CCS cluster in Teesside will be an important test case in UK and there are other plans for industrial clusters across Europe.
Invest heavily in Research & Development – especially in carbon removal/ negative emissions but also in energy storage technology
Our review notes that there are a dozen or so technologies (including CCS) which could create negative emissions by 2050 and that investing significantly now in R&D for these technologies will create the conditions for one or more of them to succeed. There is also a very clear need for faster progress on afforestation across the UK if the UK is to vastly augment its domestic carbon sinks in line with the CCC’s pathways.
As our chapter on the power sector details, the importance of energy storage technologies suggests that these technologies should receive special support in the near term, particularly as they are expected to be cost competitive relatively soon. Action is essential now to improve the UK’s capacity for effective clean energy storage. Additional support for rapid R&D and deployment of battery storage, as well as other kinds of pumped storage, will be necessary in the 2020s in order to support much greater grid flexibility and the integration of intermittent renewable energy sources.
Ensure current action on transport aligns with long term goals
The current concerns around urban air quality and health (and the associated issue of diesel engine emissions testing) are important factors in near-term transport policy. While many policy actions, such as the encouragement of low-emission vehicles, will address both health and decarbonisation issues, any proposed policy should be assessed against near-term and longer-term goals.
Further Nuclear may not be the best option
The review recognises that while it is a mature technology and should be considered along with other generation options, there are legitimate concerns around the cost of nuclear and its ability to deliver projected capacity, while addressing technical and safety challenges. Part of a portfolio approach to the generation mix should include assessing the non-delivery risk of nuclear power compared to alternatives such as combined tidal and offshore wind, whilst recognising that account must be taken of the need to address supply intermittency issues with the associated technologies.
As we know, three issues need to be viewed together when looking at energy options: security of supply, GHG emissions and cost. Nuclear power should be kept open as an option – but there is a risk that it may not be able to keep the lights on and that it may not be the lowest cost option. Energy efficiency is the ‘first fuel’
Efforts to achieve energy efficiency are an early priority and have already been clearly set out by the Liberal Democrats. A comprehensive plan to implement energy efficiency, particularly in UK buildings, needs to be initiated urgently. Beyond the health benefits and lower energy bills for consumers, the evidence shows that a comprehensive energy efficiency programme would make a significant difference to emissions. To minimise its cost and maximise its benefit, it needs to begin in the near-term – an immediate focus.
Look at more regionalised approaches to energy generation
A lot of research points to the benefits of looking at increasingly regionalised energy generation for the UK. This could offer multiple benefits in terms of creating new economies, skills and stimulating competition and growth, as well as helping to pilot new technologies and tailored solutions for local areas. This could, for example, support the development of hydrogen infrastructure – another key technology in the zero-carbon portfolio. Within this context, reviewing the current energy system governance is a critical factor (both in terms of electricity markets but also markets for heating), and future regulation should fully support localised energy solutions.
Don’t assume complete electrification of surface transport is the silver bullet
Complete electrification of surface transport (transport by road and rail) is not a ‘silver bullet’. Use of hydrogen and sustainable biofuels, in addition to conventional technology developments and demand related measures, should also be key considerations for the future – sustainable biofuel may also be considered for the aviation sector. Furthermore, measures that increase electricity demand or change its profile, need to be considered along with overall energy system governance. UK bio-economy strategy set alongside CAP reform, agriculture and land use.
It is important to develop a genuinely sustainable bio-economy strategy for the UK that draws together the carbon, food, fuel and water nexus, alongside positive environmental reforms to agricultural policy (which are also highlighted by possible Brexit scenarios). This would also serve to illustrate the multiple connections, and potential social, environmental and economic co-benefits, from joined-up action across differing policy spheres. This approach also reflects the desirability of including relevant emissions such as those from peatland within the UK inventory.
Focus on early action, remain nimble and be open to new thinking
Acting early will reduce costs and entrench progress, however switching or adapting to new or emergent technologies as they develop – “being nimble” – will also be important in a successful (cost effective) zero carbon strategy, as we cannot realistically foresee what the successful emerging and radical technologies in twenty or thirty years’ time will be.
Grasp the significant wider opportunities that come from decarbonisation
Much discussion on decarbonisation focuses on the challenges and costs incurred, however it is clear that there are also significant benefits beyond dealing with climate change impacts. The low carbon transition places UK business – including financial services firms – in a good position to take advantage of growing global markets, and there are also potential wider benefits in areas such as health, mobility and wellbeing.
Consider innovative, private-sector as well as fiscal and monetary policy to finance the low carbon transition
Now is a crucial time to ensure the finance sector is able to deliver the huge amount of capital needed for the transition. There are also important opportunities for the UK financial sector when it comes to the increased focus on risk and disclosure. Added to this could be the imperative for a greater level of public sector funding, either through fiscal policy for investment or through some of the unorthodox tools being discussed in the financial literature at the moment such as “Green Quantitative Easing” or “Green Helicopter Money”.