Green Day: Watt's next?

The last ten months has seen the energy sector plunged deep into uncertainty, dizzied by a number of Government U-turns ranging from the fracking ban to wind and solar planning rules. Across three Prime Ministers, the sector has been left waiting on the many promises for clarity and timelines but now the day has finally arrived.

Unveiling thousands of pages of green energy policies and decarbonisation commitments intended to provide a response to the high court ruling which saw Boris Johnson’s net zero strategy ruled unlawful, the Government has also come under significant pressure by President Biden’s Inflation Reduction Act which is diverting crucial investment across the Atlantic. Chancellor Jeremy Hunt today has criticised Biden for distorting the global subsidy race, indicating a sharp contrast to Shadow Net Zero and Climate Change Secretary Ed Miliband who earlier this week claimed the IRA offered collective benefits in support the global transition to net zero.

Whilst announcements around Sustainable Aviation Fuels and Electric Vehicles showcase the Government’s commitment to decarbonising transport, it reflects upon Shapps’ own interests from his time as Transport Secretary. While important, the rest of the energy sector has been critical and will be asking why the level of ambition reserved for transport is not shared more widely.

Many will feel that today’s publications are simply repackaged, existing government commitments but without any additional funding. This will now fail to hold up against Biden’s IRA and could even result in further court action as environmental groups speculate that the policies will once again fall short of meeting the legally climate targets.

As Parliament goes into recess, the sector can now take time to digest today’s announcements, exploring how to support the Government’s net zero vision whilst impressing upon them, the jeopardy the country now faces from lost investment if industry’s ambition for going further and faster is not matched.

If you’ve trawled through the various documents published today on the lookout for anything new related to hydrogen, I’m afraid you will be left disappointed.

While the 15 successful applicants of the Net Zero Hydrogen Fund will be boosted by the news that their projects will be taken forward – the ￡37.9 million allocated to support these projects is neither new or ambitious enough to match the type of investment the UK needs to keep pace in global the hydrogen race.

The lack of ambition can also be seen by today’s announcements on CCS, where the Government has put Acorn and Viking in pole position for Track-2 funding but instead of progressing both, it has left both oven ready projects in limbo as it holds a four-week consultation. Elsewhere, little or no progress has been made on bringing forward the hydrogen transport and storage business models, while the Government remains ominously silent on blending.

As if often the case with big Government announcements, they often fail to live up to the billing. Those with an interest in hydrogen were looking for clarity and policy certainty – they got neither and may decide to put their investments elsewhere.

There is a distinct lack of support for the UKs onshore and offshore wind sectors following today’s announcement. While the announcement does recognise that onshore wind technology is efficient, cheap and widely supported, the government has made no commitment to this technology beyond responding to the National Policy Planning Framework consultation.

For offshore wind, the reform to planning is a welcome addition, but the Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS) re-announced today, commits ￡160 million to kick start investment in port infrastructure, however this support package misses the mark as it does not address the sectors wider problems. Firstly, there are visa barriers facing overseas seafarers who require the skills needed for UK wind farm production. Secondly, the vessels needed to build wind farms are only being produced aboard due to a significant cost differential. Finally, on innovation and advanced manufacturing infrastructure the UK remains less competitive to its European counterparts. To continue to enable a thriving offshore wind sector, these factors must be addressed.

At a time when many developers are stalling their wind farm plans in the face of rising costs, today was an opportunity to utilise our rich renewable resources and putting us on a pathway to help decarbonise the power system by 2035. Unfortunately it appears an opportunity missed.

Shifting away from Boris Johnson’s pledge that the UK would become the “Qatar of hydrogen”, today’s announcements on nuclear speak to the rebranding of Green Day, prioritising energy security in favour of renewables.

As stated today, the government’s ambition is to “ramp up nuclear capacity in the UK”, with the means of achieving this being the confirmed launch of Great British Nuclear, an organisation initially focused won overseeing a competitive process to select the best small modular reactor technologies. With the concept of Great British Nuclear having first been floated in 2022, detractors, such as Labour’s Shadow Secretary of State, Ed Miliband are already criticising the nuclear commitment as reheated, alongside being a costly and potentially environmentally damaging energy source.

Although nuclear power will play an important role in addressing the intermittency issues associated with renewable energy, the industry has criticized the Government for neglecting wind and solar investments. The industry argues that investing in nuclear will take several years to yield results and will not provide immediate relief to households who are currently struggling with increasing energy bills.

Transport decarbonisation is a significant feature of today's package – the DfT even got their own press release. ￡400m for local EV charging will be welcomed - while not new money - yet the bigger news are the Zero Mission Vehicle (ZEV) and Sustainable Aviation Fuels (SAF) Mandates.

Despite concerns the ZEV mandate may be watered down following pressure from car manufacturers, Shapps stuck to his guns and introduced a truly ambitious policy by legally mandating EV production. This should mean that in the coming years we will we not only see more affordable EVs on the road, but also more chargers, improving consumer confidence.’

The SAF mandate announcement also isn’t new, and is only a second consultation on its design following confirmation last year that Government will require at least 10% of jet fuel to be made from sustainable feedstocks by 2030. However Government efforts to kick start a domestic SAF industry and the goal for at least five UK commercial-scale SAF plants under construction by 2025 is an important industry signal and will be pivotal to help the aviation keep pace with net zero ambitions.