Last month we highlighted (here) some of the key findings in the Infrastructure Progress Review (the Review) which reported on government's progress on infrastructure policy, funding and delivery. As well as reviewing past progress, the National Infrastructure Commission (NIC) set out what should be the government's key priorities over the next five years across the various sectors covered by the Review. In this blog we focus on the challenges facing working towards Net Zero and the recommended priorities in this broad sector.
The transition to Net Zero
The recommended five-year priorities to work towards Net Zero must be set in the context of achieving a 78% reduction (against 1990 levels) of carbon emissions by 2035 (as laid down in the sixth carbon budget), and net zero emissions by 2050. By necessity, then, these priorities will have an application beyond the next five years, and the Review broadly notes that increasing the pace of delivery of all priority areas is critical over the next five years in any event.
The Review splits the key priorities into three distinct areas of focus: the electricity system, heating and energy efficiency, and new infrastructure networks. Some of these key priorities are highlighted below.
The Electricity System: annual contracts for difference auctions must continue and remain fit for purpose to deliver significant (at least 65%) renewable generation.
The Review states that government should publish plans and policy to:
- encourage deployment of engineered greenhouse gas removal technologies
- deliver business models for long duration energy storage and a strategic energy reserve
- ensure that unabated gas generation generates less than 2% of electricity by 2035, and
- support hydrogen-fired generation and gas generation with carbon capture and storage.
Additionally, the establishment of both the National Energy System Operator as an impartial expert with responsibilities across the gas and electricity networks, and Regional Energy System Planners, which set local energy system development plans needed to reach net zero, should be completed.
Heating and Energy Efficiency: given that the Review concludes that government is not on track to deliver its heat commitments, it prioritises increased incentives for both energy efficiency measures and the adoption of low carbon heat technologies for homes and businesses. Government should also commit long term funding to low carbon heat for the public sector estate, social housing, and lower income households. Planning for the ending of natural gas for heating and the repurposing of the gas network should begin now. Heating through hydrogen should be unequivocally ruled out now.
New Infrastructure Networks: in contrast, the Review stresses the need, at this stage, for clear policies to be set that:
- encourage industrial decarbonisation, and
- articulate the "vision" for carbon capture and storage and hydrogen distribution models, accelerating the delivery of business models for such networks.
Comment
Barriers to greater introduction of "new" generation projects do still exist, and the Review notes that the planning system, most notably in England, remains a hindrance to the delivery of onshore wind projects in particular. It is perhaps surprising that addressing this issue does not feature more prominently in the Review's priorities, and, although it is touched upon, this is not identified as a priority area.
As we noted in our recent blog on the NIC's recommended transport priorities, the NIC published the Review just days before the general election was called. Undoubtedly, "green" issues generally and how the economy will transfer to net zero, will both be major policy areas on which all the main parties will campaign in the run up to the general election. While we do not expect to see the detail of the main political parties' manifestos until around mid-June, Labour's campaign speech of 31 May 2024 set out its plans to create a publicly-owned energy company in Scotland to invest in wind and solar projects across the UK. Projects like these will certainly address some of the Review's identified priorities in this area and we anticipate the other main political parties will also highlight their focus on some of the net zero priorities set out in the Review.
