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Legislating net zero target is crucial step forward

11th June 2019

Welcoming the government’s announcement that it will update the Climate Change Act by introducing a 2050 net zero target, Nick Molho, Executive Director at the Aldersgate Group, said: “This is a crucial step forward and a landmark achievement for the Prime Minister and all the ministers and MPs who have supported an increase in the UK’s climate ambition. The message from business is clear: the UK will strengthen the competitiveness of its economy by being the first major economy to legislate an ambitious net zero target – as long as this is supported by a comprehensive policy package.
 
We now look to the Prime Minister’s successor to introduce a robust policy package that puts the UK on a credible path to deliver net zero emissions by 2050 and supports business investment and competitiveness. It is important that the review planned in five years’ time does not undermine the robustness of this package. As we have seen recently in the UK’s offshore wind and recycling sectors, complementing clear targets with ambitious innovation and market creation policies is what rapidly brings down the costs of new technologies and grows domestic supply chains.” 
 
Nick Molho added: “The best way to address competitiveness concerns will be for the government to introduce measures such as product standards to protect British industry from high carbon competition and use its extensive diplomatic network to encourage other emitters to adopt similar targets and grow low carbon trade. Indeed, this announcement puts the UK in a very strong position to host COP26, which will be a crucial opportunity to raise international ambition.”

PARLI

More than 130 leading businesses urge UK Government to legislate for 2050 net zero economy

31st May 2019

More than 130 leading UK businesses, investors and business networks, including the CBI, Anglian Water, the John Lewis Partnership, BT, Aviva, Arup, Coca-Cola and Kingfisher, are today calling on the UK Government to put climate neutrality by 2050 into legislation immediately.

In an open letter, CEOs from across the economy are urging the UK to accept the recommendations of the Committee on Climate Change and lead the way by becoming the first major economy to legislate for an ambitious, domestic decarbonisation target that delivers net zero by 2050 at the latest.

The letter, signed by 131 businesses, investors and business networks, states: ‘As leading businesses and investors, we are determined to support an affordable transition and drive innovation. Many of us are setting our own net-zero and science-based targets. We are also increasingly investing in and purchasing clean energy, using low emission and electric vehicles, converting land to carbon sinks and improving energy efficiency throughout our operations and portfolios – and making new green jobs in the process.

‘We are doing this because we see the threat that climate change poses to our businesses and to our investments, as well as the significant economic opportunities that come with being an early mover in the development of new low-carbon goods and services. But we need effective, long-term policies to support the investment and innovation required if the UK is to accelerate the necessary transition and ensure it is delivered fairly.’

The signatories come from both multi-national and national businesses, across industry sectors, including energy, finance, consumer goods, retail, construction, water and communication.

The business and investment networks supporting this initiative include the CBI, The Prince of Wales’s Corporate Leaders Group (CLG), the Aldersgate Group, and the Institutional Investors Group on Climate Change (IIGCC), representing more than 190,000 businesses, more than 7 million workers, and more than £20trillion in assets under management.

The signatories acknowledge the urgency of the climate crisis, calling on the UK to legislate immediately to end its contribution to global warming within 30 years.


Government must seize business opportunity presented by net zero target

2nd May 2019

Welcoming the publication of the Committee on Climate Change’s advice today [1], the Aldersgate Group urges the government to press ahead with setting a net zero target. This must be underpinned by a comprehensive policy package to deliver net zero emissions and support business investment and competitiveness. Today’s report from the CCC follows the recent publication of two reports from the Aldersgate Group, setting out how innovation and business investment in ultra-low carbon technologies can be accelerated to achieve net zero emissions by 2050. [2]

Nick Molho, Executive Director, Aldersgate Group, said: “The CCC’s advice provides powerful analytical backing for the growing calls to update our 2050 target to deliver the Paris Agreement’s 1.5°C goal. Setting a net zero target without delay is essential to provide investment clarity for the new business models and high capital cost infrastructure required to drive down emissions. To put the UK on a credible path to net zero, the government should accelerate its efforts to meet existing carbon budgets in areas such as buildings and transport and should ensure that a net zero target is accompanied by industry-led decarbonisation roadmaps, as has been done in Sweden.”

Nick Molho added: “A net zero target could provide a significant industrial opportunity for UK businesses to lead in the development and export of ultra-low carbon goods and services. However, a policy framework to accelerate innovation and support British businesses investing in low carbon technologies and solutions is essential. This requires urgently trialling key technologies such as carbon capture and storage and hydrogen at scale, introducing market standards to drive demand for low carbon goods and provide a level playing field for businesses, and using the UK’s diplomatic network to encourage low carbon trade and the adoption of net zero targets globally.”  

Peter Simpson, CEO, Anglian Water, said: ”We fully support the CCC’s recommendation to tighten the UK’s climate change target to net zero by 2050. At Anglian, we have seen first hand how ambitious carbon targets can disrupt established practice, drive innovation, and significantly reduce costs and environmental impacts. This experience has convinced us that more ambitious targets are not only essential but are also good for business. That is why the water industry has agreed to go even further and achieve net zero carbon emissions for the sector by 2030.”

Steve Waygood, Chief Responsible Investment Officer, Aviva Investors, said: “The CCC’s report makes a significant contribution, showing that a net zero economy is necessary, feasible and desirable. We urge the Government to accept the CCC’s recommendations and set out a comprehensive plan to raise the investment needed to deliver the net zero target. The forthcoming Green Finance Strategy presents a key opportunity for this and we urge the government to bring forward an ambitious package that includes fiscal and regulatory levers to ensure finance flows are consistent with a net zero economy and ensures the UK leads the world in green finance.”

Andy Wales, Chief Digital Impact and Sustainability Officer, BT Group, said: “Policymakers setting more ambitious targets will encourage the entire supply chain to make their own bold commitments and generate greater positive momentum towards a net zero future. BT is working to drive change with our own target to be net zero by 2045 but there is no doubt industry needs collaboration and policy support to realise it.”

Duncan Price, Director of Sustainability, BuroHappold, said: “BuroHappold welcomes the Committee on Climate Change recommendation that the UK government should legislate for net zero greenhouse gas emission by 2050. We know from our research for C40 Cities that clean transport, buildings and industry can deliver significant air quality, health and economic benefits. We need government to support a series of ‘no regrets’ actions including adopting ambitious energy efficiency targets for new and existing buildings and, working together with the UK construction and property industry, adopt the UK Green Building Council’s framework for net zero carbon buildings.”

Tom Delay, CEO, the Carbon Trust: “The Committee on Climate Change report on reaching net zero emissions by 2050 fundamentally makes the best in the world even better, by strengthening the ambition of the UK’s Climate Change Act. It sends an important message - it is possible, it is worthwhile and we don’t have to compromise. Crucially net zero captures the public mood in the UK which is increasingly demanding urgent action on climate change and this should help to carry the Committee’s recommendations over the line by securing the necessary political backing. The vast majority of businesses already recognise the opportunities that a net zero economy will bring and we expect them to embrace this ambitious goal."  

Iain Patton, CEO, EAUC, said: “Universities and colleges are supportive of the recommendation to increase the UK’s GHG emissions cutting target to 100% by 2050. To reach net zero by 2050, it is critical the Government invests in the enabling infrastructure and skilled people required to ensure a low carbon society. Higher and Further Education is in a prime position to undertake much of the Research and Development required to achieve net zero emissions and has a big role to play in educating and upskilling young people and those already in the workforce on this agenda. Universities and colleges are working hard towards incredibly ambitious carbon reduction targets, with 80 UK institutions committed to divesting from fossil fuels already. We will continue to work with institutions to ensure they fulfil their potential on this topic.”

Nick Blyth, Policy Lead on Climate Change and Corporate Sustainability, IEMA, said: “In supporting a binding Net Zero target, IEMA believes there is a leadership and skills imperative. Innovation as a priority extends from the technical right through to leadership and collaborative skills. It is vital to equip companies and organisations with sustainability skills, in order to enable their rapid and successful transition.”

Benet Northcote, Director, Corporate Responsibility, the John Lewis Partnership, said: "It's clear that rapid action is needed to avoid global climate breakdown and the UK should lead the way with an ambitious and binding zero emissions target as recommended by the CCC, along with clear decarbonisation roadmaps. It would help businesses like ours who have already committed to net zero operations ramp up decarbonisation efforts even further and unlock investment and innovation needed to cut emissions across the board." 

Andy Walker, Technical Marketing Director, Johnson Matthey, said: “There is no doubt that setting a Net Zero target raises the bar. UK plc can meet this challenge, which will also ensure the UK maintains a global leadership position in the technologies required to stabilise our climate. However, this is not just a question of waiting for new technologies to be discovered but, importantly, providing the policy framework that allows us to deploy the technologies we currently have – and at scale.”

John Bromley, Head of Clean Energy Strategy, Legal & General, said: "We welcome the recommendations of the CCC and encourage the government to adopt them. People and the economy benefit from prosperous low carbon jobs and a healthy environment while businesses and investors need policy certainty to plan and innovate. Adopting the net zero target would be an important step to meet both goals."

Mike Barry, Director of Sustainable Business, Plan A, Marks & Spencer, said: “The imperative for transformational action to build a low carbon society and economy is clear. The Committee on Climate Change’s call for a bold Net Zero 2050 target is welcome as is its detailed analysis of the UK’s potential pathway to get there. Now is the time for Government and business to respond decisively by scaling the many known solutions we have today and innovating the remaining hard to solve challenges. In doing so, we can respond to rapidly shifting societal expectations, provide global leadership and position the UK to win in a new, green global economy.”

Julian Brown, Vice President and UK Country Manager, MHI Vestas Offshore Wind, said: “Today’s recommendation by the CCC sets an ambitious, and much needed, vision for a low carbon UK economy. Quite simply, to achieve net zero by 2050, the UK will need to unleash the full power of the renewable energy sector. With MHI Vestas driving wind turbine innovation and industrial investment to help deliver at least 30 GW of offshore wind by 2030, the offshore wind industry is well-positioned to play a leading role in the drive to meet these targets.”

Matthew Wright, Managing Director, Ørsted UK, said: “The CCC report highlights that the action needed to decarbonise the UK is both achievable and affordable. As a company that has divested its fossil fuel business to invest only in renewable energy, we are convinced that we can transition to a world that runs entirely on green energy and that this transition creates a great economic opportunity for the UK.

75GW of offshore wind by 2050 is definitely achievable. The cost of offshore wind has already reduced to the point where it is comparable with conventional generation, and it’s continuing to fall. The UK has a rapidly expanding supply chain supporting the offshore wind sector, which is creating thousands of new jobs, and we are confident of attracting the tens of billions of pounds of investment required to make this a reality.”

Matthew Knight, Head of Business Development, Siemens plc, said: “Siemens UK welcomes the CCC report on net zero. Businesses need to respond to the urgency and scale of the climate challenge and Siemens is committed to make our own operations net zero by 2030. Government and politicians have an import role to play. Climate change transcends politics and we call for immediate cross-party commitment to deliver net zero emissions by 2050 in line with the CCC report.

Net zero is a big challenge and businesses need to make big investments to deliver it. Government can help by setting clear policy direction, creating the right market conditions through financial mechanisms such as carbon pricing, training and skills and setting standards through regulation to raise the bar. We are committed to work with government to make this ambitious target a reality for society and future generations.”

Steve Robertson, Chief Executive, Thames Water, said: “Climate change is perhaps the biggest challenge facing humanity and will directly impact on the provision of water and sanitation both here in the UK and the rest of the world. We recognise the need to urgently reduce greenhouse gases entering the atmosphere so to help build a better future for our customers and the environment, we’ve committed to work towards delivering net zero emissions by 2030. We continue to develop our plan on how we’ll achieve this but are proud to be stepping up our ambition and encourage others to do the same if we’re to collectively reduce the impact of climate change.”

Bevis Watts, CEO, Triodos Bank UK, said: “Now is the time for much faster action and a clear and credible plan and policy. The government must also look beyond specific climate policy and influence climate change through an ambitious Green Finance Strategy. In the Netherlands, they have a climate agreement in place mandating the financial sector to measure and reduce the carbon footprint of finance and investment. With the right political will, the banking sector is uniquely placed to lead the transition to the sustainable economy. We need disclosure rules in the UK such as those recommended by the Taskforce for Climate-related Financial Disclosures (TCFD) and efforts to account for carbon on bank balance sheets such as the Platform for Carbon Accounting Financials (PCAF).”

Frazer Mackay, UK Managing Director of Water, Energy & Industry, WSP, said: “Net Zero makes perfect long-term business sense on the basis that the cost of inaction will outweigh the cost of action. A Net Zero goal is exactly the type of aspiration that will galvanise industry to step up its efforts to decarbonise as an immediate priority. It will embolden WSP’s engineers and planners to leverage their ingenuity to devise innovative solutions to break the vicious circle between carbon emissions and economic growth.” 

- ENDS - 

[1] The UK has an existing target of at least an 80% emission reduction between now and 2050 against 1990 levels under the Climate Change Act. Following the publication of a report in October 2018 from the Intergovernmental Panel on Climate Change calling on the world economy to achieve net zero emissions by mid-century to limit global warming to 1.5C, the CCC was asked by Minister of State Rt Hon Claire Perry MP, along with the Scottish and Welsh governments and support from senior Northern Ireland officials, to review the UK’s long-term climate targets in light of the IPCC’s report. The CCC published its advice today, recommending that the UK increase the current goal under the Climate Change Act to achieve net zero emissions of greenhouse gases by 2050. The advice is available here: www.theccc.org.uk.

[2] The Aldersgate Group published two reports on 4th April 2019 on the business implications of achieving net zero emissions by 2050. The first report, Accelerating innovation towards net zero, from Vivid Economics and the UK Energy Research Centre (UKERC) commissioned by the Aldersgate Group, sets out key recommendations to accelerate innovation based on a review of case studies of rapid innovations. The second report, Zeroing in: capturing the opportunities from a UK net zero emission target, from the Aldersgate Group, establishes key policy measures that should accompany a UK net zero emissions target to maximise industrial opportunities for UK businesses and avoid unintended consequences. Both reports are available here.

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Spring Statement 2019: sustainability must sit at the heart of the UK's economic model

13th March 2019

Reacting to the Spring Statement presented to Parliament today by the Chancellor Philip Hammond, Nick Molho, Executive Director of the Aldersgate Group said: “The Chancellor’s clear commitment to reaping the opportunities of our shift to a carbon neutral economy and improving our natural environment is very welcome. For too long, Chancellor's speeches have been at odds with government commitments in these areas and businesses will welcome the signal that this is a genuine cross-government mission.
 
We look forward to seeing further details of the proposal to increase the proportion of green gas in the grid and the development of the Future Homes Standard. Cutting the carbon intensity of the gas grid and building new homes with low carbon heating and high energy efficiency standards are key low regret policies which will allow the government to learn by doing and avoid costly retrofits further down the line. In the same vein, the confirmation that government will mandate net gain for biodiversity will be welcomed by business and ensure new developments deliver much-needed improvements for the natural environment.”
 
Nick Molho added: “The announcement of a three-year spending review to be concluded at this year’s Budget will be a further opportunity for the Chancellor to put his money where his mouth is. The next twenty months are going to be crucial – both in the UK and globally – to increase ambition on climate action and tackle biodiversity decline. A spending review that supports the ongoing implementation of the Clean Growth Strategy and 25 Year Environment Plan will ensure the UK reinforces its leading role on these issues on the world stage.”

PGH

System-wide approach key to cut transport emissions

11th March 2019

Today the Aldersgate Group publishes a new report, Shifting emissions into reverse gear [1], setting out key policies needed to deliver deep cuts in surface transport emissions. It argues that improving the overall efficiency of the transport system will be just as important as investing in new technologies and infrastructure and therefore calls on the government to take an integrated system approach to decarbonising transport, rather than treating each mode of transport separately.

This report will be launched at an event hosted by RELX Group from 1:00pm – 3:00pm on Monday, 11th March [2].

UK carbon emissions have fallen by over 42% since 1990 [3], thanks mainly to actions in the power sector. However, there has been relatively little overall change in the level of greenhouse gas (GHG) emissions from the transport sector over the same period, which is now the largest emitting sector of the UK economy accounting for 28% of GHG emissions [4]. This is happening in a context where 33% of UK drivers are more dependent on their car now than a year ago [5].

Making substantial cuts in surface transport emissions, which accounts for the majority of domestic transport emissions [6], is therefore essential to delivering the UK’s climate targets cost-effectively. Decarbonising transport could also provide significant social and economic benefits for the UK, for example by tackling poor air quality, now the most significant risk to public health in the UK [7] and growing the manufacturing base for low and zero emission vehicles, a global market estimated to reach £1-2tn per year by 2030, and £3.6-7.6tn per year by 2050 [8].

Given the significant challenges faced by the UK’s automotive industry in light of recent announcements by Honda, Nissan, Ford and Jaguar Land Rover [9], the UK cannot afford to be left behind in the global race to design and manufacture low and zero emission vehicles.

To deliver deep cuts in surface transport emissions and maximise the environmental, social and economic opportunities from the transition to a zero carbon transport system, government policy should:

1. Establish an integrated road and rail strategy to ensure that the most environmentally and economically beneficial infrastructure projects are taken forward. This should include shifting more road freight onto the UK rail network and developing a national bus strategy.

2. Devolve long-term funding and key powers to local authorities to cut emissions from short journeys. With 72% of journeys in urban areas being under five miles [10], local authorities have a key role to play to cut emissions. Similar to the stable budgets given to Network Rail and Highways England, the government should devolve long-term revenue and capital funding to local authorities so they can develop their own integrated transport strategies and empower them to require new housing developments to be better connected to sustainable forms of transport. As part of this, the decline in funding to supported bus services and the development of cycling and walking networks must be urgently reversed to cut car dependence for local journeys.

3. Improve local air quality by moving the most polluting journeys outside of urban areas, through supporting the development of Urban Consolidation Centres (UCCs) to reduce inner-city freight traffic and implementing an ambitious national network of Clean Air Zones (CAZs) with common standards.

4. Grow the UK’s global manufacturing base for Low and Zero Emission Vehicles, by setting rapidly tightening CO2 emission standards for vehicles after the UK leaves the EU, guaranteeing upfront purchase grants for electric vehicles until they reach cost parity to help drive the market until the mid-2020s, and delivering widely accessible electric vehicle charging infrastructure, with a particular focus on areas where the business case is more complex such as in rural locations.

5. Provide targeted innovation support to complex parts of the transport sector where zero emission technologies are not yet deployable at scale, such as long distance journeys and Heavy Commercial Vehicles (HCVs). This should include trialling different technologies on UK roads and rail lines, such as hydrogen and renewable biomethane, and pursuing an ambitious rail electrification strategy to close the gap with the UK’s continental neighbours [11].

6. Use measures announced under the Resources and Waste Strategy to drive greater resource efficiency across the UK transport system. Measures such as extended producer responsibility schemes and product standards have an important role to play to incentivise the use of more resource efficient components such as long-lasting performance tyres, the re-use and reconditioning of electric vehicle batteries for second-life appliances and a much greater use of secondary materials in vehicle manufacturing.

Nick Molho, Executive Director, Aldersgate Group, said: “With emissions flatlining for several years now, government needs to fundamentally rethink its transport policy and work across departments to deliver the modern and ultra-low emission transport system the UK needs. This means taking an integrated view of the whole transport system to ensure that new transport infrastructure projects deliver the best environmental and economic outcomes, empowering local authorities to develop low-carbon transport systems, incentivising greater resource efficiency across the automotive industry and targeting innovation support to technologies that can help cut emissions in difficult areas such as heavy commercial vehicles, long-distance journeys and rail.” 

Nick Molho added: “Given the significant challenges faced by the UK’s automotive industry following the announcements by Jaguar Land Rover, Ford, Nissan and Honda, the UK cannot afford to be left behind in the global race to design and manufacture zero emission vehicles. To ensure the UK is at the forefront of the shift to cleaner mobility, the government must commit to long-term financial and regulatory measures that will grow that market, such as through predictable purchase grants and tightening vehicle emission standards.”

Justin Laney, General Manager of Fleet, John Lewis Partnership, said: “Radical change is needed to decarbonise long distance heavy trucks. These vehicles are the most challenging to tackle, but also the ones that deliver the biggest benefit. Our view at the John Lewis Partnership is that biomethane is the best solution for the next 20 to 25 years, and after that electrification, whereby trucks are supplied by power from an electrified overhead line. Government has been very supportive of low carbon trials, and it is important that continues, combined with creating the right tax and fuel duty regime that provides a sound, long term business case.”

Andy Walker, Technical Marketing Director, Johnson Matthey, said: “The coming decade will see more change in the automotive sector than we have seen in the previous 100 years, and it is clear that if the UK is to meet its climate targets and deliver deep cuts in emissions, greater innovation across the transport sector will be essential. At Johnson Matthey, we are driving innovation in battery and fuel cell capability to meet the needs of an electric vehicle future. To put UK businesses at the forefront of the global race to decarbonise transport, further policy support is needed to ensure the UK remains one of the best places in the world to design and manufacture low and zero emission technologies.”

Alexander Law, Public Affairs Manager, Michelin Group, said: “It is only by decisive action that we will be able to decarbonise the transport sector, and meet the aims of the Paris Agreement. Decarbonisation requires the collaboration of all the relevant stakeholders, the four Cs: countries and cities which have the power to bring in smart regulations, companies which can find the technical solutions and civil society which pushes for change for the better. At Michelin, our purpose is to provide a better way forward for goods and services by ensuring that mobility is sustainable and resource efficient. But we cannot do this alone, the solutions will only be found collectively.”

Chris Fry, Director, Infrastructure & Regeneration, Ramboll, said: “Like squeezing a balloon, reducing emissions in one part of the transport system has tended to increase them elsewhere. Ramboll welcomes the integrated approach outlined in this new report, which will enable a step change in transport decarbonisation, unleash opportunities in the clean growth economy and help to create liveable places. It is by combining new technologies with a people-centric approach – for example in the design of Nordhaven (Copenhagen) as a carbon neutral, “five minute city” – that we can develop effective and feasible solutions to decarbonising. This makes it an incredibly exciting time to be in the sector.”

Christina Downend, Climate Change Manager, Tesco, said: "Efficient and widely accessible charging infrastructure will be key to accelerate the uptake of electric vehicles, and businesses can take a lead. At Tesco, we want to be the UK’s leading electric vehicle energy provider and make it easier for customers to switch to clean vehicles. That’s why we have committed to roll out over 2,400 charging bays across our 600 stores within the next three years. But government must also accelerate it's own ambition on this agenda, such as by guaranteeing upfront purchase grants on electric vehicles and establishing the UK as one of the best places to develop new electric vehicle technologies."

Giles Perkins, Head of Future Mobility, WSP, said: “There’s a huge opportunity to rapidly cut transport emissions since forecasts show electric cars will be cheaper to own and run than petrol and diesel in the mid 2020s, if not sooner. It’s essential that the UK has the charging infrastructure ready to go for this future, learning from leaders, like Norway, where 4 in 10 of the cars sold this January were fully electric or hydrogen-powered. The move to electric fleets requires action from local authorities, developers as well as national Government, and provides tremendous opportunity for innovation and business leadership.”

Jonathan Hampson, General Manager, Zipcar, said: “Car sharing is at an all time high and Zipcar UK, the UK’s leading car sharing network, has a rapidly growing membership of over 250,000 members and is playing a key role in changing public attitudes to private vehicle ownership. Zipcar UK is cutting emissions by reducing the UK’s dependence on private cars and bringing electric vehicles into the mainstream, with over 300 electric cars in our fleet so far.

However, to accelerate current momentum towards car sharing and meet our vision to be fully electric by 2025, we need the government to roll out efficient and widely accessible charging infrastructure and certainty that the government’s upfront purchase grants for electric vehicles will remain in place. Beyond this we need government to encourage local authorities to integrate car sharing within their local transport systems.”

—ENDS—

[1] The Aldersgate Group publishes a new report today called Shifting emissions into reverse gear: priorities for decarbonising transport available at the following link from 00.01 Monday 11 March 2019 http://www.aldersgategroup.org.uk/latest#system-wide-approach-key-to-cut-transport-emissions

[2] This event will be held from 1.00pm – 3.00pm on Monday 11th March at RELX Group, 1-3 Strand, London, WC2N 5JR. Chaired by Joan Walley, Chair of the Aldersgate Group, the event will feature a panel with Justin Laney, General Manager - Fleet, John Lewis Partnership; Andy Walker, Technical Marketing Director, Johnson Matthey; Alexander Law, Public Affairs Manager, Michelin Tyre; Chris Fry, Director, Infrastructure & Regeneration, Ramboll; Justin Moss, Strategic Development Manager, Siemens; Christina Downend, Climate Change Manager, Tesco. Please email sophie.arndt@aldersgategroup.org.uk to attend.

[3] BEIS (February 2018) 2017 UK Greenhouse Gas Emissions, Final Figures

[4] Committee on Climate Change (June 2018) Reducing UK emissions: 2018 Progress report to Parliament

[5] RAC (September 2018) Report on Motoring 2018: The frustrated motorist

[6] Cars, vans and heavy good vehicles account for 87% of domestic transport emissions. Committee on Climate Change (June 2018) Reducing UK emissions: 2018 Progress Report to Parliament

[7] Public Health England (14 November 2018) ‘Health matters: air pollution’ https://www.gov.uk/government/publications/health-matters-air-pollution/health-matters-air-pollution 

[8] HM Government (July 2018) The Road to Zero: Next steps towards cleaner road transport and delivering our Industrial Strategy

[9] SMMT (31 January 2019) ‘UK Automotive on red alert as ‘no deal’ threat sees manufacturing and investment plummet’ https://www.smmt.co.uk/2019/01/uk-automotive-on-red-alert-as-no-deal-threat-sees-manufacturing-and-investment-plummet/

[10] DfT (July 2018) Future of Mobility: a call for evidence

[11] 42% of the UK’s railway is electrified compared to 76% in the Netherlands, 71% in Italy and 61% in Spain. Institution of Mechanical Engineers (February 2018) Decarbonising Rail: Trains, energy and air quality


Offshore wind sector deal shows low carbon transition is a huge industrial opportunity for the UK

7th March 2019

Reacting to the new Offshore Wind Sector Deal published today, Nick Molho, Executive Director at the Aldersgate Group, said: “We welcome the release today of the Offshore Wind Sector Deal, especially its commitment to boost the supply chain and ensure job opportunities are spread across the country, and its 2030 ambition to achieve a 40% female workforce. Other pledges, such as introducing an Offshore Energy Passport to facilitate work across offshore sectors and driving a greater focus on jobs and skills for young people, will cement offshore wind at the centre of the UK’s energy system, bringing jobs, investment and export opportunities to regions across the UK.
 
The government’s objective to reduce project costs in the 2020s will materialise if there is a sufficiently high and stable volume of projects in the coming decade. This requires building on the government’s commitment to hold auctions every two years and further clarifying the process, volume and exact timings of auctions as soon as possible so that the industry is clear about the opportunity ahead.”

IS

Reactive to Secretary of State Greg Clark's speech on the Cost of Energy Review

15th November 2018

Reacting to Secretary of State Greg Clark's speech on the Cost of Energy Review, Nick Molho, Executive Director at the Aldersgate Group said: "The Secretary of State announced some important principles today that give a better sense of the government's long-term energy policy direction. However, if the UK is to have an affordable and low carbon power system, the government's upcoming policy paper needs to tackle how cheap and mature forms of renewable energy can have a route to market, how interconnection links with the EU will continue to grow after Brexit, what the carbon price trajectory will look like in the 2020s and how large consumers of electricity can be rewarded for providing flexibility services to the grid [1]."

—ENDS—

[1] UCL (2018) UK industrial electricity prices: competitiveness in a low carbon world http://www.aldersgategroup.org.uk/latest#removing-barriers-to-mature-renewables-key-to-lowering-industrial-electricity-prices

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Budget 2018 doesn’t live up to government’s clean growth ambitions

29th October 2018

Reacting to the Budget presented to Parliament today by the Chancellor Philip Hammond, Nick Molho, Executive Director of the Aldersgate Group said: “Despite some positive announcements on industrial energy efficiency and plastics, today’s budget – and the way in which it was presented – did little to match the commitment to clean growth the government showed during Green GB Week. The creation of an industrial energy transformation fund is welcome and targets public funding at an essential part of the economy that needs support to cut its emissions, but it would be made even more effective if combined with measures to support a renewed roll-out of onshore renewable energy to lower power prices for industry [1].”
 
Nick Molho added: “As the red book recognises today, ‘the economy of the future will be low carbon and green’ and the UK is well positioned to compete in this global transition. It is essential that the government backs its commitment to clean growth in the next Spending Review and upcoming legislation. Priorities should include introducing new regulations and fiscal incentives to accelerate energy efficiency investments in domestic and commercial buildings, accelerating the phase out of polluting vehicles and roll out of electric vehicles, providing clear visibility to investors on carbon pricing and introducing an ambitious Environment Bill with legally binding goals that drives improvements in the natural environment.”

—ENDS—

[1] UCL (2018) UK industrial electricity prices: competitiveness in a low carbon world http://www.aldersgategroup.org.uk/latest#removing-barriers-to-mature-renewables-key-to-lowering-industrial-electricity-prices

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UK shows welcome leadership on net zero emissions

15th October 2018

Reacting to the UK government’s announcement today that it is commissioning independent advice from the Committee on Climate Change on the setting of a net zero target, Nick Molho, Executive Director of the Aldersgate Group said: “Just a week after the publication of the IPCC report highlighting the importance of limiting temperate rises to 1.5°C, the Prime Minister and her government deserve credit for making a formal referral to the CCC to investigate how a net zero emissions target could be set in the UK. The development of such a target, which is receiving growing public and cross-party support [1], could provide significant supply chain growth and export opportunities for the UK if it is accompanied by a clear plan of action.” [2]

Nick Molho added: “In parallel with the CCC developing its advice, it is essential that the government continues progress on its Clean Growth Strategy to deliver on current climate targets. Greater policy detail is urgently needed to drive energy efficiency improvements in commercial and domestic buildings, increase the take-up of zero emission vehicles and support the growth of onshore renewable energy which is key to deliver affordable industrial power prices [3]. Targeted innovation support will also increasingly be needed to support businesses in sectors where emission cuts are more complex to achieve such as agriculture, heavy industry and long-distance transport.” 

—ENDS—

[1] Bright Blue (2018) Hotting up: Strengthening the Climate Change Act ten years on

63% of UK adults when the UK to be a global leader in tackling climate change and 64% of UK adults agree the UK should aim to cut its carbon emission to zero in the next few decades. https://brightblue.org.uk/wp-content/uploads/2018/05/Hotting-up.pdf

See also Cross-party MP joint letter on net zero emissions target ahead of 2050: https://www.theclimatecoalition.org/joint-letter

[2] The UK cut its emissions by 43% since 1990, leading the G7, and grew its economy by over 70% in the same period. With strengths in areas such as offshore wind and electric vehicle manufacturing, energy efficient building design, green financial and legal services, and ICT solutions, UK businesses have a strong basis from which to accelerate emission cuts and be at the forefront of the development of the new clean technologies and services which the world economy will increasingly demand. See Committee on Climate Change (2018) Reducing UK emissions – 2018 Progress Report to Parliament https://www.theccc.org.uk/wp-content/uploads/2018/06/CCC-2018-Progress-Report-to-Parliament.pdf

[3] UCL (2018) UK industrial electricity prices: competitiveness in a low carbon world  http://www.aldersgategroup.org.uk/latest#removing-barriers-to-mature-renewables-key-to-lowering-industrial-electricity-prices

Big ben

Aiming for net zero emissions is a major opportunity for UK plc

8th October 2018

Reacting to the publication today of the International Panel on Climate Change’s special report on 1.5 degrees, Nick Molho, Executive Director of the Aldersgate Group said: “This report from the world’s leading climate scientists is clear that there are compelling environmental, economic and social benefits to limiting the increase in global temperatures to 1.5 degrees as envisaged in the Paris Agreement. Whilst achieving such a target will require challenging emission cuts across the economy, important progress has already been made and an increase in ambition would unlock a significant innovation and investment opportunity.

The UK cut its emissions by 43% since 1990, leading the G7, and grew its economy by over 70% in the same period. [1] With strengths in areas such as offshore wind and electric vehicle manufacturing, energy efficient building design and green financial and legal services, UK businesses have a strong basis from which to accelerate emission cuts and be at the forefront of the development of the new clean technologies and services which the world economy will increasingly demand.”

Nick Molho added: “Major economies now need to increase their existing emissions reduction pledges under the Paris Agreement and adopt net zero emissions targets in line with the conclusions of the IPCC report. The Prime Minister made the right call when she announced at the UN General Assembly that the UK will be joining the Carbon Neutrality Coalition, especially as this follows growing public backing [2] and cross-party support for a net zero target. [3]

The government must now begin work towards legislating for such a target in the UK, by rapidly acting on its commitment to seek the Committee on Climate Change’s advice on how the UK can ensure its climate targets are aligned with the 1.5 degrees goal. Backed by detailed policies, such a target would accelerate investment in ultra-low emission goods, services and infrastructure and support the innovation needed to tackle emission cuts in more challenging sectors such as land management, agriculture, long-distance transport and heavy industry.”

Steve Waygood, Chief Responsible Investment Officer, Aviva Investors, said: "Aviva Investors understands the business imperative of tackling climate change. The Economist Intelligence Unit estimated that, left unabated, climate change will cost the global economy $43tn in today’s prices. This is not a risk we can afford to take.

Keeping global temperature increases to 1.5 degrees will help safeguard our investment portfolios and protect our customers savings. The long term negative financial consequences of climate change are far, far greater than the short term financial risks of transitioning to the Paris Agreement. Today’s report reiterates the need for policymakers to accelerate action to reduce carbon emissions and meet the agreed aims of the Paris Agreement.”

Gabrielle Ginér, Head of Environmental Sustainability, BT, said: “Recognising the need to limit global warming to 1.5 degrees, BT set a science-based target in line with a 1.5 degree trajectory in September 2017. Our target is to reduce the carbon emissions intensity of our operations by 87% by 2030 against a 2016/17 baseline. We welcome this report by the IPCC and hope that other organisations and policymakers will follow suit in setting 1.5 degree targets.”

Pia Heidenmark Cook, Chief Sustainability Officer, IKEA Group, said: “This latest IPCC report on climate change reinforces the urgent need for action from every part of society. The science and facts are clear and that is why IKEA has set an ambition to be climate positive by 2030, reducing more greenhouse gas emissions than what the IKEA value chain emits.

Setting stretching science based targets is essential for achieving this. We will contribute by decarbonising our energy use including electricity and heating, using zero-emissions deliveries, moving to a circular business model and enabling millions of customers and co-workers to take climate action in their everyday lives.

We firmly believe that together with other businesses joining the climate action movement, we can help to create a positive future and avoid the worst impacts of climate change.” 

Benet Northcote, Director, Corporate Responsibility, John Lewis Partnership, said: “The Paris Accord was a great moment of hope as countries came together to tackle the challenge of climate change. Today's IPCC report confirms that it is possible to achieve what we need to, but only if everyone responds with speed and ambition. It is not too late, but there can be no delay.  

Fortunately, we know what is needed and I am pleased that the John Lewis Partnership is responding in our operations and through our supply chains. We have already cut our operational emission intensity by nearly 70% since 2010 and over the coming months we will be unveiling the next stage in our plans to reduce our environmental impact and emissions even further. Waitrose & Partners continues to lead in its commitment to truly sustainable agriculture, while John Lewis & Partners is pioneering circular economy solutions that will lessen humanity's impact on the environment."

Meryam Omi, Head of Sustainability and Responsible Investment Strategy, Legal & General Investment Management, said: “Climate science is unequivocal in showing the benefits of action to finance a low-carbon future. But we have to act now. From large investors to individuals who choose their own pension fund, our option must be the one that makes sense financially and for the planet.”

Mike Barry, Director of Sustainable Business, Plan A, Marks & Spencer, said: “The IPCC continues to provide the sound science we need to make profound decisions about how we run the economy globally. It’s a powerful reminder that business as usual is unsustainable and even climate action 1.0, as inspired by COP21, is insufficient. We need to take bolder, faster action and shift our mind-set to one of embracing the inevitability and opportunity of the low carbon economy.”

Nicolas Beaumont, Senior Vice President Sustainable Development and Mobility, Michelin Group, said: “Michelin is firmly committed to the full implementation of the Paris Agreement and the subsequent necessity to limit the increase of temperatures to 1.5 degrees. Fighting climate change is essential and not an option and it is only by working together that we will be able to face this challenge. That’s why Michelin has set up its annual global summit Movin’On which aims to go from ambition to action while bringing together all stakeholders from the transport sector to invent the mobility of the future.

We welcome any initiative by the UK government to decarbonise the transport sector, by encouraging electric and hydrogen powertrains, and by ensuring the effective pricing of carbon. This will help us ensure we continue to bring to market the most effective products and services, through our continuous R&D efforts and by reducing the CO2 impact of our offerings. Now more than ever, our aim is to ensure that transport is safe, green, efficient and accessible.”

Sarah Handley, Carbon Neutral Programme Manager, Siemens plc, said: "By providing innovative technologies, Siemens is a leading partner for decarbonisation for our customers and society. We welcome the IPCC’s report on the benefits of limiting global warming to 1.5 degrees which supports the urgency of delivering the Paris Agreement goals. Siemens has set targets to achieve net zero-carbon status by 2030. We urge the government to review the UK Climate targets to help shape the low carbon economy."

Danielle Lane, UK Country Manager, Vattenfall, said: “Vattenfall strongly welcomes the IPCC’s new special report on the Paris Agreement. We are seriously concerned that the combined effect of the pledges for reduced GHG emissions in national plans to date may cause the temperature to continue to rise above 3 °C. It is vital that governments take heed of the IPCC report and let it guide them when updating their respective pledges under the Paris Agreement to ensure that these conform with global objectives.”

David Symons, UK Director of Sustainability, WSP, said: “Ambitious carbon free strategies drive business innovation and growth. That’s why the UK must continue to be a leader and why we’re challenging all our colleagues to design Future Ready buildings and transport networks – ready for the future as well as today. And business has to lead too. At WSP we’ve set a target to be carbon neutral by 2025 – because we want to do the right thing and because our colleagues want us to lead.”

—ENDS—

[1] Committee on Climate Change (2018) Reducing UK emissions – 2018 Progress Report to Parliament https://www.theccc.org.uk/wp-content/uploads/2018/06/CCC-2018-Progress-Report-to-Parliament.pdf

[2] Bright Blue (2018) Hotting up: Strengthening the Climate Change Act ten years on

63% of UK adults when the UK to be a global leader in tackling climate change and 64% of UK adults agree the UK should aim to cut its carbon emission to zero in the next few decades. https://brightblue.org.uk/wp-content/uploads/2018/05/Hotting-up.pdf

[3] Cross-party MP joint letter on net zero emissions target ahead of 2050: https://www.theclimatecoalition.org/joint-letter

UK expertise to help developing countries tackle climate change and move to cleaner energy: https://www.gov.uk/government/news/uk-expertise-to-help-developing-countries-tackle-climate-change-and-move-to-cleaner-energy?utm_source=116d819e-3284-4ce7-ba27-0f20242c25f3&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Labour announces zero net greenhouse gas emissions by 2050: http://www.itv.com/news/2018-09-24/labour-to-commit-to-zero-net-greenhouse-gas-emissions-by-2050/

IPCC

UK must accelerate transition to zero emission vehicles

11th September 2018

Coinciding with the global Zero Emission Vehicles Summit held in Birmingham today, the Aldersgate Group launches a new briefing, Driving ambition: accelerating the transition to zero emission vehicles, [1] setting out key business recommendations for rapidly cutting road transport emissions in the UK. The Group argues that to significantly cut emissions in line with climate targets and put the UK at the forefront of the zero emission vehicle industry, government must provide much greater clarity on regulations, fiscal incentives and innovation support to drive manufacturing and demand.

Transport is now the largest-emitting sector of the UK economy, accounting for 28% of UK greenhouse gas emissions in 2017, with road transport the most significant form of emissions within the sector. Hitting the UK’s current climate targets requires the transport sector to cut emissions by 46% by 2030. [2] While the need to decarbonise is urgent, the opportunities of doing so for the UK are also great. The global market for low emission vehicles could be worth £1-2tn per year by 2030, and £3.6-7.6tn per year by 2050 [3] and significantly cutting emissions from road transport would deliver air quality and health benefits. The UK is well placed to capture a significant part of this low emission vehicle global market, with just one Nissan plant in Sunderland producing a fifth of all electric vehicles sold in Europe in 2016. [4]

To seize this economic and environmental opportunity, the Aldersgate Group urges the government to:

  1. Drive consumer uptake of the cleanest vehicles by extending the plug-in car and van grants until such a time that electric vehicles reach cost parity with conventional cars, which is not expected to happen until the mid-2020s. [5] The government should also consider boosting demand further through fiscal incentives, including significant VAT cuts on the sale of zero emission vehicles.  
  2. Provide much greater clarity on how vehicle emissions are to reduce in the 2020s after the UK leaves the EU. This should include providing clarity on whether the UK will remain part of the current EU rules on car, van and HGV emission targets or whether the UK will develop its own framework to drive down emissions. The government will also need to consider regulatory measures to tackle the limited supply of zero emission vehicles on the market, such as by introducing mandatory zero emission vehicles sales targets as a backstop.
  3. Deliver an affordable, efficient and reliable charging infrastructure by accelerating roll out of charging infrastructure to support 100% electric new car and van sales by 2030 and introducing standards on smart charging. Public funding to support charging infrastructure should be targeted where the market will not deliver such as in rural areas and should include offering guarantees against the unknown cost of connecting the chargers to the electricity grid to lower investment risk.
  4. Plan now for the future by looking at how the overall efficiency of the transport system can be improved. This should include planning long-term improvements to the accessibility, affordability and reliability of public transport (including working with cities and local authorities), encouraging a shift from road freight to rail, preparing for connected and autonomous vehicles, as well as facilitating disruptor businesses such as car sharing services. This will also require developing a sustainable future road tax system.

Nick Molho, Executive Director of the Aldersgate Group said: “Significantly cutting emissions from road transport is both an urgent environmental imperative and a unique economic opportunity for the UK. We will only get there however if the government provides much greater clarity on how vehicle emissions need to reduce in the 2020s, provides stable grant and tax incentives to drive consumer demand and stands ready to take the necessary measures to ensure that manufacturers play their part in meeting the public and business demand for clean vehicles.”  
 
“If we are to fully decarbonise transport by 2050, technological changes are only part of the picture. The government also needs to plan ahead and consider the shifts in travel patterns and infrastructure needs that are required to improve the overall efficiency of the transport system, from passenger travel to freight transport.”

—ENDS—
 
The Aldersgate Group will be exploring some of wider issues involved in decarbonising the transport sector in a comprehensive report early next year. This will include planning long-term improvements to the accessibility, affordability and reliability of public transport (including working with cities and local authorities), encouraging a shift from road freight to rail, preparing for connected and autonomous vehicles, as well as facilitating disruptor businesses such as car sharing services.

[1] The briefing can be found here.
 
[2] Committee on Climate Change Progress report to Parliament 2018: https://www.theccc.org.uk/wp-content/uploads/2018/06/CCC-2018-Progress-Report-to-Parliament.pdf
 
[3] Road to Zero (2018): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/724391/road-to-zero.pdf
 
[4] Green Alliance: How the UK can lead the electric vehicle revolution (2018)
https://www.green-alliance.org.uk/How_the_UK_can_lead_the_electric_vehicle_revolution.php
 
[5] Bloomberg New Economic Forecast: Electric Vehicle Outlook 2018
https://about.bnef.com/electric-vehicle-outlook/        


UK must up the pace on its clean vehicles ambition

9th July 2018

Reacting to the publication today of the government’s Road to Zero Strategy, Nick Molho, Executive Director of the Aldersgate Group said:

“With transport now the largest emitting sector of greenhouse gases across the UK economy [1], the publication of the government’s Road to Zero Strategy should mark an important milestone in the UK’s efforts to tackle climate change and boost clean growth. However, despite welcome measures to support the roll out of electric vehicle charging infrastructure and innovation, this strategy fails to support the rapid pace of change that is needed to deliver climate targets and put the UK at the forefront of the global clean vehicles market [2]. Transport emissions need to reduce by at least 46% by 2030 for the UK to meet its fifth carbon budget [3], which requires a phase out of conventional petrol and diesel cars far ahead of 2040.”   

Nick Molho added: “Given the UK’s strengths in manufacturing ultra-low emissions vehicles and world leading battery research, it is essential that the government provides strong regulatory and policy support to accelerate the transition to zero emission vehicles and ensure that UK businesses are amongst the best placed to capitalise on this emerging market. This requires building on the charging infrastructure measures announced today by bringing forward the phase out date for the sale of conventional petrol and diesel vehicles, providing support for the purchase of ultra-low emission vans beyond October 2018 and cars beyond 2020, and delivering on its commitment to simplify the regime for drivers to access local charging points.”

[1] Transport accounted for 28% of UK greenhouse gas (GHG) emissions in 2017. Committee on Climate Change Progress report to Parliament 2018: https://www.theccc.org.uk/wp-content/uploads/2018/06/CCC-2018-Progress-Report-to-Parliament.pdf

[2] The global clean vehicles market is estimated to be worth up to £7.6tn by 2050 by government. The UK automotive sector employs over 160,000 people and generates £40bn in exports, accounting for 7.3% of the UK’s total exports of goods and services. UK Automotive Council 2017: https://www.automotivecouncil.co.uk/wp-content/uploads/sites/13/2017/03/UK-Automotive-Sector-Core-Briefing-March-2017.pdf

[3] Transport emissions must reduce by 46% between 2017 and 2030 for the UK to remain on a cost-effective pathway to meet its climate targets. Committee on Climate Change Progress report to Parliament 2018: https://www.theccc.org.uk/wp-content/uploads/2018/06/CCC-2018-Progress-Report-to-Parliament.pdf

used-nissan-leaf

Time for UK clean growth plans to turn into concrete policies

28th June 2018

Reacting to the publication today of the Committee on Climate Change’s 2018 Progress Report, Nick Molho, Executive Director of the Aldersgate Group said: “Despite the positive progress delivered in the power sector and ambition coming out of government, the UK is not on course to deliver its carbon budgets on time or cost effectively. Private sector investment and supply chain growth in areas such as onshore wind and energy efficiency is being hampered by a lack of clear regulations (such as binding EPC targets), fiscal incentives (such as stamp duty rebates) and market mechanisms (such as subsidy free CfDs for onshore wind). 

The vision set out in the government’s Clean Growth Strategy was a positive one but it must urgently be complemented by clear regulations and incentives that will support decarbonisation in sectors that have shown negligible progress by creating project pipelines to drive energy efficiency improvements and low carbon heat provision in buildings, and the growth of an ultra low emissions vehicles market. Without project pipelines that attract long-term business investment in innovation, supply chains and skills, the UK will miss out on its climate targets and its industrial clean growth ambitions.”   

Nick Molho added: “In the power sector, providing a route to market for onshore wind through a new competitive auction round and providing more clarity on the timing and size of future offshore wind auction rounds would do much to cut power prices for UK heavy industry and support continued cost reductions in renewable technologies.” [1]

[1] See Professor Michael Grubb and Paul Drummond (February 2018) UK industrial electricity prices: competitiveness in a low carbon world. This report set out six policy recommendations to support competitive industrial electricity pricesas the UK continues its transition to a low carbon power system including for the government to improve investment conditions for low-cost renewable energy technologies such as onshore wind.

Committee on Climate Change

Ambitious and well-enforced environmental regulations are good for business

10th May 2018

Reacting to the publication of the government’s consultation on a new Environmental Principles and Governance Bill, Nick Molho, Executive Director of the Aldersgate Group said: “Well-designed, ambitious and properly enforced environmental regulations are essential to economic growth: they provide a stable environment for businesses to invest in, support innovation in new green solutions and products and provide a level playing field across the economy [1]. This consultation to introduce a new Bill to set out environmental principles and a new governance body with statutory underpinning is therefore a significant and positive step forward and has the potential to support improved enforcement of existing legislation and good quality policy making on the environment after the UK has left the EU.”    
 
Nick Molho added: “To maximise regulatory certainty and clarity of policy direction for business, the new Bill should set out environmental principles in legislation, be broadened to include specific environmental improvement goals linked to the delivery of the government’s 25 Year Environment Plan and should provide the new body with powers to advise government on the delivery of these goals. Environmental gains and business certainty would also be clearly enhanced if devolved administrations played a role in co-designing and owning the new environmental principles and governance body.”

[1] BuroHappold (December 2017) Help or Hindrance? Environmental regulations and competitiveness. This report explores the impacts of ambitious environmental standards on business competitiveness, skills and innovation to conclude that well-designed environmental regulations can deliver positive economic outcomes in the form of increased business investment in innovation and skills, better quality products and infrastructure, greater business competitiveness and job creation. 

naturalengland

Removing barriers to mature renewables key to lowering industrial electricity prices

5th February 2018

Today, the Aldersgate Group publishes a new report written by University College London (UCL) [1], setting out what the government can do to support competitive industrial electricity prices as it delivers its Clean Growth and Industrial Strategies. The report recommends that the UK government improves investment conditions in low-cost renewable energy technologies such as onshore wind, co-ordinates investment in power generation and network infrastructure more efficiently and ensures that the UK leaves the EU in a way that supports increased interconnection with European power grids and cross-border electricity trading. 

This report, written by Professor Michael Grubb and Paul Drummond of UCL, will be launched at an event in London on Monday 5th February [2]. Professor Michael Grubb, Professor of International Energy and Climate Change Policy at UCL, is available for interview.

Coming shortly after the government has published a Clean Growth and an Industrial Strategy and is reviewing the findings of the Helm Review on energy costs, this report sets out six policy recommendations to provide competitive industrial electricity prices. These recommendations seek to capitalise on the technological revolution underway in the clean power sector to reduce system costs and better align the structure of the electricity market with the UK’s new Industrial Strategy. 

To deliver competitive industrial electricity prices and reduce the gap with prices prevailing in some continental countries, the government should consider:

  1. Removing barriers to investment in mature renewable energy projects, given that technologies like onshore wind no longer need subsidy provided the political risks are minimised. This should be coupled with a resumption of the carbon price escalator, taking effect as coal retires from the UK system in the early 2020s, so that investors have confidence that they will save on fuel and rising carbon costs (with an appropriate compensation mechanism for those electro-intensive businesses in need of support);
  2. Encouraging greater co-ordination between investments in network and generation infrastructure to avoid congestion and inefficient network development. This should be done in conjunction with a review considering how to support electro-intensive companies with network costs;
  3. Ensuring that the UK leaves the EU in a way that retains unrestricted access to the internal energy market and supports continued investment in interconnection with continental grids, which will be essential to maintain system security affordably as the UK electricity system decarbonises. Research suggests that for every 1 GW of additional interconnection, UK wholesale electricity prices could reduce by 1% to 2% [3];
  4. Facilitating cross-border industrial electricity purchases;
  5. Using the five-year review of the Electricity Market Reform and Capacity Market to help UK industrial electricity consumers benefit from providing system-related services to the electricity system, such as demand-shifting and frequency support;
  6. Establishing a long-term market of zero carbon and tradeable electricity contracts to facilitate industry access to low cost and unsubsidised sources of renewable electricity such as onshore wind. Industrial consumers holding these contracts would avoid paying the carbon price.

The fact that UK industrial electricity prices are higher compared to those in countries such as France and Germany has been well documented but this report goes further than previous analysis by considering the drivers behind the evolution of electricity prices and what policy measures can help mitigate unnecessary costs to businesses.

It finds that differences in industrial electricity prices have been driven by the fact that some of the UK’s key continental neighbours tend to be better interconnected and engage in more cross-border electricity trading, are more supportive of long-term contracts to reduce prices for electro-intensive companies, take a more strategic approach to supporting electro-intensive companies with network and policy costs and have historically integrated renewable energy on their system in a more co-ordinated – and therefore cost-effective – way than in the UK (although UK policy is now improving in this regard).

Professor Michael Grubb, UCL, said: “With costs tumbling, the clean energy revolution presents an opportunity for UK industry. But harnessing the benefits will require removing the obstacles to mature renewables including onshore wind, and helping business consumers profit from flexibility. It also means ensuring that both fossil fuels and renewables face their environmental and system costs along with developing smarter energy markets, through which industry can procure its energy efficiently with the most cost-effective renewables.”

Nick Molho, Executive Director, Aldersgate Group, said: “Electro-intensive companies have an important role to play in the UK’s transition to a low carbon economy. The government has a wide range of tools available to deliver competitively priced power to those businesses in the years ahead, such as taking a more strategic approach to network development and funding, improving industry access to low cost forms of clean energy and ensuring that Brexit does not get in the way of increased interconnection and cross-border trading with the European electricity market.”

Roz Bulleid, Head of Climate, Energy and Environment Policy, EEF – the manufacturers’ organisation, said: “UCL is to be commended on a thorough investigation of the many complex and interconnected factors driving electricity prices in the UK and on the continent. Energy intensive manufacturers have been concerned for some time about the disparities between UK prices and those paid by their direct competitors. They will be pleased at the recognition of the challenges they face even if the scale of disparity for individual companies may vary beyond the averages necessarily set out here.

As a starting point, government should commission regular assessments of this type, as already happens in some competitor countries, and launch a wider conversation about the impact a more activist approach to electricity prices could have on UK industrial competitiveness.”

Martin Casey, Director of Public Affairs and Communications, CEMEX, said: “This report provides welcomed clarity on some of the challenges facing the cement industry and also puts forward some interesting options to improve the competitiveness of electricity prices which are fundamental to the future success of cement manufacturing in Britain, and consequently to the delivery of the Government's ambitious infrastructure and house building programmes.”

Dr Robert Gross, Co-director, UK Energy Research Centre, said: “This report provides a proper explanation of why UK power prices differ from those in near neighbours. Industrial power prices are not high because Britain is overambitious on green energy but because the way the costs and benefits of clean energy are shared have tended to disadvantage heavy industry.

The report rightly recommends that the UK should push ahead with subsidy-free long term contracts for low cost renewables and encourage large customers to contract directly with generators. The report also shows that prices here are higher because we are less interconnected than our continental neighbours. Interconnection is threatened by Brexit and it is a policy priority to keep the UK in the European energy market.”

Mary Thorogood, Stakeholder Relations Adviser, Vattenfall UK, said: “The UK has a great opportunity to take advantage of its investment in home grown, clean power to deliver competitive prices for consumers and businesses. Vattenfall agrees that, as the cheapest form of generation, UK Government should look at providing a viable path to investment in onshore wind. This will enable decarbonisation at least cost whilst improving the global competitiveness of British businesses of all sizes.” 

Angus MacRae, Head of Electricity Economics, SSE, said: “SSE welcomes this new analysis of how to achieve competitive GB electricity prices whilst delivering the Government’s Clean Growth Strategy at lowest cost. Many of the report’s recommendations will benefit customers by minimising overall costs, in particular, restoring access to the CfD mechanism for the cheapest renewable technologies, ensuring that carbon is properly accounted for in electricity imports, and providing a long-term investable carbon price signal.”

Dr Richard Leese, Director - MPA Cement and Director - Industrial Policy, Energy and Climate Change, Mineral Products Association said: “This report draws attention to an important issue for mineral products producers. Energy costs remain a significant issue for small, medium and large companies alike. Some cost compensations and exemptions exist for the few and are only partial where they apply. The Government’s clear support for renewable subsidies has brought down the cost of their installation and operation, but paradoxically, delivered electricity costs continue to rise. The Government needs to delve deeper into the energy system to understand the impacts and costs of low carbon electricity delivery on the system as a whole. In doing so it needs to take action on the rising costs associated with the network and its capacity constraints.”


[1] The Aldersgate Group published today a new report from Professor Michael Grubb and Paul Drummond at University College London, UK industrial electricity prices: competitiveness in a low carbon world.

[2] Delivering competitive industrial electricity prices in a low carbon world. This event will be held from 10.00am-11.30am on Monday 5th February at RELX Group, 1-3 Strand, London, WC2N 1JR. Chaired by Aldersgate Group Executive Director Nick Molho, the event will feature keynote speaker Michael Grubb, Professor of Energy and Climate Change, at the UCL Institute for Sustainable Resources. Panellists include Roz Bulleid, Head of Climate, Energy and Environment Policy, EEF - the manufacturers’ organisation, Dr Richard Leese, Director - MPA Cement and Director - Industrial Policy, Energy and Climate Change, Mineral Products Association, Matthew Knight, Director of Energy Strategy and Government Affairs, Siemens Plc, and Mary Thorogood, Stakeholder Relations Adviser, Vattenfall UK. 

[3] National Grid (March 2014) Getting more connected: the opportunity from greater electricity interconnection


Clean Growth now part of UK’s mainstream economic strategy

27th November 2017

Reacting to the publication of Industrial Strategy: Building a Britain fit for the future today, Nick Molho, Executive Director at the Aldersgate Group said: “The Industrial Strategy can have a transformative impact on the UK’s economy, driving low carbon innovation and the continued growth of jobs, skills and supply chains. It is positive to see that clean growth is now a core objective for the strategy and there is increased focus on energy and resource productivity, and strengthening the synergies between power, heat and transport systems.

Annual global investment into climate-related projects is already more than $1 trillion and accelerating. Given UK strengths in industries such as offshore wind, ultra low emission vehicles and low carbon services, UK businesses are among the best placed to capitalise on the growth of low carbon opportunities and export markets.”

Nick Molho added: “Government can grow market demand for low carbon goods and services and help maximise the benefits of clean growth for UK plc through clear incentive policies, environmental standards, supportive policies on skills and a public procurement policy that rewards resource and energy efficient business. Going forward, the Industrial Strategy must also ensure that energy intensive industries are supported in a way that is consistent with the UK’s emissions targets and helps grow the role of these high value businesses in the UK’s low carbon supply chains.”

IS

Budget 2017: A bright future for Britain needs more focus on the low carbon economy

22nd November 2017

Reacting to today’s Autumn Budget, Nick Molho, Executive Director of the Aldersgate Group said: “The Chancellor is right that we cannot build an economy fit for the future unless we ensure our planet has a future. As well as aiming to be a world leader in tackling plastic pollution, it was good to hear further support for electric vehicles and charging infrastructure, and in ensuring the UK has the skills required to benefit from the job opportunities of the future.
 
However, the lack of clarity and progress on the future of low carbon power investments and energy efficiency standards in new buildings is disappointing. To reduce power sector emissions cost-effectively and continue to grow renewable energy supply chains, the UK needs a policy environment that allows it to deploy mature low carbon technologies such as onshore wind without subsidy, increase its ambition on offshore wind in the 2020s and keep the door open to improvements in new technologies. The announcement that there will be no new low carbon electricity levies until 2025 mustn’t get in the way of that.”

house-of-commons

Aldersgate Group reactive to Professor Helm's Cost of Energy Review

25th October 2017

Reacting to the publication of Professor Dieter Helm’s Cost of Energy Review today, Sarah Williams, Public Affairs Manager at the Aldersgate Group said: “We welcome the publication of Professor Helm’s review. The UK needs a framework that supports the cost-effective growth of a secure low carbon power system. However, it is important to recognise that policies that have supported the deployment and economies of scale achieved in areas such as offshore wind have played a key role in driving clean energy innovation and cost reductions.

We note the suggestion of an equivalent firm power auction with interest, but would suggest that managing a low carbon power grid at the system level is likely to be far more efficient and cost-effective than asking individual renewable generators to arrange for their own balancing services.”[1]

Upcoming UCL analysis commissioned by the Aldersgate Group will explore in detail why UK industry faces higher electricity prices compared to EU counterparts and actions that can be taken to address this. Sarah Williams added: “Our upcoming study will be a useful complement to the findings of the Helm Review."

[1] Professor Jim Watson & Dr. Robert Gross (9 October 2017) Cost of Energy Review: Insights from UKERC Research

COE

Clean Growth Strategy sets UK economy on competitive path

12th October 2017

Reacting to the publication of the Clean Growth Strategy today, Nick Molho, Executive Director of the Aldersgate Group said: “The importance of positive government messaging on the low carbon agenda for investment confidence is often overlooked and today’s clear cross-government commitment to deliver on the UK’s climate targets will be welcomed by businesses. Recent announcements in the offshore wind and car manufacturing industries have highlighted how a clear vision, supported by detailed policies, enable the private sector to drive innovation, cut the costs of clean technologies and invest in UK jobs and supply chains.
 
By restating key commitments such as the £557 million for new offshore wind projects, providing new funding for electric vehicle charging infrastructure and innovative low carbon heat projects, and setting out important consultations on energy efficiency, the Clean Growth Strategy is an important milestone that will improve business confidence and the credibility of the UK’s climate targets.”
 
Nick Molho added: “To deliver the required increase in affordable private sector investment, the Clean Growth Strategy will have to increase in detail in the near future. This will be particularly important for the UK’s buildings, where mandatory standards and well-timed fiscal incentives such as stamp duty rebates are essential to delivering a step change in energy efficiency investment.”     

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Offshore wind is UK industrial success story

11th September 2017

Reacting to the results of the Second Contracts for Difference Allocation Round, Nick Molho, Executive Director of the Aldersgate Group said:

“The announcement today that the next round of offshore wind projects will receive a strike price of £57.50-74.75/MWh highlights the considerable cost reductions achieved by the offshore wind industry, at the same time as delivering increased UK content.[1][2]

Larger and more efficient turbines now mean offshore wind is a mainstream component of the UK’s energy mix and turbine blade manufacturing facilities in Hull and the Isle of Wight and servicing companies around the coast are important examples of how the industry has driven jobs and supply chain growth across the UK.

The UK is reaping the benefits of competitive auctions and stable government policy in this area. To continue to see costs reduce, a clear pipeline of projects well into the 2020s will be required and the government’s forthcoming Clean Growth Strategy must ensure that the £730m earmarked for auctions of less established technologies during the last parliament will be committed by 2020 as originally planned.” 

[1] The cost of offshore wind projects are now 50% lower than the first auction held in 2015.

[2] Renewable UK (September 2017) Offshore Wind Industry Investment in the UK: 2017 Report on Offshore Wind UK Content

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