With Labour having set out its energy policy stall this week, decarbonisation and energy security have found themselves at the forefront of conversations. The UK government’s position on this has also been in the news, with their ambitious target to decarbonise the power sector by 2035. However, a report from the Public Accounts Committee (PAC) that was published this week highlights a critical challenge in turning that ambition into a reality: the lack of an integrated and coherent delivery plan.
The report finds that the absence of a comprehensive strategy puts the government’s green power goals at risk.
Integration or isolation
The PAC report reveals that while the UK government has numerous ongoing plans for power decarbonisation, these places are in isolation of one another with no overarching strategy to consolidate. Without this coherent, holistic plan, bringing them together, the report suggests that decision-making processes will not be as informed and, therefore, ineffective. To right the ship, the emphasis is on the urgent development of an integrated delivery plan by autumn 2023 at the latest – a very narrow window.
Costs and the public
A crucial aspect missing from the government’s plans is a clear assessment of the costs of decarbonising the power sector – and what this means for the typical energy bill (and taxpayers).
The current model of passing on to consumers the costs of any change in the energy system was identified by the PAC as a risk; if the cost becomes very high, action loses public support.
Moreover, the government has stated that it plans to improve energy efficiency by driving changes in consumer behaviour; however, these plans are also found to be somewhat lacking in clarity.
A key takeaway from the PAC’s report was the genuine scepticism about the credibility of the government’s plans to expand nuclear, solar, and wind power.
Today, the UK’s operating capacity for these sources is only a quarter of the goals set, and the expansion plans outlined by the government heavily rely on technologies that are still in the early stages of development. To achieve credibility, the PAC asks for greater accountability in progress – it will be interesting to see the government’s response.
Distractions and Confidence
Understandably a current focus from the government is on managing high gas prices. However, if this has distracted attention from efforts to decarbonise, the PAC warns it would undermine progress toward meeting the low-carbon energy target, especially as time frames are tight.
To meet targets and estimates that up to £400 billion of public and private investment in new generating capacity will be required by 2037. The importance of private sector investment, and that this sector had confidence in the UK is a vital component for successful policy delivery.
Yet the PAC found that they do not consider ‘green power projects’ as something they can confidently invest in – mainly as they feel they do not have clarity from the government.
This issue has been raised in past PAC reports, that emphasized the damaging impact of stop-start approaches on investor confidence. It is an issue the report marks up as a priority to address.
What does the PAC report mean for businesses? The PAC report highlights that there are currently shortcomings in the Government’s approach to achieving its green power goals.
It in particular highlights the need for an integrated and coherent delivery plan.
In the backdrop of a global race to harness the technology to achieve net zero, the PAC report underscores the need for the government to act decisively, charting a clear path forward to tackle the climate crisis and secure a sustainable future for the UK.
In a week where Labour has reached out on energy policy development, this PAC report shows that both parties are seeking something important from businesses and the public – confidence and credibility. To achieve that they need partners and endorsers for their approach to the energy transition.
This offers a real opportunity for businesses and organisations who want to help deliver the energy transition to make themselves known and start engaging with the Government and opposition – we’d love a conversation on how we can help make that happen.