ETI response to Clean Growth Strategy

The ETI welcomes today’s Clean Growth Strategy which increases the resources available for clean energy innovation in the UK. The Clean Growth Strategy shows that a UK economy fuelled by low carbon energy could unlock a great deal of economic opportunity - as well as being a responsible environmental path.

Infrastructure upgrades and replacement don’t happen overnight, and as a country we are running out of time to prove the options likely to be needed to transition our energy system affordably. Some of the approaching decisions will be generational in their implementation and multi-generational in their impact. Certainty of direction and constancy of market signal is important. To realise the opportunities will need sustained commitment over multiple political cycles and a consistency of purpose that stimulates investment. The UK has achieved a lot over the 10 years of the ETI’s existence, but a lot more needs and must be done.

There are no silver bullets to decarbonisation – it will require renewal and change across a broad front as today’s energy assets end their lives. An affordable energy system that meets UK climate and energy targets will need a balanced mix of technologies and the Clean Growth Strategy recognises this. The future will include new and existing generation technologies, combined efficiently and flexibly using smart technologies, optimised through data analytics, traded nationally, regionally, locally and through peer to peer models. All of these building blocks are available to us today, and while continued research and development into new low carbon technologies is therefore both welcome and necessary, we need to begin to focus on deploying technologies that are already available – and we need to get on with it. The increased emphasis in the Clean Growth Strategy on technology innovation is welcome, however early stage research on “over the horizon” technology must not be in place of the deployment and testing of today’s technology. Reducing project investment risk is one of the biggest levers for cost reduction for deployment – as has been seen in Offshore Wind.

The Clean Growth challenge is a whole system question. It is not simply which technologies and which business models, it is primarily how best to put them together in an optimal system that works economically. We need a system which is able to adapt to a changing societal need. Only by testing technologies and new commercial approaches at scale - learning by doing – underpinned by long term policy signals, will we provide the necessary confidence for investors.

To effect an affordable transition to a low carbon future and to meet our legally binding climate targets, the UK needs a blended mix of renewables, nuclear, bioenergy, carbon capture and storage (CCS), and gaseous fuels as well as greater efficiency and low carbon energy in buildings, industry and transport and to combine these in a flexible and adaptable way – technically and commercially.  The recent contracts for difference for offshore wind is an example of what focused technology innovation combined with consistent policy and market signals, sustained over more than a decade, can achieve. We should not stop here.

We welcome the inclusion today of a new pathway for CCS development in the UK. This is a cornerstone for the lowest cost energy system transition, providing resilience and robustness to other choices. With our natural resources as an island providing ample CO2 storage capacity, CCS is an opportunity we shouldn’t ignore. CCS is an enabling technology with implications and benefits that can stretch across the whole energy system. Its multiple functions present an economic prize, combining not only the storage of generated carbon emissions from power generation and industry, but also enhancing system flexibility - for example in the clean generation of hydrogen. It may be possible to meet the climate targets without CCS, but it will make it more expensive for the country to do so – potentially doubling the cost and closing down options that could be more attractive to consumers than others. Driving down the costs of capture technologies is an important goal, but First of a Kind at scale projects are needed to reduce investor risks. Crucially, these large scale projects are needed to prove and establish CO2 stores and develop infrastructure – these are essential to building momentum to allow CCS for power, hydrogen and for heavy industry.

The low carbon energy system of tomorrow will need to be very different from the energy system we are familiar with today if we are to meet our climate goals. Low carbon electricity, available when and where it is required, is a necessary condition to creating a low carbon energy future. Decarbonising the power sector is relatively straightforward and we are well advanced. We need to continue with this effort – as power is the simplest area to decarbonise – but we also need to address the more challenging heat and transport sectors as well as industry. The transition is both an immense challenge and an immense opportunity. Today’s strategy might not provide all the answers for everyone but it sets an outline and if it provides confidence to the markets it might give the country a real opportunity to be a world leader in low carbon energy.

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