The Informer

This week’s headlines: plans for a UK emissions trading scheme have been unveiled ahead of leaving the EU; an industry body has called on the Government to set out a clear plan for the long-term future of battery storage to help unlock growth; and corporates are stepping up their commitments to reduce carbon footprints despite the pandemic.

  • Proposals unveiled for UK emissions trading scheme

    The UK Government has published its proposals for a UK-wide Emissions Trading System (ETS) that would replace the EU's carbon trading mechanism.

    BEIS said the proposed model, developed with the Scottish Government, Welsh Government and Northern Ireland Executive, would play an important role in the push to achieve net-zero emissions by 2050.

    The new system will come into effect at the end of this year when the transition period for the UK leaving the EU is due to end.

    Energy Minister Kwasi Kwarteng said: “The UK is a world-leader in tackling climate change, and thanks to the opportunities arising as we exit the transition period, we are now able to go even further, faster."

    “This new scheme will provide a smooth transition for businesses while reducing our contribution to climate change, crucial as we work towards net zero emissions by 2050.”

    The ETS sets a cap on greenhouse gases that can be emitted by energy-intensive industries. The UK’s draft proposals confirm that the Government is willing to “consider a link” between its ETS and the EU version depending on progress with ongoing trade negotiations.

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  • ‘Clear signals’ vital for growth in battery storage

    Investors need more confidence in the future direction of battery storage to enable the sector to achieve its full potential, according to an industry report.

    The Electricity Storage Network group says the Government should set a clear signal for how it sees the trajectory for storage over the next decade.

    A report published by the group highlights a number of key barriers which exist including the lack of a legal framework. It sets out a number of recommendations to enable further growth in a sector which it says now has almost 4GW of capacity connected to the network with a further 9GW in the planning system.

    “At present storage is, by default, treated as a subset of generation, with rules tweaked to make them more appropriate for storage. We believe that without a legal framework, storage is stuck in limbo and must therefore be included in the electricity licence framework,” says the report.

    “The Government is supportive of storage and recognises its role in the net zero transition, but we need a longer-term plan that gives the whole industry, including investors, confidence in the direction of storage over the next few years.”

    The call came as a separate study forecast dramatic growth in energy storage across Europe to help networks cope with growing levels of variable renewable generation.

    Reducing technology costs are expected to help energy storage capacity to grow from 3GW in 2020 to 26GW in 2030, and then to 89GW by 2040, according to Wood Mackenzie. The report also forecasts that gas peakers will also “have a good decade complementing the renewable power system.”

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  • Businesses step up commitments on renewables and EVs

    A number of major UK businesses have made pledges to cut their carbon footprint through committing to renewable power, EVs and smarter energy use as part of a global campaign.

    The Climate Group said it had seen a flurry of activity around its key initiatives to promote renewables (RE100), electric vehicles (EV100) and smart energy use (EP100) to mark World Environment Day.

    The Climate Group’s Chief Executive Helen Clarkson said: “It's encouraging to see such a display of corporate leadership on accelerating climate action and government endorsement of our RE100 initiative.

    “By working together, businesses and policymakers can get us on track to achieving net-zero emissions by the middle of the century.” 

    Since RE100 was launched in 2014, it has attracted 236 members committed to reaching 100% renewable electricity across their global operations.

    The EV100 campaign has encouraged the adoption of 80,000 low-carbon vehicles to date and is now targeting 2.5 million vehicles by 2030.

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  • Government stages roundtable to explore low carbon recovery potential

    The Government is to stage a green recovery roundtable to bring together businesses and academics to "capture economic growth opportunities from the shift to net zero carbon emissions".

    Business Secretary Alok Sharma is chairing a series of events for new working groups set up to help the country bounce back from the Covid-19 crisis as quickly as possible by accelerating business innovation and boosting R&D investment.

    "These roundtables are a redoubling of our efforts to listen to and work with the business community and academic experts as we consider the measures needed to support our economic bounce-back," said Sharma. "This will undoubtedly lead to a cleaner, greener, more resilient economy which will create new jobs."

    "The output from this initiative will feed directly into the Government's work on economic recovery and will help deliver the commitments we made to the British people only last December, which now take on an even greater sense of urgency and importance."

    In Scotland, the Royal Scottish Geographical Society is also hosting an environmental summit featuring 50 industry and scientific leaders will look at how Scotland can build a sustainable recovery from the coronavirus outbreak.

    Last week more than 200 of the UK’s leading businesses urged the UK Government to ramp up investment in areas such as renewables, EVs and energy efficiency to deliver a green recovery.

    Reports suggest the Government may announce a car scrappage scheme to rapidly boost take-up of EVs.

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  • Ofgem urges industry to be ambitious in return to normal

    Regulator Ofgem has said it expects the energy industry to be “ambitious” in restoring business-as -usual and normal standards of customer service as quickly as possible.

    In an open letter providing an update on the Covid-19 response, Chief Executive, Jonathan Brearley said it will publish guidance in the coming weeks setting out which of the regulatory requirements it had temporarily eased in the wake of the crisis are being re-introduced.

    His comments came as the regulator also announced a £350m scheme to support energy suppliers by allowing them to defer network payments if they can’t access commercial loans.

    Ofgem said the financial challenges facing customers has impacts on the energy supply chain, which may experience cash flow issues that could have negative impacts on consumers.

    Ofgem said it would expect suppliers and shippers to only access the scheme as a last resort and will monitor uptake carefully to mitigate the risk of abuse.

    It expects businesses taking advantage not to pay out dividends and show restraint in relation to senior management pay until payments have been made.

    Separately BEIS has confirmed it will give suppliers temporary relief on increases in Contracts for Difference (CfDs) charges to ease cash flow.

    Next month, Ofgem will be setting out its draft determinations for the next set of network price controls, which it said will help put Britain on the path to net zero at the lowest possible to cost to consumers.

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