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UK Clean Growth Strategy

October 25, 2017

UK Clean Growth Strategy

The Clean Growth Strategy
The Clean Growth Strategy

Clean & Affordable Energy for All

Clean growth means growing our national income while cutting greenhouse gas emissions. Achieving clean growth, while ensuring an affordable energy supply for businesses and consumers, is at the heart of the UK’s Industrial Strategy. It will increase our productivity, create good jobs, boost earning power for people right across the country, and help protect the climate and environment upon which we and future generations depend.

Extending Carbon Budgets to Drive Down Emissions

UK Leadership and Progress Our Strategy for clean growth starts from a position of strength. The UK was one of the first countries to recognise and act on the economic and security threats of climate change. The Climate Change Act, passed in 2008, committed the UK to reducing greenhouse gas emissions by at least 80 per cent by 2050 when compared to 1990 levels, through a process of setting five year caps on greenhouse gas emissions termed ‘Carbon Budgets’. This approach has now been used as a model for action across the world, and is mirrored by the United Nations’ Paris Agreement.

Decoupling Growth & Emissions

We have been among the most successful countries in the developed world in growing our economy while reducing emissions. Since 1990, we have cut emissions by 42 per cent while our economy has grown by two thirds. This means that we have reduced emissions faster than any other G7 nation, while leading the G7 group of countries in growth in national income over this period.

Continuing Growth & Reducing Emissions

This progress has meant that we have outperformed the target emissions reductions of our first carbon budget (2008 to 2012) by one per cent and we project that we will outperform against our second and third budgets, covering the years 2013 to 2022, by almost five per cent and four per cent respectively. Our economy is expected to grow by 12 per cent over that time. This will be a significant achievement. We have made progress across every sector of our economy.

Renewables & The Largest Global Offshore Wind Capacity

In 2016, 47 per cent of our electricity came from low carbon sources, around double the level in 2010, and we now have the largest installed offshore wind capacity in the world. Our homes and commercial buildings have become more efficient in the way they use energy which helps to reduce emissions and also cut energy bills, for example average household energy consumption has fallen by 17 per cent since 1990. Automotive engine technology has helped drive down emissions per kilometre driven by up to 16 per cent and driving a new car bought in 2015 will save car owners up to £200 on their annual fuel bill, compared to a car bought new in 2000. England also recycles nearly four times more than it did in 2000.

The Falling Costs of Law Carbon Technology

This progress has been aided by the falling costs of many low carbon technologies: renewable power sources like solar and wind are comparable in cost to coal and gas in many countries; energy efficient light bulbs are over 80 per cent cheaper today than in 2010; and the cost of electric vehicle battery packs has tumbled by over 70 per cent in this time.

Exporting Low Carbon Technology Expertise

As a result of this technological innovation, new high value jobs, industries and companies have been created. And this is driving a new, technologically innovative, high growth and high value “low carbon” sector of the UK economy. Not only are we rapidly decarbonising parts of the domestic economy, but thanks to our world leading expertise in technologies such as offshore wind, power electronics for low carbon vehicles and electric motors, and global leadership in green finance, we are successfully exporting goods and services around the world – for example, one in every five electric vehicles driven in Europe is made in the UK. This progress now means there are more than 430,000 jobs in low carbon businesses and their supply chains, employing people in locations right across the country.

Cutting Bills, Driving Growth, Creating Jobs, Improving Quality of Life

This progress has altered the way that we see many of the trade-offs between investing in low carbon technologies that help secure our future but that might incur costs today. It is clear that actions to cut our emissions can be a win-win: cutting consumer bills, driving economic growth, creating high value jobs and helping to improve our quality of life.

Of course, greenhouse gas emissions are a global problem and action is needed from all countries. The UK has played a key role in demonstrating international leadership on tackling climate change through its domestic action, climate diplomacy and financial support.

Recognising the Impacts of Climate Change

The UK was among the first to recognise climate change as an economic and political issue as opposed to solely an environmental one and has used its world leading economic, science and technical skills to shape the global debate around climate change, for instance making the economic case for climate action in the landmark Stern Report in 2006.

The UK has also used its influence and resources to help developing countries with their own clean growth – and our actions to date are expected to save almost 500 million tonnes of carbon dioxide over the lifetime of the projects, more than the entire annual emissions of France. While we do not count these results against our domestic targets, we can be proud of the impact of the UK’s commitment to global climate action.

Investment for Innovation in Clean Growth
Investment for Innovation in Clean Growth

Key Policies and Proposals in the Strategy Accelerating Clean Growth

1. Develop world leading Green Finance capabilities, including by:

  • Setting up a Green Finance Taskforce to provide recommendations for delivery of the public and private investment we need to meet our carbon budgets and maximise the UK’s share of the global green finance market
  • Working with the British Standards Institution to develop a set of voluntary green and sustainable finance management standards
  • Providing up to £20 million to support a new clean technology early stage investment fund
  • Working with mortgage lenders to develop green mortgage products that take account of the lower lending risk and enhanced repayment associated with more energy efficient properties

2. Improving Business and Industry Efficiency – 25% of UK Emissions

  • Develop a package of measures to support businesses to improve their energy productivity, by at least 20 per cent by 2030, including by
  • Following the outcome of the independent review of Building Regulations and fire safety, and subject to its conclusions, we intend to consult on improving the energy efficiency of new and existing commercial building
  • Consulting on raising minimum standards of energy efficiency for rented commercial buildings
  • Exploring how voluntary building standards can support improvements in the energy efficiency performance of business buildings, and how we can improve the provision of information and advice on energy efficiency to SME
  • Simplifying the requirements for businesses to measure and report on energy use, to help them identify where they can cut bills

3. Establish an Industrial Energy Efficiency Scheme to help large companies install measures to cut their energy use and bills

4. Publish joint industrial decarbonisation and energy efficiency action plans with seven of the most energy intensive industrial sectors

5. Demonstrate international leadership in carbon capture usage and storage (CCUS), by collaborating with our global partners and investing up to £100 million in leading edge CCUS and industrial innovation to drive down costs

6. Work in partnership with industry, through a new CCUS Council, to put us on a path to meet our ambition of having the option of deploying CCUS at scale in the UK, and to maximise its industrial opportunity

7. Develop our strategic approach to greenhouse gas removal technologies, building on the Government’s programme of research and development and addressing the barriers to their long term deployment

8. Phase out the installation of high carbon forms of fossil fuel heating in new and existing businesses off the gas grid during the 2020s, starting with new build

9. Support the recycling of heat produced in industrial processes, to reduce business energy bills and benefit local communities

10. Innovation:

  • Invest around £162 million of public funds in research and innovation in Energy, Resource and Process efficiency, including up to £20 million to encourage switching to lower carbon fuel
  • Support innovative energy technologies and processes with £14 million of further investment through the Energy Entrepreneurs Fund

Improving Our Homes – 13% of UK Emissions – Improving the energy efficiency of our homes

11. Support around £3.6 billion of investment to upgrade around a million homes through the Energy Company Obligation (ECO), and extend support for home energy efficiency improvements until 2028 at the current level of ECO funding

12. We want all fuel poor homes to be upgraded to Energy Performance Certificate (EPC) Band C by 2030 and our aspiration is for as many homes as possible to be EPC Band C by 2035 where practical, cost-effective and affordable

13. Develop a long-term trajectory to improve the energy performance standards of privately rented homes, with the aim of upgrading as many as possible to EPC Band C by 2030 where practical, cost-effective and affordable

14. Consult on how social housing can meet similar standards over this period

15. Following the outcome of the independent review of Building Regulations and fire safety, and subject to its conclusions, we intend to consult on strengthening energy performance standards for new and existing homes under Building Regulations, including future proofing new homes for low carbon heating systems

16. Offer all households the opportunity to have a smart meter to help them save energy by the End of 2020 Rolling out low carbon heating

17. Build and extend heat networks across the country, underpinned with public funding (allocated in the Spending Review 2015) out to 2021

18. Phase out the installation of high carbon fossil fuel heating in new and existing homes currently off the gas grid during the 2020s, starting with new homes

19. Improve standards on the 1.2 million new boilers installed every year in England and require installations of control devices to help people save energy

20. Invest in low carbon heating by reforming the Renewable Heat Incentive, spending £4.5 billion to support innovative low carbon heat technologies in homes and businesses between 2016 and 2021

21. Innovation: Invest around £184 million of public funds, including two new £10 million innovation programmes to develop new energy efficiency and heating technologies to enable lower cost low carbon homes

22. End the sale of new conventional petrol and diesel cars and vans by 20

23. Spend £1 billion supporting the take-up of ultra low emission vehicles (ULEV), including helping consumers to overcome the upfront cost of an electric car

24. Develop one of the best electric vehicle charging networks in the world by:

  • Investing an additional £80 million, alongside £15 million from Highways England, to support charging infrastructure deployment
  • Taking new powers under the Automated and Electric Vehicles Bill, allowing the Government to set requirements for the provision of charging points

25. Accelerate the uptake of low emission taxis and buses by:

  • Providing £50 million for the Plug-in Taxi programme, which gives taxi drivers up to £7,500 off the purchase price of a new ULEV taxi, alongside £14 million to support 10 local areasto deliver dedicated charge points for taxis
  • Providing £100 million for a national programme of support for retrofitting and new low emission buses in England and Wales

26. Work with industry as they develop an Automotive Sector Deal to accelerate the transition to zero emission vehicles

27. Announce plans for the public sector to lead the way in transitioning to zero emissions Vehicles

28. Invest £1.2 billion to make cycling and walking the natural choice for shorter journeys

29. Work to enable cost-effective options for shifting more freight from road to rail, including using low emission rail freight for deliveries into urban areas, with zero emission last mile deliveries

30. Position the UK at the forefront of research, development and demonstration of Connected and Autonomous Vehicle technologies, including through the establishment of the Centre for Connected and Autonomous Vehicles and investment of over £250 million, matched by industry

31. Innovation: Invest around £841 million of public funds in innovation in low carbon transport technology and fuels including:

  • Ensuring the UK builds on its strengths and leads the world in the design, development and manufacture of electric batteries through investment of up to £246 million in the Faraday Challenge
  • Delivering trials of Heavy Goods Vehicle (HGV) platoons, which could deliver significant fuel and emissions savings

Delivering Clean, Smart, Flexible Power – 21% of UK Emissions

32. Reduce power costs for households and businesses by:

  • Implementing the smart systems plan, which will help consumers to use energy more flexibly and could unlock savings of up to £40 billion to 2050
  • Working with Ofgem and National Grid to create a more independent system operator to keep bills low through greater competition, coordination and innovation across the system
  • Responding to the forthcoming independent review into the cost of energy led by Professor Dieter Helm CBE Publishing a draft bill to require Ofgem to impose a cap on standard variable and default tariffs across the whole market

33. Phase out the use of unabated coal to produce electricity by 2025

34. Deliver new nuclear power through Hinkley Point C and progress discussions with developers to secure a competitive price for future projects in the pipeline

35. Improve the route to market for renewable technologies such as offshore wind through:

  • Up to £557 million for further Pot 2 Contract for Difference auctions, with the next one planned for spring 2019
  • Working with industry as they develop an ambitious Sector Deal for offshore wind, which could result in 10 gigawatts of new capacity, with the opportunity for additional deployment if this is cost effective, built in the 2020s

36. Target a total carbon price in the power sector which will give businesses greater clarity on the total price they will pay for each tonne of emissions. Further details on carbon prices for the 2020s will be set out in the Autumn 2017 Budget

37. Innovation: Invest around £900 million of public funds, including around:

  • £265 million in smart systems to reduce the cost of electricity storage, advance innovative demand response technologies and develop new ways of balancing the grid
  • £460 million in nuclear to support work in areas including future nuclear fuels, new nuclear manufacturing techniques, recycling and reprocessing, and advanced reactor design
  • £177 million to further reduce the cost of renewables, including innovation in offshore wind turbine blade technology and foundations

Enhancing the Benefits and Value of Our Natural Resources – 15% of UK Emission

38. As we leave the EU, design a new system of future agricultural support to focus on delivering better environmental outcomes, including addressing climate change more directly

39. Establish a new network of forests in England including new woodland on farmland, and fund larger-scale woodland and forest creation, in support of our commitment to plant 11 million trees, and increase the amount of UK timber used in construction

40. Work towards our ambition for zero avoidable waste by 2050, maximising the value we extract from our resources, and minimising the negative environmental and carbon impacts associated with their extraction, use and disposal

41. Publish a new Resources and Waste Strategy to make the UK a world leader in terms of competitiveness, resource productivity and resource efficiency

42. Explore new and innovative ways to manage emissions from landfill

43. Support peatland through a £10 million capital grant scheme for peat restoration

44. Innovation: Invest £99 million in innovative technology and research for agri-tech, land use, greenhouse gas removal technologies, waste and resource efficiency

Leading in the Public Sector – 2% of UK Emissions

45. Agree tighter targets for 2020 for central government and actions to further reduce greenhouse gas emissions beyond this date

46. Introduce a voluntary Public Sector target of a 30 per cent reduction in carbon emissions by 2020-21 for the wider public sector

47. Provide £255 million of funding for energy efficiency improvements in England and help public bodies access sources of funding Government Leadership in Driving Clean Growth

48. Work with businesses and civil society to introduce a “Green Great Britain” week to promote clean growth

49. Reinstate a regular Clean Growth Inter-Ministerial Group responsible for monitoring the implementation of this Strategy and driving ambitious clean growth policie

50. Report annually on our performance in delivering GDP growth and reduced emissions through an “Emissions Intensity Ratio”

Download the Full Report BEIS The Clean Growth Strategy