3 key business takeaways from the Energy White Paper
What are the key takeaways from the Energy White Paper? How can your business join the green industrial revolution? We talk about upgrading to zero emission electric vehicles (EVs), creating greener buildings and low carbon business energy.
The government has put green recovery at the heart of its economic policy and its Energy White Paper sets out how the UK will decarbonise all sectors and move to a net zero future. The report sets out the substantial action to be taken to cut emissions by 230 million tonnes over the next 10 years, while supporting 220,000 jobs.
The Energy White Paper builds on the Prime Minister's 10-point plan for a 'green industrial revolution' announced in November, to ensure the UK delivers affordably on its legally binding net zero 2050 commitment.
With the UK hosting both the G7 summit and COP26 climate summit this year, the government is positioning itself as an international climate leader and will follow-up on the Energy White Paper, with sector-specific decarbonisation strategies in the coming months.
Key business takeaways from the Energy White Paper
In line with green energy policymaking, you'll be required to make some radical changes over the coming decade, such as shifting to zero-emission transport, making much wider use of net zero energy sources, and finding new ways of heating your business.
The Energy White Paper covers both domestic and business energy, but our blog focuses on the major announcements that affect commercial, industrial and public sector organisations. Below we examine 3 of the key policies and commitments that are most likely to change your approach to energy.
1. Shift to zero emission electric vehicles (EVs)
One of the boldest climate action policies announced by the government is a ban on the sale of new petrol and diesel cars and vans from 2030 – ten years sooner than originally planned. This is backed by funding to support industry and consumers to make the switch to cleaner vehicles and rollout the supporting infrastructure.
Further details on the phase-out plans for petrol and diesel vehicles will be made clearer in the government's Transport Decarbonisation Plan, which is scheduled for publication in the coming months. Centrica will respond and seek to input into the government’s formulation of this strategy.
The Energy White Paper sets out a plan to invest £1.3 billion to accelerate the rollout of EV charging points across homes, streets and motorways, as well as another £1 billion to support the purchase and development of EVs themselves, such as funding for battery production.
Low emission vehicle technology is advancing rapidly and costs are falling dramatically to bring us to an economic tipping point, which is why many organisations are accelerating their EV plans to deliver on their net zero targets. One of the current incentives to make the move to EV is the availability of workplace charging grants of up to £14,000.
2. Creating greener, more efficient buildings
The government states that the biggest emissions savings laid out in the white paper are expected to come from buildings, as illustrated by the report's chart below
Gas boilers will be gradually removed and replaced with cleaner alternatives. By the mid-2030s, the government hopes that all newly installed heating systems will be low carbon models or be appliances that are hydrogen-ready for future conversion to hydrogen supply. However, the government says it expects gas to continue to play a role for at least the next 10 years.
One of the key goals is a massive ramping-up of electric heat pump installation from 30,000 per year to 600,000 per year by 2028.
The potential for hydrogen heating is also being explored, with a proposal for a pilot hydrogen-heated town before 2030. One option could be to adapt existing gas infrastructure for hydrogen distribution, supported by the government's plan to consult on the role of “hydrogen-ready” boilers next year. Energy efficiency is a quick and cost-effective method of decarbonising buildings. As first announced in the Prime Minister’s Ten Point Plan, the Public Sector Decarbonisation Scheme, launched in September 2020, is to be extended for a further year. The £1 billion first tranche of funding is expected to cut emissions by up to 1.3MtCO2e by 2032.
We are expecting a Heat & Buildings strategy, a UK Hydrogen strategy and an Industrial Decarbonisation strategy in the first half of 2021. This will provide more detail on the policy frameworks and funding for these sectors and Centrica will be discussing these strategies with the government in the coming months.
3. Moving to a low-carbon and flexible power system
To meet its commitment to generate emission-free electricity by 2050, the government aims to deliver an "overwhelmingly decarbonised" energy system by 2030,with 40GW of offshore wind by 2030. Emission-free electricity is seen as central to the UK’s transition to a net zero economy, with demand expected to double due to transport and low carbon heat.
To enable a decarbonised power system, with increasing volumes of intermittent renewables, such as wind and solar, the government recognises a need for much greater flexibility in the decentralised energy system to maintain grid balance. Centrica has been at the forefront of these discussions and welcome the acknowledgement of the importance of flexibility from all customers and technologies.
Government analysis estimates that “a smarter, more flexible system could unlock savings of up to £12bn per year by 2050”. This is much higher than previous analysis on the value of a flexible system. The government will publish an updated Smart Systems and Flexibility Plan in spring 2021.
This will pave the way for greater energy optimisation opportunities, such as monetising flexible power capacity from on-site generation with storage and EV charging – through a wider range of demand side response activities. Centrica is at the forefront of aggregation with all size customers and types of technologies, regularly accessing different National Grid’s flexibility markets.
How your business can help the UK reach net zero
The race to net zero requires urgent action and the role of business is critical to delivering on the UK's climate action commitments. There are many opportunities to contribute to the decarbonisation challenge, whatever the size or sector of your business. Developing your own carbon reduction pathway can balance both your economic and environmental aims, while helping you to gain control over your energy to increase business resilience.