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Retrofitting leaky homes would cost £5bn over next four years, UK ministers told

Renovating the UK’s draughty homes to low-carbon standards would cost the government only £5bn within the next four years and would create 100,000 jobs, cut people’s energy bills, increase tax revenue and bring tens of billions in economic benefits, the construction industry has estimated.

Sector leaders have written to ministers proposing a new “national retrofit strategy” that they say would boost a green recovery in the UK and put Britain on track to meet its climate targets.

The proposal comes ahead of the government’s heat and buildings strategy, which is expected to be published soon. Decarbonising the UK’s homes, which are among the leakiest in Europe, and which produce nearly one-fifth of the UK’s carbon output, is a pressing issue as the government seeks cuts of 78% to greenhouse gas emissions by 2035.

Gas boilers will have to be replaced with heat pumps, district heating systems and possibly hydrogen systems, and homes will need loft, window and wall insulation. But the task is huge, and a plan has so far been lacking, with the green homes grant – an insulation scheme launched to fanfare last year as a way to build a green recovery from the Covid-19 pandemic – having been scrapped after a disastrous six months in operation.

In a letter to the business secretary, Kwasi Kwarteng, signed by more than 50 organisations and seen by the Guardian, the Construction Leadership Council set out a strategy that would help people to save more than £400 on their energy bills each year, and improve the health of those in fuel poverty.

“If the UK is to meet our world-leading carbon reduction targets, create jobs and level up, we must address the energy and water efficiency of our 28m homes. Our strategy is a blueprint, endorsed by the construction industry and beyond,” they wrote.

A government-led programme for refurbishing houses between now and 2024 would “support the levelling-up agenda, generate government revenue of more than £12bn, provide additional GDP of more than £21bn and unlock £11.4bn of private capital,” they added.

As well as a short-term strategy for this parliament of recruiting tens of thousands of people to install insulation and low-carbon heating systems in more than 850,000 homes, they propose a long-term strategy that would refurbish all of the UK’s homes by 2040. This would cost £524bn in total, of which the government would need to invest £168bn, and would create 500,000 jobs.

According to the construction industry’s strategy, this would require a mix of policies, including green mortgages to provide the finance for people to install low-carbon heating, stamp duty rebates on refurbished homes, reduced VAT on home improvement works, and loans to landlords to improve their properties.

Low-income households would need government grants, and those on higher incomes should be given access to low interest loans and council tax rebates, paid for by central government, the Construction Leadership Council said. Ministers should also act quickly to enable companies to start training employees and new recruits in the skills needed, the companies said.

“Wide-scale domestic retrofit is essential to the net zero agenda and backing a long-term strategy will help position the UK as global market leader in the low carbon economy ahead of the UN climate change conference [Cop26] in November,” the organisations added.

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “We are already investing in making our buildings more energy efficient, and in order to meet our world-leading commitments on carbon emissions, we are gradually transitioning away from fossil fuel boilers and incentivising the take-up of low carbon alternatives as appliances are replaced, in a way that is fair, affordable and practical. To encourage energy efficiency and lower people’s energy bills, we are considering a range of options put forward by stakeholders and plan to launch a call for evidence to test what will work best for consumers in the UK.”

The government has said that people would not be fined for using their existing gas boilers, or refusing to switch to a low-carbon heating system, and that no one would be prevented from selling their homes if they do not meet energy efficiency standards, as some media reports have claimed.

Jenny Hill, the head of buildings and international action at the Committee on Climate Change, the government’s statutory adviser, said the industry’s proposed strategy was in line with the government’s net zero target. “This report shows a can-do attitude and a clear vision by the construction industry,” she told the Guardian. “It has all the different elements that are needed to come together: skills, consumer education, compliance and enforcement, performance standards, and a framework for market certainty.”

Public backing for the move to low-carbon heating would be essential, Hill added. Many media reports have focused on the difficulties of switching away from gas boilers, and the cost of low-carbon alternatives such as heat pumps. However, without a comprehensive programme for domestic housing there is little chance of meeting climate targets.

“It’s a condition of success that the negative impacts are minimised, that this is fair and equitable, and that people have a say in the process,” said Hill. “This transition definitely can be done in a sensible way that supports people and listens to their concerns.”

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Commercially viable electricity from nuclear fusion a step closer thanks to British breakthrough

Scientists appear to have solved the exhaust problem for compact fusion power plants, making them more economically-viable.

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Centrica calls on Government to pay homeowners for heat pump switch

British Gas owner says Retrofit Fund would fund household switch to hybrid systems, where homes run on heat pumps plus a backup boiler

British Gas owner Centrica is calling on the Government to fund the rollout of new “hybrid” heating systems, as ministers face mounting pressure to clarify the future of the gas boiler in Britain.

Hybrid heating systems combine a small gas boiler with an air source heat pump. Transitioning to such a system would cut household carbon emissions in the short term, but would rely on green hydrogen replacing natural gas on the gas grid to become a zero emissions solution for home heating.

Centrica, which is the largest installer of gas boilers in the UK, said ministers should launch a Retrofit Fund to help at least 5,000 households change from a traditional gas boiler to a hybrid heating system by 2024.

The fund could target the draughtiest homes, gathering data to help officials decide whether to subsidise a mass rollout of hybrid systems, Centrica said.

The calls follow advice from the International Energy Agency and the CBI, which both say the installation of new gas boilers should be banned by 2025 to keep the UK on track for its net zero emissions target. The Government is reportedly considering a later phase-out date of 2035, but a key strategy document that will set out more details on ministerial plans has been delayed until next month.

 

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Unsustainable transmission charges could jeopardise British infrastructure investment warns report

Green energy infrastructure investment is being jeopardised by British regulations that favour EU electricity imports.

In new analysis put together by RIDG (Renewable Infrastructure Development Group), a member company of RenewableUK, the transmission charges set by the regulator Ofgem and paid by electricity generators in the country are criticised in comparison to competing European generators.

On average the report suggests EU generators pay £0.46/MWh in transmission system charges. However, in Scotland the average is £6.42/MWh as of 2021.

This difference is even starker in the windy north of Scotland where the price spikes to £7.36/MWh.

“The UK has the best wind resource in Europe, and we should be making the most of the clean electricity we’re producing for UK consumers at the lowest cost and ensuring we can export the massive amount of power we’re generating when there’s a surplus,” said RenewableUK’s director of future electricity systems Barnaby Wharton.

“The current approach to transmission grid charging is not sustainable if we want global Britain to become a bigger player in the international power market. If Ofgem is serious about supporting UK’s net zero emissions target, it should change its approach to ensure we can take advantage of the bountiful natural resources we have.

“Ofgem needs to have a specific net zero remit to ensure we maximise our zero carbon generation as a matter of urgency – and this should be addressed by Ministers alongside the government’s forthcoming Strategy and Policy Statement for Ofgem.”

Transmission charges are set to cover the cost of building and maintaining the network, and are ultimately paid by consumers as part of their bills.

At their current levels, the UK risks becoming a net importer of renewable energy from the EU in coming decades, as cheaper energy is favoured in comparison with that generated in the UK that is subject to the transmission charges.

“Of 36 countries in the European transmission network, 20 do not charge generators at all and only five levy charges based on location,” expanded associate director of RIDG Marc Smeed. “Compare this to Scottish offshore wind projects, which our analysis forecasts will pay £10/MWh – around a quarter of a project’s revenue – to access the grid in the years ahead.

“Addressing this imbalance would help unlock the best wind energy resources in Europe, bringing billions of pounds of investment and jobs to some of the most remote and disadvantaged parts of the UK.”

The report follows criticism from network operator Scottish and Southern Electricity Networks (SSEN) of the current Transmission Network Use of System (TNUoS) charging regime, which it has described as “unfair and volatile”. Similarly it highlighted that the current system makes wind generation in the north of Scotland particularly expensive.

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Half of Shell’s energy mix to be clean next decade, CEO says

Royal Dutch Shell Plc’s head expects clean energy to make up half of the company’s energy mix “somewhere in the next decade.”

“If we do not make that type of process by the middle of next decade, we have a problem not just as a company but as a society,” Chief Executive Officer Ben van Beurden said in an interview with AXIOS on HBO.

Like its European peers, the Anglo-Dutch major has set itself an “ambition” to become a net-zero emissions energy company by the middle of this century. The feat involves producing less oil, more gas and renewables, as well as using technologies still in their infancy like hydrogen and carbon sequestration. Not everyone is convinced, with the energy giant set to clash with some shareholders on the matter at its annual general meeting later this month.

“If you want to get rid of hydrocarbons in the mix, you have to do something about the use of it, not the production of it,” van Beurden said. Speaking on the challenges of the transition, the 63-year-old Dutchman also said that people want to see results straightaway, but “don’t expect that tomorrow we will stop selling diesel to trucks.”

While van Beurden welcomed the U.S. rejoining the Paris Climate Agreement, which seeks to limit global warming temperature increases to less than 2 degrees Celsius from pre-industrial levels, he questioned other policies. “What I also see is that the government is flirting with popular ideas that are clear, simple, and wrong, which is, ‘Let’s ban the production of oil and gas in our country.’”

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Energy Assets acquires UK smart meter portfolio from Macquarie

Energy Assets Group has added more than 600,000 industrial and commercial meters to its growing portfolio of assets with the acquisition of a UK smart meter portfolio from Macquarie Specialised and Asset Finance.

Energy Assets has invested an undisclosed sum to buy Cortex Metering Solutions (CMS) from Macquarie.

Colin Lynch, Energy Assets CEO, said: “This acquisition complements our gas metering portfolio and aligns with our strategy to be a leader in technologies and services that support the journey to Net-Zero.

“We very much look forward to extending our reach in industrial and commercial metering assets on behalf of new and existing customers, working in partnership with more than 80 energy suppliers who have relationships with CMS.”

Julian Liddy, senior managing director and head of Macquarie Specialised and Asset Finance in EMEA said: “Having played an active and founding role in the UK’s metering industry for the last 18 years, we are proud of the contribution we have made in building out the I&C portfolio to this point and helping our clients to deploy smart meters across the country.”

Neil Denley, a managing director for Macquarie Specialised and Asset Finance in EMEA, added: “The sale of part of our industrial and commercial portfolio will allow us to focus on our residential metering business – where we have an important role to play in helping meet our customers’ ambitious smart meter rollout targets.”

Macquarie, which entered industrial and commercial metering in 2006, said it will continue to focus its efforts on the residential metering sector going forward.

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50,000 jobs by 2050: UK Government outlines plans to scale up carbon capture sector

Published late on Friday (7 May), the policy paper states that the UK will aim to capture and store 10 million tonnes of CO2 per year by 2030. Should this target be met, and progress continue accelerating between 2030 and 2050, the paper states, some 50,000 jobs could be supported.

The emerging CCUS sector is described in the report as a “great incubator of green jobs” as Ministers seek to get the UK on track to host two million such roles by the end of the decade. It is also described as a sector that can help deliver a “fair and equitable transition” for oil and gas workers who will likely need new roles in the coming years, given that many in the sector will have transferrable skills.

While the report describes itself as a ‘roadmap’, there is little detail on how the Government will support the skills, infrastructure and technologies needed to deliver on 2030 and 2050 targets. It states that a full map of opportunities and challenges, as well as Government supports, will be published later this year. This document will come alongside a ‘Fit for CCUS’ scheme for businesses, designed to help high emitters like oil and gas majors and heavy industrial sites to prepare to adopt the technology.

The document does state that BEIS will work more closely with bodies including the Treasury, the Department for National Trade, the British Business Bank and the National Infrastructure Bank (NIB) to develop the map. Ministers have faced multiple accusations in recent months of failing to work across departments to avoid net-zero loopholes. The NIB is notably entering operation this week, with questions still remaining about its climate remit.

It also reassures readers within the sector that BEIS remains open to supporting CCUS projects it is not currently aware of, through mechanisms such as the dedicated Infrastructure Fund. Announced late last year as part of the Ten Point Plan, the Fund’s remit was updated last week in line with the UK’s adoption of the Climate Change Committee’s (CCC) Sixth Carbon Budget recommendations last month. The paper also expresses the possibility of CCUS being included in future post-Brexit trade deals.

Existing projects, the policy paper states, should identify and advertise potential delivery contractors “as visibly and as early as possible”.

Clusters and dispersed sites

The paper comes after a report commissioned by BEIS, and published last year, concluded that the department is lacking a “comprehensive regulatory framework” to overcome challenges to “dispersed” sites that would be suitable for CCUS but that aren’t located in industrial clusters.

Indeed, the overarching target for CCUS to date has been for the UK to fully decarbonise at least one industrial cluster by 2040. Clusters are seen as less risky locations for deployment as, with dispersed sites, new transportation infrastructure will be needed.

The UK Government has increasingly focused on CCS since setting its legally binding net-zero target. Before then, the previous £1bn competition fund for CCS was actually scrapped by the now-defunct Department for Energy and Climate Change (DECC).

According to the CCC, CCUS is a “non-optional” component of the UK’s transition to net-zero. However, some green groups would like to see Ministers doing more to prioritise technologies that are already mature, alongside nature-based solutions for sequestering carbon, in the short to mid-term.

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Octopus Energy reveals plans to expand into green hydrogen

The Octopus Energy Group is set to expand into the green hydrogen sector, touting the benefits of the technology for “parts of the economy electrification can’t reach”.

It is planning to bring to market a locally distributed ‘green hydrogen as a service’ proposition as part of a new division of the company, Octopus Hydrogen.

Set to launch in Autumn 2021, the green hydrogen is designed to serve sectors such as heavy goods transportation, energy storage, industrial applications and aviation.

The move follows Octopus Energy Group acquiring Octopus Renewables, bringing a portfolio of more than 300 clean energy assets with a combined capacity of 2,800MW across six countries together with the company’s supply business which currently serves two million domestic customers.

Its Kraken platform is now used by 2.2 million customers in the UK alone, with the software used by energy companies including E.On and Good Energy in the UK, and companies like Origin Energy and Hanwha Corporation in Australia.

Together, its large renewables portfolio and Kraken platform means the Octopus Energy Group is “uniquely positioned to drive down costs and help customers drive the transition to a competitive and 100% green economy”, the company told Current± in a statement.

Green hydrogen picks up pace in the UK

Green hydrogen is increasingly drawing focus from both the government and companies looking to invest in a solution for decarbonising challenging sectors. In March, the UK government announced a £171 million Industrial Decarbonisation Fund for green tech projects focused on hydrogen and carbon capture and storage (CCS), which built on the National Infrastructure Strategy announced in November 2020.

Among the nine projects set to be funded by the scheme are Zero Carbon Humber – which will include one of the world’s first at-scale low carbon hydrogen production plants, as well as CO2 and hydrogen pipelines – and the South Wales Industrial Cluster – which will see solar giant Lightsoure bp develop solar powered green hydrogen for direct use in the steel manufacturing on site.

Other energy suppliers are also becoming increasingly interested in the sector, with ScottishPower submitting a planning application for up to 40MW of solar along with up to 50MW of battery storage and a 20MW electrolyser as part of its Green Hydrogen for Scotland project this April. Hydrogen companies are also expanding their operations, with Logan Energy announcing former SSE CEO Ian Marchant is to become chair of the board this week.

In a report produced by the International Renewable Energy Agency in March, it suggested that if global warming is to be curbed, green hydrogen must take over from fossil fuels in a number of sectors. It expects 30% of electricity to be dedicated to green hydrogen and the fuel’s derivatives such as ammonia and methanol by 2050. In order to reach this point, the green hydrogen sector needs to scale up massively, with almost 5,000GW of hydrogen electrolyser capacity needed, up from just 0.3GW today.

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UK to toughen targets on greenhouse gas emissions for next 15 years

Carbon dioxide to be cut by 78% by 2035 compared with 1990 levels, the prime minister is to say later this week

The UK is to toughen its targets on greenhouse gas emissions for the next 15 years, the first major developed economy to do so, the Guardian understands.

Following recommendations of the government’s statutory climate advisors, carbon dioxide is to be cut by 78% by 2035 compared with 1990 levels, the prime minister will say later this week – an increase from the current target of a 68% reduction by 2030.

The move is intended to help spur further action by other governments, ahead of vital UN climate talks, called Cop26, to be hosted by the UK in Glasgow this November.

At Cop26, nations will be asked to set out national plans for carbon curbs over the next 10 years. Known as nationally determined contributions, or NDCs, these plans form the bedrock of the Paris agreement, but current plans from most countries are far too weak to fulfil the aims of the treaty.

Joe Biden is expected to set out the US’s NDC later this week, ahead of a virtual climate summit of 40 world leaders he is hosting. China is also expected to submit an NDC in the coming months, and new NDCs for Japan, South Korea and Canada are believed to be imminent.

The UK already had an NDC, stipulating 68% cuts by 2030, but by setting out a further target for 2035 the prime minister will fulfil the legal obligations set out in the 2008 Climate Change Act. Under the act, governments must set five-year carbon budgets stretching beyond the term of the current parliament.

The UK’s sixth carbon budget will run to 2035 and was presented last December by the Committee on Climate Change, the independent advisory committee set up under the act.

The Department for Business, Energy and Industrial Strategy refused to confirm the plans, which the Guardian was informed of by independent sources. A government spokesperson said: “We will set our ambition for Carbon Budget 6 shortly, taking into account the latest advice from the Climate Change Committee.”

However, Labour accused the government of setting targets without putting in place the policies needed to deliver them. Ed Miliband, shadow business secretary, said: “The character of this government on climate change is now clear: targets without delivery. So while any strengthening of our targets is the right thing to do, the government can’t be trusted to match rhetoric with reality. Ministers have failed to bring forward an ambitious green recovery. We need a government that treats the climate emergency as the emergency it is.”

The government has caused consternation among senior climate experts around the world in recent months, through a series of measures that have appeared at odds with its commitments to tackling the climate crisis. Senior ex-diplomats told the Guardian that the decision to slash overseas aid was causing particular concern among developing countries ahead of the Cop26 summit.

Observers are also concerned at actions including the green light for a new coalmine, now subject to a public inquiry; new licences for oil and gas exploration in the North Sea; the UK’s support for making Australia’s climate sceptic former minister Matthias Cormann head of the OECD; the scrapping of the green homes grant, the government’s only “green recovery” measure; airport expansion; and slashing support for electric vehicles.

Chris Venables, of the Green Alliance thinktank, said: “It’s great news that the government will put the 2035 target into law, and including aviation and shipping is genuine global climate leadership. But it’s increasingly jarring for this long-term ambition not be backed up by action in the here and now. The clock is running down to Cop26 in November, and a detailed and fully funded net zero plan is needed well before then.”

Ed Matthew, campaigns director for the climate change think tank E3G said: Setting an ambitious emission reduction target would boost the UK’s diplomatic drive to persuade other countries to set out ambitious targets of their own. That is one of the big tests of UK climate diplomacy ahead of the Cop26 climate summit. The UK now has the opportunity to spark a global green industrial revolution but ultimately its credibility will rest on action. It must now put in place the policies and investment needed to achieve the target. That is the mark of true climate leadership.”

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Energy networks make it easier for companies to provide flexibility services

ENA has made it easier for companies to provide flexibility services to the energy sector by refreshing and streamlining a common contract used across the sector.

The updates, published today, offer more transparency and will unlock liquidity in local markets for flexibility, ultimately pushing down energy bills in the long term.

The standard contract has been created through ENA’s leading Open Networks project, with input from distribution network operators and National Grid Electricity System Operator, to provide a consistent GB-wide core agreement for those wishing to provide vital flexibility services to the networks. It will help take the transition to the smart grid to the next level and marks another step forward in bringing consistency across the industry.

The new contract has been developed with feedback from a range of industry stakeholders including Ofgem and the Department for Business, Energy and Industrial Strategy.

Key updates include:

  • simplifying the core contract, providing increased alignment with ESO approach
  • making clauses more accessible across the agreement
  • making the process more accessible to aggregators

The energy networks have made significant progress on flexibility services since the launch of a dedicated workstream as part of ENA’s Open Networks project at the beginning of 2019. With over 2GW of flexibility tendered by distribution network operators last year, the workstream has played a key role in helping all distribution network operators prioritise and deliver their flexibility commitments.

Farina Farrier, Head of Open Networks Project at Energy Networks Association, said:

“The UK is already a world leader when it comes to energy flexibility and as part of the UK’s commitment to Net Zero, the whole of the energy industry is behind making it easier and more accessible to work with network operators. We’ve got lots of work ahead of us but by really focusing on providing a consistent, accessible way of working together, we can maintain that world-leading position and power towards Net Zero emissions.”

Alex Howison, Flexible Solutions Manager at Scottish and Southern Electricity Networks said:

“It’s brilliant to be able to take the lead in actioning another positive step towards a ‘whole industry’ standard agreement being finalised. Flexibility is critical for enabling the UK to reach Net Zero and is vital to help customers get the most from new technologies – while helping networks to manage their systems better and plan investment.

“The momentum ENA’s Open Networks project has built, and the pivotal role it plays in the energy transition, will continue into 2021 and this will be another year of action and delivery for the flexibility services workstream.”

A public consultation on the next version of the common contract will follow in August, with plans to launch at the end of the year. Its associated contractual evolution report will be launched later this month.