A Green Industrial Revolution: the UK’s plan to build back “greener”

Ahead of the Chancellor’s spending review, which focused on how the UK can “Build Back Better” in response to Covid-19, the Department for Business, Energy and Industrial Strategy (“BEIS”) unveiled a Ten Point Plan for a Green Industrial Revolution (the “Ten Point Plan”) mapping the UK government’s route for a green recovery.

The aim of the Ten Point Plan is to reduce UK emissions of carbon dioxide equivalent by 180 Mt in the decade up to 2032, and to position the UK “at the forefront of global markets for clean technology”. It sets out that this will be achieved through the mobilisation of £12 billion in public funds, the creation of up to 250,000 “green jobs” by 2030 and, additionally, there is promise of “three times” the amount of public funds in private investment (the Ten Point Plan states there is potential of £20 billion for offshore wind, alone).

Target milestones are also set throughout the Ten Point Plan indicating when implementation, policy or publications can be expected. Those of note include:

• Energy White Paper – November/December 2020
• Net Zero Treasury Review – December 2020
• Transport Decarbonisation Plan - 2021
• Net Zero Strategy – before COP26 in November 2021

However, perhaps it is the recognition from the UK’s highest office that carries the greatest weight – the Prime Minister himself having provided a press-release and foreword to the Ten Point Plan. Does this signal the beginning of policy that will provide sustained support for a Green Industrial Revolution after all?

This summary explores the topical points – highlighted in the table above - relating to offshore wind, Carbon Capture, Usage and Storage (“CCUS”), low carbon hydrogen and electric vehicles (“EVs”) due to the prominent roles they will play in the UK’s energy transition.

Offshore Wind

The Ten Point Plan does not set out anything unexpected for offshore wind, rather reiterating the Prime Minister’s comments made earlier this year, regarding £160 million being invested into UK ports and factories producing necessary infrastructure and a commitment to produce 40GW of energy by 2030.

Comparatively, the UK currently has an installed capacity of around 10GW having grown from just 1GW a decade ago. The Ten Point Plan suggests this ambitious target will be achieved by, amongst other things, supporting twice the capacity of renewable generation in the Contracts for Difference (“CfD”) allocation round four (“AR4”) in 2021 – approximately 11-12GW - though this will be spread across offshore wind, onshore wind and solar projects. See more on AR4, here.

CCUS

The headline for CCUS under the Ten Point Plan is the acceleration in the development of industrial clusters, or “SuperPlaces”, with four sites expected to be deployed across Northern England, in Scotland and Wales by 2030, two being in operation. These SuperPlaces, and the carbon-intensive industries operating within them (steel and chemical production, automotive manufacturing), will benefit from an increased £1 billion CCUS Infrastructure Fund to help scale-up CCUS projects in order to capture 10Mt of carbon dioxide annually by 2030.

Nevertheless, little is given away regarding the government’s preferred business model to be used to support the development of CCUS projects. Despite having published its response to the public consultation in August 2020 (see here), the Ten Point Plan states that the preferred mechanism will not be revealed until 2021 which, given the complex infrastructure involved in building the CCUS projects, risks the two sites not being operational in time to meet the goals stated in the plan.

Low-carbon hydrogen

Complementary to the planned CCUS projects and the growth of offshore wind, is the development of low-carbon hydrogen. The Ten Point Plan sets a modest target of achieving 5GW of low-carbon hydrogen production capacity by 2030 (1GW by 2025) with £500 million set aside to support this. However, detail on how this target will be achieved is sparse and, instead, stakeholders will have to wait until the government’s Hydrogen Strategy is published and public consultation begins in 2021.

While the Ten Point Plan acknowledges the UK’s innovation in electrolysis technology and pilot projects for hydrogen blending, it fails to recognise the pace at which other countries are reaching milestones in their hydrogen roadmaps. More information about the European Hydrogen Strategy for a Climate-Neutral Europe can be found here. Still, the UK’s Hydrogen Strategy is progress that will be welcomed.

To read more about the emerging role of hydrogen, see here.

EVs

Perhaps the most impactful, but unsurprising, announcement is the UK ending the sale of all new petrol and diesel cars and vans by 2030, bringing this previous target forward by a decade. To support this transition, £1.3 billion will be used to provide the necessary EV charging infrastructure, £582 million to fund grants for consumers until 2022-23, and a further £500 million towards developing batteries at scale in “Gigafactories”. Further detail of phase out dates will follow in 2021 along with a Green Paper on the UK’s post-EU emissions regulation.

There is lots to unpack in relation to EVs, however, the Ten Point Plan doesn’t address the undeniable strain electricity networks could be put under by millions of EVs, HGVs and electric buses plugging in, without effective use of smart charging and other technologies. Analysis of the UK government’s Transport Decarbonisation Plan, released earlier this year can be found here.

Next steps

The Ten Point Plan does well to raise the profile of the impending energy transition, as well as outline the milestones for the UK government to achieve its net zero goals, but it is clear this is only a starting point; further announcements in relation to policy and legislative agenda will be anticipated in 2021, where we will see the true level of the Government’s commitment to building back “greener”.