Comment by Emily Ford, Senior Energy Policy Advisor – Carbon Policy, at Energy Systems Catapult.

We’ve pulled together five key takeaways from Politico’s Energy and Climate UK Summit, held on 27 March in London, which convened industry leaders, policy experts and politicians to discuss the UK’s energy strategy.

Should the Clean Power 2030 target be scrapped?

“Who in the room thinks that Clean Power 2030 is possible?” was the opening provocation from the day’s hosts. During the debate which followed, arguments were made for and against scrapping the target. For: The pace implied by a 2030 deadline is simply too fast for the market to deliver and would supersede our ability to develop the domestic production, supply chains and workforce skills needed. This ‘outsourcing’ of our energy transition could, it was argued, see the UK create 170,000 jobs – in China.

On the other hand, abandoning the target could undermine policy certainty and therefore increase risk for businesses and investors, as well as denting confidence in any future targets (similarly to how the car industry criticised changes to the UK’s electric vehicle (EV) target). The case was made that government should be looking to integrate large amounts of renewables into the grid as quickly as possible to start bringing energy bills down.

And what about the sentiment in the room? According to a live poll, 87% of those present thought that achieving the target was possible (if difficult). Of those we spoke to, almost all agreed that having the target in place was fundamental for making progress.

CfD Allocation Round 7: A bellwether for Labour’s energy policy

There’s no doubt that the seventh Contracts for Difference (CfD) auction represents a crucial moment for Clean Power 2030, with the government needing to procure a huge amount of capacity. The consensus is that this year’s allocation round (AR7), and next year’s AR8, are the only viable auction rounds for offshore wind procured to be operational by 2030 (for solar and onshore wind, AR9 should suffice). Certain industry voices are hailing AR7 as a bellwether for Energy Secretary Ed Miliband’s future success or failure in delivering the government’s ambitious energy promises.

Resource constraints within DESNZ create additional pressure, as the department simultaneously gears up for AR7 whilst also working towards a decision on the review of electricity market arrangements (REMA), inherited from the previous government. As if that wasn’t enough, DESNZ’s consultation about reforms to the CfD, including extending the contract length beyond 15 years, rumbles on. Increasing the contract length – which in turn reduces the cost of capital – has largely been welcomed by those in the industry.

Neil McDermott, CEO of the Low Carbon Contracts Company (which acts as the counterparty for CfDs), cautioned against expecting the CfD mechanism to do the heavy lifting in delivering other keystone government policies, such as the forthcoming Industrial Strategy. Whilst the CfD mechanism might not be able to do it all, McDermott emphasised that it is seen as the gold standard in revenue-stabilisation contracts for new technologies. Investors understand it; other countries have copied it. It has led to a tangible increase in private investment (over £61 billion, much of this in the North of England) – and under the government’s growth agenda, more could be done to share its success story.

Is the Climate Change Committee facing mounting political heat?

As an independent, statutory body, the Climate Change Committee (CCC) is responsible for providing the government with advice – mapped out in Carbon Budgets – as to what types of pathways are available for achieving Net Zero. Increasingly, however, the CCC is seeing its role being dragged into political debate. Shadow Energy Minister, Andrew Bowie, was asked about Kemi Badenoch’s recent speech, in which she declared Net Zero ‘impossible’ for the UK. In the Conservative party’s resulting policy overhaul, “no options are off the table”, according to Bowie. He confirmed that the options being considered include scrapping the UK’s 2050 Net Zero target, the Climate Change Act 2008, and the CCC.

This change in the political consensus on climate action has not deterred the CCC. Emma Pinchbeck, CEO, said that the medium- to long-term outlook for the country’s transition is positive, and was particularly upbeat about electrification. “The economics of electrification all look like they’re going in the right direction,” which is encouraging given the emphasis placed on electrification (especially for industry) in the latest Carbon Budget.

When quizzed on whether the CCC has an optimism bias, Pinchbeck had a strong rejoinder. She pointed out that in some cases, such as with wind power, previous Carbon Budgets have in fact underestimated the speed of the transition that the market has delivered. She was also quick to emphasise the consistent levels of public support for action on Net Zero – and that people are looking for clear, positive and ambitious messaging from government about what changes to make. The CCC’s next progress report, due out in June, will give an indication as to how far the government’s current policies are hitting these notes.

Community benefits are key to securing public support for infrastructure

If public support for action on Net Zero is as high as Pinchbeck suggests, how can government and businesses translate this support into acceptance of new energy infrastructure? This was the theme of the day’s final session. Christopher Hammond, CEO of UK100, highlighted how communities can often feel “done to”, rather than engaged as partners in the transition. The panel explored how changing this perception is less often about introducing compensation for decreased property values or introducing financial incentives like discounted bills – and more often about being transparent.

Communities want to understand the trade-offs of new infrastructure, as well as the co-benefits, which should be front and centre. Benefits which serve the wider public good, such as funds for retrofitting homes, are seen to be more widely accepted. DESNZ’s recent guidance on these types of benefits for transmission infrastructure is a good first step towards a more well-rounded and considered approach – and is due to be followed by similar guidance for generation infrastructure.

GB Energy’s long-term ambitions to be unveiled

The newly formed GB Energy featured throughout the day, with Policy Director Paul Addison describing bringing down energy bills as a “medium-term goal” for the organisation. £180 million for schools and NHS trusts to install solar panels represents its first major investment. Approximately 200 schools and 200 NHS sites are set to benefit, with energy bill savings to be reinvested into these services.

Headquartered in Aberdeen, GB Energy will look to take minority stakes in projects such as floating offshore wind. Addison also mentioned working closely with local authorities and communities, including through the Local Power Plan. Its overall strategy, however, will only emerge in more detail after the Bill formally establishing it has been granted Royal Assent – which is expected soon.

Overall, the day’s discussions brought to light just how important it is that Net Zero technologies are married up with the right policies to support their roll out. The decisions of this government – and the next – will be instrumental in creating the right conditions for the innovation the UK needs to achieve our climate goals. At the Catapult, we work to accelerate Net Zero energy innovation by directly supporting innovators and by addressing whole systems challenges.