This year’s Energy Barometer survey prescribes rapid change to avert future shocks to the UK economy and build moral authority for COP26, says Energy Institute Chief Executive Louise Kingham OBE FEI
The Covid-19 crisis has wreaked personal tragedy the world over. Many have suffered the loss of loved ones; few have been spared its impacts entirely.
I’m proud to work in a sector that’s playing an indispensable role keeping energy supplies flowing. But it’s also one that’s been turned upside down by the global lockdown, with unprecedented curtailment of economic activity, of all forms of transport, reductions in energy demand, prices and investment. Many of course losing their jobs as a result, in particular in oil and gas.
As we start tentatively to emerge, however, some fundamental questions are being posed about how we should rebuild our economy. Although it’s true greenhouse gas emissions will probably be down this year to the levels of a decade ago, the even bigger risk to our way of life – climate change – is still on the horizon.
So it is timely for the Energy Institute’s annual Energy Barometer to report on what our UK members, in all walks of energy from oil and gas through to renewables and energy efficiency, think about the prospects for getting to net zero emissions by 2050.
There’s no doubt the UK has a strong track record as a climate leader. The Climate Change Act was in its day the first of its kind, and upgrading the target to net zero last year in line with the science put us back in the vanguard. And astonishing progress has been made getting renewables onto, and coal off, Britain’s electricity grid.
But in our survey published this week, energy professionals have raised some serious red flags. Nine in ten believe that the UK is currently off track for net zero by 2050; more than half of them say we’re even off track for the target for 2030 without urgent policy action.
More ambitious policies are needed and fast
In this endeavour, numbers matter. Zero is the goal, but emissions are still only down around 40% and the hardest work is yet to be done. Dates matter too. 2050 might sound like a long time away, but the lead times for technology development and deployment are lengthy.
Fortunately, the Energy Barometer contains help for ministers looking for solutions. Before anything else, our members prescribe bringing our nation’s buildings up to scratch. Energy efficiency is singled out as both the biggest missed opportunity of the past decade and the foremost option for plugging the emissions reduction gap for the 2030 target at least cost. Furthermore, in the context of COVID-19, more of our members urge retrofitting existing housing stock than any other action for a resilient recovery. It has nation-wide, job-creating potential, with long term environmental and social benefits.
In fact EI members overwhelmingly support calls for ministers to use the discontinuity of the pandemic as an opportunity to build back better. Four in five agree with the Committee on Climate Change (CCC) that stimulus should be channelled into green industries and jobs, and support for emissions-intensive sectors should be contingent on action on climate change.
Urgent decisions are prescribed now to bring on low carbon aviation fuels, hydrogen HGVs, heat pumps, hydrogen ready boilers and carbon capture demonstration – to get us on track to deliver on net zero by 2050.
A warning shot for industry
Two thirds of our members do not think the energy industry is doing enough either, and there’s a hint of trouble ahead for those who still have their head in the sand.
Boardrooms and management teams will all have to manage change over the coming decades – in terms of profitability, the supply of skilled workers and the supply chain. But it’s in the cast list of industry players where our members see things changing most dramatically. Almost half of our members expect gradual change, but a further third expect that change to be disruptive.
Incumbents are already facing challenge from dynamic new entrants, from innovative start-ups to big name brands from the ICT and automotive sector, and we can only expect that to intensify.
The oil and gas sector will have to undergo a significant transformation under a net zero scenario. By 2050, our survey expects oil and gas companies to have significantly pivoted from conventional fuels to low-carbon liquids and gases, as well as other low-carbon energy technologies and services.
There is a bold ambition to make the UKCS the world’s first net zero basin, and some individual companies are grasping the nettle so the UK can lead the way here too. But, the global oil and gas sector is currently spending less than 1% of its capital expenditure on low-carbon technologies so will need to accelerate its investment and quickly.
Leading by example
All of this matters for the UK’s economic recovering and delivering on our legally binding targets, but it also matters for Glasgow and COP26. Without immediate domestic policy steps from ministers, to quote the CCC’s Lord Deben, “the UK’s international credibility is on the line”.
Orchestrating the international ‘Race to Zero’ and the diplomacy required by it over the next year will call for every bit of credibility we can muster. Hence why leading by example is singled out by our members more than any other measure as the number one priority for maintaining the UK’s status as a climate leader.
The delay to COP26 bought breathing space but the moment is fast approaching when the UK will need to prove its moral authority.
The world has entrusted the UK with COP26. Only with ambitious clean energy action at home can we hope to inspire reciprocal action from countries around the world and avert the worst impacts of climate change.
The Energy Institute’s Energy Barometer 2020 can be found at www.energyinst.org/barometer/2020
