Viewpoint from Jason Eis, Senior Strategy Manager, Carbon Trust
In the face of a fragile economic recovery and ambitious emissions targets, there is a pressing need to find opportunities that marry “green” and growth. Much is made of some issues, especially electricity supply (offshore wind, solar power, nuclear), low-carbon vehicles (whether electric or fuel cell), smart grids, and energy efficiency (which arguably deserves even more attention). Yet there remain many “unsung heroes” – equally important, but much farther from the limelight. Here are five that more than deserve their place in the headlines.
First, the most under-hyped of our renewable energy options is undoubtedly heat pumps. They are the lynch pin of high-efficiency, low-carbon heat, and their roll out could employ tens of thousands of installers (replacing up to 25% of new boiler purchases by 2020), while saving the UK energy system billions of pounds. Current targets call for heat pumps to have a similar impact to onshore wind (and much greater impact than solar) in meeting our renewables targets (e.g. by 2020, DECC estimates a heat pump contribution of 16-22TWhr, which is at least five times that of solar). Targets are rightly ambitious (growth of 41% a year!) given its cost advantage versus other options (25-50% lower levelised cost on average), and the government is moving forward with a Renewable Heat Incentive (RHI) and better installation standards. However, success will also require a scrappage scheme in combination with the RHI, significant installer training, and demonstration and monitoring support to ensure installations achieve consistently high performance. The benefits of well-fitted, high performing kit outweighs (by an order of magnitude), the cost of better training and better performance monitoring. If we want to engage the public, while boosting green and growth, then heat pumps deserve centre stage.
Second, sustainable biomass is a case in point of missing the forest for the trees. Biomass is a flexible way to affordably meet targets across some of the toughest to tackle sectors, and increasing the amount of biomass available can have an enormous impact on ensuring the UK is both green and growing. We spend a lot of time discussing the various ways to use biomass (e.g., biofuel targets, and debates about the right incentive for co-firing with coal), but far less discussing the much more important issue of how to make this biomass available in the first place. IEA work points to significant unrealised potential for increasing the amount of biomass at our disposal, with billions of pounds in annual economic impact by 2020, increasing to tens of billions by the 2030s or 2040s. However, this requires a revolution in local land-use planning, transparent and business-friendly mechanisms to ensure sustainability of supply, and investment in the technologies that improve the yield and resilience of crops. Recent attention to DEFRA’s waste review is well placed, and offers an important short-term opportunity. But this is only the tip of an immense iceberg.
Third, the most humble (yet still heroic) is demand reduction in transport. The CCC’s Third Progress Report estimates that expanded Eco-driving training (helping people get more miles per gallon) and Smart Choices (a programme that encourages more sustainable travel behaviour, including public transport, cycling, carpooling, etc.) would have a greater impact on meeting 2020 emissions targets than biofuels, low-carbon electric vehicles, or a potential green tax on new car purchases. Moreover, these measures could be rolled out quickly (boosting our fragile recovery), would employee people in all regions of the country, and would save large amounts of money on imported fuel (which could then be spent on local high streets). According to CCC estimates of reduction potential and DECC estimates for fuel use and prices, the reduction in fuel used could save travellers over £4bn/year (with a direct benefit to the economy of ~£2bn less in fuel imports). If we combine this with better enforcement of speed limits, we save even more GHGs (and fuel costs), and potentially add a source of government income!
This doesn’t replace the long-term need for fundamental transitions in the transport system, but it makes it easier and cheaper to ultimately achieve targets. And it gives an immediate double economic boost, both employing under-utilised resources and improving cost efficiency.
Fourth, although one hears often about the importance of innovation, the extent and effectiveness of UK low carbon innovation policy is rarely discussed. Innovation drives down the underlying cost, helps accelerate deployment, and serves a bit like an insurance policy – creating more options in case we botch things up. Moreover, it is arguably one of the key drivers of comparative advantage, helping UK companies capture the value of these new markets. IEA analysis suggests the UK is decidedly below average when it comes to low-carbon innovation spending. If we’re looking for a short-term “green growth” boost (through direct RD&D projects) with a large medium-term “green growth” upside (billions of pounds/year), then there’s considerable room to increase this spend. But it will require a far greater tolerance for risk and failure than I’ve seen to date from the UK media. It’s absurd to criticise government innovation programmes for failure (by definition, they will and should fail sometimes). Instead, we need to ask if they’ve properly assessed the potential risks and rewards.
Fifth, international connectivity gets my vote for the most under-covered issue related to low-carbon electricity. In our case, this means a European and North African transmission supergrid. Recent studies by the EU point to the enormous value of a coordinated Europe wide transmission network (€19bn annual economic gain for EU countries by 2020). Based on this work, the potential impact of such a supergrid in lowering our electricity costs and boosting growth is as large as the cost impact of nuclear vs. renewables. Those wanting to reduce the burden to consumers and preserve British industrial competitiveness should be focussing as much on the benefits of interconnectivity as they are on debates about the best forms of low-carbon generation (e.g. nuclear vs. wind).
Roughly speaking, these five “unsung heroes” are as important to a “green and growing” UK as those policies that receive most of the headlines (e.g., FiTs, ROCs, the Green Deal, the GIB, waste-to-energy, and Smart Meters). Some offer short-term stimulus potential (i.e., heat pumps and transport demand reduction), while others pave the way for a more robust “green” recovery (i.e., innovation and sustainable biomass). Government policy is not oblivious to these issues, but the lack of media attention inevitably pushes them down the list of priorities. There is a pressing need to look beyond the usual suspects (with the catchy names), to inform the public of the full breadth of opportunities, and to demand of the government a pervasive and well balanced “green and growing” strategy.