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— The Energy Bill faces its last day of committee scrutiny — and time is tight to get it over the line before recess.
— More fallout from Wednesday’s mammoth Climate Change Committee (CCC) report, with reaction from across the U.K. energy landscape.
— Eyes turn to former PM Theresa May, who is giving a speech about net zero in London this afternoon.
Good Thursday morning and welcome to POLITICO Pro Morning Energy and Climate UK. We’re nearly at the end of another week. Here’s an dazzling update to keep you going in until we get there.
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ENERGY BILL INCOMING: It’s the Energy Bill’s last day in committee stage — and MPs are gearing up for its return to the floor of the House of Commons. But with only three weeks to go until parliament breaks for the summer, time is tight for the government get the Bill passed before recess.
Recap: The Bill is chunky. It the biggest energy legislation ever to go through parliament, says Energy Secretary Grant Shapps. It’s also very technical, covering the regulatory ins-and-outs required to underpin the future energy system, including the effective nationalization of National Grid’s electricity system operator and rules for new technologies like carbon capture and storage.
What Labour says: Labour’s Shadow Energy Minister Alan Whitehead calls it “the green plumbing bill.” He told MECUK: “A lot of the things that we think are necessary to get to the next stage of development in terms of grid management, carbon capture and storage, hydrogen and so on — those are in the Bill.”
But but but … The Bill has also become a lightning rod for some noisy debates about the U.K.’s net zero transition. As committee stage winds down, expect a raft of amendments from opposition parties and backbenchers in the hope they might be selected for a big House of Commons vote when the Bill returns for its Report Stage (no one is sure but this is expected the week after next).
Whither the hydrogen levy? The biggest row so far has been about plans to add a hydrogen levy to people’s energy bills in order to help fund the nascent sector. The Bill potentially allows the government to enforce a tax in the future — but Shapps has signaled he is likely to ditch these plans.
What to look out for: The government could change course by amending the Bill at Report Stage. If they don’t, Labour is likely to throw in their own hydrogen levy amendment. With strong opposition to the levy on the Tory backbenches, there’s a good chance a Labour amendment would pass, Whitehead said.
Other amendment action: One of the key players on the Bill is the government’s former net zero czar Chris Skidmore. He told MECUK he’ll be putting down (count ’em) eight amendments. They would, among other things, seek to ban new coal mines, stop electricity production from coal outright from January 2025, put the target for decarbonizing U.K. electricity supply by 2035 into law, and ensure the U.K. left the controversial Energy Charter Treaty.
Oil and gas compromise? Another Skidmore amendment would create an independent body to advise the government on a date for ending new oil and gas exploration. Think of it as a middle way between Labour’s position of banning new oil and gas production and the government’s support for new licenses.
Solar amendment: Green MP Caroline Lucas is putting down several amendments too, including one requiring solar panels on all new homes.
EXPECT A SWIFT DEBATE: MPs anticipate just one day to be scheduled for Report Stage. As few as four amendments could be selected for a vote.
THERESA TALKS: Theresa May is delivering a keynote speech at the Aldersgate Group’s net zero policy tracker launch event today, where the ex-PM will reflect on the government’s progress since its net zero target was signed into law by her administration. Register here.
QUESTIONS FOR KEMI: Business and Trade Secretary Kemi Badenoch is up for questions in the Commons at 9:30 a.m., including one from Labour MP Stephen Kinnock on decarbonizing the steel industry. “The numbers don’t lie. The British government lacks the ambition of competitor nations such as Germany and Spain when it comes to supporting the steel industry,” Kinnock told MECUK.
Steely Steve: “[The government] has been too slow to implement a Carbon Border Adjustment Mechanism,” Kinnock continued. “UK Steel has warned that almost 23 million tons of non-EU steel could flood the U.K. market, if the U.K. fails to introduce its own new import carbon costs at the same time as the EU in 2026 … We need to see proper investment in green steel and a British CBAM sooner rather than later.”
**A message from SSE: Want to achieve a decarbonised power system by 2035? Then now is the time to be bold on carbon capture. SSE has projects ready to go. But urgent action is needed, right now. Find out more.**
MUST TRY HARDER: The Department for Education’s (DfE) sustainability strategy is at risk because of the deterioration of schools in England, the government’s public spending watchdog found.
Bad grade: The government wants to reduce direct emissions from public sector buildings by 75 percent by 2037. The DfE is key to this as it is responsible for 37 percent of public sector building emissions. But in Wednesday’s report the National Audit Office said that the department will fall short of the overall 2037 target and has not set any goals of its own. More here.
DEFRA DEBUT: The department — making its first appearance on MECUK today — has pledged to crack down on carbon emissions from peat soils.
Peat problem: The soils contain terrestrial carbon stores which have been dried out by centuries of drainage. As a result, the organic matter they contain has decomposed and released carbon into the atmosphere.
The solution: The government today pledged £7.5 million in new water management projects, following recommendations from the lowland agricultural peat task force.
BLACKROCK PREDICTS: The green energy transition is one of five “mega forces” reshaping the global economy, according to the Blackrock Investment Institute (effectively the in-house think tank of the world’s largest asset manager.) Their mid-year report predicts “a massive reallocation of capital as energy systems are rewired.”
COAL CRUNCH: Two coal power stations put on standby last winter to provide power in the event of shortages will not be available this year, National Grid ESO said. Coal units run by EDF and Drax both confirmed they have begun their decommissioning process. Another coal plant, Uniper’s Ratcliffe-on-Soar, will still be generating power this winter.
CCC REMINDER: The CCC used its annual report to parliament on Tuesday to warn that the government had lost its leadership position on climate, was too slow to respond to global policy shifts — think Biden’s green subsidies — and is now at risk of missing its legally binding climate targets.
The sector speaks: That’s a lot to digest — and now that industry groups and campaigners have taken in the report, they’ve piped up with some reactions.
AIRPORT EXPANSION: For example, the committee recommended that airports should not expand further unless a system to control emissions is put in place. Karen Dee, chief executive of the Airport Operators Association (AOA) — the industry trade body — said her organization disagreed. “Banning airport expansion now, in the way suggested, would damage the U.K.’s economic future and deter investment from the U.K.,” she said.
Planes please: Matt Gorman, chair of the industry group Sustainable Aviation, said the sector could effectively decarbonize “without the need to artificially limit demand growth.” Gorman added that the group “fully agree[s]” with the committee on the need for cooperation between the sector and the government, including on sustainable aviation fuel and hydrogen powered planes.
THE DIPLOMAT: The committee also recommended a state-level climate envoy to represent the U.K. abroad. “I think it would be a great thing if we had somebody whose full-time role it was, who didn’t have a department to run as well,” Gareth Redmond-King, international lead at the Energy and Climate Intelligence Unit, told MECUK.
What a Kerry on: Added Redmond-King: “What John Kerry [the U.S. special envoy for climate] does, that perhaps only really in recent times Alok Sharma has done as COP president, is travel around the world trying to build coalitions, trying to negotiate progress and build coalitions to drive progress faster. That’s a very powerful bit of leadership.”
HEAT PUMPS: Progress on the heat pump rollout is too slow, according to the CCC, as is a decision on the role of hydrogen in heating. Charlotte Lee, chief executive of the Heat Pump Association, told MECUK she hoped to see “swift and decisive action” from the government in introducing the Future Homes Standard, as well as clarity on a full phase out date for 100 percent fossil fuel boilers and action to reduce the price of electricity.
INDUSTRY: The committee also pushed the government to show more urgency in setting out clear plans for decarbonizing industry. “Manufacturers are accelerating their efforts to decarbonize, and an increasing number of companies now have net zero strategies firmly embedded within their businesses,” said Verity Davidge, policy director at Make UK. “However, they cannot do this alone, and as the CCC report suggests, we need strong, long-term industrial policies that help industry to move towards the net zero goal.”
STATE OF SOLAR: The committee said renewable capacity had increased in 2022 — but not quickly enough to meet net zero targets, particularly in solar deployment.
Sunnier outlook: The CCC is right that solar energy growth must increase “markedly,” said Chris Hewett, chief executive of the trade body Solar Energy UK, but added: “I have every expectation that next year’s report will reach very different conclusions.”
Forceful: Hewett pointed to the work of the solar task force he co-chairs with Energy Minister Graham Stuart. By next year, he said, the group “will have outlined what needs to be done to resolve the sector’s key blockers to growth and maximize its contribution to jobs and the economy.”
**A message from SSE: Time to be bold. Carbon capture and storage is key to helping Britain reach net zero. Because when the wind isn’t blowing and the sun isn’t shining, we need flexible low-carbon technologies to decarbonise our power system, enabling us to deliver cleaner, cheaper and more secure homegrown energy, level up our industrial heartlands and protect and create jobs in communities across the country. The UK has made a start on carbon capture and storage, but needs to move faster and further if we are to achieve a decarbonised power system by 2035. SSE has carbon capture projects ready to go in Scotland and the Humber, but time is running out. Actions, not ambitions will secure our energy future. SSE. We Power Change. Find out more.**