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Stranded fossil fuel assets and the renewable momentum: Power sector responds to net zero legislation

Image: EDF.

Image: EDF.

Prime Minister Theresa May’s announcement that the government will indeed legislate for a net zero economy by 2050, albeit with certain caveats, has been lauded by the power sector.

Industry professionals from utility CEOs, legal eagles and trade bodies have welcomed the move, arguing that not only does it square the momentum firmly behind renewables, but could lead to fossil fuel assets becoming increasingly regarded as stranded.

Keith Anderson, chief executive, ScottishPower

“The UK now has a very clear commitment to reduce carbon emissions to net zero. In only 30 years’ time we need a society that runs on a carbon neutral basis.

“To deliver this race to zero we will double the amount of electricity we use, therefore we need to quadruple the amount of renewable energy we make. That’s going to require bold innovation alongside market and regulatory frameworks that encourage significant and sustained investment.”

Peter Dickson, technical partner, Glenmont Partners

“If we are serious about putting this policy into practice and achieving our new decarbonisation goals, policymakers must encourage all forms of renewable power generation. This includes revisiting proposals for developing onshore wind in the UK, while continuing to make progress on deploying large-scale offshore wind and developing new technologies such as Carbon Capture Storage.

“Investors we speak with are increasingly viewing fossil fuel-based generation plant as stranded assets and are looking for opportunities to divest into new technologies that help to tackle climate change. Right across the spectrum significant amounts of institutional investment is being poured into renewable technologies that is helping to decarbonise the energy system, as we have seen with our own Clean Energy Fund III recently that raised €850 million.

“Today’s announcement is good news for the UK energy industry and underlines our long held view that the industrial momentum lies firmly with renewables.”

David Smith, chief executive, Energy Networks Association

“We warmly welcome today’s announcement. Given the time that we have available it is vital that the government and the regulator act now to get the right policies in place to turn the 2050 target into a reality. The time for waiting is over.

“We need to invest to innovate and to deliver the right infrastructure at the lowest possible cost to the public. That will mean more renewable energy projects, more electric vehicle charging points and a decarbonised gas grid, for which hydrogen is an absolute necessity. Public support for net zero is key, and so we must have the tools to deliver for them.”

Sir John Armitt, chair, National Infrastructure Commission

“Protecting the UK’s economy and environment from the impacts of climate change is a probably one of the biggest challenges we face in the decades ahead. We cannot do this without first putting in place the infrastructure we need to change how we travel and power and heat our homes and businesses.

“The National Infrastructure Assessment is a fully costed plan that would ensure that at least 50 per cent of our electricity is from renewable sources by 2030 and supports action now on determining how we heat our homes and support consumers switching to cleaner electric vehicles.

“This autumn’s National Infrastructure Strategy must be unambiguously bold in using the Assessment to set a clear and achievable path to ensure the UK becomes a low-carbon nation.”

Lit Ping Low, climate change adviser, PwC

"While not a surprise, this announcement is a big deal that will drive the behaviours and tech innovations needed to meet the ambitious target.

"The Committee on Climate Change has been advocating the net zero target for a some time, and the UK government had signalled that it was moving in this direction. But signals are not the same as commitment. The new target gives businesses clarity that low carbon targets must be an essential part of business strategy and decisions, whether it's about building or upgrading their infrastructure, developing new products and services, implementing policies for employees, or sourcing supplies.

"The target is ambitious but it needs to be to incentivise behaviour - meeting it is dependent on decisions and technology developments, now and in the coming years, to help reduce emissions. For example, recent research we developed with Microsoft shows greater adoption of AI across even a few sectors could reduce global greenhouse gas emissions by as much as 4 percent. The Government will be banking on new technologies being developed and deployed to help get emissions to almost zero."

Helen Clarkson, CEO, The Climate Group

“Today’s announcement to enshrine a net zero target into UK law should be welcomed by business. Big, ambitious long-term climate targets help governments and business alike. The UK’s bold leadership helps improve certainty to invest at the scale and speed required.

“Companies that we work with to set strong climate targets, such as going fully renewable or purchasing electric vehicles, are meeting or exceeding expectations and making significant profit along the way. We hope that today’s announcement will inspire all British business to act now and help protect our planet for all.”

Neil Harris, professor of atmospheric informatics, Cranfield University

“The most important point is what happens next, how does everybody react? What moves will businesses and consumers make and what incentives will be given to them to change their behaviour? Government action on its own is not enough.

“There is much talk of the costs to the economy today but that is to overlook the efficiency savings that will be made and the new jobs that will be created as we embrace a greener economy.”

Tim Rotheray, director, Association for Decentralised Energy

"Today's announcement is a welcome step to maintain the UK's leadership role in combatting climate change and make the UK economy ready for the rest of this century. It requires action from every area of society. We need a revolution in the way in which we generate and use our energy, putting businesses and household energy customers at the centre of energy decision making. Decentralised energy has a central role to play, with the generation, management and storage of energy taking place at a local level and so ensuring that our energy system becomes more nimble, flexible and low to zero carbon.

“Energy customers from heavy industry through to every home must be at the centre of this revolution. Those users are key to meeting over half of the emissions cuts needed. To make this happen, a new energy policy is now needed; one that enables energy users to be rewarded for cutting carbon in heat, power and transport, with energy policy making at the centre of all Government departments.

“Ambitious policies to secure large scale investment in heat networks, ensuring all customers can earn money for helping to keep the power grid stable and large scale investment in energy efficiency in homes, businesses and the public sector are essential to making today’s announcement happen.”

Antony Skinner, renewables partner, Ashurst

"This is potentially very good news for the low-carbon industry and could see the UK become one of the leaders in this area, but this can only happen if this government and future governments commit to a stable regulatory structure and energy policy that encourages and incentivises investment in low-carbon technologies to achieve this ambitious target."


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