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Auction of EU:ETS permits restarts
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The UK government has started auctioning carbon permit allowances again under the European emission trading scheme (EU:ETS) – fourteen months after the last such sale was cancelled owing to uncertainties over Brexit.
On March 4 just over 5.7m allowances were made available. And an official timetable has been published, which is operating on a fortnightly basis until December 9. Over this period a total of well over 110m permits are officially set to be auctioned off.
This is in complete contrast to the UK response to potential involvement with the EU:ETS during 2019, when no auctions were organised, and legislation was passed permitting the government to replace the trading system with a new carbon tax post-Brexit (see EiBI April 2019). Last spring the Committee on Climate Change was charged with making recommendations for other options to replace the EU:ETS (see EiBI June 2019). Although it reported to Government last July, neither the report nor any formal Government response to it has yet been published.
Compliance with the EU:ETS has formed a key role in the initial salvoes from the European Union concerning the creation of an operational trading relationship with a post-Brexit UK.
The bloc is demanding that a system of carbon pricing is implemented that is “at least as effective as the EU:ETS”, as part of requirements to maintain all existing European-wide environmental standards. Indeed French president Emmanuel Macron is pushing for a closer alignment, to ensure that the UK stays in alignment with Brussels, as the EU it introduces its own ambitious green deal.
• The UK government has just issued a record £5.6m in fines to be levied upon UK companies that have violated EU:ETS requirements. This is the largest batch of non-compliance fines to date. Among those said to be in breach include the low cost airline EasyJet and the luxury department store Harrods.
LOW LEVEL OF MONITORING AMONG LOCAL AUTHORITIES Councils in dark over energy use
Many councils in England have no idea how much energy they use, a new survey reveals. The findings make it “inconceivable” that they will become carbon neutral within 30 years, as the government has mandated.
According to the survey, 43 per cent of councils – 93 of the 214 local authorities that responded to a freedom of information request from electrical contractors’ trade body ECA – do not measure the energy they use in council-owned buildings, or know how much carbon they produce.
This is even though 265 (65 per cent) of councils have declared a climate emergency. And for the past quarter century, every housing authority has been required under the Home Energy Conservation Act to maintain an up-to-date plan on the relative energy efficiency of homes in their area.
ECA energy adviser Luke Osborne said the findings were “highly concerning”. Without immediate changes, “it is inconceivable that councils are going to become carbon neutral in less than 30 years”, he said.
Despite 78 per cent of councils in the survey saying they are planning towards net zero operation by 2050, 47 per cent say they do not have
a strategy in place to reduce the carbon emissions from housing, offices and other buildings. Of the 49 councils in the survey that stated they would be carbon neutral by 2030, 11 do not know their current carbon footprint.
Council buildings pump out large amounts of carbon dioxide (CO 2 ). On average, a council HQ building emits 1,234 tonnes of CO 2 a year, according to ECA. Overall, English council headquarters emit more than 250,000 tonnes of CO 2 a year – the equivalent of 150,000 return flights from London to New York.
Many councils have older, energyinefficient buildings, said Osborne, but there are simple measures that could be implemented quickly, such as switching to LED lighting and monitoring occupancy levels. “There is a lot of rhetoric out there, but very few action plans,” he said.
Resource management company Veolia, working through its specialist energy performance contracting team, is now helping the Rotherham NHS Foundation Trust save money and cut carbon emissions using wide-ranging energy efficiency services.
By delivering a 20-year energy performance contract (EPC) that will target savings of over £1m per year the company will implement a wide range of improvements at the 500-bed Rotherham Hospital. Backed by the necessary investment and payback through the Carbon and Energy Fund Procurement framework, the EPC will now upgrade energy provision, reduce CO2 emissions by 49,620 tonnes and build long term energy resilience.
Maintaining a modern patient care environment for the Trust, which treats over 430,000 patients each year, means that a secure and cost efficient energy supply is essential. To meet this energy demand and dramatically reduce the carbon footprint, the projects will cover the design, delivery, installation, commissioning and subsequent operation of combined heat and power plant, replacement of seven 40-year-old boilers, and installation of a chiller plant to provide effective air conditioning.
As good lighting levels have a positive effect on patient treatment and outcomes in the contract will upgrade the lighting to take advantage of the latest low energy and LED technology through the installation of 7,000 new fittings. Further energysaving measures will include insulation on pipes and valves, and a battery energy storage system. These energy saving measures will be guaranteed by Veolia who will also provide a comprehensive 20-year maintenance service. Energy services to help Yorkshire NHS trust
‘Grandfathering’ set to be banned REGULATIONS TO BE UPDATED
House builders will be banned from “grandfathering” building regulations energy efficiency standards, once new zero-carbon requirements are finally introduced in 2025. During the 2015 General Election campaign former Chancellor George Osborne had surprised practically everybody by axing plans to require all new homes to be zero carbon from 2016.
For decades, builders have been permitted to build to whatever regulatory standards were in existence when the local authority had given permission for construction. This means that larger building sites are still being built at the same unambitious energy levels that applied once any initial work on any part of the development had been undertaken.
However, during the Second Reading debate of the Domestic Premises (Energy Performance) Bill in the House of Lords, former environment secretary, Lord Deben, referred to the Government’s public consultation on upgrading the Regulations. He argued that: “From 2025, the new standards will come into operation on any house that is under construction, and not wait for people to have fulfilled their planning period. Otherwise, it will not be 2025 - as history tells us, it will be 2029 - before the higher standards become commonplace.” Energy Minister Kwasi Kwarteng (right) at the Sustainable Energy Association annual reception in the House of Commons, with new SEA boss Jade Lewis, both backing Lord Foster’s Domestic Premises (Energy Performance) Bill
Responding for the Government, junior energy minister, Lord Duncan of Springbank, told Lord Deben that: “I will give that commitment. This may not be in the consultation, but I think that would make perfect sense. We need dates to be meaningful, and 2025 is the meaningful date we are talking about here.”
The Bill in question is being promoted by Lord Foster, a former building regulations minister between 2013 and 2015. It seeks to ensure that domestic properties have a minimum energy performance certificate rating of C by 2035. Originally introduced before the December election in the Commons by Conservative MP Sir David Amess, the Bill is likely to return for consideration by MPs this spring. • Since making that commitment, Lord Duncan has been replaced as energy minister by Lord Younger. However, later in his speech, Duncan confirmed that this proposal was now firm government policy.
Energy supply trade association, Energy UK has called for general taxation to fund a national energy efficiency programme focussed primarily on fuel poverty. The suggestion is among 14 steps Energy UK says the Government could take in the upcoming Budget and its long-awaited energy white paper. They include investing in largescale, low-carbon heating trials – covering both green gas and electrification; as well as introducing incentives to the development of large-scale energy storage, in a bid to increase flexibility across the energy system.
Responding to that announcement,
Energy UK’s interim chief executive Audrey Gallacher (left) said: “The UK power sector has been world-leading in reducing emissions and we stand ready to work together to help transform other sectors, like transport and heating, as well as our own. “And we look forward to the forthcoming energy white paper and Budget where we hope to see measures that will allow the necessary innovation and investment to flow – and ensure that as a country we go further and faster towards net zero.”
Among the other 14 steps proposed by Energy UK are: • build on the success of the Contracts for Difference scheme, by allowing the lowest cost, low carbon generation – onshore wind and solar power – to compete in future auctions; • recognise the vital role a wide mix of generation technologies will play in maintaining a stable electricity grid in the transition to net-zero, providing a route to market and supporting innovation to enable continued investment in these assets; • support the completion of the smart meter rollout; • invest in large-scale, low-carbon heating trials to find the best local options for decarbonising heat; and • tighten building regulations to ensure all new properties are fit for the future; that they have a smart meter and access to EV charging infrastructure, and from 2025 be ready for a low carbon heating system or a connection to a heat network.
IN BRIEF
Expanded offering for relaunch
t-mac Technologies, the energy and building insight specialist, has relaunched into the metering and controls marketplace with an expanded offering for microbusinesses and large firms.
Its next-generation, metering, monitoring and control technologies were previously only available to mid-sized businesses and can now be accessed by all organisations across all sectors including manufacturing, retail, commercial and education. t-mac’s IoT technology connects building hardware systems with dynamic software to enable users to remotely manage key utilities including electricity, gas and water, as well as heating and ventilation systems.
t-mac is now part of the Majestic Securities Group of businesses, which also includes Energy Intelligence Centre Ltd and several other energy and water specialists.
Energy from waste set for Midlands
Vital Energi has signed a contract to design, build and operate an energy from waste facility near Burton Upon Trent that is set to contribute to greening the grid by generating 18MWe of electricity from non-recyclable Refuse Derived Fuel (RDF).
The facility will also make a valuable contribution to diverting waste from landfill with the capability of processing 169,000 tonnes of non-recyclable Refuse Derived Fuel (RDF) each year. The RDF is combusted, and the syngas produced during this process is then consumed by the boiler to create steam which then drives the 18MWe steam turbine which generates electricity. An additional benefit of the project is that Vital Energi has designed the facility so the heat generated can be used to provide heat and hot water for nearby developments should demand arise.
The new facility is scheduled to be completed by 2023 and Vital Energi will have a 30-year concession to operate the facility.
Consultation on future of UK heat networks
The UK Government has published a consultation on heat networks in advance of dedicated legislation and awarded £40m to seven projects in the first and second round of funding through the Heat Network Investment Project.
Heat networks deliver cost effective, low carbon heat, in the form of hot water or steam, from a central point of generation to the end user through a network of insulated pipes. There are already around 500,000 customers receiving heat through heat networks, equating to around 14,000 heat networks. The CCC (Committee on Climate Change) has set a target to grow this to serve 1.5m homes in 2030, making £320m available in funding through the Heat Network Investment Project to grow the industry.
Meanwhile, the Scottish Government has released its budget, inclusive of business rates relief guaranteed until 2032, to provide investor certainty and committed to £50m for the Heat Networks Early Adopters Challenge Fund.
Ian Calvert, director of the Association for Decentralised Energy, said: “For too long, the heat sector has played second fiddle in the fight against climate change, overlooked for more familiar technologies like electric cars and wind turbines. The announcement that the Government will bring forward its consultation on heat networks is most welcome. We are delighted to see £40m invested in seven projects that will bring jobs and unleash investment up and down the country. Business rates relief is a crucial step towards levelling the playing field on the rates and fees levied on heat networks compared to other essential utilities.” Significantly, these announcements signal the considerable potential that heat decarbonisation can make to reaching the net zero target. The Heat Network Industry Council, which the ADE has been convening, will release its offer to Government shortly and this consultation sets a strong direction for industry and Government working together to grow this underrated sector.
EU set to miss 2020 energy target CONSUMPTION IN EUROPEAN UNION ABOVE CONSUMPTION GOAL
The European Union is set to completely fail to meet its 2020 target of an energy reduction of 20 per cent from 1995 levels. Latest Eurostat figures reveal that primary energy consumption last year was 4.9 per cent above the efficiency target. Final energy consumption figures – measured at consumer level- are slightly more encouraging, but still remain 3.2 per cent above benchmark. Poland and Spain are the worst offenders, according to Eurostat figures. Their performances have worsened by 13.7 per cent and 7.5 per cent respectively.
The official European Environment Agency has long been concerned that lack of purposeful national energy saving policies is placing the EU at “risk of not meeting” its 2020 energy efficiency targets. “This worrying trend is most prevalent in the buildings sector”, the agency warns. “Final energy consumption has increased within buildings by 8.3 per cent.” This is acknowledged to be the largest single sector, responsible for 45 per cent of energy usage.
Projections for 2030 don’t look good either. According to the European Commission, energy efficiency targets currently planned by national governments (including the UK) leave a gap of 6.2 per cent versus the agreed 32.5 per cent energy saving benchmark agreed for 2030.
“Energy Efficiency First is the
vital principle in the clean energy transition,” Kadri Simson (left), the EU’s new energy commissioner, has told European Parliamentarians. “Improving energy efficiency of buildings will be an obvious place to start. The European Green Deal will aim to triple the annual rate of renovation, which currently stands at 1 to 2 per cent of the building stock. “I want to do more to ensure it applies in practice,” she added. She intends to “provide concrete guidelines to member states” in order to mainstream energy efficiency “into all levels of policy making.”
“Europe is about to blow its target for cutting energy waste,” warns Clémence Hutin of Friends of the Earth. “This is the biggest miss of all the EU’s climate related targets due to de delivered this year. There is still a clear lack of political will, even though energy efficiency is the foundation of the energy transition.”
Private finance ‘critical to achieving net zero’
Private finance will be “critical” to creating a net zero economy, according to Mark Carney, the finance adviser to the Prime Minister for COP26.
In a speech following the announcement of his appointment, Carney, who also governor of the Bank of England, stressed that “today is all about action” from the private financial sector, as well as from regulators, governments and countries.
“Achieving net zero will require a whole economy transition- every company, every bank, every insurer and investor will have to adjust their business models,” Carney said, adding that this could turn an existential risk into “the greatest commercial
opportunity of our time”.
Companies, banks, insurers, pension funds and investors will increasingly be expected to develop and disclose their transition plans, which could mean setting a net zero target by a specific date, assessment and disclosure of how the transition to a net zero business model will impact strategy, short term milestones to track progress and details of governance, including whether executive compensation is tied to success and how risks are managed at the board level.
The Bank of England will stress test its major banks and insurers against different climate pathways, including the “catastrophic” business-as-usual scenario and the “ideal – but still challenging” transition to net zero by 2050, as well as the late policy action scenario.
Low-carbon generation accounted for more than 51 per cent of the electricity supplied in the UK in 2019, a 2 per cent growth on 2018 levels, according to statistics from the Department for Business Energy and Industrial Strategy.
BEIS’ December 2019 energy statistics revealed that low-carbon generation reached a record share of 51.6 per cent of the UK’s electricity generation mix, up from 49.6 per cent in 2018. The 2 per cent growth is attributed to new capacity in wind, solar, hydro and bioenergy. Previous Government statistics revealed that the renewables share of generation reached 33 per cent in 2018, an increase of 3.9 per cent compared to 2017.
Renewable energy production rose by 4.9 per cent in 2019, with bioenergy outputs growing by 2.1 per cent and “a record high level” of wind and solar capacity delivering an 11 per cent growth. Nuclear output fell by 14 per cent - the lowest level since 2008 – due to the summer power outages.
Production of coal fell to new record lows, recording a 14 per cent decline in 2019, but oil production actually rose by almost 2 per cent, largely due to new production from the Clair Ridge field which opened in late 2018. Gas production was down 1.3 per cent in 2019. Low-carbon generation tops 50 per cent in 2019
Demand decline drives carbon cuts POWER SECTOR EMISSIONS FALL
A decrease in power demand was the single biggest driver of emissions decline in the electricity sector in the past decade.
From 2010 until the end of last year carbon emissions from the UK’s power sector fell by around two thirds, as the industry rapidly shifted away from coal and natural gas towards renewables such as wind and solar, according to a study undertaken by Imperial College London and commissioned by energy supplier, Drax.
The report detailed how CO 2 emissions from the power sector stood at around 161m tonnes in 2010, but subsequently fell to 54m tonnes last year, as output from new wind and solar projects surged and coal plants were shut.
Electricity demand, which fell 13 per cent over the decade, delivered around a third of the decline in carbon emissions in the sector over the period, while wind energy delivered a quarter of the reduction. The fall in power demand came
even as the population grew by 7 per cent and GDP rose by a quarter as measures such as more energyefficient lighting, manufacturing and other efficiency measures took hold.
However, this decline could be reversed in the years ahead with the rise in the use of electric vehicles and household heat pumps, meaning further decarbonisation cannot be achieved through a reduction in demand alone.
The report warns that with the greater reliance on weatherdependent sources ‘system operability will undoubtedly become more difficult in the years to come’, with a need for increased system support services and greater flexibility.
Dr Iain Staffell of Imperial College London and lead author of the report, said: “In the past decade, we’ve seen unprecedented changes in Britain’s power system, which has transformed at a speed never seen before.
“Several factors made significant contributions to falling emissions including carbon prices, coal retirements, conversions to biomass and the growth in wind capacity. But reductions in electricity demand dwarfed all the others – helping to push down power prices and environmental impacts.
“If this pace of change can be maintained, renewables could provide more than half Britain’s electricity by the end of this decade and the power system could be practically carbon free.”
Buildings should be recycled to reach net zero
Current government tax structures incentivise the demolition of buildings that should instead be recycled in order to reach net zero. That’s the suggestion from the Building Better, Building Beautiful Commission, which is an independent body set up to advise the government on how to promote high-quality design in developing new homes and neighbourhoods.
It claims existing buildings should be taxed more fairly, noting VAT is currently charged at 20 per cent on repair, maintenance and adaptation work to existing buildings – it says this contrasts with new builds, which are not charged VAT.
This means in many cases it is cheaper to knock a building down
and rebuild it rather than retrofit it, even though the former may be more environmentally intensive – the report says ‘the greenest building is the one that is already built’ and highlights as the built environment sector is currently responsible for up to 40 per cent of the country’s total greenhouse gas emissions, more needs to be done to encourage greener practices.
It notes building a new twobedroom house emits the equivalent of 80 tonnes of carbon dioxide, whereas refurbishment emits only eight tonnes on average.
The report states: “It is desirable to make better use of existing buildings in city centres given not only the colossal challenges facing traditional urban-based business but critically the need to better use finite natural resources. We want to dispel the perception that renovation represents poor value for money in comparison with demolition and reconstruction.”
Heat as a service trials held across UK cities
UK energy companies Bristol Energy and Baxi Heating have completed year-long trials funded by the Department of Business Energy and Industrial Strategy (BEIS) to explore whether offering heat as a service could drive demand for lowcarbon heating solutions in the UK’s domestic building stock.
The two energy companies partnered with Energy Systems Catapult to trial Living Labs, whereby 100 homes across Newcastle, Manchester, the West Midlands, Gloucestershire and Bridgend in Wales were fitted with smart heating systems.
The aim of the trial was to garner how the public would interact with the systems, due to many prioritising comfort and cost over whether or not the heat source is low carbon. In response, the companies trialled selling “heat-asa-service”, offering a “Heat Plan” where consumers purchased ‘hours of warmth’ rather than units of energy (kWh). This enabled the households to schedule and budget for heating and were offered a fixed price based on data about the thermal efficiency of their home and the number of hours of warmth needed by every customer each week.
According to Energy Systems Catapult, the accessibility and ease of the smart heating systems could lead to more willingness amongst the public to adopt low-carbon heating.
Energy Systems Catapult’s consumer insight business lead Dr Matt Lipson said: “Consumers have concerns about their ability to get warm and comfortable at an affordable price and how to fix the system if it breaks down. Yet our research clearly shows that people care more about heating outcomes – such as getting warm and comfortable - than which device or system delivers the heat.
“If people have the peace of mind that heat-as-a-service will deliver the comfort they want at a price they can afford…then when it comes time to replace their gas boiler, they will be more confident of switching to a low carbon heating system like a heat pump, district heat network or hydrogen boiler.”
