Commission proposes ‘big switches’ for high-carbon sectors

The government should organise bulk power purchasing agreements (PPAs) of renewable electricity for energy intensive industries in order to help cut the cost of their shift to lower carbon power sources, a cross-party commission has urged.

The IPPR Environmental Justice Commission, which has been conducting an 18-month long inquiry into how to deliver a socially fair transition to net zero, has published its final report.

The swathe of recommendations by the commission, which includes former Labour environment secretary of state Hilary Benn and ex-Tory MP Laura Sandys, include “big switches” for multiple industries and green energy providers.

The report says the government could facilitate auctions among energy suppliers to supply industries aggregated together for bulk purchase arrangements with renewable electricity at a fixed price capped for a number of years.

Bringing together high-carbon industries would ensure a sufficiently large level of energy demand to incentivise suppliers to participate in auctions and offer competitive prices.

The fixed price and number of years of supply would help provide businesses with certainty regarding their overheads, says the report.

Once the PPAs were verified, the participating industries should be exempted from Climate Change Levies on electricity as their power sources would be decarbonised.

For those not participating in “big switches”, between now and 2030 the government should gradually increase the Climate Change Levy on gas and decrease the levy for electricity in line with power sector decarbonisation to incentivise further investment into electrification, the commission says.

Other recommendations in the report, entitled Fairness and Opportunity: A people-powered plan for the green transition, include the streamlining of existing consumer support for decarbonisation into a single £7.5 billion per annum “GreenGO” scheme to help households switch to green alternatives on heating, home insulation and transport.

The biggest element of this scheme would be a GreenGO Warm scheme for England, worth £6 billion per year through to 2030, focussed on heat pumps and high energy efficiency upgrades. This would aim to help up to 650,000 households per year with a mix of means-tested grants and zero or low-cost loans for homeowners and private landlords.

Households could supplement these grants loans with cash saved via tax exempt GreenGO ISAs.

The commission has also recommended that the UK government should set a target that one-third of all onshore renewables in England, such as wind turbines and solar panels, should be under community ownership by 2030.

It advocates raising the minimum energy efficiency standard for all rented housing to band ‘B’ by 2030, above the government’s proposed benchmark of ‘C’. And no new homes should connect to the gas grid from 2023, two years ahead of the government’s planned cut-off date.

Luke Murphy, head of the Environmental Justice Commission, said: “We need to transform the UK into a zero-carbon economy by working together, with the same overriding urgency we shared during the pandemic. Like defeating Covid, this is a major undertaking – yet at present the government’s plans, so far as they exist, are piecemeal and wholly inadequate to the task.

“The Environmental Justice Commission’s comprehensive blueprint for change, developed with the help of people across the UK, is oven ready. It outlines how 1.7 million jobs could be created across the UK, and sets out what will be needed to support workers affected by the transition. Crucially, it shows how we can tackle the climate change and nature crises in a way that creates opportunity, improves lives for people everywhere, and builds a fairer society for us all.”