Don’t expect white paper to grab the headlines

With publication of the Energy White Paper still expected this month, Josh Buckland – who wrote an early draft of it – gives his view on what to expect.

How it came about

The time taken to publish the Energy White Paper has led some to believe it doesn’t really exist – a sort of Schrödinger’s cat for those in the energy industry.

Born out of a slightly kneejerk response to the collapse of negotiations on the Wylfa Newydd nuclear project, the White Paper started life just over two years ago, announced as part of Greg Clark’s ‘After the trilemma’ speech.

Work begun on the White Paper swiftly after, but events transpired in such a way that it didn’t quite managed to get published before the arrival of a new prime minister in July 2019. Ever since then, the combination of political change and Covid have put the date of publication back and back. But keep faith. All the signs are that it will be published imminently – and this time government really means it.

What lies beneath

If the White Paper is really going to be published – the cat really is alive – what does it need to say.

A lot has changed since 2018. We have committed to a net zero target, as well as a new 2030 NDC target. Covid has led to a greater focus on how climate action can drive job creation, COP26 puts the UK at the centre of the global climate movement and the prime minister has announced £12 billion of public funding to support his 10-point green plan.

But it is too easy to focus on headline goals and public spending commitments and forget the detail that lies beneath. What is needed now is a more detailed strategy on how we achieve the overarching net zero vision – this is where the Energy White Paper comes in.

The aim of the White Paper should not be to grab headlines. Its focus should be on establishing the building blocks for what a comprehensive net zero strategy really is. It needs to identify the major challenges ahead, then outline a broad framework for how government will go about addressing them. In some areas the path will be clear, in others less so. The task is to narrow the funnel of the unknown as far as possible before taking definitive decisions when it is appropriate to do so.

So, what are these major challenges that the White Paper will have to start to address?

Let’s start with the power sector. One thing is clear – we are going to need a great deal more electricity, and it will have to be zero-carbon. The electrification of transport and potentially heating will drive up electricity demand, as well as impact the shape of demand over the course of a typical day.

The White Paper offers the chance for government to outline how it will get the power sector to net-zero well in advance of 2050, say by 2035. This will lay the basis for the net zero target generally, but also add urgency to reforming the electricity market to ensure the growth of renewables is accompanied by sufficient firm low-carbon power to keep costs down.

There is, however, no value in a net-zero power sector if the wiring to support it – the energy networks – isn’t up to scratch. While we continue to enjoy world-class reliability, the transition to net zero will require a rethink in how we plan network investment as demand increases. Some technologies – such as hydrogen and CCUS – will require us to coordinate investment across both the gas and electricity networks, as well as a at a transmission and distribution level.

A more interconnected environment will require a revamp of how the system is governed to ensure we are taking the impact on the whole system into account when making strategic decisions. This may require a single entity that is responsible for coordinating the delivery of net zero across the system, better able to deliver rapid change than the current myriad of mixed responsibilities. Exactly how far the White Paper should go in articulating how this would work in practice is open to debate, but kicking off governance reform is vital.

Even if you have the perfect approach to system governance, it won’t be much good if it can’t actually unlock the necessary clean infrastructure investment. It’s clear that while public spending will have a role, our ability to unlock sufficient private investment will be a key determinant of whether we can actually achieve the target.

The White Paper offers the chance for government to outline a set of financing models that will be implemented to mobilise investment in key technologies, across CCUS, nuclear, hydrogen and negative emission technologies. Without clarity on how the mix of public funding and consumer subsidy will be moulded with private capital, we risk losing precious time.

Getting personal

Government also has the chance to use the White Paper to make the decarbonisation journey a bit more personal. A more stretching 2030 target means that we will have to go further on boosting energy efficiency and deploying low-carbon forms of heat than previously thought. This is the point where political danger mounts.

This is far from easy. It will require greater levels of targeted public support to drive down costs, as well as a more stringent regulatory framework to drive change. It will also require the rapid completion of the smart meter programme, the opening up of energy data and a revamped regulatory framework to ensure consumers see the full value of adopting new energy technologies in their homes.

Finally, the White Paper offers a chance to start to answer the question that vexes us all – how on earth do you pay for it all? While the cost may well not quite be the £1 trillion quoted by a certain past Chancellor, there will be significant costs across the economy to fund new capital investment – to pretend otherwise undermines the more difficult political choices that are still to come.

The White Paper offers government a chance to outline what the relative balance between different sources of funding will be, including how it will continue to protect the most vulnerable. Integral to this will be clarity on the role of carbon pricing out to 2030. While not a silver bullet, more effective and consistent carbon pricing across the economy is key, especially if it can be aligned with a broader trade policy that prioritises coordinated international action on climate ahead of COP26.

Conclusion

This is just a flavour of the big issues that the Energy White Paper will have to delve into. I wouldn’t expect to see headline grabbing new funding commitments or big surprises – most of those went into the prime minister’s 10-point plan.

But in truth this is not what the White Paper should be about. Its focus should be on taking the headline political ambition and starting the process of translating it into a detailed programme of policy and regulatory reform over the coming years that will put us on a course to hit net zero.

As ever, it will be detail that matters in the end.

Josh Buckland is the former energy advisor to Greg Clark when he was business and energy secretary. He is now a director at Flint Global.