How the energy transition can drive the economic recovery

25 Jun 2020

By Séverine Turgis – Brexit and Economic Policy Manager, Energy UK

Energy UK, in collaboration with PwC, this week published a report titled “Rebuilding the UK economy: fairer, cleaner, more resilient”, providing a set of recommendations on how the energy transition can drive the economic recovery.

Done the right way, the economic recovery can support our transition to a low carbon society, creating a stronger and more resilient economy. And, we can avoid duplication of costs down the road. The government has a number of stimulus policy options at its disposal. These will need to prioritise support for both achieving our climate target and, creating a prosperous economy that works for all.

Climate proofing our buildings

The UK has one of the least energy-efficient building stocks in Europe and is heavily reliant on natural gas as a source of heating. Considering the scale of the challenge, Energy UK believes that the response needs to come in the form of a centrally funded, long-term national energy efficiency, building retrofit programme.

Alongside this project, we also call for a Heat Sector Deal to address the decarbonisation of heat, with a high prospect for job creation and new industry. Our challenge is one million heat pumps installed by 2025. Finally, we need to make our buildings smart: we recommend that having a smart meter installed becomes the default option and smart meters be mandatory in non-domestic premises and new build homes.

Strengthening our backbone

The energy sector is the backbone of our society and has been leading the decarbonisation journey and now provides nearly 60% of its electricity from low carbon generation. Forward-thinking policy and private investment have been central to this success. We need to build on this success by taking forward an ambitious programme and publishing an overall procurement strategy, providing long term visibility to investors.

As our transition to net-zero intensifies, we need to incentivise networks to prioritise investment in digitalisation and enable efficient anticipatory investment. Key learnings from COVID-19 on system balancing and the role of flexibility should be reflected in the energy white paper.

The energy sector also plays a key role in helping other sectors decarbonise. We want to develop new low carbon industries and opportunities for UK businesses. We need to accelerate the development of green and blue hydrogen solutions and Carbon Capture, Storage, and Utilisation. These can be new markets for the UK if we want.

Supporting our society

One of the positives from the lockdown has undeniably been cleaner air and reduced noise pollution. We can preserve some of this by acting now to ensure that drivers switch from conventional petrol and diesel vehicles to electric vehicles (EVs). A time-limited increase to the Plug-in Car Grant and/or a zero-emission scrappage scheme could incentive this switch. This would boost EV production, protect automotive jobs, and provide an opportunity for UK businesses to become leaders in battery technology and EV infrastructure.

All our recommendations have the potential to create new jobs in the next few months and years. This is essential to a successful, long-lasting economic recovery. Government needs to work with industry to launch a retraining programme to support unemployed workers into permanent employment. The scale, geographic coverage, and breadth of the energy industry makes it an excellent platform for job creation.

We are at a stage where decisions taken now will have long-lasting impacts on the future of the UK. Back in September last year, Energy UK called for a net-zero test in all government policies. This approach will ensure we rebuild our economy and industries in a sustainable manner, providing work today to build our World of tomorrow.

See the full report here:

PwC & Energy UK – Rebuilding the UK Economy – Low Res