After much anticipation, the Clean Growth Strategy (CGS) is finally out. And, of course, it’s been swiftly followed by the Helm Review – although it remains to be seen what, if any, impact the latter has on the former.
To say the Clean Growth Strategy was much-anticipated is something of an understatement. Since being pushed back by climate change minister Claire Perry over the summer, many across the energy and environmental sectors have been eagerly watching for its publication. Meanwhile, some within the industry have questioned the extent to which the Helm Review may influence long-term energy policy, despite being commissioned by business secretary Greg Clark.
Critics were quick to point to the CGS as being broad but short on revelatory plans, concrete means to achieve its aspirations, and methods of measuring success. It grabbed headlines in advancing the government’s commitment to a price cap on Standard Variable Tariffs (SVTs), but disappointed many – particularly in the solar sector – for the focus on ‘developing technologies’ including offshore wind for the half a billion pounds committed to Pot 2 of the CfD auction.
But it would be wrong to simply describe the strategy as an aspirational exercise, just as it would be wrong to challenge the relevancy of the Helm Review. The strategy has clearly shown the need for greater energy efficiency and the fundamental importance of cutting carbon emissions to tackle climate change. It also identified the need and committed the investment to developing demand response technologies that will support the grid and enable an even greater contribution by renewables than that reported by National Grid earlier in the year.
It’s also important to see how both the Clean Growth Strategy and the Helm Review fit into the bigger picture, which began with the launch amidst much fanfare of the Industrial Strategy Green Paper in January by Greg Clark and Theresa May. It isn’t a coincidence that, in his foreword to the Clean Growth Strategy, the business secretary explicitly referenced the Industrial Strategy.
What’s the ‘next big thing’?
With the Helm Review and the CGS now out, the question is what’s the ‘next big thing’ in terms of government policy announcements, and what can we expect from it? The Budget takes place on 22 November and will be keenly watched (particularly following industry calls on carbon price support), but of particular prescience for the energy sector is likely to be the Industrial Strategy White Paper that’s currently expected before the end of the year.
Whereas the Green Paper included among its ten ‘pillars’ a specific set of proposals for ‘delivering affordable energy and clean growth,’ the White Paper will cluster its measures around five focuses of ‘people’ (including skills and job security), ‘innovation’ (commercialising research and development production), ‘place’ (focusing on new clusters for goods and services), infrastructure (both ‘invisible’ and digital) and supporting businesses to grow. But while there might not be the same obvious home as in the Green Paper, the publication of the CGS and Helm’s recommendations should suggest clean energy and decarbonisation will feature.
This isn’t, however, likely to include any government repositioning on solar so soon after the announcement of the technologies covered by the CfD auction. Nor should we expect any new money for renewables, given the auction is based on un-used funds from those announced by George Osborne in March 2016. But it remains to be seen whether this might be the last we see of CfDs, at least in their current form, given Dieter Helm’s recommendation for a combined Equivalent Power Firm auction designed to streamline and simplify the energy market.
It seems plausible electric vehicles and battery technology will appear in the White Paper, given their reference in the Green Paper, Clean Growth Strategy and implications for battery technology in the Helm Review. Ministers could usefully take the opportunity to expand on the Strategy’s commitments for funding - including £80 million for charging infrastructure deployment for EVs and £265 million for smart systems and demand response technologies – to set out how these will be directed.
Ministers may also look to build upon the announcement of the Faraday Challenge, although given the existing commitment of a quarter of a billion in funding, this is more likely to be through recommitting to the Green Paper goal of establishing UK supremacy in battery technology. This would helpfully build upon the funding for demand response in the Clean Growth Strategy. And while we’re unlikely to see additional funding for storage, further ministerial commitments to supporting the technology would encourage further investment that would drive down battery costs and support small and utility scale deployment.
We should also expect the Industrial Strategy White Paper to address at least some of the recommendations set out by the National Infrastructure Commission immediately following the publication of the CGS. This would be encouraging as part of a broad commitment to decarbonisation, but is unlikely to include any commitment to a new institution to bridge an infrastructure funding gap, given the privatisation of the Green Investment Bank.
While the Industrial Strategy won’t dovetail perfectly with the Clean Growth Strategy and Helm Review, it should serve as the next chapter in government strategy to support clean energy. But it’s important the White Paper builds on what are presently aspirations with concrete plans for investment in clean energy infrastructure and storage capacity.