Climate deal creates opportunity for an energy rethink

The COP21 climate talks outcome provides an opportunity to revive low-carbon approaches before nuclear new-build comes on stream says Richard Lowe.

Richard Lowe
15 December 2015

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Last weekend, for the first time ever, 195 countries came to an agreement at the COP21 conference in Paris to cut emissions and help combat climate change. The deal aims to limit global warming to less than 2°C by the end of the century and is seen by many as a turning point towards a sustainable and low-carbon future.

"The Paris agreement should provide fresh impetus for the decarbonisation of the country’s future energy supply."

Under the agreement, countries will be held accountable for acting on their carbon reduction commitments, providing a welcome incentive for global governments to pursue the low-carbon agenda. But the challenge now is for outcomes of the Paris negotiations to translate into tangible actions by individual countries.

For the UK, the draft final outcome provides an opportunity to revive low-carbon approaches before nuclear new-build comes on stream. After all, there is a clear need to plug the country’s energy gap before nuclear new-build comes online and the proposed decommissioning of coal-fired power stations by 2025, which was announced by energy secretary Amber Rudd last month.

A diverse portfolio is needed to balance risk and achieve a secure, reliable and affordable supply of energy that also allows decarbonisation goals to be met. A range of energy sources is required to meet future demand, but government will need to make it commercially attractive for industry to bring new capacity on stream. Key to this will be a long-term approach to energy planning that stretches beyond the five-year electoral cycle.

All too often energy policy is affected by political uncertainty, which makes it harder to get projects that will provide significant new capacity off the ground. Take carbon capture and storage (CCS).

The government’s recent move to cancel its £1bn competition for CCS technology does not help build industry confidence in the longevity of UK energy policy and could deter future investment for fear of similar sudden policy changes. And there are plenty of other countries with 25-year plus plans that surely make for a more attractive investment.

Undoubtedly industry needs greater predictability if it is to build the UK’s required mix of energy. The UK government recently took steps to achieve a long-term, cross-party approach to infrastructure, including energy storage, through the creation of the National Infrastructure Commission. Certainly a similar approach should now be explored for energy generation and would give businesses and investors greater confidence about policy certainty.

Energy policy certainty is clearly a concern for UK business too, with 88% of respondents to the 2015 CBI/AECOM Infrastructure Survey seeing political risk as either a very significant or a significant hindrance to attracting investment for energy infrastructure. Indeed 97% of respondents want to see government take action to ensure investment in a diverse and secure energy system, further indicating the need for government to increase political certainty and enable businesses to prepare a strong business case for investment.

Given the UK policy shifts in energy in recent years, the Paris agreement should provide fresh impetus for the decarbonisation of the country’s future energy supply. Acting on the COP21 carbon reduction commitments while providing long-term investment certainty has the potential to help diversify the UK’s energy mix. It is also critical to the country’s future security of supply.

Dr Richard Lowe, UK Director of Power and Industrial Consents, AECOM