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| SNEAK PEEK |
— Grant Shapps tells Morning Energy and Climate UK why he thinks Britain doesn’t need its own version of the U.S. Inflation Reduction Act.
— Shapps today also sets out new funding for solar panels in space. Industry says that for now they’d really appreciate more solar panels on Earth.
— There’s a huge pipeline of offshore wind projects to power the U.K.’s net zero transition. But can they get a grid connection?
Good morning and welcome to the very first edition of POLITICO Pro Morning Energy and Climate!
We’re here to be your one-stop shop for news, analysis and intel on the politics and the policy battles around the U.K.’s net zero transition. The climate debate (and the weather) in the U.K. are hotting up, with a general election only a year or so away. We’ll guide you through every keynote speech, every spiky committee hearing, and every searing policy report, and we will bring you scoops and stories while sharing what we’re hearing from the corridors of power in Westminster. As a subscriber to this newsletter — affectionately known as MECUK — you’ll hear it all first.
This is Charlie Cooper and Abby Wallace, your newsletter authors, under the watchful eye of our editor Russell Hargrave. When we’re not working, you can find Charlie trying to persuade his toddler that growling like a tiger is not an acceptable substitute for talking. Abby has just got her first pair of roller skates and is whizzing — wobbling — around London. And Russ is in the process of trying to adopt a greyhound. Follow us on Twitter: @charliecooper8; @abby_wallace3; @hargraver.
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| DRIVING THE DAY |
SHAPPS INTERVIEW: Energy Security and Net Zero Secretary Grant Shapps is speaking at London Tech Week this afternoon with a new announcement about (checks notes) solar panels in space. You can catch his speech live streamed here at 2.05 p.m. and there’s more on those off-planet solar farms below. But ahead of our launch, Morning Energy and Climate UK caught up with Shapps ourselves, to discuss a few more earthly matters. Here’s what he told us …
WE DON’T NEED NO IRA: Asked about calls from the U.K.’s energy sector for a bigger national response to the U.S. Inflation Reduction Act (IRA) — Joe Biden’s green tech subsidies bonanza — Shapps was clear: the U.K. does not need to copy Washington. In fact, he said, the country is “a decade ahead of the rest of the world.” The U.S., he said, had been “years behind — and I welcome them catching up.” More from Charlie here.
So what will the government do? We’re expecting to hear more from Chancellor Jeremy Hunt about the U.K.’s response to the IRA in the fall. Shapps said there was some “tweaking” that could be done, including around new contracts for difference, the government’s longstanding mechanism for renewables investments. But he contrasted the government’s approach to that of Labour, which plans to spend £28 billion a year on green stimulus from the second half of the next parliament. Shapps called the Opposition’s approach “non-sensical,” saying it would pump taxpayer money “into something that is already attracting the income.”
In response: A Labour party spokesperson said their plans would support employment across clean energy industries and accused the Conservatives of “waving the white flag in the race for the good jobs of the future.”
In other words: Don’t expect a big wodge of IRA-style government cash any time soon.
ENERGY BILL TIMETABLE: Amid mutters among MPs that the government’s mammoth Energy Bill might not make it into law before the summer, Shapps said he hoped it will in fact all be done and dusted before recess. Most elements of the Bill have “cross-party support,” he said, and — “subject to the vagaries of parliamentary process” — it should be possible to get it over the line.
HYDROGEN LEVY: One part of the Bill that does not have cross-party support is the proposal to give the government powers to put a levy on energy bills, aimed at supporting the U.K.’s nascent hydrogen industry. Conservative and opposition MPs say it’s wrong to put up people’s bills in a cost-of-living crisis. Many climate campaigners, meanwhile, think hydrogen is far from the best bet for the decarbonization of domestic heating.
U-turn incoming? Shapps said he shared some of the “concerns” of the levy’s critics and cast doubt on the role of hydrogen as a major future source of domestic heating, adding that he didn’t want “a situation where a levy is penalizing people who don’t use it.” The government would “look at ways to create a levy or a financing that works for everybody as best as possible,” he added, emphasizing that hydrogen would be “a better bet” for heavy industry and transport.
In his own words: “I came in [to this current role] thinking, because this was the narrative that was around, that one day hydrogen will fuel homes. I think that’s unlikely to be the way forward, although we’re interested, we’ll carry out some village trials … We do think the hydrogen economy is part of the future.”
QUICK HITS: The energy secretary also said that he couldn’t give “an exact timetable” for when spades will go in the ground for the first U.K. carbon, capture, usage and storage pipe, but added that he expected that “by 2027 we should be seeing carbon stored and moved.” He also couldn’t give a timeframe for a government decision on localized — or nodal — pricing as part of its review of electricity market arrangements (REMA). Shapps said we may hear more from the government on REMA “this year.” And finally, on ties with Europe, he said that due to collaboration on energy security in the wake of the war in Ukraine, the energy relationship is “possibly better” than it was pre-Brexit.
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| AGENDA |
ENERGY BILL: The Energy Bill is under discussion again today, continuing its committee stage from Thursday.
ENERGY/CLIMATE AT LONDON TECH WEEK: Labour Leader Keir Starmer is also speaking today, with a “fireside chat” at 9.40 a.m. He’ll be touching on the potential benefits of AI, including “accelerating climate science,” according to a trail of his speech shared by Labour.
Elsewhere: There’s a panel on “How business leaders can be climate leaders” at 4.30 p.m. and Oliver Stone (yes that Oliver Stone) is speaking on a panel about nuclear energy at 4.45 p.m.
GLOBAL OFFSHORE WIND SUMMIT: The event kicks off on Wednesday with opening remarks from RenewableUK’s Dan McGrail and energy minister, Graham Stuart. Registration at 8:30 a.m sharp.
G20: Development Minister Andrew Mitchell has been in India attending the G20 Development Ministerial Meeting. On the agenda is U.K.-India cooperation on climate and tech.
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| QUICK HITS |
KHAN’S CLIMATE TECH REVIEW: Mayor of London Sadiq Khan launched a review to explore ways in which the metropolis can use tech to tackle climate change. Speaking Monday, Khan said technology was already being used to improve congestion, air quality and public transport, but the review would help future-proof the city.
LABOUR PLANNING SHAKE-UP: ICYMI from the weekend, the Sunday Times reports Labour has planning rules in its sights in a bid to speed up the roll-out of renewable and nuclear energy.
COAL FOR AIR CON: National Grid ESO asked a coal power station in Nottinghamshire to warm up to cope with potential additional electricity demand driven by air conditioning amid the U.K.’s warmest spell of the year so far, the Guardian reports.
NOW IT IS GETTING SERIOUS: It turns out Bollinger champagne isn’t safe from climate change either. Climate collapse is speeding up the grape ripening process and affecting acidity, the luxury brand’s chief winemaker tells the Times.
| SOLAR IN SPACE |
I’M IN SPACE, MAAAAAAN: The Department of Energy Security and Net Zero this morning announces new investment in space-based solar power — the experimental technology that aims to harness solar power from panels orbiting Earth and beam it down to the surface. U.K. tech companies and universities will receive £4.3 million to develop the technology, Energy Secretary Shapps will say in his London Tech Week outing.
What does it do? What it says on the tin. Panels are placed on satellites and harness energy from the sun, beaming it back to Earth.
ENERGY SUPPLY: The government says the technology is capable of generating up to 10 gigawatts of electricity per year by 2050, citing a study from 2021. That’s around a quarter of the U.K.’s power needs. It added that the industry could open up 143,000 jobs.
INDUSTRY VIEW: Industry leaders say money would be better spent developing solar power back on planet Earth. “We already have a very effective technology for transmitting solar energy to the surface of the earth. It’s called the sun,” Chris Hewett, chief executive of SolarUK told us. “We know how to harvest that energy on the surface.”
TARGETS AHEAD: The government plans to quintuple solar power to 70GW by 2035. “I think the fact of the matter is we can absolutely deliver those net zero targets with the current technologies and that’s really where we need the focus to be because that’s what we need to do for climate change,” Hewett added.
| OFFSHORE WIND |
CAPACITY SWELLS: The U.K.’s offshore wind pipeline is growing. According to recent data from RenewableUK’s Energy Pulse, the U.K.’s pipeline of offshore wind projects has reached almost 98 gigawatts, up from around 91 GW a year ago.
China looms: The U.K.’s total pipeline was second globally only to China with 157 GW, according to the data.
Pat on the back: The U.K. has also set strict net zero targets, including plans to deploy up to 50 GW of offshore wind by 2030, which some say is driving the uptick.
BUT BUT BUT: But the pipeline data encompasses projects at every stage of development, including those still under construction or just in the planning phase. Industry leaders warn the U.K. shouldn’t be so quick to boast of growing capacity and targets without the infrastructure in place to connect such projects to the grid.
Pipeline pile up: “We’ve already seen a bunch of projects that are viable and can start generating, they’ve got connection waiting terms of 10 years or even more,” Ana Musat, executive director of policy and engagement at RenewableUK, told MECUK.
Musat added: “Now, because we’re ramping up targets for basically all the technologies, we want to build more floating offshore wind, we want to build hydrogen … All of those projects will come across the same issues and it’s almost no good announcing new targets and ramping up the ambition if we don’t sort out the connections.”
OTHER PROBLEMS: Still, industry experts have warned that the U.K. cannot take its foot off the pedal with offshore wind as other countries announce vast new subsidy packages and plans to hasten the rollout of offshore technologies.
On the plus side: “We already know that there are industries in the U.K. that are in dire need of investments and that we’ve got a huge comparative advantage, for example, in offshore wind where we’ve got some of the best resources in all of Europe,” added Tessa Khan, executive director and founder of Uplift, a research and campaigning organization. “We need to make sure that we’re doing everything we can to make the most of those resources.”
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