Theresa May’s net zero smackdown

SNEAK PEEK

— Theresa May made a heavyweight intervention on net zero. MECUK was in the room.

— The Climate Change Committee (CCC) recommended banning new hybrid cars at the same time as petrol and diesel ones. Carmakers? Not so keen.

— Ofgem wants to crack down on electricity generators accused of gaming the grid’s “balancing mechanism” to charge crazy prices.

It’s Friday. Welcome to POLITICO Pro Morning Energy and Climate UK. Looking for weekend outfit inspo? Energy UK boss Emma Pinchbeck recommends wind turbine earrings.

DRIVING THE DAY

MAY ON NET ZERO: It is four years this week since the U.K., under Theresa May, put net zero by 2050 into legislation. It’s an oft-forgotten part of the May legacy — and now the former PM has waded back into the country’s net zero debate.

Speech: May delivered a keynote speech on Thursday afternoon at an event hosted by the Aldersgate Group, a business association she chairs. MECUK popped along.

Warning: The U.K. is “falling behind” other countries in the fight against climate change and has been “too slow to act” in response to U.S. and EU green subsidies, May told a slightly too air-conned room of academics, journalists and business leaders.

HAPPY ANNIVERSARY: May said the problem was “not that the U.K.’s transition to a green economy is moving too fast,” but that others countries were gaining an advantage. In an apparent jab at net zero skeptics — including fellow Tories David Frost and Jacob Rees-Mogg — May also warned of “an increasingly vocal minority … looking to delay action on climate change.”

Leaders no more: She added: “In fact, we have been slow to act in the face of intense competition from abroad. Where the U.K. once led, we are now falling behind.”

GLOBAL RACE: The Aldersgate Group event was to launch its latest net zero policy tracker report. The paper found that the government is on track to miss its net zero targets and called for a detailed plan to plug the policy gaps and deliver in the “global race for green.”

CLARITY PLEASE: Ben Westerman, interim executive director at the Aldersgate Group, told the event that the U.K. was sending “confusing signals” to industry and had not given a “clear sign that the U.K. is a global leader to the international community” — particularly in the face of Biden’s “subsidy blitz.”

Context: May’s intervention comes after the government’s own official independent advisers said the government had lost its global leadership position on climate action. “Their report makes for sobering reading,” she said.

MORE MAY: It turned out there was more to come from May after her speech was done, as she took a seat for the final panel discussion and chimed in from the floor.

Q&Awkward: That chat — including Bea Natzler of the CCC, Amanda Skeldon from real estate business JLL, Mike Theobald from consulting firm WSP and Associated British Ports’ Tim Morris — included a call for better coordination across government. And who would know more about that than someone with three years at No. 10 under her belt?

All in: “If it’s going to work, it needs every bit of government to know that net zero is something to do with them,” May piped up. “The danger is, if you don’t start with them understanding that, they will go: ‘Oh look it’s their job. Nothing to do with us, we’ll leave it to them’ — and you don’t get any further forward I’m afraid.”

AGENDA

NEXT WEEK IN PARLIAMENT: It’s Friday so MPs aren’t sitting — but there’s plenty to get your teeth into as you plan ahead for next week …

Monday: There’s a question in the Lords on the Drax biomass power station at 2.30 p.m. … MPs are debating the draft Electricity and Gas (Energy Company Obligation) Order 2030 in committee at 4.30 p.m.

Tuesday: Energy Secretary Grant Shapps is taking questions in the House of Commons at 11.30 a.m. … Prime Minister Rishi Sunak is giving evidence to the Liaison Committee at 2 p.m., on a range of issues. “Net zero strategy and COP28” is one of the five topics up for discussion, with questions led by Environmental Audit Committee Chair Philip Dunne.

Wednesday Outgoing CCC Chair John Gummer gives evidence to the Lords’ Environment and Climate Change Committee at 12.10 p.m. … Later, the House of Lords Grand Committee is looking at a technical amendment to the Electricity Capacity Regulations.

Thursday: Environment Secretary Thérèse Coffey is taking questions in the House of Commons at 9.30 a.m. … The Lords’ Grand Committee is holding a short debate on the potential for geothermal power in the U.K. in the afternoon.

WEBINARS GALORE: Net Zero Week, a government-backed initiative run by the Binary Carbon social enterprise, includes numerous webinars to help businesses.

DESNZ DATA DUMP: The Department for Energy Security and Net Zero published lots of monthly and quarterly energy statistics on Thursday. MECUK hasn’t had time to go through them but we’ll mine for stories later (or if you see one, tell us!)

Geek heaven: We did, however, note this fun statistical retrospective on electricity capacity and generation in the U.K. from 1920 to 2020. One for the real nerds. Enjoy.

QUICK HITS

OFGEM CRACKDOWN: Ofgem has started a new consultation on its (proposed) crackdown on electricity generators that game the system and extract huge profits when energy demand is high.

Seeking balance: The regulator has already carried out a “deep dive” into the way the electricity system operator’s “balancing mechanism” works. The mechanism is basically how National Grid ESO balances supply and demand on the electricity transmission network, with generators paid to fill gaps in supply, often at short notice.

What is going on? The regulator confirmed that some gas plants have been scheduling switch-offs in the afternoon, then using the balancing market to offer eye-watering prices to make themselves available again in the evening when demand peaks.

Rip-off electricity: At its worst, Ofgem said, this practice has seen generators charging up to £6,000 per megawatt hour for up to six hours — costs that are ultimately paid by consumers.

What happens next: The regulator is considering a new license condition to prevent such practices. It’s consulted once already. This new round will last until July, with a final decision coming later this year. Let’s hope they get it done before winter.

DEFRA DAY TWO: The department has not set out the long-term plans needed to reduce the waste that contributes to climate change, a new report from the National Audit Office (NAO) found.

Waste, man: The government currently has a target of 50 percent residual waste reduction per person in England by the end of 2042 (compared to 2019 levels). But the NAO found that the department’s existing reforms will take it just halfway to meeting the 2042 goal.

ENERGY PRICE CAP: The Cornwall Insight think tank is projecting that Ofgem’s energy price cap will fall again in October, to an average of £1,871 per year for a typical consumer. However it’s predicted to creep up again in January, to £1,900. But that’s still significantly down on both the current cap and on the lower cap of £2,074 that kicks in next month.

CHINA’S TWO-TRACK TRANSITION: ICYMI, it is worth taking a minute to digest yesterday’s Global Energy Monitor report on China’s renewables development. The country seems set to exceed its 2030 targets five years ahead of schedule. This will cement the country’s place as the world leader for renewables, “hosting nearly half of the world’s total operating wind and solar capacity,” according to the report.

But but but … On the flip side, China is also still building more coal-powered stations.

HYBRID CAR BAN

HIT THE ROAD: How green are hybrid cars? Not as green as we used to think, the CCC pointed out in its annual progress report on Wednesday. The government itself recognized in its Carbon Budget Delivery Plan that carbon savings from plug-in hybrid vehicles are around three to five times lower than previously assumed.

Early ban call: That prompted the CCC to recommend the government “ideally” only allow the sale of “fully electric vehicles” from 2030, the year in which the ban on new petrol and diesel-fueled cars comes in. At the moment, some hybrid sales are set to be permitted between 2030 and 2035 if they are defined as having “significant zero emission capability.”

Hands-off my hybrid: That has received a cool reception from carmakers. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), told MECUK that the CCC had “rightly” acknowledged the automotive industry is “on track to meet its decarbonization commitments.” But he added: “We can’t leave anyone behind in this transition, and plug-in hybrids provide an essential stepping stone for some, enabling zero emission mobility, mitigating against charging anxiety and giving infrastructure providers further confidence to invest.”

Next steps: SMMT and others in the sector are waiting to see how the Department for Transport defines “significant zero emission capability.” They’re also still waiting on the “zero emissions vehicle mandate”, which is supposed to — from next year, which is only a few months away — set minimum percentages for the proportion of manufacturers’ new car and van sales that must be zero emission.

Charge! Oh, and about that “charging anxiety.” Charge points are, of course, central to the whole electric vehicle economy. The CCC found that the U.K.’s EV charging network had expanded by almost one third over the past year, but said that provision was uneven across the country. They said the rate of deploying charge points “will need to more than double in the coming year and beyond.”

Drive the change: Hawes said the government must “inspire even more drivers to make the switch to new zero emission and zero emission capable vehicles as soon as possible, while infrastructure catches up with the needs of a net zero nation.”

DfT says: Responding to the CCC’s recommendation, a spokesperson for the Department for Transport said the 2030 date for ending sales of new petrol and diesel cars “puts us ahead of the rest of Europe” and that the commitment to end the sale of all new non-zero emission vehicles by 2035, including hybrids, was “in line with our European counterparts.”

**A message from SSE: Time to be bold on carbon capture. Scotland’s north-east is synonymous with our energy past and present. There are plans to transform this region into a low-carbon hub and SSE’s carbon capture project at Peterhead in the Scottish Cluster is ready to go, but time is running out. All we need to progress is a commitment to build the transport and infrastructure in this region to underpin the rollout of carbon capture and storage. Actions, not ambitions will secure our energy future.  SSE. We Power Change.