Building Back Greener

Building Back Better took on a greenish hue this week with the Prime Minister announcing a number of schemes as part of a strategy that gets Britain towards its Net Zero targets. With the major climate summit COP26 just around the corner, the Government’s strategy sets the standard for other countries to “Build back greener too as we lead the charge towards global net zero ” Boris Johnson has claimed.

Building Back Better took on a greenish hue this week with the Prime Minister announcing a number of schemes as part of a strategy that gets Britain towards its Net Zero targets. With the major climate summit COP26 just around the corner, the Government’s strategy sets the standard for other countries to “Build back greener too as we lead the charge towards global net zero ” Boris Johnson has claimed.

The move to addressing climate change once and for all, is presented in a 368-page net zero strategy as a document that would put the UK at the vanguard of green economies. Britain at the end of the month hosts the COP26 U.N. climate talks in Glasgow, which aims to strengthen global action on climate change, so the timing could not be more appropriate. With COP26 imminent, the strategy sets the example for other countries to build back greener too as the UK lead the charge towards global net zero. It aims ambitiously to secure 440,000 jobs and unlock £90 billions of private investment by 2030.

Some of the headline statements that will potentially resonate with the population aim to help Britain gain a competitive edge in low-carbon technologies such as heat pumps and electric vehicles, carbon capture and storage and importantly from an industrial perspective, hydrogen. The government targets being powered entirely by clean electricity, "subject to security of supply", by 2035. It aims to have 40GW (gigawatts) of offshore wind power by 2030, as well as 1 GW of floating offshore wind. With the Irish Sea on our doorstep, and the World’s second largest windfarm in our vicinity this must present an economic opportunity as well as the region being recognised as a genuine contributor to our power requirements of the future.

The strategy highlights current gas price spikes that underline the need to move away from fossil fuels as quickly as possible, but the transition has to be managed in a particularly careful way which protects jobs, investment and guarantees security of supply. In the wholesale market, the price of gas, the fuel the UK relies on for the majority of its heating, has risen by over 250%during 2021, forcing some energy suppliers out of business and boosting consumer energy bills. Counteracting the steep price hikes which directly affect consumers certainly elevates the role of nuclear generation and investment to be a substantial part of the energy mix going forward. This suggests that we need to make urgent progress with building proven, low carbon energy generation that keeps costs steady and resilient and supplies secure.

But many of the UK's nuclear plants are ageing. Some are being decommissioned earlier than scheduled and EDF's new Hinkley Point C plant will not be online until 2026. EDF also plans to build a plant at Sizewell C in Suffolk subject to the right investment framework, and the government said it would secure a final investment decision on a large-scale nuclear plant by the end of this parliament. In parallel they will also launch a new £120 million "future nuclear enabling fund" for future nuclear technologies, including SMR’s (small modular reactors), with a number of potential sites such as Wylfa in north Wales. We need that latency that nuclear provides as part of our energy mix, and which wind does not deliver. Clearly West Cumbria which has a recognised social licence to operate in the nuclear sector will be keen to be part of any “fleet” roll out that UKSMR led by Rolls Royce might deliver. Whatever the siting disposition through Britain we in Cumbria have a well-established and proven supply chain to become involved at the outset in the new nuclear generation, and if we can capitalise on the recent site shortlisting of the STEP ( Spherical Tokamak for Energy Production) and attract something like a High Temperature Gas Reactor then the future looks bright for jobs and investment.

If one thing is certain it is that in the short to medium term, this is all going to be extremely costly and noises coming out of Treasury have already pointed out, as they always do, that the extreme costs associated with the Build Back Greener strategy have to be met by the taxpayers and a very sizeable contribution from the private sector, be it home-based or from overseas. In many cases they will be considerable. Eventually, of course, market forces and scientific advancement will create a green package of more affordable measures that will be acceptable to all.

John Grainger

20 October 2021