The 10 Year Challenge: How the UK’s low-carbon economy has changed

As our clients know, here at Syntegra we like to read widely around our subject to broaden our knowledge and expertise and spend a considerable amount of time explaining to potential new customers how making even very small changes to their sustainability record can have an impact on their environmental footprint.

So we were delighted this week to come across this review of changes to the UK’s low-carbon economy over the past decade and see how a series of measures, which alone might appear relatively insignificant, have together forged an impressive turnaround in our energy strategy.

And now for the challenge…how far can we capitalise on these initiatives and transform it even further in the coming decade under arguably even tougher conditions?

The 10-Year Challenge has swept across social media this month, providing celebrities with ample opportunity to show how little they’ve aged. However, the UK’s low-carbon economy has changed drastically in this time, as edie explains.

The Department of Energy and Climate Change (DECC) has been replaced by Department for Business, Energy and Industrial Strategy (BEIS)

If someone was to time travel from 2009 to today, they’d be forgiven for thinking they’ve landed in a dystopian future. Deal or No Deal has evolved from a hit television show to the UK Government’s chief negotiation strategy while, in the US, a vocal businessman who sent his first ever tweet 10 years’ ago now sits in the White House and tweets constantly.

In a year where people are enamoured by eggs on Instagram and sports teams are signing video gamers, it’s understandable if you wanted to head back to simpler times – say 2009, where swine flu was the public enemy and the Sugababes still had one original member left (at least for part of the year).

As for social media in the modern era, people have turned to all platforms to take part in the #10YearChallenge – where you post an image of yourself from 2009, and one taken 10 years later.

While we can’t summarise the UK’s low-carbon transition across two photos, (although the change in Government departments does capture the upheaval) the scope of change over the last decade has propelled the UK into a leadership position in the fight against climate change. But what did the landscape look like back in 2009?

Flourishing financial incentives

Spurred by warnings from NASA that 2009 was the “second warmest year in the modern record” – a feat which has since been eclipsed over the past four years – the UK Climate Change Act of 2008 was in the early phases of transforming key industries within the UK.

In 2009, total UK emissions were around 20% below 1990 levels, in line with the Government’s target of 20% reduction by 2010. The Act had just created its first three carbon budgets covering 2008-12, 2013-17 and 2018-22. The UK has subsequently introduced its fourth and fifth carbon budgets, the latter of which aims to limit the annual emissions to 57% below 1990 levels by the year 2032.

Elsewhere, the UK Government was still tweaking approaches to incentives that would incentivise non-domestic energy users to reduce carbon footprints. The Climate Change Levy (CCL), for example, generated £0.7bn in receipts in 2009 as companies began investing in energy efficiency measures to reduce tax. In 2018, CCL receipts surpassed £1.8bn for the second year running.

The CCL has been constantly criticised by some business groups, arguing that it adds unnecessary complexity to energy taxes by overlaying on aspects such as carbon pricing mechanisms and emissions reporting systems.

Notably, the EU Emissions Trading Scheme was the UK’s main pricing instrument in 2009, covering about 48% of UK CO2 emissions. In 2013, the UK implemented a carbon floor price of £18 per tonne in order to accelerate decarbonisation efforts. The price is substantially above the near-€10-per-tonne of the EU ERS, which covers nearly 1,400 UK installations that are accountable for around 145Mt of emissions annually. As for the UK’s involvement in the ETS, it has been widely reported that the UK will leave the system and create its own equivalent once Brexit negotiations have been finalised.

It has been suggested that the CCL is set to increase sharply in 2019 – to around 0.847p per kwh – in order to further push the UK industry towards a low-carbon economy.

The Renewables Obligation (RO) was also subjected to significant in 2009. An introduction of varying rates of certificate allocation incentivised investment in emerging technologies that had the potential to be deployed at a much larger scale.

In 2009, suppliers that did not have sufficient Renewables Obligation Certificates (ROCs) had to make a buy-out payment of between £35.76 and £37.19. As of March 2018, the buy-out price sits at £45.58.

One other policy introduction of note was that of the Community Energy Saving Programme (CESP). Implemented in September 2009, CESP aimed to reduce emissions and address fuel poverty by achieving a 19.25 million tonne reduction in CO2 emissions. However, the programme was closed in 2012 – primarily due to its slow progress – having delivered carbon savings of 16.31 million tonnes – 87% of the target.

A renewables roadmap

The transition to a low-carbon energy grid in the UK is one that few would have imagined in 2009. Between July and September 2018, renewables capacity in the UK reached 41.9GW – surpassing the 41.2GW capacity of fossil fuels for the first time. Electricity generation from power stations in 2018 was also at its lowest since 1994.

Renewables are now claiming a big share of the UK’s energy mix. The UK Government’s latest Digest of UK Energy Statistics states that renewables accounted for 29.3% of the UK’s electricity in 2017, up from 24.5% in 2016.

In comparison, renewable sources accounted for 6.7% of the electricity generated in the UK in 2009, which was still an increase of more than 1% the year prior. Total electricity generation from renewables in 2009 reached 25,222 GWh, an increase of 3,642 GWh (+17%) on 2008.

Solar deployment was in its infancy, with a capacity of around 26MW. However, results of a consultation on the implementation of a feed-in tariff programme were published later that year. With the UK Government agreeing to implement the scheme, solar capacity almost tripled to more than 76MW in 2010. As of the end of January 2018, more than 939,000 installations had pushed UK solar capacity to 12.8GW.

However, this rapid acceleration has been stunted somewhat by recent policy changes. In December 2018, the Department for Business, Energy and Industrial Strategy (BEIS) confirmed that the Feed-in Tariff scheme will close to all new applications from 31 March 2019. Fortunately, the government looks set to reverse the decision by providing a replacement to the framework.

In 2009, a study by the Institute for Public Policy Research (IPPR) found that up to 70,000 jobs in the offshore wind industry could be created by creating an enabling policy landscape. At the time, the UK had the biggest offshore wind capacity in the world, but just 700 people were employed in the sector.

The UK’s wind sector continues to be the dominant player for the UK’s low-carbon market, employing more than 10,000 people in 2017. In fact, direct employment in offshore wind could reach 36,000 by 2032.

In July 2009, the Government published its Low Carbon Industrial Strategy outlining that “Our low carbon and environmental sector, worth £107bn a year, represents 7.4% of our GDP. The sector is growing fast, even in the downturn, and is expected to employ over one million people by the middle of the next decade”.

It seems those projections have since been scaled back. Analysis of the UK’s combined low-carbon and renewable energy economy (LCRE) has been streamlined from measuring of the Low Carbon and Environmental Goods and Services. This has seen the value of the green economy shift from £122bn in 2013 – employing more than 460,000 in the process – to a more modest figure of £42.6bn – consisting of 208,000 employees.

Climate Leadership

2009 was a significant year for the global climate narrative. COP15 took place in Copenhagen, where it was widely expected that world leaders would come together to finally agree on a deal to curb emissions and avert the most drastic impacts of climate change.

The result of the 2009 climate conference is one that has been subject to ridicule and anger ever since. While the 192 parties at the conference tried to thrash out a global deal, a select group of 25 world leaders, including President Obama and the G20 chair Gordon Brown, came up with the Copenhagen Accord. While the Accord recognised the science behind halting temperature rise to no more than 2C, it did not contain reduction commitments and gave the countries most exposed to climate change very little input.

We are, of course, living in a “post-Paris” world, where an agreement is in place globally to achieve what delegates at COP15 wanted to implement. The UK should be commended for its recent actions to mobilise funds to not only reach its overarching climate goals, but assist less developed nations with their own commitments.

But with levels of CO2 in the atmosphere is forecast to rise by a near-record amount in 2019, the UK must now reach out across borders to imprint its vision of leadership onto other nations – a concept that might be lost on a nation that is alienating itself from its closest neighbours.