The government risks not meeting its ambition to decarbonise
power by 2035 because it lacks a delivery plan, the NAO warned
today. With its attention focused on the recent energy crisis,
the Department for Energy Security and Net Zero (DESNZ) has made
little progress with a long-term delivery plan for all
electricity to be generated through clean energy sources.
With the government’s own net zero strategy predicting a 60%
increase in electricity demand − due to modes of transport and
heating in buildings switching to electricity from fossil fuels −
decarbonising electricity has become the backbone of the
government’s 2019 plan to achieve net zero greenhouse gas
emissions by 2050. Switching to clean electricity generation has
also increasingly become part of the government’s plan to ensure
there is an affordable and secure domestic energy supply in
response to the disruption to international gas supplies that has
followed Russia’s invasion of Ukraine. Government has set an
ambition that, by 2035, all electricity should be generated using
clean sources, subject to maintaining security of supply, phasing
out gas-fired power stations in favour of wind, solar and nuclear
power.
DESNZ was recently created as a new department taking on the
responsibilities for energy security and net zero that were
previously held by the Department for Business, Energy and
Industrial Strategy. As BEIS, it had internally planned, by
October 2022, to have established a clear pathway to
decarbonisation by 2035. However, because it was focusing
attention on responses to record-high energy bills, the
department scaled back its work on coordinating long-term power
sector decarbonisation. DESNZ still has more work to do to
develop a delivery plan.
The lack of a delivery plan risks diminishing the confidence of
industry stakeholders, who have increasingly expressed concerns
about how all the change and investment that is needed across the
power sector will be brought together without a strategic vision.
Similarly, the absence of a clear plan and the perception that
there could be changes in government policies could deter
external investors from providing funds for new infrastructure or
lead them to increase the rates of return they require,
ultimately increasing costs for energy consumers.
While emissions from UK power generation have decreased by 73%
since 1990, 41% of UK electricity is still produced from natural
gas (which will need to be phased out or adapted with carbon
capture to achieve decarbonisation) and greenhouse gas emissions
from electricity generation made up 13% of total UK emissions in
2021.
The NAO report sets out the challenges of achieving the remaining
emission reductions, highlighting that the government’s ambitions
for the expansion of offshore wind, solar and nuclear power will
require much faster deployment rates than have been achieved
before. For the government to meet its goal of achieving 50
gigawatts (GW) of offshore wind by 2030, DESNZ will need to
oversee the deployment of nearly three times as much offshore
wind capacity in eight years as it has in the last two decades.
Transitioning to a secure, affordable and decarbonised supply of
power by 2035 will require a step-change in both private
investment and the pace at which new generating capacity is
built. In its Net Zero Strategy, the government estimated that
£280 billion to £400 billion of investment would be needed to
generate the required new capacity, however this only accounts
for construction costs relating to power generation – it does not
include costs for all aspects of decarbonising electricity
production, such as network construction or research and
innovation on technologies. Total costs will depend on multiple
factors, including the location of new generation and the impact
of any reforms to the electricity market.
The NAO recommends that DESNZ needs to set clear measures of
overall progress with interim milestones and that these should be
reported annually to Parliament, along with an explanation of how
this performance information has been used to determine any
significant changes to its overall plan.
, Head of the NAO,
said: “It is understandable that DESNZ and its
predecessor BEIS has focused on dealing with the immediate energy
crisis over the past 12 months. But one consequence of this is
that it lacks a delivery plan for decarbonising power by 2035,
which is the backbone of its broader net zero ambition.
“The longer DESNZ goes without a critical path that brings
together different aspects of power decarbonisation, the higher
the risk that it does not achieve its ambitions, or it does so at
a greater than necessary cost to taxpayers and consumers.”
