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Achieving Net Zero: Government looks to increase investment in renewable energy

achieving net zero

The Government is exploring additional measures which would expand the scope of the Contracts for Difference scheme (CfDs). To achieve Net Zero targets, these reforms will be aimed at further supporting green industries to create a more secure energy future alongside economic growth.

Contracts for Difference are 15-year private law contracts between renewable electricity generators and the Low Carbon Contracts Company (LCCC). Generators are guaranteed a fixed, pre-agreed price for the electricity they provide which is then sold on the market as low-carbon energy.

Regina Finn, the Chair of the LCCC wrote for Curia earlier this month – explaining the workings of the CfDs, she discussed how the LCCC is a key player in attaining Net Zero as they will be delivering up to 20% of carbon emissions reduced between now and 2035.

Decarbonising the economy

The scheme currently has supported 26.1 gigawatts (GW) of low carbon projects. However, the Government has stated that changes are needed “in face of the deployment challenges currently faced by the renewable energy industry”.

New provisions could widen the scheme so that applicants would be rewarded for including the wider benefits that their projects will bring when submitting price bids to the Government for their low carbon electricity. Benefits could include supply chain sustainability, addressing skills gaps and innovation, and boosting the country’s energy security.

Based on the competitive nature of the scheme, the department for energy security and Net Zero is hoping to further incentivize investment in renewable and low-carbon energy sectors such as wind and solar while simultaneously bringing down consumer costs. Crucially, the Government also points to the financial backing of environmentally friendly jobs – since 2020, 68,000 green jobs have supposedly been supported and this is intended to rise.

Net Zero emissions and sustained economic prosperity

Net Zero is an internationally agreed upon goal for mitigating climate change. Net Zero specifically refers to a balance between CO2 emissions entering and being removed from the atmosphere. Under the Paris Agreement, the UK has a commitment to achieving Net Zero emissions by 2050. In order for Net Zero to be effective, it must be permanent which means that greenhouse gas removed cannot enter back into the atmosphere over time.

Related to Net Zero is the notion of green growth – protecting the environment, along with maintaining GDP growth through adapting our practices to green ones such as switching to renewable energy sources.

In reference to the new provisions under consideration for the CfDs, the minister of State for Energy Security and Net Zero Graham Stuart said, “we want to go further to ensure we maximise the scheme’s potential… which will ultimately make for a stronger sector and help our economy to grow”.

Importantly, Graham Stuart asserted that potential reforms to the scheme will “accelerate our energy transition plans to power more of Britain from Britain” as the CfDs has successfully helped to domesticate some energy supplies – the last round secured almost 11GW of low-carbon capacity which is enough to power 12 million homes in Britain.

If, following this Call for Evidence, appropriate changes to the CfD scheme have been identified and considered positively impactful, the government will launch a consultation on more in-depth proposals. 

Final thought

The Government appears to be making progress in boosting the green energy sector. Investment is important for adapting our existing practices to greener options, especially as the climate crisis deepens.

Moreover, along with aiming to achieve environmental targets, the UK is correct in seeking to become more independent when it comes to energy reliance on Russia, particularly considering Russia’s invasion of Ukraine.

However, there are concerns that Net Zero is an illusionary term – ‘net’ allows for emissions to be ‘cancelled out’ through initiatives such as carbon capture and offsetting. These still involve the burning of fossil fuels and creation of CO2 so only act as alternatives for reducing overall emissions if the CO2 is reliably stored and not remitted over time.

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