‘Energy Security Day’
Last Thursday, 30th March 2023, during its ‘Energy Security Day’, the UK Government made a series of key announcements related to its Net Zero, energy and sustainability strategy.
An eagerly anticipated event, the day provided the opportunity for many to hear what new and updated initiatives the UK will take to be at the forefront of global efforts to develop clean energy and the green economy, and avert a wide-scale climate disaster. Major topics included energy security, decarbonisation, green finance and sustainable growth. Although some observers felt the day fell short of the UK’s green ambitions, some new proposals were issued that could soon be turned into policy. It is therefore critical that the organisations affected should quickly and thoroughly get to grips with the content – quite a challenge considering nearly 3,000 pages worth of documentation was published!
Here we summarise the day’s objectives, key announcements, and what might come next.
Why Energy Security Day happened:
Several events led to Thursday’s announcements. Chris Skidmore’s expansive ‘Mission Zero’ Independent Review on the UK’s Net Zero Strategy, published in January this year, set out 129 recommendations to support the transition to Net Zero by 2050. Alongside this was the Climate Change Committee’s 2022 Progress Report to Parliament. There was added pressure from the High Court to issue an updated Net Zero Strategy before the end of March since the UK Government’s Climate Strategy had been ruled unlawful back in July 2022.
Other external factors made the Energy Security Day even more pressing, notably the rising cost of energy. In parallel, both the USA and the EU have taken strong positions on investment in energy security and climate with the Inflation Reduction Act (IRA) and Green Deal Industrial Plan, respectively. This left big questions around where the UK stands.
Major announcements:
So far, the reaction to Energy Security Day has been mixed. The event was originally labelled ‘Green Day’, implying that climate change and Net Zero were going to be at the heart of the initiatives and proposals announced. However, the rebranding to ‘Energy Security Day’, along with the policy rationale behind many of the announcements, such as the expansion of oil production in the North Sea, clearly shows the focus is much more on energy security, rather than green transformation. This proved disappointing to climate groups, who are concerned Net Zero and climate change plans continue to fall short.
In total, some 44 new documents were published on the day, many drawing on existing pledges and proposals, while others introduced entirely new commitments. What is notable at first glance is the variety among them; there are policy statements, official government responses, external reviews, consultations, and research reports.
Here is a short summary of the documents most relevant for our clients:
Powering Up Britain
announced by the Secretary of State for the Department for Energy Security and Net Zero, Grant Shapps, Powering up Britain brings together two plans: the Energy Security Plan and the Net Zero Growth Plan. The document commits investment totalling in the hundreds of millions; a £240 million Net Zero Hydrogen Fund, £205 million to incentivise investment in renewable electricity and £380 million for boosting EV charging points.
Energy Security Plan
the Government’s plan to create energy resilience and have “the cheapest wholesale electricity prices in Europe” by 2035. This document sets out an ambition to generate cheaper and greener energy within the UK. However, it does re-confirm the need for oil and gas in the short-term having started the process for opening new projects in the North Sea in October last year, to ensure energy security.
Net Zero Growth Plan
this plan focusses on the opportunity which the Net Zero transformation can bring, setting out a long-term decarbonisation plan to enable a competitive UK economy over the coming decades by maximising green growth. The document includes details on reducing emissions across the economy, including investment in offshore wind, carbon capture, and nuclear, and the plan to support the economy to transition to Net Zero, for example leveraging £100 billion of private investment by 2030.
2023 Green Finance Strategy
an update to a strategy first published in 2019. It has quickly drawn support from the Financial Services sector, with the FCA, the FRC, the Bank of England, and the Pension Regulator issuing a joint statement welcoming the updated strategy shortly after its publication. Among the most eye-catching proposals for organisations in the strategy are plans for Sustainability Disclosure Requirements, which aims to protect investors from consumer harms such as ‘greenwashing’ and for a UK Green Taxonomy, which will be consulted on in the Autumn and will provide definitions of which economic activities are ‘green’.
Carbon budget delivery plan
produced in response to the High Court’s ruling, this key document shows how the policies and plans launched by the Government will impact UK emissions up to 2037, and crucially whether this is enough to meet our legally binding targets. There is acknowledgement from the Government there is still a small shortfall which will need to be closed through further evolution of the plans.
What’s next?
Despite the scale of the announcements, Energy Security Day represents a start, rather than an end point. Many of the documents published are policy statements and consultations, not detailed delivery plans. We can therefore expect a lot more detail to emerge over the summer and autumn after officials consider consultation responses and evolve policy proposals into policy objectives, especially with a General Election on the way in 2024.
We also note that the Government did not publish its response to the IRA. Approved in the US last August, it earmarked nearly $400 billion of investment, and shaped regulation to stimulate the development of domestic clean energy technology and solutions. While the Chancellor has cast some doubts about the IRA, the UK will nevertheless need to react, which will now likely happen later in the year, given the IRA’s impact on the global green technology market and the fact an international consensus seems to be forming around its core ideas, with the EU having already prepared its response.
Over the coming months, Moorhouse will closely follow both the reaction to ‘Energy Security Day’ and how the documents evolve from proposals into detailed policy.
If you have any questions about how the announcement affects your organisation, or your Net Zero Strategy, please reach out to our experts.
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