The CGS has several important outcomes for businesses: the investment in ‘clean growth’ is expected to have a positive impact on the economy, through the creation of new jobs and investment in technology, and forms a key part of the UK’s industrial strategy. On an immediate and practical level however, it will mean changes to energy efficiency commitments for businesses of all sizes, particularly where business heating systems are concerned, and it will also lead to changes in carbon reporting, with the reform of the ESOS scheme and the introduction of a new streamlined energy and carbon reporting framework. This will follow two separate consultations, which were also launched this week. The property sector is likely to feel the impact most deeply, with other energy intensive industries close behind.
CGS Key aim: Increased economic growth AND decreased emissions
In 2016 47% of our electricity came from low carbon sources – around double that of 2010. We now have the largest installed offshore wind capacity in the world and the price of low carbon technology continues to tumble. However, more investment is needed to continue this trend and ensure the UK can secure maximum industrial and economic benefit from the global transition to a low carbon economy.
Buildings are more efficient in the way they use energy – reducing emissions and bills. But these still account for one third of all carbon emissions and cutting this will be a major focus going forward.
Businesses are to be supported to improve energy productivity by at least 20% by 2030. We’ll keep you up to date with progress and details of the consultation set to take place.
To meet fourth and fifth carbon budgets (2023-2027), significant acceleration in decarbonisation is needed. Businesses – and the way they use energy and heat their buildings – will have a significant role to play, and policy will be put in place to progress this.
Key considerations addressed by the CGS:
The affordability of energy – this is to be assessed under independent review. We’ll keep you up to date.
The impact of leaving EU – Brexit will not affect the commitments made under the CCA but the UK needs to ensure its strategies remain at least as strong.
The need for low cost, low carbon technologies – to meet commitments at the lowest net cost to taxpayers, consumers and businesses.
Devolved Administrations have a range of plans and policies in place to deliver emission reductions.
Areas have been identified by the CGS, where greatest progress will need to be seen, in order to meet the fifth carbon budget – industry will be one such focus area.
The CGS will instigate the following steps:
Low carbon transport is a major focus of the CGS, and the shift to low carbon transport, along with investment in trials of HGV platoons, will be an important consideration, as well as an opportunity for businesses. Watch this space for more information on the future of EVs and what it could mean to businesses.
Investment in smart, clean, flexible power:
The Smart Systems Plan, introduced by the CGS, aims to provide around £900 million of public funds to innovation including:
However, the government will also need to incentivise businesses to invest heavily in energy efficiency and low carbon heating systems and new technology for their buildings. UK electricity prices are currently the second highest in the EU, while gas prices are some of the lowest, and this will pose a challenge during the transition away from carbon based fuel.
Public sector impact:
Public sector businesses will also see tighter controls on emissions, with the introduction of a voluntary public sector target of 30% reduction in carbon emissions by 2020-21 for the wider public sector. £225 million of funding will be made available for energy efficiency improvements.
What now? We’ll keep you updated with further developments and provide you with the opportunity to have your say in forthcoming consultations. Look out for more information on the ESOS and Streamlined Energy & Carbon Reporting Consultations from us next week.
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