The Government are currently undertaking a consultation on their Industrial Strategy Green Paper. Our response is below.
Response to Industrial Strategy Green Paper – submitted by Weinberg Next Nuclear
Weinberg Next Nuclear is a UK-based think tank promoting clean energy, including advanced nuclear power.
Weinberg Next Nuclear welcomes the opportunity to respond to the Department of Business, Energy and Industrial Strategy’s (BEIS) Green Paper on Industrial Strategy. We welcome the Government’s commitment to an Industrial Strategy and agree with BEIS that industrial strategy is needed to “build on our strengths and extend excellence into the future”.
The Green Paper has a significant focus on productivity. Energy productivity – including end use, production and distribution – must be a part of that. As such we welcome the commitment to “delivering affordable energy and clean growth” as one of the Government’s 10 pillars. Success in delivering this strategic pillar will require clarity in policy and diversity in approach. Below, we set out our recommendations for progress on energy in the Industrial Strategy.
- Delivering Secure and Sustainable UK Power
Investing in clean power not only tackles policy issues such as decarbonisation and air quality, it is also highly important to increasing energy security and rejuvenating industry around the UK.
The Green Paper suggests as one of the pillars of the Industrial Strategy, the aim of “driving growth across the whole country”. Energy is a key sector that could deliver this. Nuclear power for example, only has one site in the southeast, the rest being distributed around the Midlands, North and Wales. New power stations on these sites would secure jobs for many decades to come, which is why many of the communities around existing sites are so in favour of new development. The Government should tell the Nuclear Decommissioning Authority (NDA) to more actively release sites and pursue the options of using nuclear reactors to burn nuclear waste (our forthcoming report will be on this issue). The Government should also tell the Office for Nuclear Regulation (ONR) to begin more Generic Design Assessments, especially now the AP1000 is complete, so that regulation is less of a barrier to progress. If necessary the ONR capacity should be increased (as we argued in our 2016 report Next Steps for Nuclear Innovation in the UK). The Government should accelerate the progress of its Small Modular Reactor Competition, to quell uncertainty in the industry and prevent further reactor companies seeking development elsewhere rather than the UK. Achieving a fleet of new nuclear power stations would allow the UK a long term supply of low carbon, secure energy whilst rejuvenating Britain’s leadership status within the sector.
Other technologies can also improve economic development around the UK. Offshore wind expansion will be good for the economies of Wales, Scotland, North West England, North East England and East Anglia. Offshore wind technology, which is rapidly getting cheaper, exerts to the best advantage our natural resources of wind and sea. As turbines get higher and floating potential is explored, the power they produce is increasing and the issues of intermittency are decreasing. It is essential the UK Government continues its work in encouraging the development of this technology and the entire industry that supports it (see section 6 below).
There are significant, simple and inexpensive policy changes that could encourage decarbonised energy. Removing the local veto and subsidy block for onshore wind, the cheapest renewable technology, would allow sensible developments to go ahead. Providing an exemption for solar panels within the new, higher business rates would avoid discouraging schools, hospitals and other businesses from pursuing the technology. This would not necessarily require new legislation, only an exemption similar to that of combined heat and power.
Carbon capture and storage (CCS) also has great potential for rejuvenating industry in our industrial areas. The 2016 report of the Parliamentary Advisory Group on Carbon Capture and Storage Lowest Cost Decarbonisation for the UK: The Critical Role of CCS cited potential locations for clusters, including Merseyside and Humberside, where CCS should be pursued due to the ability to capitalise on existing gas infrastructure and skills. Many organisations, from the UN Intergovernmental Panel on Climate Change to the UK’s Committee on Climate Change have said CCS is essential in order to meet carbon budgets cost-effectively. The UK Government should heed this advice and re-start a UK CCS programme.
There are also areas where the UK could achieve regional development and cultivate world-leading skills and export potential. For example, the Swansea Bay tidal lagoon, recently backed by the Hendry review, addresses many pillars of the Green Paper. The Government should move quickly to agree a Contract for Difference.
In combination with cultivating and supporting new industries, the industrial strategy should ensure that the UK is not supporting out-dated industries. Removing coal and diesel from the capacity market would be a key step in ensuring our future energy mix is sustainable and that the UK is only supporting future-proof industries. In addition, to support the proposed phase out of coal, the UK should legislate that by the end of 2025 the Emissions Performance Standard will be applied to existing as well as new power stations.
- Delivering Secure and Sustainable UK Heat and Transport
We welcome the proposed sector deals in the Green Paper for electric transport vehicles. Because of air pollution and climate change, it is vital that the car industry is a focus for change in the future. Therefore the £390 million for electric transport is much needed. The focus should be on forming the bridge between innovation and realisation. In addition to developing the electric vehicle industry, barriers to commercialisation should be addressed. A scrappage scheme for polluting diesel cars to enable more consumers to buy electric vehicles and more infrastructure, including charging points, would support commercialisation of the industry. These could be rolled out in public areas such as supermarkets and train stations.
Heat is the biggest source of demand for energy in the UK, and the biggest source of energy-related emissions. As such we hope to hear ambitious, long term plans to decarbonise heat in the forthcoming Clean Growth Plan. Heat policy can be combined with industrial strategy to serve both heat decarbonisation and industrial rejuvenation. Nuclear reactors and CCS plants should be used to provide combined heat and power, greatly increasing the efficiency of energy production. Additionally new industries, such as hydrogen, could act to balance the grid by using excess renewable electricity to produce hydrogen via electrolysis. The hydrogen could then be used as sustainable heat sources with little infrastructure change required. Methane steam reforming should also be used to produce hydrogen at scale – though this would only be low-carbon if combined with CCS. We recommend that the Government gives more priority to options to decarbonise heat, rejuvenate industry and increase the efficiency of energy production.
- Delivering Skills for the Future
Many of the Green Paper’s proposed sector deals are vertically focused on specific areas. Horizontal policy, that crosscuts and benefits multiple sectors, is also key. Skills is one of these beneficial, horizontal areas. As well as preparing for the future in general, we must address areas where gaps are appearing. Nuclear is one of the areas where a gap is imminent and skills investment needs to take place. Investment in engineering skills could deliver excellent returns for the UK.
- Creating Long-term Certainty and Consistency
Industry needs security, but in the uncertainty wrought by the Brexit vote it also needs consistency. Blocking low cost, green solutions such as onshore wind, is unwise. A consistent approach should be used between energy sources. For example, if local communities are not allowed a veto vote over shale gas developments, they should also not be allowed a veto on wind farms. Whatever is decided on veto policy, it should be consistent across technologies.
Similarly, industry needs consistency over time. Regulatory stability and long-term agendas help investor confidence. One of the key mechanisms for delivering regulatory stability was EU membership. In the Brexit scenario that the UK now finds itself in, it is essential that a stable, consistent and long-term approach to policy is developed, to maintain confidence and ensure industrial progress.
One area where consistency and certainty must now be cultivated is the Levy Control Framework replacement. Having removed the framework in the Spring Budget but not providing replacement details until the autumn budget, the Government has created uncertainty. A new framework should be developed and announced as soon as possible.
- Cooperation with Europe
Significant portions of our energy infrastructure are imported: for example, parts for wind turbines. Tariffs on these imports would increase the cost of energy infrastructure, and so damage British industry. The Government should therefore give priority to energy in the Brexit negotiations.
In addition to securing imports that do not damage industry, the UK should cultivate more home grown industry by producing more of its infrastructure needs within the UK.
The UK must also ensure it stays competitive and open to EU and global markets, whilst also maintaining its leadership in certain fields. One of these fields is emissions. The Industrial Emissions Directive is a key policy that keep relationships with Europe strong whilst protecting our local and global environment. It is essential that that this, and other environmental initiatives are maintained and strengthened to allow the UK to continue to be a key part of Europe’s sustainable industrial future.
Another key treaty with Europe that will impact the UK’s infrastructure plans and energy security is Euratom. The Government has said that it intends to leave this treaty, but not what the desired future relationship with Euratom will be. As Euratom manages the movement of nuclear fuel, and nuclear fuel is essential to UK energy security, it is by extension essential that the UK achieves a good deal and a form of associate membership with Euratom. This could also potentially mean the continuation of research projects in the UK funded by Euratom, such as the Culham centre in Oxford.
- Cooperation with the rest of the world
As well as working closely with Europe, in a post-Brexit scenario the UK will be looking more at closer relationships with the rest of the world. One area in which this will benefit our industrial strategy is through cooperation on regulation. In the nuclear sector, high standards of regulation are crucial, but lack of co-operation with other countries pursuing nuclear, such as Canada and the USA, is slowing progress. The UK should work more closely with these countries to smooth the regulation process and allow maximum benefit of nuclear power to the UK.