Written evidence submitted by ABB (CGE0010)
1.0 The strategy
1.1 The relative importance of the four main areas identified in the Strategy, and whether the Strategy places the right weight on each of those sectors to deliver emissions reductions;
ABB welcomes the Strategy’s focus on driving innovation, promoting green growth and delivering real emissions reductions.
All of the four areas identified must be tackled if the UK is to meet its carbon budgets, and we applaud the general scope and ambition of the Government’s Clean Growth Strategy. However, we believe it should move faster on low-emission vehicles, heat decarbonisation and energy efficiency. Our own studies suggest that savings of 20-30% are available across the full electricity value chain through technology upgrades, in both generation and transmission.
We note that the section on low-carbon forms of transport is centred on road transportation. In order for the UK to fully achieve its targets, Government should also recognise the opportunities for decarbonisation in marine and rail, and set out appropriate measures to reduce emissions in these areas.
We also believe that as the largest carbon producer, industry, and measures intended to reduce its impact should be an important area for the committee’s consideration. Efforts to reduce emissions in this area could have a significant effect on the UK’s ability to meet its targets.
The focus of the Government’s Clean Growth Strategy should be where the most cost effective improvements can be made and capabilities exported. The net value of each needs to be confirmed by defined plans and policy, something which we believe the current strategy lacks.
1.2 Progress on meeting carbon budget targets to date and areas where more progress is needed going forward;
Whilst ABB agrees with Government that the target areas are generally rational and clearly defined, we believe that the strategy currently lacks the requisite action, plans or measures required for the UK to meets its carbon reduction goals, and as things stands we look set to fall short.
It is therefore vital that progress is made at pace, not only to ensure we reach our goals, but also to demonstrate the UK’s global leadership on the issue. For example, the UK has been a much slower adopter of electric vehicles (EV) and EV infrastructure compared to other competing nations such as China, which risks us missing out on some of the opportunities this technology brings. This was typified by the constant delays and slippage around the Government’s Road to Zero Strategy, when a clearer roadmap needed to be set out for EVs.
Moreover, the strategy needs more specific actions for targeting energy efficiency as a whole; increasing the uptake of zero carbon electricity generation and the decarbonisation of heat.
1.3 The extent to which current and future technologies can help to meet the carbon budgets
The UK needs to encourage the greater uptake of existing technologies, which can take us a long way to meeting our carbon reduction goals. There are a wide range of technologies available across a variety of sectors that can help the UK reduce its carbon emissions, including variable speed drives (VSDs), electric motors, EVs, high efficiency transformers, wind power, smart grid management and control technologies. In the case of VSDs and electric motors, together they control the speed and torque of motor-driven applications so that they only run at the optimum speed for the process, thus saving energy and enhancing productivity, often with a beneficial impact on the end product quality. As almost 30% of global electricity is consumed by industrial electric motors a 3% more efficient motor can save almost 1% of total electricity consumption.
In the case of building standards, ABB has numerous examples of improvements to the control and automation of heating, lighting, ventilation and shutters in existing buildings that have reduced energy consumption by 10-30%. This shows that what is ready and available to us can have a significant impact – we just need to encourage wider adoption.
Government should support take-up of the most impactful technologies so that price can be reduced. This has been particularly successful with wind power and solar, but we still need support for other technologies, such as EVs where price parity is vital for there to be a significant impact. Meanwhile, unnecessarily high UK electricity prices are negatively impacting the adoption of electrification solutions, and the Government should be tackling this through reform of the regulatory system and considering the recommendations from the Helm review.
Further new technologies and innovations will be vital for the UK in meeting our carbon budget targets. The Government should therefore demonstrate it is serious about future deployments of carbon capture, zero carbon transport, hydrogen and the electrification of heat, through supporting new technologies to bring down costs and support the growth of the low carbon goods and services sector.
1.4 The uncertainty in future technologies’ contribution to emissions reductions, and how that uncertainty can best be incorporated into the Government’s carbon budgets.
Policy should be flexible to a wide range of uncertainties, and not just those relating to changing technology, but also consumer behaviour and Brexit.
ABB would welcome the Government setting out how it intends to monitor progress and adjust plans to remain on track to meet its carbon budget targets.
2.0 How the development and deployment of technology can best be supported, and the extent to which the Government should support specific technologies or pursue a ‘technology neutral’ approach
As stated above, ABB believes that the Government need to provide clear leadership and direction on this issue by supporting the deployment of existing technologies, as well as the development of new innovations. This involves setting a long term strategy. If picking winners in technology terms is part of this, that is fine, but we need to ensure that consensus is built on the right technologies and there is consistency across areas of policy. For example, if electrification of heat is prioritised, we need to have policy to expand electrical supply. Complexity of future energy systems and interaction of technologies will be vital, so we need to need to ensure connectivity of systems. Technology adoption will need a supportive regulatory environment and attractive business models for service providers. We should therefore support realistic scale demonstrators to prove the whole ecosystem works together.
Government should also ensure that there is enough flexibility in the system/long-term strategy to allow for change if something isn’t working and for new technologies to be brought on-stream.
One aspect of Government’s leadership that should be emphasised is in adopting clean technologies within Government operations and estates. While direct Government emissions may be a relatively low percentage of the national total, they are not insignificant and the value of Government both setting an example and allowing the benefits of new technologies to be demonstrated, should not be underestimated.
3.0 The relative priority that should be attached to developing new technologies compared to deploying existing technologies, including consideration of the costs and pollution involved in the decommissioning of technologies or infrastructure
We need to act with pace to address some of the carbon budget targets so deployment of well-established technologies is important for this. There will be economic benefit from the UK becoming a leading implementer of such technologies but greater economic benefit will come from breakthrough technologies (provided we also develop application expertise and not just the original idea).
The degree to which future technologies are ‘future proof’ varies so there is not a simple answer to relative priorities – it will depend on the technology adequacy and needs to be balanced. For example, we know that we need EV charging infrastructure in residential areas and main highways so we should install existing technologies with the capability to be expanded and upgraded to ‘future proof’ it. On the other hand, we still have work to do on heat for older residential properties so the focus in this area should be on developing new technologies.
4.0 Examples of specific technologies whose development and deployment have been effectively supported so far, as well as those that show particular promise for meeting the Government’s carbon emissions targets or supporting the UK’s economy, or which would benefit from specific Government action, in the future.
From 2010-15, the Government made significant steps to improving support for renewable technologies, especially wind and solar. This support significantly improved energy generation from renewable sources across the UK. However, since then, a number of policy decisions have indicated a step change in policy that has been to the detriment of the energy sector and in particular the renewables industry; the early end of subsidies for onshore wind power and large scale solar projects, alongside major changes to the climate change levy indicate a Government that is lacking clarity over its long-term strategy for decarbonisation. Such unexpected policy changes go far beyond impacting the onshore wind and solar sectors. Investors and developers across all industries will see sudden interventions of this nature as significantly increasing political risk.
Onshore wind and solar power are potentially the greatest opportunities for growth and investment, whilst at the same time reducing the UK’s carbon emissions. ABB would also urge the Government to support the generation capabilities of offshore wind and marine energy including tidal. These sectors have their unique requirements in terms of political and financial support from the UK Government. Importantly though, the installed base of the electricity network still contains much aging equipment that is not highly efficient. Smart grid technologies are therefore required to reduce the overall cost of running the electricity system and allow more renewables to be included
There is a clear opportunity for the UK Government to show leadership in efforts to reduce carbon emissions. Below, we’ve outlined a few areas where action and support is most required.
5.0 The role of the Industrial Strategy ‘Clean Growth Grand Challenge’, and what the Government should do to ensure it contributes effectively to meeting emissions targets.
ABB is concerned that the Industrial Strategy ‘Clean Growth Challenge Fund’ is too focused on innovation, and not giving enough weight to technologies that are readily available. It is important that Government balances technology development and invention.
More broadly, the Government has in place a number of strategies with the goal of reducing the UK’s emissions. It is vital that the Government integrate the Industrial Strategy ‘Clean Growth Grand Challenge’ with related plans such as the Clean Growth Strategy, the Clear Air Strategy and the Road to Zero Strategy. All of these are currently very high level and not very specific in terms of defined actions. We would encourage Government to ensure that as more specific actions are defined, the need for consistency between the various strategies is maintained.