Written evidence submitted by Anglian Water Services (CGE0017)

Anglian Water is the water and water recycling provider for over 6 million customers in the East of England, extending from the estuary of the Humber in the North through to the Thames in the South, and from Lowestoft in the East through to the edge of Buckinghamshire and Oxfordshire in the West. The region we serve is the fastest growing outside of London and is critical to the UK’s agriculture and food supply. Simultaneously, it is also facing increasing risk of climate change, particularly when it comes to flood risk and drought. Therefore, we believe it is only right that we embed carbon reduction into our operations in order to deliver clean growth and positive outcomes for customers and the environment alike.

In many respects, the water industry is on the front-line when it comes to addressing complex issues in the environment and combatting climate change, but any action we can take must be collaborative to be effective. If we are to deliver sustainable growth and counter the threat of climate change, industry as a whole must play its part and operate with a low carbon, low cost mentality.

At Anglian Water, we pride ourselves on our achievements in reducing carbon emissions, with our capital carbon footprint down nearly 60% on 2010 levels. In our Strategic Direction Statement 2020-2045, we are going further by aiming to become a carbon neutral business by 2050, and new technology is central to meeting this goal. Therefore, we welcome the opportunity to input into this timely inquiry.

Overall, we believe carbon reduction from technology can be delivered with:

• Further certainty of policy direction in developing and deploying technologies.
• The embracing of a ‘technology neutral approach’ to development and deployment.
• Further moves to a more outcomes-based approach to regulation that will drive carbon reduction.
• A more active role for government in establishing new markets, particularly in areas such as low grade heat reuse.
• Recognition from government that reducing carbon also reduces costs, which benefits consumers, businesses and the environment alike.

The Clean Growth Strategy

Broadly speaking, the strategy places the right importance and weight on the four main sectors identified to deliver emissions reductions. However, we believe there should a greater focus on retrofitting new technologies into existing buildings and industrial processes. Regardless of what new technology is built into future housing, transport or industrial processes, the nation will still need to look at cutting carbon in our existing infrastructure and housing stock if we are to be serious about meeting future carbon budgets. 

We want to see:

• The rollout the PAS 2080, as developed by the Green Construction Board, in the delivery of infrastructure projects. PAS 2080 ensures carbon is consistently and transparently quantified at key points in infrastructure delivery which promotes sharing of data along the value chain. In turn, this reduces carbon emissions and costs, while promoting innovation and best value for consumers. 
• Greater recognition of the need to retrofit existing housing stock in order to meet the UK’s commitments under the 2015 Paris Climate Change Agreement, in line with the Corporate Leaders Group’s Renovation Roadmap.

Development and Deployment of Technology

Government has a crucial role to play in developing and deploying new technology in a number of ways, but primarily by creating the right environment for technologies to grow and thrive.

The most obvious way to achieve this is to embrace an outcomes-based approach to technology development through regulatory frameworks. An excellent example of this is in Ingoldisthorpe, Norfolk. Our Water Recycling Centre (WRC) discharges into the River Ingol, a small, 10km long chalk stream which flows west and enters the Wash. The Environment Agency – our regulators - asked us to remove more ammonia and phosphorus from the final effluent to ensure that changes in the catchment served by the WRC would not result in a deterioration of the river downstream.

Rather than install new assets or reroute the final effluent, both of which would have had significant financial and carbon costs, we delivered a catchment-based solution alongside the Environment Agency and Norfolk Rivers Trust.

At our WRC, we installed a Nitrifying Sand Filter (NSF) to achieve a reduction in ammonia levels, and, downstream of this, a wetland was built to improve water quality further. Together, the NSF and wetland meets the new ammonia standard and potentially further reduce total phosphorous concentrations discharged backed to the River Ingol. This partnership approach represents excellent value for money for our customers, enhances the natural environment, and improves biodiversity in the Ingol. The wetland scheme also cost a fraction of a capital solution delivered solely by Anglian Water.

This sort of project is atypical in the water industry, but it is one that we are looking to roll out across our 2020-2025 business plan. Collaboration and a flexible, outcomes-based regulatory approach has created the space for an innovative solution and a new way of partnership working. Government’s role should be to further this sort of endeavour so as to create the space for environmental enhancement that drives better value for consumers. More details can be found on the Ingoldisthorpe Wetland here.

There are examples where planning frameworks and policy do not favour a technology neutral approach when it comes to renewables. At present, the vast majority of the growth in our generation of renewable energy will come from solar and from the sewage treatment process, using anaerobic digestion and combined heat and power (CHP). We have potential to go further, by installing more large wind turbines on our land or by co-digesting sewage with outer forms of organic waste to further our CHP generation. However, policy is currently prohibitive in achieving this.

If the UK is to meet its longer term carbon budgets, it needs to enable larger organisations, like Anglian Water, to make to transition to lower carbon forms of energy. At present, we generate just over 15% of our own energy usage and we aim to have doubled this by 2020. The bulk of this, around 90%, comes from Combined Heat and Power and Solar. With changes to planning and policy, we would be able to go further again, making the most of our operational land in a way that allows us to keep bills low for customers. All the while, this would reduce our carbon footprint and make the most of an existing technology that has a key part to play in the UK’s energy make up. 

Recommendations:

• Government should focus on raising aspirations for the UK to achieve its carbon reduction targets ahead of its obligations. Regulatory flexibility, particularly relating to the planning system, is crucial to enabling this. 
• Improve waste regulations to facilitate the co-digestion of waste streams that can help contribute to the circular economy and increase renewable generation.

Prioritising Technology Development

We do not believe that it is a question of whether to prioritise new or existing technologies for development. Ultimately, government’s role should be to create the environment that allows for innovation to drive down costs and delivers best value for money for consumers – this should be done using a ‘technology neutral approach’.

This is best achieved through an outcomes-based approach to regulation that will truly embed the mantra which drives how we operate at Anglian Water – lowering our carbon footprint means lowering costs and maximises the savings we can pass onto our customers.

Alongside setting outcomes, the government must adopt policies that help lay the foundations and the certainty for the country to meet its outcomes. For example, the government has committed to banning petrol cars by 2040 - a most welcome development. However, the government should also be putting in place practical steps to help meet that target and help enable the change over to low carbon vehicles.

There are concerns over the cost, effectiveness and performance of current electric vehicle technology and its supporting infrastructure, which were noted in the BEIS Committee’s recent report into the Electric Vehicles. The government’s role in this example should be to provide certainty of direction and outcome. Therefore, there can be no ‘chopping and changing’ of policy, as highlighted recently by the Committee on Climate Change.

One measure that the government can, and should, take immediately is to extend the grant funding available for plug in hybrid vehicles (which is due to end 9th November 2018), and to reverse the £1000 reduction in the grant available for electric vehicles. Costs of low emission vehicle technology remain too high for widespread take up and government support to help the transition remains critical. For plug in hybrids, recent changes amount to up to an extra £4500 on the buying price. At present, the market is not in a strong enough position to make such sudden and big changes. It requires a longer, more gradual approach as the market is still in its relative infancy.

Finally, for Anglian Water, we have a huge opportunity to link our extensive infrastructure -at the heart of communities across the East of England - with our generation of renewables and electric vehicles. We believe the potential is there to create a fleet of electric vehicles, build and operate the accompanying charging infrastructure, and to generate the electricity to power them. While we are a long way from realising this, it can be done given the right regulatory and planning frameworks be put in place. 

We believe:

• The phasing out of grants for low emission vehicles needs to happen over a much longer period of time to enable a managed transition to a more mature low carbon vehicle market, underpinned by policy and regulatory certainty.

Emerging technologies

Government’s role with emerging technologies should be to support their development if they help meet the country’s carbon reduction commitments.

We recently began trialing a technology that was developed as a result of direct government support. redT’s flow machine is AI-powered energy storage infrastructure which offers reliable, renewable ‘baseload’ power. Sitting alongside our existing solar generation capacity at our test site in Norfolk, the flow machine enables us to store excess solar power generated during the day and use it at other times. This reduces the site’s reliance on the electricity grid, while enabling us to make the most of the renewable energy we generate. In fact, it has the potential to cut the site’s energy bill in half by 2040.

Without government funding for research and development, this sort of new technology may not have been more than a concept, let alone a technology which is being trialed and we believe can play a huge part in managing our energy mix.

Finally, we have significant quantities of low grade heat in our water and sewerage infrastructure, which has the potential to help meet some of the renewable heat aspirations in the Clean Growth Plan. At present, there are difficulties marrying these low grade heat resources with demand, and we would welcome measures to help develop this market to help make best use of the resources we have.

October 2018