The Department for Energy Security and Net Zero – What’s New?
On the 7th of February this year Rishi Sunak divided the Department of Business, Energy and Industrial Strategy (BEIS) into four new departments, one of these being the Department for Energy Security and Net Zero (DESNZ). Following the announcement, a list of priority outcomes for the department has been published, which focuses on lowering carbon emissions, energy security, and inflation.
DESNZ is due to pass the Energy Security Bill at some point soon, with it currently passing through the House of Lords. The bill includes measures for hydrogen and carbon capture and assessing end-uses for hydrogen in the UK, which is aided by the new Hydrogen Champion certification, meant to verify the sustainability of low-carbon hydrogen in order to incentivise further investment in hydrogen production and use across the country to accelerate hydrogen’s role in the UK's greener energy future.
The Energy Security Bill briefly mentions setting in motion the development of regulation for the nascent fusion energy sector (which also happens to use hydrogen), showing promising signs that the UK Government is keen on being a leading force in the hydrogen-powered future of green energy.
On January 13th, Chris Skidmore MP published the results of his Net-Zero Review, which was meant to map out a “pro-growth, pro-business” pathway to delivering the UK’s climate targets. Skidmore’s concluded that the Government’s existing approach is not ambitious enough to realise the full scale of the potential social and economic benefits from the transition.
This lack of ambition is reflected in Hunt’s pledge to reduce the annual energy consumption of buildings and industry by a meagre 15% by 2035, which the Climate Change Committee (CCC) named as one of the slowest parts of the UK’s low-carbon transition. The international scientific consensus is that to prevent the worst climate damage, global net human-caused CO2 emissions need to fall by about 45% from 2010 levels by 2030, showing the government has to be a lot more ambitious if they want to achieve the goal of net-zero by 2050.
Whether any of these criticisms will be sufficiently addressed is another matter, given the Government’s history of commissioning environment-related reviews and then only actualising certain parts of them with less-than-ambitious goals.
Regarding the ‘energy security’ part of the DESNZ, the government will continue the long process of reshaping the energy market in the UK to break the relationship between global wholesale fossil fuel prices and wholesale electricity prices for electricity generated in the UK. With a growing demand for electricity and increasing fossil fuel prices, this is becoming less and less sustainable, as shown by a recent Carbon Tracker analysis which concluded that the relationship added £7.2 billion to energy costs from 2021-22. In the past year, this relationship has been felt throughout the entire country in the cost-of-living crisis, presenting a solid case to fast-track this process.
In conclusion, the DESNZ’s recognition of the role of hydrogen and fusion in the future of sustainable energy is impressive, and giving net-zero a seat in the Cabinet Office will undoubtedly increase its significance in both the public and private sectors. That said, it is important that the government recognises the requirement for both business model and infrastructure changes across the entire economy to accommodate an economy-wide switch to sustainable energy. The DESNZ is not obscuring this fact, naming one of its main long-term priorities as coordinating net-zero objectives across government, although it will be interesting to see how they action this while attempting to maintain an efficient transition to net-zero.