FAIR ENERGY TRANSITION

By David Watson Managing Director Heat Trust

ENERGYCENTRAL - Mar 3, 2021  - Getting to net zero is the biggest challenge of our lifetime and the personal goal for many of you reading this. As energy professionals we have already achieved much. But the next stage of our journey will be harder.

Progress to date has largely been achieved by decarbonising the power sector, and it has had little impact on peoples’ daily lives. As we decarbonise transport and heat this will not be the case. People will be asked to drive less and buy EVs. They will be asked to replace natural gas boilers for hydrogen ready equivalents, install heat pumps or connect to heat networks. The impacts will be immediate and visible. The benefits will often be indirect and deferred. Delivering this will need widespread public consent, engagement and participation.

Only a transition seen by all as being fair and equitable will command that consent, engagement and participation. We will therefore fail to make the transition if we fail to make the transition just.

But what is a “just transition”, why does it matter and how can we deliver it?

A just transition starts by using the opportunity of large low carbon investments to create decent work for all. National Grid estimate 400k new roles will be needed in the energy sector[1]. The LSE found that the manufacture of EVs and batteries here in the UK could create up to 80k new jobs[2]. BEIS suggest that innovations in new low carbon manufacturing technologies could support a further 80k jobs[3].

Against this is the fact that many jobs in fossil fuel related industries will be lost. Many of these jobs are found in specific cities and regions. For example, a significant share of employment around Aberdeen is focused on an oil and gas sector projected to see global demand reductions of 85% and 70% respectively by 2050[4].

Whilst the net impact of the transition should be positive for jobs, the distribution of the impact is therefore unequal. Deindustrialisation has already created regional differences across the UK and there is the risk that the energy transition may exacerbate these. Analogies to the social and economic impact coal of mine closures in the 1980s are not unwarranted.

Creating decent work for all will require national strategies to join up with regional plans like Net Zero North West, or city plans such as those in Bristol where they have big ambitions for heat network deployment. It will require investment in jobs, skills and retraining being targeted at specific areas, tailoring solutions for different geographical needs.

Incentivising new low carbon industries to locate themselves in area most at risk will help. We are already seeing how this can be done with strategic Government investments in net zero emissions industrial zones[5].

A just transition would also mean tackling poverty across the UK. The energy transition will create costs and benefits. As we develop our delivery plans, we can ensure these costs and benefits are fairly and equitably distributed.

Whilst we know the transition will lead to lower energy costs in 2050 than would otherwise have been the case[6], it is also true that investments in energy networks, energy efficiency and scaling new technologies will add cost in the short to medium term.

Recovering all these costs through the energy bill would be regressive. As a percentage of income poorer households spend more on energy than wealthier households. They are less able to substitute goods when producers pass rising energy costs on. In extreme cases, rising energy costs may prevent more people from meeting their energy needs, exacerbating fuel poverty.

Poorer households are also significantly less likely to be able to invest in low carbon technologies such as heat pumps, energy efficiency upgrades or EVs. We can help them through subsidising the upfront cost of making the transition, and in doing seize an opportunity to improve their lives. Energy efficiency will improve housing quality and health outcomes. Zero carbon transport will contribute to better air quality and improve local streets. Heat networks will not simply enable decarbonisation but can contribute to lower heating bills and stronger communities.

Finally, a just transition means giving people a stake or a voice in how the transition occurs. We are already making progress here, for example with the 2019 Climate Assembly process[7]. But this is only the start of the public engagement we need to see. An ongoing and meaningful dialogue is needed on the challenge, the journey and the outcomes we will deliver - and what it all means for individuals. This is not just a responsibility for Government, but for all of us as energy professionals.

We can start by putting customers at the heart of our planning and delivery. One such opportunity can be seen in the heat network sector today. Heat Trust, the organisation I represent, protects those living and working on heat networks by setting minimum customer protections standards. But as many as 400k heat network customers still live on networks not registered with us and lack even the basic standards and protection that many of us take for granted.

Whilst the Government is committed to addressing this, the design of future regulation is yet to be agreed. A just transition in this context requires that customer voices are represented in this debate, and that the resulting market framework applies to all customers on all heat networks.

A just transition is not just possible but also necessary if we are to get to net zero. As we debate how we meet our challenge of a lifetime, we must ensure that we put customers at the heart of it all by delivering decent jobs for all, tackling poverty and social inclusion. The benefits will be felt in more than just the energy industry.

[1] https://www.nationalgrid.com/uk/stories/community-spirit/400000-new-energy-workers-needed-power-uk-net-zero

[2] https://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2020/02/GRI_Seizing-sustainable-growth-opportunities-from-zero-emissions-passenger-vehicles-in-the-UK_FULL-REPORT.pdf

[3] https://www.gov.uk/government/publications/energy-innovation-needs-assessments

[4] The CCC “Sixth Carbon Budget – The Path to Net Zero”

[5] https://www.gov.uk/government/news/green-boost-for-regions-to-cut-industry-carbon-emissions

[6] The CCC – “Net Zero – The UK’s contribution to stopping global warming”

[7] https://www.climateassembly.uk/

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This thought leadership article was originally shared with Energy Central's Energy Collective Group. The communities are a place where professionals in the power industry can share, learn and connect in a collaborative environment. Join the Energy Collective Group today and learn from others who work in the industry.

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