Energy and Utilities

The Energy Transition | the new green gas levy, a call for investment in green heating and machine learning energy optimisation

Published on 25th Sep 2020

This week we look at the government's plans to introduce a green gas levy, Origami's new machine learning energy trading software, a potential new "carbon charge", and more.


Green Gas Levy consultation launched to promote the decarbonisation of heat

The government has launched a consultation on a new Green Gas Levy which was first announced in the 2020 Budget earlier this year. The levy will be imposed on gas suppliers in England, Scotland and Wales and will be used to increase green gas production in order to decarbonise the gas grid and help people across Britain go green with their energy supplies.

The levy will fund support for increased biomethane injection into the gas grid through the new Green Gas Support Scheme. These measures are also intended to support an economic green recovery and bring jobs into rural areas. The move marks another step towards the government's 2050 decarbonisation goal and could save as much as 21.6 million tonnes of CO2 from entering the atmosphere.

The government is seeking views on the potential makeup of the levy including its design, financial management, administration, enforcement, impact and payments. Consultation workshops will take place in mid-October which may be of special interest to gas suppliers.

‘Substantial sums’ must be invested in storage to prevent reliance on gas engines

The Energy Research Partnership has called for increased investment in energy storage to prevent Britain becoming dependent on gas and diesel engines to fill gaps in renewable generation. Research into energy storage has tended to focus on short-duration lithium-ion batteries due to the appeal of the rapidly growing electric vehicle market. However, more funding needs to be directed toward researching medium and long-duration storage technologies that can perform a similar role to gas engines.

The UK's electricity supply is increasingly reliant upon gas and diesel reciprocating engines to plug gaps in renewable power generation caused by weather conditions. The Energy Research Partnership's new report warned that without urgent action the UK is on the path to missing the net zero target by 2050. According to the report, no matter how much green energy the UK is able to generate, the current storage models alone are not robust enough for future energy demand and generation scenarios. The report also highlights that this issue will be greatly magnified by the decarbonisation of heating, in whichever form that takes.

UK poised to bring forward the combustion engines ban, according to reports

It has been reported that the UK is set to bring forward the ban on internal combustion engine vehicles in autumn 2020 in order to help speed up the rollout of electric vehicles. The plan is said to be supported by the government advisers at the Committee on Climate Change and is also backed by the Labour party, which has recently doubled down on its pre-election pledge to implement a 2030 ban. As part of this recent push from Labour, Matthew Pennycook, shadow climate change minister, stated that an earlier ban would "give a new lease of life to the UK car industry, whilst combating climate breakdown and cleaning up the air that dangerously pollutes so many of our towns and cities".

In February 2020, Boris Johnson announced that the ban would be introduced in 2035 - five years earlier than the original 2040 date. Despite this however, calls to bring the date forward even further have grown. Should the government choose to introduce the ban in 2030, it would bring the UK in line with the dates set by Germany, Ireland and the Netherlands.

Green Finance Institute launches Taskforce to unlock investment in green heating

The Green Finance Institute has launched a Zero Carbon Heating Taskforce to decarbonise heating systems in the UK and develop a portfolio of financial solutions to unlock investment in the sector. The Taskforce will bring experts from the heating sector together with members from the financial services sector, local and national government, energy and construction industries, academia and civil society in order to design, launch and scale financing mechanisms for heat. It is hoped that this will help enable the rapid adoption of zero-carbon heating technologies for individual buildings and entire districts around the UK.

Heating and hot water for homes account for almost two-fifths of the UK's annual energy consumption and one-fifth of greenhouse gas emissions. As such, the taskforce will conduct a review of the heating sector to identify barriers and enablers for investment in low-carbon heating in the UK housing market. Using the results of this review, the Green Finance Institute will develop and launch new financial products to help attract investment and advise government departments on policy changes to scale up the market for low-carbon domestic heat in line with the national net-zero target.

‘Overlapping’ levies should be replaced with ‘single, simple’ carbon charge

A new report published by the Zero Carbon Commission has called for the “overlapping” levies on electricity to be replaced with a “single, simple” carbon price across both power and heating. The report states that the charge could bring in annual revenues of £27 billion by 2030 which could help to fund renewable support mechanisms (such as the Contracts for Difference scheme), support the Covid-19 recovery and cushion rises in household energy bills.

The proposed charge would replace the UK’s planned Emissions Trading System, as well as the Carbon Price Support top-up payments and Climate Change Levy imposed on business consumers. It would immediately start at a rate of £40 per tonne of carbon dioxide before ratcheting up to £55 per tonne in 2025 and £75 per tonne in 2030.

Whilst most countries have modest electricity carbon charges and place additional taxation on gas and oil, the UK places more carbon charges on the use of electricity than other fuels. The Commission is therefore calling for a carbon charge that is consistent with other countries, and encourages people to switch to renewable sources of energy and reduce their energy use.

Origami launches new machine learning energy trading software

Technology provider Origami has launched Origami Forecast, a machine learning software product to increase trading options for energy companies.

The software uses real-time data to provide energy companies with automated, live forecasts for power generation, demand and market prices. This allows energy traders, analysts and data scientists to run accurate forecasts at scale, and quickly make adjustments. This ability to make informed trading decisions that decrease cost and risk will become increasingly important due to the energy mix becoming more complex and uncertain as the energy sector transitions to meet the UK target of net zero emissions by 2050,

The software is the first product from Origami's new suite of interoperable modules called Renewables+, which will all be aimed at optimising energy trading.

Ikea, Unilever and BT join net-zero supply chain initiative

Ikea, Unilever, BT and Ericsson are among the founding corporate members of a new 1.5°C Supply Chain Leaders initiative which is designed to drive climate action across the supply chains of major corporations. In taking such action, the initiative is intended to support the reduction of greenhouse gas emissions in line with the target to keep global temperature rises this century within 1.5°C, as set out in the Paris Agreement. The initiative is part of the Exponential Roadmap, which “highlights 36 solutions that can scale exponentially to halve Greenhouse Gas Emissions by 2030 worldwide.”

Members of the initiative have agreed to work with their supply chain to halve their absolute emissions before 2030 and achieve net zero emissions throughout their supply chains before 2050. The initiative requires members to report annually on progress and to make climate-related targets and performance an integral part of purchasing criteria and contracts within 12 months.

Given that the average company’s supply chain emissions are estimated to be around five-and-a-half times greater than those generated by the company's direct operations, decarbonising supply chains is an important consideration for companies when assessing their total emissions and net zero targets.

National Grid and TenneT look to link British and Dutch offshore wind farms

National Grid Ventures, the commercial development arm of National Grid, and Dutch transmission system operator TenneT have announced a cooperation agreement to explore the feasibility of connecting British and Dutch offshore wind farms to the energy systems of both countries.

The agreement will explore the development of a multi-purpose interconnector) to simultaneously connect up to 4GW of offshore wind to the British and Dutch electricity systems. By connecting to both systems, the interconnector would enable spare transmission capacity to be used to trade electricity between the countries.

The development would be the first of the kind for the UK and the Netherlands in the North Sea. Both countries have established ambitious targets to expand offshore wind capacity: the UK government has targeted 40GW of new offshore wind by 2030, whilst the Dutch government has targeted 11.5GW by 2030 and a further increase of 20-40GW by 2050. Harnessing the full potential of offshore wind will play an important part in decarbonising European economies and societies by 2050.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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