06/04/2020: Revisiting low-carbon governance

Hello again. I’m delighted to say that I’ve managed to record and post my second vlog, although I continue to have problems with the technology.

This update is entitled “Revisiting low-carbon governance”. It focuses on two related areas.

The first is an overview of the event I organised with support from the Association of Distributed Energy, which took place at the offices of lawyers Squire Patton Boggs in London on 27th February. A really great part of this was the keynote speech given by Professor Catherine Mitchell who recently stepped down from her teaching role at the University of Exeter, and who has been at the rock-face of academic and industry work on energy governance reform for a number of years, notably through the IGov project. Her lively and inspiring presentation can be found on my New Anglia Energy website here. It advocates a series of changes to avoid “the middle way”, a systemic policy and regulatory bias which means decision-makers always land on low-risk outcomes unless they have clear political cover. Catherine made a compelling case to explain why, after several years of focus on low-carbon interventions, the gap between the decisions needed and those made is widening and now requires concerned rectification and much braver decisions.

There are also brief summaries of the panel sessions led by Simon Skillings (E3G/Trilemma) and Laura Sandys (Challenging Ideas.Lead of the Energy Data Taskforce).

The second area is my own presentation during one of the panel sessions at the event. There has been lots of attention directed at institutional design and oversight of low-carbon policies and programmes at the highest level over recent years, but much less debate around complimentary changes needed at the regional level, although in the background there has been a lot of activity around local energy and industrial strategies in England and Wales.

You will see from my comments that I believe there is an urgent need to revisit low-carbon governance and consider it in the round. I also strongly support rationalisation of regional structures under the various local enterprise partnerships (or LEPs) supported by the five new Local Energy Hubs, who should in my view provide leadership and coordination amongst a number of disparate stakeholders, including local authorities, utilities and infrastructure providers. Activities should focus around mandatory local action plans that will allow performance to be compared and best practice to be identified. This layered approach should in turn permit regional differentiators and different stakeholder aspirations to be properly folded into measures tailored to the locality, thus enabling quicker progression to delivery of the target. My presentation is also on the New Anglia Energy website here.

The vlog focuses more on the broader argument, rather than detailed recommendations. But you will see from the penultimate slide of my presentation some of my emerging more detailed conclusions. These are expanded on below.

My basic argument is that we need to reset and strengthen low-carbon governance within an holistic and recognised framework.

The overall system of an explicit statutory target, establishment of appropriate carbon budgets to deliver it and assessment provided by the independent Climate Change Committee (CCC) reporting annually to parliament seems to be working broadly well. The bottom line is that the CCC has made clear that policies need to move beyond aspiration and be more clearly defined, and there are already gaps to attainment of the fourth and fifth carbon budgets even before the shift to net zero. These widening gaps need to be addressed alongside setting the super-critical sixth carbon budget, which is due late summer/early autumn.

The establishment of the National Infrastructure Commission (NIC) in 2015 first as a bespoke entity under Treasury and then as an independent body in 2017 also marked a logical enhancement in ensuring a longer-term framework to set infrastructure priorities. While we still await the government’s response to the National Infrastructure Assessment in the form of its delayed Natioanl Infrastructure Strategy, the NIC has already produced some good reports on the future of regulation, technological options for clean energy, heating, and housing and launched several important calls for evidence. Its remit should be updated and there should be a primary statutory duty on all advisory and delivery agencies to promote net zero. Its mandate should also be extended to include land use and farming, as well as social infrastructure, and it needs to provide a clearer steer on the demand side and behaviours.

But we also need some new institutions as well as refocusing. Notably, however, we need a new entity, which I call a Low-carbon Transformation Commission, to provide oversight of delivery, including regional programmes and priorities, and much better coordination between delivery bodies such as the various Catapults and LEPs. It should also have a duty to promote a just transition – specifically social equity and distributional issues that are already arising from policy but which do not presently receive sufficient weighting.

Within government the BEIS local energy team and other policy teams should be given a much clearer mandate and an explicit scope embracing cross-departmental issues, including transport, housing, environment along with much closer integration with the Treasury. Relationships with the Devolved Administrations are also confusing and need to be clarified so that stakeholders better understand the boundaries and interactions.

There is a pressing requirement for reinforcement of government support to bring together local industrial strategies and energy strategies. This should be enabled by a coherent medium-term Strategy and Policy Statement as envisaged by the Energy Act 2013, which can be used as an unambiguous point of reference by Ofgem, but also other economic regulatory agencies (we have one in water but not energy despite the vires existing). Ofgem’s Decarbonisation Action Plan needs to be rethought and extended over time, and other regulators in key sectors like water and transport should produce similar programmes.

There also needs to be a more orderly, bottom up focus with a seamless and well-functioning join between local delivery agencies and central government and national institutions. The Local Energy Hubs are beginning to have an impact but they need to be formalised and given a clear mandate and funding going forward.

The Clean Growth and Industrial Strategies should be upgraded in the light of changes since late 2017 given the profoundly more stringent abatement target represented by net zero. Within this, there needs to be more diversity in type and size of schemes supported and a much greater focus on commercial, and not just technical, innovation and enabling changes to support new business models. This should be complemented by more decentralisation of decisions and local initiatives to enable local strengths to be built on, with guidelines developed to help the Local Energy Hubs and LEPs optimise support streams and play to regional strengths in delivering these strategies.

Ultimately the debate has only begun, and these are some initial thoughts. But a clear view on the institutional structure needs to be settled upon by CoP26 (whenever it takes place). I will of course develop these thoughts over the coming weeks.

As ever, please follow me at @NewAngliaEnergy. This will give you sight of a number of daily feeds on the wide variety of low-carbon news stories and research, as well as the occasional gratuitous opinion from yours truly.

We will be changing tack next week in my third vlog, and I will probably be making some comments about the suitability of the current electricity trading arrangements in helping deliver net zero (or not as the case may be). It has just gone 30 years since the Pool was established and there is a perplexing lack of debate about the fitness of the current NETA design for delivering net zero. I am also pulling together thoughts on what needs to be done to better support community energy, and I am working up a comment on the current limits to roll-out of time-of-use pricing. So I have lots in the pipeline.

In the meantime, stay home, keep safe and I hope you remain in good spirits.

Nigel