Energy and Climate Change Committee enquiry into
future challenges in energy and climate change
1. The ETI’s systematic analysis of the UK energy system and low carbon technology options
suggests that we can achieve secure and affordable low carbon energy system by 2050
provided that the right strategic action is taken before 2030.
2. Between now and the mid 2020’s we need to develop and commercialise a portfolio of high
potential technologies, and make infrastructure design choices.
What would a UK energy system, that successfully tackles the energy trilemma, look like by 2030
and beyond?
3. The UK energy system in 2030 should be mid-way in a transition process towards 2050.
4. By 2030 the power sector must be almost completely decarbonised. Generating capacity
should include a mix of technologies in the order of one third nuclear, one third gas (with
Carbon Capture and Storage (CCS) increasingly deployed) and one third renewables
(predominantly wind). Waste and biomass gasification with CCS could make a small
contribution, limited by resource availability. Coal need not be excluded if CCS is fitted, but
longer term the residual emissions (even with CCS) could preclude coal.
5. The most cost effective energy system designs in the longer term rely heavily on bioenergy
with CCS to deliver negative emissions. Infrastructure requirements, particularly in
transport, will look very different depending on the extent to which we deploy negative
emissions. Given infrastructure lead times, decisions must be made around the role of
bioenergy before 2030. To make those decisions with confidence we need to develop the
UK bioenergy supply chain, the feedstocks, technologies (particularly gasification) and end
vectors and we need to have successfully deployed bioenergy with CCS at full scale.
6. By 2030 our heat sector should have completed simpler efficiency measures and converted
off grid buildings to low carbon heat sources. Focus should be moving towards almost
eliminating gas consumption in most of the 21 million homes that are heated by gas boilers
today, through a combination of local district heating systems and electric systems (mainly
heat pumps). District heating schemes could initially be supplied by gas or biomass
combined heat and power, but with increasing use of zero carbon sources such as
recoverable heat from power stations, large scale heat pumps and in niche locations
geothermal. Heat pumps will need to be deployed in combination with whole house retrofits
to improve the thermal efficiency of buildings. By 2030 local area decisions on infrastructure
options (eg heat pipes, gas pipes, wires) will be required as it will be impractical and too
costly to install and maintain multiple new and existing options.
7. In transport we will need adoption of plug in hybrid electric vehicles to have exceeded 1-2
million with conventional and hybrid cars operating at ever increasing rates of efficiency.
8. In industry waste heat recovery, modest efficiency improvements and biomass will contain
emissions and cost until CCS starts to be deployed in the run up to 2030.
www.eti.co.uk
Delivering the UK’s Future Energy Technologies
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Energy and Climate Change Committee enquiry into future challenges in energy and
climate change
Energy Technologies Institute
What are the greatest challenges in UK energy and climate change policy over the next Parliament
(2015-2020)?
9. UK energy policy has become increasingly complex and a process of consolidation and
simplification could lower policy costs. Reducing uncertainty in policy could lower the cost of
capital and movement towards a clearer economy-wide carbon price signal would help drive
long term investment in delivering new technologies and infrastructure. Given the scale of
challenges the next Parliament needs to integrate decarbonisation into policies on
infrastructure, land use, agriculture and transport.
10. Continued progress to decarbonising electricity by 2030 is critical, and Parliament will need
to contend with the success (or otherwise) of the EMR in bringing forward investment, and in
driving innovation and deployment to reduce the cost of currently under developed, but high
value, technologies.
11. Clarity around the details of EMR is urgently required, particularly the support for CCS, but
further market intervention and support will be required to incentivise and enable the
development of a CCS sector at scale. Funding of both the White Rose and Peterhead CCS
projects is a critical decision early in the next Parliament, with support for the 2nd phase of
CCS projects and the development of infrastructure also likely to be required.
12. A coherent strategy and co-ordinated policy measures for domestic bioenergy needs to be
developed, based on solid evidence of the sustainability, potential availability, optimal uses
and value (from a whole systems perspective) that bioenergy can deliver. The major
potential value of domestic biomass to decarbonisation should be reflected in agricultural
and land use policy, including thinking about the post-2020 shape of EU common
agricultural policy.
13. With limits on available funding it will be vital to prioritise, taking account of the potential
value of technologies from a ‘system wide’ perspective (rather than simply focussing on
£/Whr cost metrics). Bringing forward private sector investment in supply chains and early
deployment of key technologies is likely to require greater visibility about and the medium
term shape of policy support.
14. In prioritising public resources, Parliament will have to contend with sectoral interests and
lobbying. Markets and support schemes must be designed to reward those technologies
which help to reduce the overall cost of delivering security of supply .
15. The next Parliament will increasingly need to address how we decarbonise the heat sector.
RHI is having some success in the commercial and light industry sectors, and will potentially
stretch to off-grid housing, but is unlikely to incentivise households with gas boilers to switch.
Parliament needs to consider the mechanisms which will drive adoption of district heating
and heat pumps, taking account of the overall value they will deliver, not just in terms of
reducing emissions, but also the health and welfare benefits which arise.
16. In order to progress the decarbonisation of heat (and later transport), local area energy
strategies will be required and local actors will need to be equipped with tools and
capabilities to develop them. Parliament needs to consider how it will empower local
authorities, communities, energy companies and households to make the decisions
collectively and individually that will drive progress beyond 2020.
About the ETI
17. The Energy Technologies Institute (ETI) is a public-private partnership between global energy
and engineering firms and the UK Government. ETI carries out three primary activities:
www.eti.co.uk
Delivering the UK’s Future Energy Technologies
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Energy and Climate Change Committee enquiry into future challenges in energy and
climate change
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Energy Technologies Institute
modelling and strategic analysis of the UK energy system (power, heat, transport,
infrastructure) to identify the key challenges and potential solutions to meeting the UK’s
2020 and 2050 energy and climate change targets at the lowest cost,
investing in major engineering and technology demonstration projects through targeted
procurement to address these challenges with the aim of de-risking solutions – both in
technology and in supply-chain development – for subsequent commercial investors
providing support to enable the effective third party commercialisation of project
outcomes.
18. Recognising the need to focus and target investments to ensure value for money and leverage
from public sector support, the ETI’s techno-economic modelling and strategic analysis of the
UK energy system is a critical tool for supporting effective system planning and innovation
delivery. The ETI modelling approach is termed ‘ESME’ (Energy System Modelling
Environment) and is now used by DECC and the Committee on Climate Change to aid with
policy development, planning and effective investment targeting.
19. Insights from ESME analysis have been reviewed with the European Commission and the
JRC. With their support ETI have now developed a prototype tool for use in assessing energy
system design for the European Union area using the same approach used for the UK. A
local (urban area) energy system planning tool EnergyPath Networks is in development as
part of the ETI Smart Systems and Heat programme.
20. The UK energy system development and decarbonisation priorities identified by ETI are:
 Efficiency – introducing systems and technologies to reduce cost and improve buildings
and transport efficiency.
 Nuclear – establishing a new build programme based on new supply chain capacity and
increased investor confidence.
 Bioenergy – informing the science, technology and business cases for decisions on how
to optimise the use of sustainable bioenergy resources as solid, liquid and gaseous fuels.
 Carbon Capture and Storage – providing system demonstration and strategic insights
for capture, transport and storage building investor confidence.
 Gas – enabling long-term use of a critical fuel for power, heat, storage and potentially
transport (‘gas’ = natural gas, synthetic combustion gases, biogas and hydrogen).
 Offshore renewables – reducing cost and building investor confidence.
21. The ETI has announced more than £210m of investments in projects across nine technology
programme areas, including buildings, distributed energy and smart systems and heat. The work
taking place in our Smart Systems and Heat (SSH) programme involves active communication
with a number of local authorities across Scotland, England and Wales. The ETI ’is working with
a selection of local authorities, including Bridgend County Borough Council (in conjunction with
the Welsh Government), to host a demonstration of “smart” cost-optimised local energy designs
for heating domestic and light commercial buildings. To help the ETI achieve this, we are working
with local authorities to develop a software tool that will allow the design of practical, cost-effective
local energy systems (both heat and power) for their areas. Importantly, the activity will prove that
the capability and approach can be adopted nationally.
www.eti.co.uk
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