Departmental delays ‘put government’s net-zero plans at risk’

National Audit Office says lack of a delivery strategy for clean electricity could spook investors and ramp up costs

By Jim Dunton

02 Mar 2023

The government is in danger of failing to deliver a core element of its plans to make the UK a net-zero emissions economy by 2050 because of uncertainty over its vision for making clean electricity generation a reality, the National Audit Office has warned.

Ministers have set a target for all electricity to come from “clean” sources by 2035 as part of the longer-term vision. But the public-spending watchdog said “little progress” had been made with a delivery plan for the ambition.

The NAO said the Department for Business, Energy and Industrial Strategy – which is in the process of being replaced by the Department for Energy Security and Net Zero – had been due to establish a “pathway” for the 2035 target by October last year.

However, the energy-price crisis prompted by Russia’s invasion of Ukraine forced a shift of focus in BEIS and the department scaled back its work on coordinating long-term power sector decarbonisation, the NAO said.

The watchdog's report on decarbonising the UK power sector cautions that DESNZ still has more work to do on creating the delivery plan and risks fuelling investor uncertainty and driving up consumer costs because of the lack of a strategic vision.

The NAO said that as of 2021, around 41% of the UK’s electricity was produced using natural gas, which would need to be phased out – or adapted through carbon capture – to hit the 2035 target.

Boosting the amount of energy generated through clean energy sources like offshore wind and solar power, as well as nuclear power, will be important elements of decarbonisation.

The NAO said the DESNZ will need to oversee the deployment of nearly three times as much offshore wind capacity in the next eight years as it has in the last two decades if it is to meet a decarbonisation target delivering 50GW of power from that source by 2030.

However, the switch away from gas-powered electricity generation also involves developing new transmission networks, contingency plans for when there is not enough wind or sun to drive green generation, and new arrangements for buying and selling electricity.

The NAO said many of the changes that are necessary to deliver power decarbonisation rely on technologies that either do not exist in deployable form or need to be scaled up. It said hydrogen power and energy storage solutions were examples of contingency energy sources that DESNZ was currently supporting the private sector to develop.

But the report said that the lack of a delivery plan for the 2035 target “risks diminishing the confidence of industry stakeholders”. The NAO said sector players had “increasingly expressed concerns about how all the change and investment that is needed across the power sector will be brought together without a strategic vision”.

The report added that the absence of a clear plan and the perception that there could be changes in government policies “could deter external investors from providing funds for new infrastructure or lead them to increase the rates of return they require, ultimately increasing costs for energy consumers”.

NAO head Gareth Davies said DESNZ needed to set clear measures of overall progress with interim milestones for its decarbonisation plans and that they should be reported on annually to parliament – along with the rationale for any significant changes to the overall plan.

“It is understandable that DESNZ and its predecessor BEIS has focused on dealing with the immediate energy crisis over the past 12 months. But one consequence of this is that it lacks a delivery plan for decarbonising power by 2035, which is the backbone of its broader net-zero ambition,” he said.

“The longer DESNZ goes without a critical path that brings together different aspects of power decarbonisation, the higher the risk that it does not achieve its ambitions, or it does so at a greater than necessary cost to taxpayers and consumers.”

Among its recommendations, the NAO also suggested that DESNZ should consider the potential costs and benefits of keeping some carbon-emitting power generation capacity, such as gas-fired power stations, and offsetting the impact in other ways to achieve net zero.

A DESNZ spokesperson acknowledged the pressures that Russia’s invasion of Ukraine had placed on the department’s work. But they insisted that the UK was making more progress with decarbonisation than other advanced economies.

“Since the energy crisis caused by Putin’s illegal invasion our focus has been on delivering essential cost-of-living support, including paying half a typical household’s energy bills this winter, because this is the primary focus for families across the country,” they said.

“At the same time, the UK is decarbonising faster than any other G7 country, having cut our emissions by 48% between 1990 and 2021. Building on this progress, we have launched world-leading blueprints, such as our British Energy Security and Net Zero Strategies, with many plans already implemented to ensure we are on track to achieve our 2050 net zero target. 

“Our targets are ambitious, however we haven’t taken our foot off the pedal and our commitment to decarbonise the UK’s electricity system by 2035 remains resolute.”

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