Opinion
Industry responds to CCC Sixth Carbon Budget
In response to the recommendations, the UK downstream oil sector reiterates that it wants to work closely with UK governments to deliver the most effective policy and economic frameworks needed to reach net-zero.
Downstream oil is already playing a significant role in meeting societal targets for decarbonisation, and UKPIA launched its report – “Transition, Transformation, and Innovation: Our role in the Net-Zero Challenge” in October, which sets out an illustrative pathway for the sector in the energy transition.
Sir Ian Wood, Sir Ian Wood KT GBE chair of Opportunity North East, (ONE) commented:
“The publication of the UK Committee on Climate Change’s Sixth Carbon Budget is a very positive step on our journey to a net-zero future. A fundamental shift in how we produce and use energy is essential to deliver this plan and the North East of Scotland, with its incredible natural resources and world-class energy supply chain, is uniquely placed to accelerate the transition.
“After half a century of oil and gas production, with more to come produced with ever decreasing emissions and a rapidly growing renewables sector, this region is already recognised globally for its energy expertise. We must now build on this strong position to become a global leader in energy transition.
“Aberdeen’s proposed Energy Transition Zone will provide the critical infrastructure needed for this low carbon activity and has received strong interest from international companies, industry and government. It will be home to leading-edge innovation and manufacturing for offshore wind, hydrogen and carbon capture and storage activities, creating the environment for the energy supply chain to diversify into new markets at home and abroad.”
UKIFDA, having lobbied for targets and timelines, also welcomes the Sixth Carbon Budget and is pleased that the CCC agrees. However, liquid biofuels are still not included in the list of possible decarbonisation solutions thereby potentially limiting options and increasing costs for 1.5m households in the UK.
Many of the CCC recommendations and timelines would allow UKIFDA members to play a part in achieving the net-zero aims but the association stands by the importance of government recognising the role liquid biofuels can play in decarbonising both heat and transport. Whilst UKIFDA was pleased to see that bio-kerosene were mentioned by the CCC, it also wanted to see that talked more about in the wider sense of being an option for heat policy as well as transport.
UKIFDA went on to say:
“We absolutely agree that government support on energy efficiency measures is required – both on and off-gas grid – that encourage consumers to upgrade existing equipment, improve insulation and install smart controls to better monitor energy usage. We believe that these measures are vital in moving homes upwards through the EPC ratings and thereby reducing emissions although care needs to be taken that the disadvantaged, such as the fuel poor, are not excluded.
“It is important that consumers have choice and we again urge the government to include liquid biofuels in policy for off the gas grid homes. Hydrogen is an option as an alternative to gas heating as well as heat pumps and rural consumers should be given choice over the solutions, they use to decarbonise their home heating otherwise they will unfairly face enormous expense.
“65% of oil heated properties (765,000 homes) are in EPC Bands E-G and among the least energy efficient homes in the UK and will take more than the proposed £10,000 per property average upgrade cost to bring a property up to EPC C. At a time when COVID-19 is having devasting effects on people’s jobs and finances we should, as a country, be looking to ensure we don’t place additional financial burdens on households and government must focus on putting in place a policy framework that will create a competitive market and drive down prices, enabling consumers to select low carbon products that best suit their needs and budgets.
“The CCC suggest hybrid heating systems as an appropriate solution for off-grid properties. We believe this is important consideration for some homes and are pleased to see this included as using a hybrid unit combines the higher flow temperatures produced by a boiler, with the operation of a heat pump, to meet the buildings heat demand throughout the year. But why replace boiler equipment when a drop in, liquid biofuel will be available that has a lifecycle carbon emission factor as good as biomass (the government’s preferred non electric solution).
“Our industry is undertaking trials of liquid biofuels across the UK (similar to the gas industry undertaking hydrogen trials) and we believe that liquid biofuels can and should play a part in the Committee’s list of core solutions for buildings as well as transport.
“What we need now is a supportive and timely response from the UK Government to these proposed timelines from the CCC, so businesses and the public can get on with reaching it. Government should set the right legal and policy framework to enable industry to invest and innovate and say that liquid biofuels will form part of the policy solutions. Once they do that, then industry will respond to the supply challenge and consumers will have choices in beginning their personal decarbonisation transition and this is the point we strongly want to make to you and government. To succeed, government policy must encourage innovation and investment and our industry is waiting to start meeting the needs of the UK’s Net Zero challenge – so why delay us further?
“We remain committed to the ambitions of the CCC and would welcome direct conversation with the Committee on some of the points raised and to discuss how we, and our members, can support the energy transition.”
OFTEC’s response to the report was also positive and, similarly to UKIFDA, suggests how liquid fuels could play a big role, if the CCC’s ambition is backed by the right policy support as Malcolm Farrow, head of public affairs, explained:
“OFTEC welcomes the Sixth Carbon Budget report which clearly sets out the scale of the UK’s challenge to reach net zero, particularly in heating. We also welcome the inclusion of biokerosene within the range of low carbon heating options endorsed for off-gas grid homes in the road map.
“OFTEC believes that, if backed by the right policy support, the use of renewable liquid fuels could enable the CCC’s ambition to end the installation of new fossil fuel oil boilers in rural homes by 2028 to be achieved even sooner.
“The rapid deployment of a renewable liquid fuel, namely HVO, would meet the CCC’s requirements to quickly gain ground on emissions cutting. This near drop-in replacement for heating oil offers a carbon reduction of approximately 91% which is significantly greater than heat pumps can achieve until the electricity grid is more fully decarbonised later in the 2030s. Existing oil heated households could switch to an HVO solution at a fraction of the cost of installing other low carbon technologies. Household disruption is also minimal, making this a ‘frictionless’ option that overcomes two of the main barriers to heat decarbonisation that currently exist. An HVO solution also allows more resource to be channelled into the energy efficiency improvements the CCC has identified as a priority.
“The overriding challenge for government now is to develop policies that are fair, affordable and effective – a point emphasised by the CCC. For off-gas grid homes this is a critical requirement and HVO must be included among the technologies supported to achieve this transition. OFTEC remains committed to supporting this option and industry is now just waiting for the signal from government to start delivering an HVO solution.”
The downstream sector has always risen to challenges and will continue to do so to reach the net-zero goals as UKPIA’s director general, Stephen Marcos Jones concludes:
“This is an exciting yet challenging period of evolution for the downstream oil sector – we are committed to action on climate change and with the right policy framework, this sector will do its part to deliver Net-Zero.
“It is only through industry and government working closely together that the task of Net-Zero will be achieved in the UK.”