Decarbonising the power sector

Public Accounts Committee Closed Inquiry
Opened: 30 Jan 2023 Closed: 24 Sep 2023 Parliament page
In October 2021 the Government set a target to decarbonise the power sector by 2035, subject to security of supply. But demand for electricity is expected to increase significantly in that timeframe as other sectors, such as transport and heating in buildings, switch to electricity to reduce emissions. Decarbonising in … Read more
3 Recommendations
20 Conclusions
1 Report
1 Oral session
2 Letters
1 Event
Activity timeline 6 events
24 Sep
2023
Report published
11 Jul
2023
Correspondence
21 Jun
2023
Report published
17 Apr
2023
Correspondence
23 Mar
2023
Oral evidence
23 Mar
2023
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
23 Mar 2023
View on parliament.uk
Decarbonising the power sector
Ashley Ibbett · Department for Business, Energy and Industrial Strategy Jeremy Pocklington CB · Ministry of Defence Jonathan Mills · Department for Energy Security and Net Zero
Title HC No. Published Items Response
Fifty-Ninth Report - Decarbonising the power sector HC 1003 21 Jun 2023 23 Responded
Recommendations & Conclusions
23 results
2 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Provide annual updates to Parliament on progress towards energy objectives and risk mitigation.
We are sceptical that plans for expanding nuclear, solar and wind power are credible. Government has set itself highly challenging electricity generating capacity ambitions for nuclear (24GW by 2050), solar (70GW by 2035) and offshore wind power (50GW by 2030). … Read more
Government Response
The government agrees with the recommendation but states it already provides annual updates to Parliament through its responses to the Climate Change Committee's annual Progress Reports and other departmental publications.
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3 Recommendation Accepted
Fifty-Ninth Report - Decarbonising…
Set out plans to provide greater clarity to the private sector for decarbonisation investment.
We are not convinced that government is providing enough clarity to the private sector to attract the investment that is necessary to build infrastructure, spur innovation and drive competition to lower costs. Government estimates that hundreds of billions of pounds … Read more
Government Response
The government published several strategies and roadmaps (Green Finance Strategy, Powering Up Britain, specific sector roadmaps in March 2023) to provide investment clarity, and plans to publish further roadmaps for other sectors later in 2023. It highlighted £20bn funding for CCUS and annual CfD auctions as specific actions.
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4 Recommendation Accepted
Fifty-Ninth Report - Decarbonising…
Set out strategies to influence other departments for power sector decarbonisation collaboration.
It is not clear the Department has the support it needs from other departments to achieve government’s power sector decarbonisation ambition. While it holds responsibility for, and takes the lead for achieving energy security and net zero, the Department nevertheless … Read more
Government Response
The government states it already has robust governance and reporting processes at ministerial and official levels, including various committees and groups, to ensure cross-departmental collaboration and prioritization for power sector decarbonisation.
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5 Recommendation Rejected
Fifty-Ninth Report - Decarbonising…
Publish delivery plan information on decarbonisation cost impact for energy bill payers and taxpayers.
The Department has not yet set out how it expects decarbonising the power sector will impact energy bill payers and taxpayers. While government recognises that initially it will rely heavily on private investment to fund the clean energy transition, the … Read more
Government Response
The government rejects the recommendation, stating that future costs are uncertain and that it already publishes information on cost impacts for specific policy interventions in Impact Assessments and monitors energy prices via Quarterly Energy Prices reports.
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6 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Write to Committee setting out demand assumptions for energy efficiency and consumer behaviour policies.
We are not yet clear what the Department’s plans are in respect of energy efficiency and consumer behaviour. The Department acknowledges that improving energy efficiency and changing consumer behaviour are key to meeting net zero. However, recent energy bills support … Read more
Government Response
The government states it has already modelled two scenarios (Net Zero Higher and Lower) and that full details of its modelling, assumptions, and how policies reflect energy efficiency and consumer behaviour are set out in the technical annex to the Net Zero Strategy and the Carbon Budget Delivery Plan.
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1 Conclusion Acknowledged
Fifty-Ninth Report - Decarbonising…
Committee takes evidence from Department on power sector decarbonisation report.
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Energy Security and Net Zero (the Department) about decarbonising the power sector.1
Government Response
While responding to a conclusion, the government outlines its 'whole system' approach to power sector decarbonisation and states it intends to publish a short overarching plan later in the year to coherence its various policies.
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7 Conclusion Not Addressed
Fifty-Ninth Report - Decarbonising…
Regulatory system for nuclear energy insufficient to deliver government's ambitious pipeline.
In the last two decades, government has only agreed one nuclear project, at Hinkley Point C.18 The government is now creating Great British Nuclear to help it build capacity and expertise, and a regulatory regime aimed at expanding its nuclear … Read more
Government Response
The government states it agrees with the recommendation and provides annual updates to Parliament through responses to the Climate Change Committee’s reports and other publications. The response does not address the committee's observation regarding the efficiency or speed of the nuclear regulatory system.
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8 Conclusion
Fifty-Ninth Report - Decarbonising…
Offshore wind project pipeline could exceed ambition, but not all expected to succeed.
The Department also told us that it is tracking offshore wind projects at various stages of development that could produce 80GW of electricity when operating, more than its 50GW ambition. However, it acknowledged that not all these projects would succeed. … Read more
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9 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Uncertainty creates investment hiatus despite billions needed for power sector decarbonisation.
The government estimated in its 2021 Net Zero Strategy that £280 to £400 billion of public and private investment in new generating capacity would be needed by 2037 to decarbonise the power sector. These costs represent the construction costs for … Read more
Government Response
The government agrees with the committee's observation, recognizing the importance of clear plans for private investment. It has published several strategies, committed £20 billion for CCUS, launched annual Contracts for Difference rounds, and is producing sector-specific investment roadmaps to provide investor clarity.
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10 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Contracts for Difference mechanism effectively reduced offshore wind costs and spurred investment.
The Department told us that its role is to enable competition to drive innovation and cost reduction, and that the best example of this is how contracts for difference have sustained investment and innovation from the private sector in offshore … Read more
Government Response
The government agrees and aims to provide clarity to the private sector to encourage investment by publishing the 2023 Green Finance Strategy and other plans. These initiatives include £20 billion for CCUS, annual Contracts for Difference rounds, and sector-specific investment roadmaps to boost investor confidence.
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11 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Government's ambitious CCUS strategy remains untested at scale despite significant investment
At the 2023 Spring Budget, the Chancellor announced £20 billion for carbon capture, usage and storage (commonly referred to as CCUS).32 However, while providing a signal to the sector and investors, this technology is untested at scale in the UK. … Read more
Government Response
The government accepts the committee's observation, stating a target implementation date of December 2023, and details its efforts to provide clarity and encourage investment through recent publications, £20 billion funding for CCUS, and plans to publish further sector-specific roadmaps later in 2023.
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12 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Inconsistent government energy policy undermines investor confidence and hinders decarbonisation progress
More generally, changes in policy direction can affect investor confidence in government.36 Energy policy instability, such as the stop-start nature of some initiatives like the Green Homes Grant Voucher Scheme, which was extended and then abruptly closed, have eroded investor … Read more
Government Response
The government agrees with the committee's observation and has published the 2023 Green Finance Strategy, Net Zero Growth Plan, and Energy Security Plan to provide clarity and encourage investment. These plans include £20 billion for CCUS, annual Contracts for Difference rounds, and sector-specific investment roadmaps.
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13 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Department for Energy Security & Net Zero has limited levers to influence other departments
On 7 February 2023, the government announced that the Department for Business, Energy & Industrial Strategy (BEIS) would close, and its responsibilities would transfer to new departments, including the Department for Energy Security & Net Zero (the Department).39 The Department … Read more
Government Response
The government states the recommendation has been implemented, describing its existing robust governance and reporting processes at both ministerial and official levels, including regular inter-departmental meetings, to ensure collaboration and alignment across government departments on decarbonising the power sector.
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14 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Skills shortages and planning system issues hinder energy sector decarbonisation progress
The Department has created offshore wind, hydrogen, electricity network, and nuclear champions whose role includes identifying potential risks, barriers and bottlenecks to progress and making recommendations for both the Department and other parts of government where issues cross departmental responsibilities. … Read more
Government Response
The government agrees with the committee's observation, stating the points raised are already implemented through existing robust governance and cross-departmental processes to coordinate action across relevant departments.
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15 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Cross-Whitehall collaboration challenged by competing departmental ambitions and long-term skills gaps
The Department told us that it is essential that it builds strong partnerships and collaborative relationships with relevant departments across Whitehall, and that it works with No. 10 and the Cabinet Office to ensure that departments are aligned.48 However, other … Read more
Government Response
The government states the recommendation has been implemented, detailing its existing robust governance and reporting processes, including ministerial and official level committees, to ensure collaboration and alignment across departments on decarbonising the power sector.
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16 Conclusion Rejected
Fifty-Ninth Report - Decarbonising…
Significant investment in power sector lacks clear assessment of spending timelines and funding
While government has estimated that £280 to £400 billion of public and private investment in new generating capacity will be needed by 2037, it has not yet assessed when there may be periods of higher spending and how this will … Read more
Government Response
The government rejects the committee's observation, stating its focus on consumer security, affordable bills, and its current approach to policy decisions, cost impacts, and monitoring energy prices.
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17 Conclusion Rejected
Fifty-Ninth Report - Decarbonising…
Nascent technologies for decarbonisation will incur significant costs for taxpayers and consumers
We questioned the Department as to how it is planning to protect consumers and taxpayers from the cost of decarbonising the power sector, particularly when a challenge of proceeding quickly is that deploying nascent technologies before there is a competitive … Read more
Government Response
The government rejects the committee's observation, outlining its focus on consumer security by reducing and affording bills and describing its approach to managing policy interventions, cost impacts, and monitoring energy prices.
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18 Conclusion Rejected
Fifty-Ninth Report - Decarbonising…
Long-term consumer bill reductions from renewables seem inconsequential amid high wholesale prices
Although the Department was unable to tell us when bill payers would see lower bills as a result of investment in zero and low-carbon generating infrastructure, it highlighted recent analysis by Ofgem that renewables funded by contracts for difference are … Read more
Government Response
The government explicitly disagrees with the committee's (implied) recommendation, stating its focus is on consumer security by bringing down bills. It highlights past support schemes and its long-term strategy, Powering Up Britain, to deliver wholesale electricity prices amongst the cheapest in Europe.
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19 Conclusion Rejected
Fifty-Ninth Report - Decarbonising…
Department exploring fundamental electricity market reform to reduce long-term consumer costs
The Department is also currently considering fundamental market reform of how electricity is bought and sold, through which it hopes to reduce costs of electricity to consumers over the long term. The Department expects reform of the retail market to … Read more
Government Response
The government rejects the committee's observation, stating its focus is on consumer security by reducing and affording bills, and explaining its approach to policy interventions, cost impacts, and monitoring energy prices.
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20 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Energy bill support schemes prioritise cost reduction over encouraging demand efficiency
Government’s Net Zero Strategy expects a 40% to 60% increase in electricity demand by 2035 as more modes of transport and heating switch to electricity from fossil fuels.61 The Department told us it is expecting a corresponding increase in electricity … Read more
Government Response
The government states the recommendation has been implemented, describing its existing Net Zero Higher and Lower modelling scenarios which estimate future power demands and consider consumer choices and energy efficiency. Government policies are designed to incorporate these factors and incentivise behavioural change, as detailed in the Carbon Budget Delivery Plan.
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21 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
EPC rating C requirement implementation faces ongoing cost-effectiveness and affordability debate.
We asked the Department about its plans to encourage consumers, industry and households to invest in greater energy efficiency. It told us that this is an important aspect of its strategy, which includes encouraging short-term demand flexibility from consumers to … Read more
Government Response
The government agrees with the committee's observation, stating the points raised are already implemented through existing strategies that use modelling scenarios and policies to encourage energy efficiency and consumer behavioural change, as detailed in their Carbon Budget Delivery Plan.
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22 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Government's energy efficiency initiatives plagued by fragmented, stop-go implementation track record.
In its 2022 Autumn Statement the Chancellor announced new funding of £6 billion from 2025 to 2028 to improve energy efficiency for households, business and the public sector. The Chancellor announced that an Energy Efficiency Taskforce would be charged with … Read more
Government Response
The government agrees with the committee's observation, stating the points raised are already implemented through its existing strategies that use modelling scenarios and policies to encourage energy efficiency and behavioural change, as detailed in the Carbon Budget Delivery Plan.
HM Treasury
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23 Conclusion Accepted
Fifty-Ninth Report - Decarbonising…
Significant uncertainty remains regarding consumer behaviour change for power sector decarbonisation.
We also asked the Department about how government can influence consumer behaviour. The Department told us that its modelling of power sector decarbonisation by 2035 covers different pathways characterising different assumptions of consumer behaviour and energy efficiency (such as home … Read more
Government Response
The government states the recommendation has been implemented, explaining its existing Net Zero Higher and Lower modelling scenarios that estimate future power demands and consider consumer choices and energy efficiency. Government policies are designed to incorporate these factors and incentivise behavioural change.
HM Treasury
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Government Response AI assessment · 22 of 3 classified
Accepted 15
Acknowledged 1
Not Addressed 1
Rejected 5
Total 3 recs + 20 conclusions
Correspondence 2 letters
11 Jul 2023 Correspondence from James Armstrong, Managing Partner, Bluefield Partners LLP, re Bluefield Partners LLP submission to Public Accounts Committee inquiry, dated 28 June 2023
Parliament page
17 Apr 2023 Correspondence from Jeremy Pocklington CB, Permanent Secretary, re follow up questions eaised at the Public Accounts Committee on the NAO Office report on Decarbonising the Power Sector, dated March 2023
Parliament page