low carbon economy

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By Paul Davies and Michael Green

The first solar farm has successfully launched in the UK without government subsidisation. Clayhill Solar Farm, a 10 megawatt (MW) site near Flitwick in Bedfordshire, is capable of generating enough power for 2500 homes. Clayhill’s developer, Anesco, is a private company specialising in the design and development of solar and battery storage sites.

Renewable energy projects like Clayhill have become increasingly viable in recent years due to the falling cost of solar panels and batteries. In particular, cheaper manufacturing costs have enabled solar generation to become cost-competitive with electricity from fossil fuels. However, despite these favorable conditions, the Renewables Obligation subsidy scheme — one of the UK government’s main mechanisms for encouraging renewable electricity projects — closed to new applicants in March 2017.

By Paul Davies and Michael Green

The UK government has announced that it is bringing together a new taskforce led by senior financiers in order to encourage the growth of “green finance”. The taskforce, which will be chaired by Sir Roger Gifford, former lord mayor of London, has six months to develop proposals aimed at accelerating investment in low-carbon projects.

The UK’s climate change minister, Claire Perry, announced the initiative in New York at the opening of Climate Week. According to Perry, “The transition to a low-carbon economy is a multi-billion pound investment opportunity and a key part of this government’s industrial strategy”.

By Paul Davies and Michael Green

On 16 June 2017, the Bank of England (BoE) published an article setting out its response to climate change, explaining that climate change and society’s response to it presents certain financial risks. These risks arise through two main ways:

  • The physical effects of climate change such as droughts, floods and storms.
  • The impact of changes associated with transitioning to a lower carbon economy such as (i) developments in climate policy (ii) new disruptive technologies or (iii) the changing priorities of investors.

The BoE’s approach in mitigating the financial risks from climate change has two elements:

  • Actively engaging with firms that have climate related risks such as segments of the insurance industry. The BoE is “deepening” its work here, focusing on the insurance sector and starting to work in the banking sector.
  • Improving the resilience of the UK financial system by engaging with initiatives to support a smooth market transition to a low carbon economy. This includes taking a proactive interest in the Financial Stability Board’s (FSB) private sector on climate related financial disclosures (TCFD), co-chairing the G20 green finance study group on behalf of the UK and co-ordinating with other insurance regulators in the Sustainable Insurance Forum (SIF). The BoE is consolidating this international work by (i) liaising with other financial regulators and engaging with the private sector on climate related issues and (ii) considering related research and analytical work, such as reviewing frameworks for understanding the impact of climate change on the wider community.

By Paul Davies and Michael Green

The UK Department for Business, Energy & Industrial Strategy (BEIS) published a Green Paper on 23 January 2017, setting out the building blocks for the UK’s modern industrial strategy. Described by Theresa May as a “critical part” of the plan for post-Brexit Britain, the implementation of this strategy will have important policy ramifications, in particular, for the environment.

Overview of the Green Paper

Key points to note from the Green Paper include:

  • a consultation is launched which invites a review of the costs of achieving the UK’s decarbonisation goals and how to best support business energy efficiency (the consultation will close on 17 April 2017);
  • a review of the case for a new research institution on battery technology, energy storage and grid technology, will be undertaken, and findings will be released in early 2017 and an emissions reductions plan is expected in February 2017;
  • the government’s new approach to industrial strategy based on ten pillars will focus on ensuring that the UK economy benefits from the transition to a low-carbon economy by delivering affordable energy and clean growth; and
  • there will be a focus on improving the UK’s energy, transport, water and flood defence infrastructure.