Business warning — Net zero power list — Not so smart – POLITICO

— A major report drops from the CCC’s Advisory Group on Business. MECUK speaks to the group’s chair.

— Who’s shaping U.K. net zero policy? Read our power list.

— The government has targets for rolling out smart meters, but a new report from the National Audit Office finds progress has been slow.

Good morning and welcome to POLITICO Pro Morning Energy and Climate UK, our second edition. We’re ready to keep the ball rolling. As always, please send tips, musings, encouragement and criticism to [email protected], [email protected] and [email protected] Or reach us on Twitter: @hargraver; @charliecooper8; @abby_wallace3.

BRITISH BUSINESS NET ZERO ‘MANIFESTO:’ Taking action on net zero is “more than an exercise of ESG compliance” — it is fundamental to the “commercial competitiveness” of British businesses and the global economic clout of the U.K. That’s the punchy message from an influential group of firms and business associations in a report for the government’s statutory independent adviser, the Climate Change Committee (CCC).

Avengers assemble: The CCC convened the Advisory Group on Business (AGB) — which includes industry giants like the British Chambers of Commerce (BCC), Tesco, Lloyds Banking Group, and BAE Systems — last year and it’s now submitted and published its report, which they’re calling a “manifesto for strengthening business action on net zero.” Read all about it here.

Ooft … But the AGB, chaired by the BCC’s Director General Shevaun Haviland, add that the current strategy for net zero is “not working,” calling for a “more focused approach from government” and citing long delays in getting a grid connection, a critical skills gap and the slow uptake of low-carbon heating as major roadblocks.

Shevaun says: “We have no time to lose,” she told MECUK ahead of the report’s release. “The world is frankly on fire.” Haviland emphasized the huge potential economic downside of not acting, taking recent events in North America as an example. “I haven’t seen any stats yet but I’d be interested to see how that damaged New York’s economy over those two days it was shrouded in smoke,” she said.

Copy the IRA? Haviland said she was “realistic” and recognized the U.K. could not “match” the U.S. or the EU in terms of state subsidies to fuel its energy transition. But she said central government could still be a much bigger “lever” of decarbonization — particularly through its buying power. “If they said we are retrofitting all government buildings with heat pumps, that would be market-making. The market would follow those sort of indicators.”

What do they want to happen? The report sums up its core recommendations as the “Five I’s” — that’s integrity, investment, implementing, innovative, and influence, in case you were feeling, erm, inquisitive. But within that framework there’s some crunchy stuff: they call for “targeted reforms to tax incentives, capital allowances and lending criteria” as part of a “renewed net zero industrial strategy.” They also call for DEZNZ and Ofgem to speed up the consenting process for net zero infrastructure like power grid connections.

Net zero comms: Interestingly, they also want the DEZNZ and the Department for Culture, Media and Sport to work with business on pulling together “a long-term public engagement strategy for net zero.” The Cabinet Office and No. 10, they say, need to bring in a far-reaching “net zero test” for all major investments, spending, policies and strategies.

DESNZ responds: A spokesperson at the Department for Energy Security and Net Zero said the government was “working hand in glove with British business to strengthen our energy security as we transition to net zero,” and pointed to the recent formation of the Net Zero Council of business leaders. 

GLOBAL OFFSHORE WIND SUMMIT: A reminder that the event kicks off this morning at 9 a.m., with opening words from RenewableUK’s Dan McGrail and energy minister, Graham Stuart. Here’s the agenda.

NET ZERO COMMITTEE: We have an energy security and net zero committee! Members include Labour’s Hilary Benn; Barry Gardiner; Mark Hendrick, and Lloyd Russell-Moyle, who will sit alongside the Conservative’s Vicky Ford; Alexander Stafford; Mark Jenkinson; Dan Poulter and Mark Garnier. The gang gets together for their first behind-closed-doors meeting tomorrow at 10 a.m.

NEW GIG: Conservative MP and former government net zero czar Chris Skidmore has been appointed a professor of practice at the University of Bath, with a focus on sustainability and climate research.

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VIEW FROM THE EU: On another scorching day in London, some extremely sobering reading from the European Environment Agency. The EEA has launched a new online tool tracking Europe-wide preparation for the impact of floods, droughts and wildfires — and says the U.K. and elsewhere face an “urgent need to upscale” their response plans.

2035 POWER TARGET ‘IMPLAUSIBLE:’ Former European Commission adviser and all-round energy guru Dieter Helm has run the rule over the government’s target of decarbonizing the power grid by 2035 (and Labour’s even more stretching target of 2030.) His conclusion: “On present policies there is little prospect.” Ouch. Full research paper here. 

SHAPPS SERBIA MEETING The energy secretary met Serbian Prime Minister Ana Brnabic Tuesday. The pair signed an agreement to co-operate on the energy transition, including renewables, nuclear and biomass.

ABB ON OFFSHORE WIND: 24 wind farms need to come online in the next seven years for the government to meet its offshore wind targets, according to the tech company ABB. The government plans to reach 50GW of offshore wind by 2030, up from around 14GW currently. But to do this, government and industries need to bring down the cost of developing wind farms, speed up the planning process and upgrade the grid, ABB said.

PROGRESS CHECK: New analysis from the Green Alliance think tank suggests the government’s emissions-cutting plans have actually gone backwards since ministers announced sweeping pledges on “Green Day” in March, the Times reports.

CENTRICA PROFITS: British Gas owner Centrica was expecting “significantly higher” profits in the first half of 2023, the company said ahead of its AGM yesterday.

SCOTTISH GAS BOILER BAN: Ministers in Scotland have set out its plan to ban gas boilers in new buildings from April next year, 12 months ahead of the likely date for the U.K. government’s ban. The proposal, which needs to be passed by the Holyrood parliament, meets a commitment in the Bute House power sharing agreement between the SNP and the Greens. The Herald has more.

GLASTONBURY WIND TURBINE: An Octopus Energy wind turbine has been erected at the site of Glastonbury to help produce more power for the five-day festival. Towering 20 meters high and complete with Octopus tentacles, the turbine will be quite a thing to marvel at. Especially, one imagines, for festival goers still recovering from the night before.

MOVERS AND SHAKERS: Who has the ear of the prime minister on energy and climate? Who’s shaping the U.K.’s path to net zero? Who might still flip the political agenda in a whole different direction? There’s an ensemble cast in U.K. net zero politics and policy, but we’ve whittled it down to 20 influencers molding the country’s energy future. Dive in and read all about them here.  

The political big beasts: Heading up our list is Nick Park, energy adviser to Prime Minister Rishi Sunak. Close behind are Westminster rivals Grant Shapps and Ed Miliband, who can’t seem to go very long without tweeting shade about one another’s policies (Miliband had strong views yesterday on our interview with Shapps, for instance). U.S. President Joe Biden also ranks highly: a reflection of how the U.S. Inflation Reduction Act is framing the debate on the green economy on this side of the Atlantic too.

Westminster influencers: As for the backbenchers holding the government’s feet to the fire — and in some cases mulling post-parliamentary campaigner careers — we’ve got former net zero czar Chris Skidmore, the man who presided over COP26 Alok Sharma, and Green MP Caroline Lucas, who is leaving parliament but very much not abandoning the climate cause.

The campaigners: The European Climate Foundation’s Joss Garman is the man who brings disparate elements of the U.K.’s green movement together. And while he may try to stay out of politics, politicians ignore the moral authority of David Attenborough at their peril. The protesters of Just Stop Oil and Extinction Rebellion tend to make themselves pretty hard to ignore as well.

The wildcards: There aren’t many lists that could contain Biden, Attenborough and, erm, Nigel Farage — but the net zero polemicist makes ours as a reminder that there are influential political forces in the U.K. that think the entire net zero agenda is on a hiding to nothing. And they’re getting louder.

Agree? Read on to find out who else made the cut. And yes, we know, these lists are always a little arbitrary, but they’re also fun. If you think we’ve got it wrong, tell us why you — or your boss — should be on the next one.

ROLL OUT, HOLD UP: The roll out of smart meters has been slower than anticipated, according to a new report on progress at the Department for Energy Security and Net Zero (DESNZ).

TARGETS APLENTY: The government has imposed installation targets on energy suppliers to fit smart meters in U.K. homes, as part of the drive to meet its net zero goals. In February, the government announced a new consultation on proposals to have smart meters installed in 80 percent of homes and 73 percent of small businesses by the end of 2025. 

BUT BUT BUT … Roll out has been slower than planned, according to the National Audit Office (NAO), the government’s public spending watchdog. Only one in 13 of the large suppliers hit its 2022 targets for installing both gas and electricity smart meters. 3.7 million meters were installed overall, but this fell short of their combined target of 5 million, the watchdog found. 

Meanwhile … DESNZ has previously adjusted both its roll out timescales and targets. The NAO says hopes of hitting 2025 targets are complicated by an engineer shortage and disagreements between the department and energy suppliers. It added that DESNZ itself sees its target as “ambitious but realistic.”

WHERE WE STAND: Suppliers have installed smart meters in just over half of homes and small businesses. The NAO said 57 percent of all electricity and gas meters were smart by March 2023, though around 9 percent were not working properly.

NAO SAYS: “The rollout is now at a crucial point — and the department should ensure it has robust information on both the total costs and benefits of smart meters to make decisions from an informed position to maximize value for money,” said Gareth Davies, head of the NAO.

COMMITTEE CHIMES: Meg Hillier MP, chair of the committee of public accounts said the 57 percent of meters that are smart are a “far cry” from the government’s original targets. “Without a clear grip on the escalating costs of the rollout, the Department for Energy Security and Net Zero risks chipping away at the benefits to consumers,” she added.

NEED FOR SPEED: A DESNZ spokesperson responded: “As the NAO recognizes, we’ve made good progress in the rollout of smart meters with over 32 million now in homes and small businesses across Great Britain, putting them in control of their energy use and saving money on bills. But we want more people to benefit as soon as possible. That’s why we’ve set energy suppliers ambitious but realistic installation targets and are working with them to speed up the rollout.”

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