Connecting HGVs to the UK’s green energy journey: the future of gas is green and the future for HGVs is gas

For the past 200 years, gas has been a fuel that has offered the UK flexibility – be it for street lighting, industrial processes, power generation, or heat demand. During this time, the UK has built the world’s leading gas grid infrastructure, which today directly supplies the energy used to heat 85% of British homes. Faced with the challenge of climate change, the next stage in its evolution will be low-carbon or ‘green gas’.

Gas currently accounts nearly 50% of non-transport UK primary energy needs – primarily for power generation and heat. But it also offers an option to help decarbonise parts of the transport sector, particularly for vehicles like HGVs, where large powertrains are needed.

In addition to tackling carbon dioxide (CO2) emissions, the Government has recently come under real public pressure to toughen up its plans to tackle illegal levels of airborne pollutants in our towns and cities, most notably nitrous oxides (NOX) and particulate matter (PM) which cause and exacerbate a raft of debilitating health conditions. Action on the twin challenge of CO2 and air quality must permeate every level of government, and every department of government.

There are approximately 39 million vehicles on the roads in the UK and HGVs, buses and coaches make up less than 2% of that total. In total, a staggering 324 billion vehicle miles were travelled in the UK last year, with HGVs, buses and coaches contributing 6% of that total. This relatively small number of vehicles emit 20% of the UK transport’s greenhouse gases. A recent report by Element Energy showed that just 18 months on from its opening, a compressed natural gas (CNG) filling station at Leyland in Lancashire is cutting CO2 emissions from the HGVs that use it by 84%, thanks to its exclusive usage of renewable biomethane. These are not marginal gains, they represent transformation potential for a sector that is notoriously difficult to decarbonise. Forward-thinking companies like Waitrose, who use Leyland, are at the forefront of this transformation.

But there’s a by-product too, what economists would call a positive externality. Those 2% of vehicles, travelling just 6% of the miles in the UK, also emit 43% of road side nitrogen oxides. Given that there were an estimated 40,000 early deaths last year as a result of poor air quality, then it should be a cause for concern. Low-carbon vehicle trials showed NO2 emissions down 74% when using gas not diesel; NOx down 41% whilst Iveco (who make diesel and gas trucks) reckon a EuroVI gas HGV produces 96% fewer particulate matter emissions compared to its diesel counterpart.

There has been some action in London around ultra clean air zones, but wholesale switching from diesel to gas HGVs, whilst economically rational (with 30% savings on a pence/mile basis) has been too slow. Yes, there is a need for another 150 or so, strategically located gas-filling stations to give fleet operators a real choice, but the Government could do more to signal their support for the switch. And sadly, Conservative MPs are lagging behind Labour in support for regulation to encourage the switch from diesel (52% versus 73% support according to a Dods survey on behalf of EUA).

It will also need joined-up government, too. The Department of Transport is responsible for greenhouse gas emissions from HGVs; Defra have responsibility for air quality; BEIS look after energy policy; the Department for Health pay the bill for NHS treatment for those affected by poor air quality. It’s easy to see the flaws in this structure. Let’s hope there is leadership on this to deliver.

Mike Foster is the Chief Executive of the Energy and Utilities Alliance, a not-for-profit trade association that provides a leading industry voice to help shape the future policy direction within the energy sector

The views expressed in the article are those of the author, not necessarily those of Bright Blue

An opportunity to cut harmful air pollution from coal

Coal in the UK is in terminal decline. The fuel that powered the industrial revolution and has been a staple of our economy for over a century is on its way out. Recent Carbon Brief analysisfound that last year coal use more than halved. This in turn contributed to an impressive six per cent annual fall in carbon emissions. Excluding the general strikes in the 1920s, emissions are now at the lowest level since the Victorian era.

But the job of phasing out coal from our energy mix is not complete. There are still eight coal-fired power stations on the British grid, with a combined capacity of around 14GW. In 2015, Bright Blue recommended that the Government regulate to close these last coal plants in the early 2020s. A few months later, the government adopted this policy and has just now finished consulting on its proposals to force their closure by the end of 2025.

This sharp decrease has several probable causes: anticipation of the 2025 coal phase-out, the abundance of relatively cheap gas, the build-out of zero-marginal-cost renewables, and the UK's 'Carbon Price Support', which charges power generators for each tonne of carbon they emit. But there is another factor that has helped to make the economics of coal challenging, over which EU Ministers are soon to make a decision at the European Council: the EU's 'Industrial Emissions Directive'.

The Industrial Emissions Directive (IED) came into force at the start of 2016 and its aim is to reduce harmful air pollution from industry. It sets legal limits on the levels of nitrogen oxides, sulphur dioxide, and dust that large plants can emit. Of the highest emitting 30 plants affected by the IED, 26 are coal-fired power stations.

The damage to public health from coal is significant: across all EU Member States, air pollution from coal is estimated to contribute to nearly 23,000 deaths each year with a health bill ranging from €32bn to €62bn. But the IED is not realising all the promised emissions savings. Over half of coal plants in the EU have been given special 'derogations' by the EU, meaning that they do not need to apply them.

Under the policy, national governments must issue permits to all plants affected by the IED. These permits are issued with reference to guidelines that are set out in the EU's 'Best Available Technique Reference Document' (BREF). This document is currently being reviewed, and the European Council is soon to vote on proposals to amend the BREF that would make the application of the IED by national governments more stringent.

Put simply, if these proposals are accepted, many more plants will have to choose whether to make expensive upgrades in order to cut their emissions, or simply to close. The upgrade costs could be substantial: in the UK, government-commissioned research found that for a 500 MW coal plant, the cost of compliance would typically be between £50m and £75m.

So in many cases, this investment decision will lead to plant closures, with the investment generating insufficient returns to justify the costs. The three factors named above (cheap and plentiful gas, zero-marginal-cost renewables, and carbon pricing) assist and reinforce this dynamic.

With the UK's support at the European Council, it is expected that the proposals will be passed through qualified majority voting. However, without the UK's support, they are vulnerable to defeat. For this reason, the decision of UK Ministers is absolutely critical to the pace of the coal phase-out in Europe.

Not only would these regulations help to hasten the closure of the remaining coal plants in the UK. But they could help to bring about the end of coal generation throughout EU. The benefits would be great. In relation to climate, it would greatly reduce EU greenhouse gas emissions, for which coal is responsible for 16 per cent of the total. In relation to air pollution, the proposed new BREF would reduce the number of premature deaths from coal-related air pollution to under 9,000.

Supporting and championing these tougher environmental regulations is an opportunity for the UK to demonstrate international leadership post-Brexit. By committing to phasing out coal by 2025, the UK became the first industrialised country to burn coal for electricity and the first to commit to closing its coal fleet. We have recommended before that this significant domestic legacy should be leveraged internationally, in order to make a major contribution to reducing global emissions and tackling climate change.

In its coal phase-out impact assessment, the government listed UK international climate change leadership as one of the policy's main benefits. In the European Council, the UK has an opportunity to realise some of this benefit. It should seize it.

Sam Hall is a senior researcher at Bright Blue

This article first appeared on BusinessGreen 

We’ll always have Paris

This week, delegates from almost 200 countries are gathering in Marrakech for the next round of UN climate talks. There are many reasons for climate diplomats to be cheerful. Last year’s Paris Climate Agreement, signed by all those countries, has come into legal force over a year earlier than planned. All the major emitters, including the US, China, India, and the EU, have now completed domestic ratification of the treaty. The global economy seems firmly set on a trajectory towards net zero emissions by the end of this century.

But despite these successes, there are several major challenges facing attendees in Marrakesh: how to increase individual emission pledges, how to raise sufficient climate finance, and how to respond to President-elect Trump.

Ratcheting up the ambition

Signatories to the Paris Agreement pledged to limit average global temperature rises to well below two degrees and to aim for a rise of just 1.5 degrees. Yet the Intended Nationally Defined Contributions (INDCs), voluntary pledges by individual countries of how much they would cut their emissions, are not sufficient to achieve these high-level goals.

Ahead of the summit in Marrakesh, the United Nation’s Environment Programme released a report on the ‘emission gap’, which is the deficit between the INDCs and the long-term goals. They find that current pledges will lead to an average warming of around 3.2 degrees above pre-industrial levels. They also calculate that, under current INDCs, both the 1.5 and 2 degrees ‘carbon budget’, the total amount of carbon that can be emitted before temperatures rise above a certain level, would be easily exceeded by 2030.

In the text of the agreement, there is a resolution to begin a dialogue in 2018 on progress towards the 1.5 and 2 degree targets. Another key feature of the Paris deal is that signatories must reassess and increase their individual contributions every five years to help ensure the high-level goals are met. The first occasion this will happen is in 2020. So there are mechanisms for scaling up pledges, but urgent progress is required.

Securing climate finance

The support of developing countries for the Paris Agreement was contingent on securing sufficient funding to help them mitigate and adapt to climate change. A total of $100 billion per annum by 2020 must be raised by developed countries. The UK Government this week released a statement showing that funding currently stands at $62 billion per annum, up from $53 billion in 2013. The UK’s own contribution is set to rise to £1.76 billion by 2020.

Donald Trump has said he will cancel the United States’ payments to this fund. President Obama had pledged to give a total of $3 billion by 2020. Assuming Trump follows through with this election pledge, replacement finance will now be required, as well as the outstanding amount.

Managing President-elect Donald Trump

During his election campaign, Donald Trump pledged to withdraw the US from the Paris Agreement. But as the ratification process was so swift, he is unable to cancel the treaty altogether. In fact, reports have suggested the possibility of Trump as President helped instil the urgency to bring the treaty into force. In theory, the US would have to wait four years before it could leave, but in reality, there is little to stop him disregarding the emission reduction pledges made by President Obama. In addition, Trump has promised to “end the war on coal”, and review the current regulations helping to drive coal off the system.

Nevertheless, strong economic forces, as much as political will, are now helping to drive decarbonisation. The rapidly-falling costs of low-carbon technologies have made renewables as cheap as, if not cheaper than, traditional fossil fuels. The International Energy Agency (IEA) reported that costs of onshore wind have fallen by 30% between 2010 and 2015, and those of solar by two-thirds. Independent analysis for the UK Government this week show that onshore wind and solar will both outcompete gas on price by 2025. This may help keep the US, and indeed the rest of the world, on a low-carbon trajectory in the absence of presidential leadership.

Conclusion

Even before the election of Donald Trump, the challenges of matching action with ambition and raising sufficient climate finance were significant. When President Obama hands over to President Trump, an important galvanising force for international climate action will be lost. But other major climate leaders are now emerging. China actually castigated candidate Trump in November 2016 for his intention to withdraw from the Paris Agreement.

Countries like India and China are clear that they are pursuing their own self-interest by championing climate action. Decarbonising helps India to cut its air pollution, with pollution in parts of New Delhi currently five times the level considered safe by the US’s Environment Protection Agency. Similarly, China sees a major economic opportunity both from increased low-carbon infrastructure spending and from becoming a leading exporter of low-carbon technologies.

Post-Paris there is both a political framework for scaling up ambition and an economic imperative to be at the forefront of the low-carbon transition. Despite Trump, the delegates in Marrakech can be optimistic.

Sam Hall is a researcher at Bright Blue

Going round in circles: the benefits of cycling

It’s seemingly rare for a political speech to be made in Westminster nowadays without a joke about Boris Johnson’s new cycle superhighways in London. George Osborne at this week’s Spectator Parliamentarian of the Year ceremony was the latest example. But sometimes, instead of light-hearted cynicism, cycling receives outright opposition. The Daily Mail recently launched a campaign to halt the spread of cycle lanes in the UK, claiming they are underused, polluting, and add to congestion.

Of course, cars are very popular. More than four in five people travel by car as a driver or passenger at least once or twice a week in the UK. Car traffic increased by 1.1% last year, to the highest level on record. So it is important that measures to incentivise cycling are complementary to policies to support motorists. It should not be a zero-sum game.

What policies are driving the increase in cycle lanes?

The Government recently finished consulting on its draft Cycling and Walking Investment Strategy - intended to help deliver by 2040 their aim to “make cycling and walking the natural choice for shorter journeys, or as part of a longer journey”. There are also sub-targets to double the number of cycling journeys and reduce cycling fatalities and injuries.

The largest scheme is ‘Cycle Ambition Cities’. Launched in 2013, this gives £10 per resident to eight cities to spend on cycling (Birmingham, Bristol, Cambridge, Leeds, Manchester, Newcastle, Norwich, and Oxford). Funding will be spent on segregated cycle ways, improved lighting and parking facilities for cyclists, and better cycle links to key services.

Although the Government is investing over £300 million throughout this Parliament to support cycling, some campaigners have criticised them for not giving it sufficient funding. Cycling UK claim that funding amounts to just £1.38 per person (excluding London) – far short of the £10-20 per head that many were calling for to deliver a cultural shift in favour of cycling.

The Government’s plans to mandate five cities to establish Clean Air Zones is an important nudge to get people out of their cars and onto bikes. By charging older, polluting vehicles that enter the city centre, cycling becomes a more attractive option for local residents who may not wish to upgrade their vehicle. The High Court’s recent ruling on the Government’s air quality plan makes further Clean Air Zones more likely.  

Cycling already plays a central role in London’s transport system. The new Mayor is planning to introduce an ultra-low emission zone from 2019, which will restrict access to central London for older vehicles. The most polluting vehicles will also be made to pay a £10 emissions surcharge from 2017. These two measures should help to nudge Londoners towards taking up cycling.

Sadiq Khan is continuing his predecessor’s work to improve cycling infrastructure in the capital. In 2013, Boris Johnson launched a cycling strategy to reflect the fact cycling had tripled on London’s roads over the previous ten years. He allocated up to £400 million to invest in new cycle superhighways as part of securing the Olympic legacy for London. And of course he set up the ‘Boris bike’ hire scheme, which recently celebrated its sixth anniversary.

The benefits of cycling

Health: Promoting cycling creates significant benefits for public health by encouraging more people to exercise. There is strong medical evidence linking physical inactivity with cardiovascular disease, strokes, obesity, cancer (colon and breast), type 2 diabetes, osteoporosis and depression. For this reason, the Government made cycling a component of its recent childhood obesity strategy. Bikeability, a government-funded scheme, will provide £50 million in funding over the next four years to give free cycle training to schoolchildren.

Wealth: Cycling yields fiscal benefits, many of which come from savings to the NHS. A government study in 2014 found that the direct cost to the health service of physical inactivity is £1 billion, with an indirect cost of £8.2 billion. The cycling industry also generates significant value to the economy, estimated at £2.9 billion a year according to 2011 research by the London School of Economics. Cycling charity Sustrans also found that every pound of public investment in cycling in the UK yields a £19 return.

Cleaner air: Air pollution is significantly reduced by shifting from cars to cycling. Road traffic is responsible for around 95% of pollution hotspots in the UK. So encouraging more people to switch from cars to bikes can help reduce the number of places affected by poor air quality. Cycling can also help to reduce carbon emissions in the transport sector, which have in fact increased in both 2014 and 2015.

Less congested roads:  Increasing cycling reduces congestion on roads as more people get out of their cars. Research by British Cycling finds that cycling saves a third of road space relative to cars, because it is more space efficient. Moreover, building new cycle lanes does not preclude expansion of road capacity. The Government is in fact investing huge amounts of money into building new or upgraded roads, in tandem with its plans for cycling. In 2014, a £15 billion programme was announced out to 2021 to add new road capacity, dwarfing spending on new cycling infrastructure.

Conclusion

Despite the clear benefits of cycling and the policies which support it, levels of cycling have stayed relatively stable in recent years. Just 15% of the English population cycle at least once a month, according to government figures.

This summer saw Team GB’s cyclists enjoy incredible success at the Olympic velodrome in Rio. The Tour de Yorkshire has become a fixture in the county’s sporting calendar, providing a permanent legacy of the enthusiasm created by hosting the first stage of the Tour de France in 2014. We have the sporting heroes to inspire us to get on our bikes. Now the Government needs to ensure we have the cycling infrastructure and policies to allow that success to be rolled out to more people across the country.

Sam Hall is researcher at Bright Blue

Strengthening the UK's demand response flexibility market

Energy has become front-page news, and the debate about its future has never been so important. Understanding what that future might look like is crucial if we are to meet the long-term challenge of providing safe, reliable, and secure energy in a sustainable and affordable way. Of course, we cannot be certain how the energy future will evolve. Factors such as environmental legislation, energy costs, and economic developments will all have a major impact on the future energy landscape.

Generation of thermal electricity in the United Kingdom is coming to an end. A large amount of coal- and oil-fueled generation has and is retiring because of age and environmental legislation, including the European Union’s Large Combustion Plant Directive. Furthermore, challenging economics for gas-fueled generation has resulted in few new power plants being built and many, including units only two years old, being mothballed until the business case for their operation becomes more favourable.

The resulting decline in capacity and generator availability has led to very tight capacity margins—the difference between electricity supply and demand levels that can make the role of the National Grid in matching generation and demand quite challenging. Indeed, spare electric power production in the electricity system is predicted to fall to less than 2% by 2015, increasing the risks of blackouts should an unforeseen operational issue arise or the United Kingdom experience a cold winter.

Today the situation is very different. Increasing contributions from the renewables sector, notably from wind and solar, are both unpredictable and fragmented, spread out across the country. To maximise carbon savings, National Grid needs to make the most of clean sources like these but must also take compensatory actions when they are not available. Expensive stand-by plant has to be called upon when the wind doesn’t blow or the sun doesn’t shine. Additional power must be either taken on to the grid or demand reduced. Large users in industry are increasingly being encouraged to “turn down” and delay their demand until such time as available capacity improves.

This increases the requirement for demand side balancing services, known as demand side response (DSR). These services help the system operator, National Grid, to balance supply and demand at times of system stress, vital to maintaining the UK’s power supplies. DSR could provide an important contribution to managing security of supply and cutting energy consumption. It offers a cheaper and greener alternative to building new generating capacity.

Ofgem estimates that non-domestic buildings (excluding industry) contribute approximately 15GW to peak demands on Great Britain’s national grid. This could rise to around 30-40GW when considering large industrial and manufacturing facilities.

The main routes to enter the demand side market are either by providing services directly to National Grid or by working with one of a growing number of demand aggregators or other third parties. Aggregators and third parties can work closely with an energy user and show them how to maximise their assets in terms of the speed of response they could provide, capacity available, the amount of time that delivery could be sustained for – and the various prices available. In effect, the demand-response aggregator will enable property owners and asset managers to access their assets' untapped revenue sources while meeting energy-saving demands, cutting costs, and contributing to the reduction of carbon emissions.

Pearlstone Energy is a National Grid-approved demand aggregator. We use Honeywell’s proven technology to automatically reduce energy consumption in buildings for a short amount of time during periods when electricity demands exceed availability. These automated energy reduction measures are totally carbon neutral and can create additional revenue streams for participating companies while contributing to broader UK carbon reduction goals.

But there are commercial challenges, especially for new entrants, due to lack of investor certainty and reliance on multiple revenue streams. Therefore, some demand side providers would like to see longer-term contracts. Others suggest that more frequent tenders, a move to regular auctions, and standardisation of products would enable wider market entry, and potentially lower minimum size thresholds.

There have also been some concerns by a number of industry observers that DSR has not received sufficient attention and is disadvantaged compared to generation capacity. In particular, DSR providers can only bid for one-year contracts, whereas new generation can receive capacity agreements of up to 15 years. Evidence from markets in other countries, where equal contract lengths are awarded to both generation and demand capacity, suggests that DSR can make significant contributions, without being at the expense of new generation.

For business customers, it can be confusing to navigate the different products and routes to market. There are cultural, informational and behavioural barriers. Confidence is critical, and can be undermined by conflicting sales messages from demand side providers. Industry standards are needed, and are being developed. For customers, senior buy-in and cross-business commitment is often required. Demand side flexibility should link into the significant opportunities for energy efficiency.

The market expectation is that change will occur. However, if change does not happen quickly enough, there is a risk of discouraging new non-traditional market participants. Likewise, as business customer interest grows, we need to ensure they are able to participate, and do not miss the opportunity. For example, some customers wanted to take part in the transitional auctions but couldn’t respond within the required timescales.

There is a clear tension between changing existing markets to ensure that they are fit for future, and not knowing how markets may develop. But a slow watchful approach may also rule things out. So we need to provide a sense of direction for those coming into the markets and wanting to invest, without being able to offer certainty.

A shared vision of an end-point, or at least the principles for a future market is required, as are the incremental steps to get there. This should be an evolutionary pathway – to ensure that we build on lessons learned and maintain investor confidence in the transition from existing to future arrangements.

Dr Azad Camyab is the founder and CEO of Pearlstone Energy

The views expressed in this article are those of the author, not necessarily those of Bright Blue.