Decarbonising the power system is a crucial step towards the UK’s commitment to end its contribution to climate change by 2050.
New nuclear power and new technologies to cut emissions across the economy could be rolled out under a new financing model and government investment to decarbonise the UK’s energy sector.
The government today (23 July 2019) set out proposals to explore the use of the Regulated Asset Base (RAB) approach to attract significant private investment for future nuclear power in the UK.
Already used in major infrastructure projects like the Thames Tideway Tunnel, the alternative model could reduce the cost of financing infrastructure and risk for developers while limiting the impact on consumers’ bills in the long-term.
Business and Energy Secretary Greg Clark said: “Reaching net zero emissions will require action across all areas of society – from innovators, government, regulators and civil society. We will all need to act together to ensure we cut emissions and build a vibrant and innovative economy that can continue to capture the economic benefits of clean growth.
“A critically important step in reaching net zero emissions will be transforming the energy system so the economy can be powered by affordable, secure and clean energy. We will need to change not just the way we use energy in our homes and businesses, but also how it is produced and delivered. We need to do this in a way that keeps the cost of energy as low as possible and ensures our energy security is never compromised.
“Through our modern Industrial Strategy we are building on our international leadership in clean growth to invest and develop the technologies and funding models we will need to reach net zero emissions. This new funding model has the potential to help UK industry seize the global challenge of the low carbon transition by building the infrastructure we need, while offering value for money for consumers and taxpayers.”
The RAB approach could also be used to reduce the costs of the transport and storage of carbon dioxide. A funding model similar to the Contracts for Difference scheme, which provides developers with a set price for low-carbon electricity will be explored alongside other options to deliver investment in Carbon Capture Usage and Storage (CCUS) power projects while cutting emissions.
The government’s ambition is to roll out the technology at scale by the 2030s, subject to costs coming down, as part of its world-leading commitment to become a net zero emissions economy by 2050.