History repeating or the great unknown? Net-zero notes from former coalition energy minister Lord Barker

History repeating or the great unknown? Net-zero notes from former coalition energy minister Lord Barker

By Matthew Hannon, EnergyREV Co-investigator, University of Strathclyde

8th June 2021

If you could snatch half an hour with a former Minister of State for Energy and Climate Change, what would you ask them? We were fortunate enough to have this very opportunity when we spoke with Lord Barker of Battle on our latest episode of the Local Zero podcast.

You’re more likely to know him as Greg Barker, from his days as a minister in the coalition government between 2010 to 2014. We’ve been very keen to speak with him for some time. Why? He was at the forefront of an energy policy revolution during the 2010s that sought to deliver on the UK’s landmark Climate Change Act. Interestingly, for Local Zero listeners, decentralised energy and retrofit was ‘front and centre’ of the coalition’s low-carbon energy strategy, launching the Feed-in-Tariff (FiT)Renewable Heat IncentiveGreen Deal and a Community Energy strategy.

During the interview, Lord Barker spoke candidly about the successes and failures during his time at the Department of Energy and Climate Change (DECC). Reflecting on these experiences, he provided some valuable lessons for his successors at the new Department for Business, Energy and Industrial Strategy (BEIS), as they now enter a crucial stage of the net-zero transition.

Summary of key lessons:

  • We’ve already come a long way towards net-zero. This progress was far from guaranteed and is testament to some major energy policy successes but it is now that the hard work really begins.
  • Market innovation is key to exciting customers and engaging them in net-zero but regulation is also essential for correcting market failures and transforming the behaviour of the hardest to reach consumers.
  • The FiT created real excitement about decentralised energy but this may have faded now, as the FiT has been discontinued, with little stimulus replacing it.
  • We need a retrofit proposition that excites consumers and to deliver this on a street-by-street approach to capture economies of scale, in partnership with Local Authorities.
  • The value of community energy cannot simply be measured in megawatts. It is often just the first step in a much longer journey towards sustainability.
  • The electoral cycle and high turn-over of ministers threatens a long-term climate strategy, with an inevitable churn that undermines institutional memory in government.
  • Fears that an entirely virtual COP26 could undermine climate negotiations and threaten the momentum that has built behind the climate emergency, both at home and abroad.

We unpick these insights in more detail below.

We’ve already come a long way towards net-zero and this progress was far from guaranteed…

Reflecting on his time in office, Lord Barker was delighted at how far we had come to date, with the UK now halfway to meeting its target of “net-zero” emissions by 2050 (CarbonBrief). He was quick to point out just how unsure parliament was about the likelihood of success when the Climate Change Act was legislated in 2008: “The fact that we are nearly halfway to meeting that net zero goal, it’s extraordinary.”

He described the passing of the landmark legislation as a “massive leap of faith” and one they took “because we knew that was the right thing to do.” Consequently, government was unsure about how best to deliver on the UK’s landmark carbon reduction targets. Instead, they had to rely on a tremendous amount of self-faith in their ability to leverage the technologies and policies necessary to put their plan into practice.

Lord Barker also remarked on how the debate around climate change has progressed over the past decade. He explained how that we he first became climate change minister:

“I was frequently still having arguments with people about whether or not climate change existed, whether or not it was actually something that we should be responding to as policymakers, whether or not actually the whole thing was a hoax or not.”

Thankfully, the view of both politicians and the public on climate change has now changed and he believed there was a much stronger consensus around the existence of climate change and the pressing need to take action. In fact, he positioned climate denialism as an extreme and fringe view; one that is now met with scorn and ridicule:

“The last time I did a BBC program where [I was] up against a climate denier was probably 2016, or maybe even 2017. And now you'd be laughed…off the TV or laughed off the radio if you started to have that conversation…Four years after David Cameron and I had gone to the Arctic and pointed at melting ice caps and patted Huskies, that was the reality of the debate around climate change and climate policy in 2010.”

…But the hard(est) work has only just begun

We asked Lord Barker what he expected to be top of the agenda for the government’s current energy ministers, in terms of delivering net-zero. He made clear that whilst the coalition government laid the foundations for extraordinary success - in particular the decarbonisation of the power sector through the deployment of technologies like offshore wind - the biggest challenges were just around the corner:

“We tackled the low hanging fruit…although it didn't seem easy at the time, [it] has been a huge success. While energy is the most important element in the de-carbonization of the economy, there are other elements of a big emitters of carbon that need to be tackled and those are harder.”

He highlighted in particular the challenges associated with decarbonising the sectors other than power, namely heavy industry, buildings, transport, agriculture and land, which together account for roughly 80% of UK emissions (CCC).

From his perspective, the success of decarbonising these sectors, will depend on a combination of technological innovation and investment. The challenge was also characterised as more “diffuse” and less easy for central centralise government to tackle with one or two “big wins”, such as growing the UK’s offshore wind industry during the 2010s.

Surprisingly, Lord Barker identified one of the hardest to reach households for energy retrofit as the owner-occupiers of relatively large homes. These were householders who owned the property outright but couldn’t afford to heat their home and held a deep mistrust of government and accruing debt of any kind. He emphasised that this type of household was not uncommon and posed a real headache for policymakers.

Regulation is critical to transforming consumer behaviours

We positioned the net-zero transition as one that is now entering a new phase, where the consumer will be at the centre of most future decarbonisation. This is especially true when considering issues such as transportation, heating and diet, and how consumers will have to make fundamentally different choices about how they satisfy these needs. For example, the CCC highlight how 60% of the carbon abatement in the Balanced Scenario for net-zero relies partly or wholly on behaviour change.

Lord Barker raised major concerns about how best to convince sceptical consumers to do things differently. Whilst, he was quick to emphasise the importance of market-led innovations into capturing the imagination of most consumers, regulation still had a key role to play in tackling the harder-to-reach consumers and correcting unintended market failures:

“I'm a Conservative politician. I still believe in liberal conservative values but I also recognize that when it comes to climate change, there is clear market failure. The market provides opportunities to create solutions but left to its own devices there is absolutely no guarantee that it will create those solutions.”

So despite his clear emphasis on the importance of free market enterprise and competition, he sees “a clear role for regulation” and that government must “step up” and “marshal the private sector” to ensure it delivers on our climate goals.

He pointed to the leadership recently taken by government with its ban on the sales of new petrol and diesel cars in 2030, announcing this almost 10 years before their phase-out, which he believed would “drive real change”, not least investment and technological innovation. Conversely, he lamented the lack of leadership with regards to the rented housing sector and highlighted it as a sector that requires attention.

The Feed-in-Tariff created an excitement around decentralised energy but this may have faded now

During his time in office, Lord Barker was most proud of the impact that the FiT had on driving up the deployment of solar PV, which he explained helped see “over a million households with primarily solar panels on their roofs”. He identified it as the policy he was most proud of. More broadly however, he reflected on the important role the FiT played in driving a sense of excitement in renewable energy technologies; something that ‘hooked in’ a lot of households who may have otherwise been unengaged up to that point. He also highlighted its impact – in the UK at least - on driving down the cost of solar; transforming it from one of the most expensive power technologies, to one of the cheapest.

He did however acknowledge how the FiT, as it was originally designed, meant that a “very small group of people [were] doing very nicely and getting a high return”. This led to the scheme being overhauled, with the introduction of regression mechanisms that stepped down the available subsidy rates in-line with deployment. The logic being that for example, the more solar PV that was on people’s roofs or farmers’ fields, the cheaper the technology would become. The aim was to “stretch” this “finite pot of money” as far as possible, to expand its impact during a period of austerity.

Reflecting on the FiT’s closure in 2019 and its successor – the Smart Export Guarantee (SEG) – the feeling was that a strong and trusted framework had been lost, which had given “people confidence to invest in their own home solar devices [or] community solar”. Policies like the SEG – despite the significant falls in the cost of solar PV – had not provided “the same attractiveness to the broader consumer.”

Government’s data for UK solar PV deployment supports this claim. The FiT ended in March 2019 and each 14 month period up to then delivered on average 640 MW. In the 14 months between the SEG being introduced in January 2020 and February 2021, deployment grew by only 179 MW. This also includes deployment that would not have been eligible for the FiT, suggesting that a like-for-like comparison would see deployment even lower than 179 MW. In summary, he explained that “we've lost that excitement [in decentralised energy], which I think is a real shame.”

Community energy is a catalyst for wider community climate action

Lord Barker poured cold water on the notion that community renewables could ultimately play a leading role in delivering net-zero, if its impact was examined purely through the lens of “total supply of clean electricity to the grid”. He also warned that, given the different mechanisms required to support communities to deliver these projects, there was likely that this “relatively small” contribution would be “disproportionate to the amount of political time and policy effort that will be required to really drive that agenda forward”.

He was however adamant that measuring success purely in terms of electrons of power generated largely misses the importance of community energy. He described it as a catalyst for wider action, where communities would become more engaged with climate action and go on to do more things. These included energy efficiency and the wider sustainability agenda. Community energy was the beginning of a much longer journey towards sustainability for many communities. As he explained, “the value that you get, the excitement and the enthusiasm and the, with the community is wonderful.”

High turn-over of ministers threatens long-term climate strategy

We asked why community energy was such a key priority under the Coalition Government but under successive Conservative Governments (Cameron, May), it was no longer a priority policy. Lord Barker pointed to the high-turnover of ministers and the constantly changing portfolio they face, which undermined the depth of their understanding of the energy and climate change challenge. In particular, he emphasised the importance of his years working on the Environmental Audit Committee and as Shadow Minister for Energy and Climate Change. This he explained meant he understood the climate change challenge, and how local and community energy were, in part, important solutions to addressing it:

“Going into government I had nearly 10 years [of experience]…if you combine my time on the Environmental Audit Committee, when I started thinking about these issues, and then as shadow spokesman to write pamphlets, to talk to people, to really get clear in my mind what I wanted to do, what my agenda was. That's not typically how the British political system…works. Someone that was doing health last week is now doing pensions and somebody that was doing environment is now sorting out the treasury.”

He explained that “the musical chairs in British politics” undermines how much experience and understanding they can bring to a particular field. This was in spite of the institutional memory that the civil service aims to provide, largely because “it's not ultimately their job to make policy and set priorities.” Even so, Lord Barker emphasised the importance of having a missionary department, like DECC, which clearly targeted a low-carbon transition. This created a centre of gravity, which pulled in people who really wanted to go there and make a positive difference.

We need a retrofit proposition that excites consumers and street-by-street delivery

One of the schemes that had much less success under the Coalition Government was the Green Deal. This was an energy efficiency retrofit scheme, which recouped the cost of measures directly via the occupier’s energy savings. It has come under a variety of criticisms over the years, in particular the high cost of finance and a lack of engagement with consumers tapping into the issues people care about (Rosenow and Eyre 2016).

Reflecting on the scheme, Lord Barker highlighted the critical importance of the consumer experience and the challenge of ensuring that this was consistent across different households. He was also keen to point out that the offer must stretch beyond pure efficiency and excite householders in other ways too.

He reflected on two Green Deal pilot schemes; one offering measures from a pure efficiency angle and another from a home improvement angle, with a much stronger emphasis on improving the aesthetic and comfort of the home. Unsurprisingly, the latter scheme had a much higher take-up and was in large part, the basis for the Green Deal going ahead. He remarked how you could have “the same policy but delivered differently and get very different outcomes”.

The importance of delivering these efficiency measures on a street-by-street or neighbourhood-by-neighbourhood basis was made clear too and how “Local Authorities are the absolute key partner in this”, alongside strong private sector partners. This could achieve two things: the first was to harness the councils’ intimate understanding of their residents and the second was offering the private sector the economies of scale they crave to make it financially attractive to them.

The latter points to how an efficiency retrofit will demand a slew of different measures, typically requiring a number of companies with different skillsets. Bundling these together across a number of homes could then make it worthwhile for large companies to coordinate the supply chain, to offer an integrated retrofit package:

“We didn't really appreciate, in designing the Green Deal, the resistance there would be in the private sector to performing small jobs on houses….What we realized is the call-out cost of these different trades was such that it didn't make huge economic sense to a lot of big firms. It was quite difficult to package it together in a way that was really exciting to them…One of the reasons we have to do street-by-street is to get critical mass…It has to be done on a street by street framework and in partnership with the Local Authorities.”

Finally, Lord Barker lamented how government hadn’t combine the FiT and Green Deal, to help householders “borrow money against the feed in tariff revenue” to then channel into efficiency measures. This would have had the added benefit of harnessing the excitement of the FiT by coupling it with the Green Deal. Unfortunately, concerns around the national debt and further adding to householder debt counted against these plans.

Hopes for an in-person COP26 that wins hearts and minds

Asked about what his greatest hopes and fears were for COP26, Lord Barker highlighted his concern that an entirely virtual COP26 could undermine climate negotiations and threaten the momentum that has built behind the climate emergency, both at home and abroad. His preference therefore would be to delay it, if that meant expanding the in-person element of the summit.

He pointed to how this was so critical to COP16 in Cancun, which followed the failure of Copenhagen, in setting up a framework that ultimately led to the Paris Agreement. So without Cancun, “we would have never have got to Paris…I'm a great believer in personal interaction on these important policy occasions.”

More broadly, he hoped that if we are able to relax COVID restrictions and deliver a form of in-person COP26 then then it could be help to capture the public’s imagination:

“That’s the opportunity. If we can spring out of COVID and go straight into COP, with a sense of enthusiasm and ambition that is infectious. If we can do that, if we can make a determination to act on climate infectious, then anything's possible.”

Biography: Greg Barker served as a Conservative member of the UK Parliament from 2001 to 2015. Between 2010 and 2014, he served as Energy and Climate Change Minister in the coalition government led by David Cameron, becoming the longest serving UK energy minister for a generation. He was ennobled as Lord Barker of Battle in 2015. He currently sits a chairman of En+ Group, the world’s largest producer of low-carbon aluminium and independent hydropower.

You can listen to the full interview on the Local Zero podcast here: https://pod.fo/e/ccb1d

This blog was first posted by Matthew Hannon on LinkedIn on 28th May 2021.