Climate Policy Dashboard - Tracking progress to deliver net zero


Power Sector


Progress Ranking and Key Recommendations | Sector Summary | Recent Policy Developments | Further detail: CCC policy recommendations

Power sector progress ranking - Good

Progress ranking and key recommendations

Progress Ranking: Good (6/10)

Key actions on the road to world-leading policy

  • The Government released the Energy White Paper in December 2020, which provided detail on the Government's strategy for power sector decarbonisation. The Government has also committed to holding the next contract-for-difference auction in late 2021, which will be open to onshore wind and solar.
  • Of nine recommendations that the CCC has made for the power sector, five have been met in full already, with one partially met, and three not met.
  1. The Government should commit to a phase-out of unabated gas generation by 2035, and provide a detailed pathway for this by the end of 2021, covering:

    1. Alternatives for unabated gas in dispatchable generation
    2. Right incentives to push unabated gas down the merit order
    3. Ensuring that all new-build gas by 2025 at the latest is CCS and/or hydrogen-ready.
  2. The Government should also set a carbon intensity target for the power sector for 2030 of ~50gCO2/kWh to provide long-term confidence around the pace of power sector decarbonisation

  3. In the next Contracts for Difference (CfD) auction in 2021, Government should ensure that advanced conversion technologies are moved to Pot 1 rather than Pot 2. This covers anaerobic digestion (above 5MW) and dedicated biomass CHPs.

Sector Summary

  • Power sector emissions in 2019 were 57MtCO2e, or 11% of the UK total (CCC Sixth Carbon Budget, 2020)
  • Emissions fell 13% from 2018-19 (CCC Sixth Carbon Budget, 2020)
  • Of the 3 power sector policy actions for 2019-20 given by the CCC, none were met in full, with two partially met and one not met at all.
The power sector represented 11% of UK Emissions in 2019
Power sector share of territorial emissions, 2019
Source: Climate Change Committee - Sixth Carbon Budget (2020)

Recent Policy Developments

  • The power sector has seen the fastest emission reductions of all UK sectors, driven by coherent and consistent policy that has driven innovation and reduced fossil fuel usage. The key policies that have driven success over the last decade have included long-term contracts for renewable electricity via the contracts for difference projects, carbon pricing via the EU-ETS and UK Carbon Price Support, clear phase-out dates for coal generation, energy efficiency policies to reduce demand, and the creation of a capacity market to ensure sufficient security of supply.
  • Ofgem announced that network operators will have to demonstrate how their business models are compatible with Net-Zero
  • In March 2020, the Government announced that onshore wind and solar PV would be able to access the next round of Contracts for Difference (CfD) auctions, reversing a four-year ban on their inclusion.
  • In December 2020, the UK's Energy White Paper was published. In this, the Government committed to:
    • Installing 40GW of offshore wind by 2030, including 1GW of offshore floating wind
    • Holding the next Contracts for Difference auction in late 2021.
    • Having at least one power plant with CCUS operating by 2030 and consulting on plans to ensure existing and new gas-fired power plants can convert to low-carbon alternatives, with a consultation date of early 2021.
    • The White Paper also had a significant focus on nuclear, aiming to bring at least one large-scale nuclear project to final investment decision by the end of the current Parliament, and providing £385m funding for advanced nuclear technologies such as SMRs and AMRs. 
  • Other commitments in the Energy White Paper included an aim for a commercially viable fusion plant by 2040, establishing the role that BECCS can play in emissions reduction via a cross-Government bioenergy strategy due in 2022, and completing a review of the existing National Policy Statements for energy, with the aim of designating these updated NPS' by the end of 2021

Further Detail: Policy recommendations from the CCC


Policy Recommendation from the CCC

Government Progress



Deploying low-carbon electricity at scale. Out to 2035 we need 400TWh of new low-carbon generation. Currently 50TWh of this has been pledged – and we therefore need detail on the other 350TWh.

The Energy White Paper has some good policy announcements here – committing to 40GW of offshore wind, and acknowledging that wind and solar will form the backbone of a low-carbon electricity system. Opening Contracts for Difference (CfD) auctions to onshore wind and solar again, and holding another auction in late 2021 will also help drive large-scale low-carbon electricity deployment. However, there is no specific focus on how this gap in future low-carbon electricity supply will be provided.



Phasing out unabated gas generation. The Government should commit to a phase-out by 2035, with a detailed pathway for this announced, covering:
a) Alternatives for unabated gas in dispatchable generation
b) Right incentives to push unabated gas down the merit order
c) Ensuring that all new-build gas by 2025 at the latest is CCS and/or hydrogen-ready.

The Energy White Paper makes limited progress here. For example, some of the £1bn Net Zero Innovation Portfolio will go to hydrogen and advanced CCUS, which would be the likely dispatchable options to replace unabated gas.

However, there is no mention in the Energy White paper or anywhere else about market incentives to push unabated gas down the merit order. (item b in the phaseout plan). There is no firm commitment on a phaseout date for unabated gas, with the Paper instead focusing on ‘likely eliminating the reliance on generation from unabated gas’, and intending to consult in early 2021 over proposals to update carbon-capture readiness requirements, to include hydrogen-readiness as an option and remove 300MW threshold (which is currently providing a perverse incentive for 299MW fossil power plants).

Greater clarity around the future for unabated gas generation could also come via the review of the energy National Policy Statements, which the Energy White Paper commits to in 2021.



Market design for net-zero. We will need to reform electricity markets to be fit for a world with high proportion of renewables. This includes:
1. Need for certain and predictable signals
2. Need for a whole-market approach – reflecting importance of supply and demand side solutions
3. Need to ensure security of supply and markets for dispatchable capacity.

The focus in the early 2020s should be on markets for dispatchable capacity such as hydrogen.

In the Energy White Paper, a key commitments is around Efficient Electricity Markets. They commit to publishing a new Smart Systems Plan in 2021 with Ofgem, and to define electricity storage in law.

The White Paper commits to £100m of funding for longer duration energy storage, and to working towards ‘a market framework which ensures that national and local electricity markets are fully coordinated’ (which would be beneficial for flexibility in the electricity market). The next review of the capacity market is still in 2024 – this may need to be brought forwards as part of the electricity market reform.

The Energy White Paper acknowledges that ‘current market framework emphasises the cost of fuels… but renewable technologies, such as wind, do not use fuel at all. It is also poor at valuing some services which will become increasingly important to the system, such as local balancing.’



Deliver plans to decarbonise the power sector to 50gCO2/kWh by 2030.

No mention of a 2030 carbon intensity target for the grid in the Energy White Paper



At least 40GW of offshore wind by 2030

The Ten Point Plan/Energy White Paper both commit to this target.



Continue to improve system flexibility via implementing all the actions in the Smart Systems and Flexibility Plan, including working with the Department for Digital, Culture, Media and Sport on cyber security. Develop mechanisms that encourage consumers to be flexible.

The Government has implemented two-thirds of the actions in the Smart Systems and Flexibility Plan, released in 2017, and is on track to deliver these actions in full by 2022.

Alongside this, the Government will publish a new Smart Systems Plan in Spring 2021 jointly with Ofgem, which will set out how the Government aims to build on the Smart Systems and Flexibility Plan.



Develop a strategy to coordinate interconnectors and offshore wind farm network connection to onshore grid, and bring forward any necessary legislation.

BEIS launched a consultation on this topic in July 2020, and so should be on track to publish a strategy by the end of 2021, as asked for by the CCC.



Consult on future electricity market design as renewables makes up a bigger share of generation

Alongside the Energy White Paper, the Government published a consultation on how best to support a High Renewable, Net Zero Electricity System. This seeks view on ‘how the contracts-for-difference scheme could evolve beyond the 2021 auction, including how longer-term changes to the contracts-for-difference or wider electricity market design can enable the effective integration of increasing renewables capacity’



Move Advanced Conversion Technologies (ACT), Dedicated Biomass-CHP and large-scale Anaerobic Digestion to the CfD Pot 1 for established technologies (so that other technologies can compete for the Pot2 money such as floating offshore wind). Restrict ACT to combined heat and power applications only, where the emissions benefit is greatest.

Advanced conversion technologies, anaerobic digestion (above 5MW), dedicated biomass with CHP are still in Pot 2 (advanced technologies) rather than Pot 1. This means they are competing with other technologies which should arguably take priority, such as floating offshore wind. 


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