Unravelling the alphabetti spaghetti

BEIS has been replaced with three new government departments. We find out what we can about the new Department for Energy Security and Net Zero (DESNZ)

The Department for Energy Security and Net Zero will provide dedicated leadership focused on delivering security of energy supply, ensuring properly functioning markets, greater energy efficiency and seizing the opportunities of net zero to lead the world in new green industries.

Source: UK Gov

We learned last week that we have a whole new set of UK Government departmental acronyms and initialisms to learn. BEIS – Business, Energy and Industrial Strategy – is no more and in its place we find the new Departments of Energy Security and Net Zero (DESNZ), Science Innovation and Technology (DSIT), and Business & Trade (DBT). At the same time, we learn that responsibility for digital policy – the ‘D’ in the (now former) office of Digital, Culture, Media & Sport – has been passed across to DSIT (see above). All of which would render the former DCMS to be simply CMS, except that it’s retained its D as the Department of Culture, Media & Sport. All perfectly clear.

So, what will this freshly shuffled pack of cards do? It’s early days of course and the dust is still settling, but we do note that some of the senior officials in the new departments are not exactly new entrants in terms of former manifestations of their briefs. Jeremy Pocklington, for example, the new DESNZ Permanent Secretary, joins from Levelling Up but is a former Director General  for Energy and Security at BEIS and was a DG at the Department of Energy and Climate Change (DECC) before that. Many others – like Sarah Munby at DSIT, move straight across from BEIS. So, hopefully they’ll all hit the ground running. They need to.

The Green Edge, of course, is most interested in how DESNZ will shape up. Most of the chatter in the mainstream media gives the impression that the department has been created primarily to reduce household bills – which, granted, is one of its earliest priorities. But Rishi does seem to have been careful in his early soundbites to show how the ‘ES’ of DESNZ links to the ‘NZ’ part:

“…we can produce more energy at home, giving us independence and security, and we can transition to cleaner forms of energy as we hit our Net Zero ambitions and create jobs in the process...”

Rishi Sunak, interview with Sky, 7 Feb link

The policy paper on the new departments, issued jointly by the Cabinet Office and Number Ten on 7 February, does at least provide a slightly deeper view of the priority outcomes for the new departments. Six outcomes each for DESNZ, DSIT and DBT, and five for DCMS (only five because it lost its Digital remit, we guess). We’ll leave you to read those yourselves without replication here. But we were interested to read an interpretation of DESNZ’s priorities in a post by edie.net the following day. The six items that edie.net thinks (and we agree) should be on the DESNZ’s to-do list for 2023 include two in particular that could be argued have a big impact on skills development. First, to increase the recognition of the ways in which the low-carbon transition can create well-paid jobs across the regions; and second, to speed up the realisation of the target announced by Jeremy Hunt last year for buildings and industry to reduce annual energy consumption by 15% by 2035.

The first of these is obvious. If, and as, recognition of the socio-economic value of Net Zero grows, then the skills system will need to keep up in all areas: careers advice for new entrants and career changers; qualification and standards; whole occupation development; and the delivery of all the above. It needs a strengthening of the relationships at local levels between businesses and education providers. The whole LSIP process in England and its equivalent in the other three nations could help. The higher education players will need to be bound in too, with their green-generation new and evolving degree programmes.

There’s a big link here also to other parts of DESNZ’s brief, in particular driving through the Energy Bill. The Bill includes business models for hydrogen and CCUS; for improved heat network zoning; for new market mechanisms for heat pumps. All areas that will need the skills to make these things happen.

The second involves the ‘hard’ skills for low-carbon heating installation, of course. But it’s also about awareness and advice. For domestic dwellings in particular, much of the 15% reduction can be readily achieved by a simple set of measures; by the management of consumption and by insulation of walls, lofts and double glazing. Beyond that, there’s the need for the population to understand what options are available for retrofit and refurbishment. To deliver that, we see the need for a mix of skills, from advisory and support through to simple building modifications. After that, the ‘hard’ skills kick in.

While we’re on the subject of energy efficiency, it’s interesting – if slightly uncomfortable - to reflect on a few metrics from the recent past. Greenhouse gas emissions from UK buildings have fallen by 18% since 1990, much of this being driven by regulations mandating all new boilers installed after 1995 to be efficient condensing models. But most homes in England are still reliant on fossil fuels (86% of gas, 4% on oil), with only around half a million (out of 25 million) being equipped with some form of low-carbon heating. And while around 54,000 heat pumps were installed across the UK in 2021 (with 33,000 going into existing homes), this is compared with around 1.8 million gas boilers. The heat pump volumes don’t compare too well against some other countries¹: 537,00 in France; 382,000 in Italy; and 177,000 in Germany.

Schemes have come and gone. The Renewable Heat Incentive (RHI), for example, was planned to deliver 491,000 heat pumps by April 2021, but by then only 71,517 had been accredited. True, gas boilers are being phased out and from 2025 the new building regulations will mandate the installation of clean heat. But let’s not forget that the original date for this was 2016, a date which was cancelled.

Going back to the basics, we find that home insulation in 2021 was running at a miserable 4% of its peak in 2012 when insulation was a government priority. Little wonder, as edie.net points out, that the CCC’s 2022 progress report to Parliament named improving building energy efficiency as one of the slowest parts of the UK’s low-carbon transition. The report shows this in particular in its policy scorecard for non-fuel poor homes, a point we highlighted in our recent post on retrofitting (or not) in Richmond Upon Thames.

Image: TGE from CCC

So, much for the new Department to do. And here’s an additional priority, not given in the policy statement from Number Ten but called out, we think quite correctly, by edie.net: improving cross-departmental collaboration.

We’ve commented often on the need for better collaboration across the departments and we take note of a quote from Aldersgate Group’s executive director Nick Molho in the edie.net post:

It is important that the creation of the DESNZ does not obscure the fact that achieving net zero will require business model and infrastructure changes across the whole economy – this must be reflected in how responsibilities are split across government departments and how they interact with one another.

One of the big collaborative areas must be between DESNZ and DBT, with its priorities including economic security and supply chain resilience. As pointed out in a recent post by the World Economic Forum, as the geopolitics of fossil-fuel based energy are replaced with the new geopolitics of lithium, copper and other clean technology staples, ‘new risks will emerge – both from new clean energy sources and from the multi-decade process of transition during which the old geopolitics of oil and gas will coexist alongside the new geopolitics of clean energy’.

Collaboration must get better for skills development too. In our recent post we asked the question about who in Westminster is responsible for adult green skills development: the answer being nobody, it seems, right now. And already, in the priority outcomes for the other new departments created alongside DESNZ, we see areas where collaboration will be needed and a skills impact will be seen – and that’s before we even consider the involvement needed from DfE.  Digital policy, for example, formerly the domain of DCMS and a key enabler for Net Zero, now sits with DSIT. Also with DSIT, ‘…championing new ways of working and the development of in-house STEM capability to improve outcomes for people.”

Perhaps, somewhere in the Westminster alphabetti spaghetti, there’s a place for a similar role to Scotland’s Minister for Green Skills, Circular Economy and Biodiversity?

1. Heat pump sales numbers are for the year ending April 2021.