National Infrastructure Assessment targets energy and transport sectors

Marcus Walters
24 July 2018

Twitter FacebookLinkedIn

Print

Topics 

National Infrastructure Assessment

The recently announced National Infrastructure Assessment contains some interesting recommendations in relation to the energy and transport sectors, says Marcus Walters of Burges Salmon.

We were pleased to see the launch earlier this month of the National Infrastructure Commission’s (NIC) first ever National Infrastructure Assessment (NIA). Marking a vital milestone in the delivery of infrastructure in the UK, the NIA assesses the UK’s long-term economic infrastructure requirements across a range of sectors, identifying key priorities and setting out a strategy to ensure that such requirements are met.

The first NIA carries out such an analysis through to 2050 and contains an ambitious set of proposals, looking at key areas such as digital connectivity, renewables, transport, waste, water and regional devolution.

It also contains some noteworthy recommendations in relation to the energy and transport sectors, some of which are highlighted below.

Energy

The NIC has concluded from its analysis that the optimal low-cost option for the energy system in 2050 is a highly renewable electricity generation mix.  It has therefore recommended at least 50% renewable electricity generation by 2030 and the continued use of contracts for difference and the capacity market to achieve this transition, with all renewable technologies, including tidal, competing with one another on an equal footing. The NIC has also recommended a ‘one-by-one’ approach to new nuclear power stations, and that prior to 2025 the government should not agree support for more than one nuclear power station in addition to Hinkley Point C.

In terms of the decarbonisation of heat, the NIC has recommended that the government establishes a coherent programme to gather the necessary evidence to make informed choices, including establishing a safety case for using hydrogen as a replacement for natural gas in heat generation.

Transport

In order to accommodate the impending revolution in road transport, the NIC has recommended the roll out of a core network of charging infrastructure to facilitate 100% electric vehicle sales by 2030 (with local authorities being required to free up 20% of their parking spaces for such purposes by 2025). It has also noted that the implications of technical innovation, such as connected and autonomous vehicles, should be taken into account in future long-term transport planning and investment strategies through a centre of advanced transport technology established within the Department for Transport. Furthermore, the NIC recommends devolving infrastructure budgets to cities for locally determined urban transport priorities, including additional funding to support major capacity upgrade programmes.

Financing

It is clear from the NIA that the successful implementation of the NIC’s proposals will require both public and private financing and the NIC has put forward an analytical framework to enable a proper evaluation of the costs and benefits of various financing options for infrastructure projects. As an immediate next step, the NIC intends to pilot this framework to develop insights into its practical application and update it where necessary.

In addition, due to the significant role that an independent state institution can have in catalysing private investment in public infrastructure, the NIC has recommended that by 2021 the government should establish an operationally independent UK infrastructure finance institution, in the circumstances where financial support from the European Investment Bank is no longer accessible following Brexit.

Next steps

The government has committed to lay the NIA before Parliament and formally respond to it within the next 12 months. It will be interesting to see which of these recommendations are ‘endorsed’ by government and form part of its infrastructure policies going forward.

Marcus Walters is a senior associate in the projects team at Burges Salmon.

A new Burges Salmon report, Perspectives on Infrastructure:  Delivering the industrial Strategy, is now available to download here.