FST JOURNAL

In Government, I was very involved in the publication of the Clean Growth Strategy in 2018. Looking back, I wish it had taken a systems approach. Net zero is the very definition of a complex problem. Some of the system engineers at the Energy Systems Catapult would say it makes getting a man to the moon look like a walk in the park.

Just look at some of the challenges: a doubling of the electricity system while at the same time completely removing coal and much gas from the system. That in parallel with an extraordinary transition: the creation of a whole new low-carbon hydrogen system, one of similar size to the current electricity system. Both have to be accomplished within 30 years. This will involve a complete transformation of the way we move around, from one based on petroleum to one based on electricity (with probably some hydrogen). After that comes the decarbonisation of the process industries – which is about as hard as it gets.

The situation we wish to achieve is something I term ‘Net Zero Nirvana’. That involves a cost-effective (less than 1% of GDP) transition which creates jobs across the country and provides a compelling example to the rest of the world – after all, this is a global problem. There are, of course many other routes to net zero. There is a very expensive version where industrial and manufacturing competitiveness has been destroyed and the UK just imports a wide range of innovations. Or alternatively there is the net zero political disaster, where the measures – effective though they may be – are unpopular and the country gains little or no economic benefit. There are also many scenarios where we do not even get to net zero.

A systems approach is iterative, going back and forth and narrowing the pathway to reaching the goal of Net Zero Nirvana, while not allowing the pathway to be diverted away from the goal. 

In practice, there are a number of steps. First, a clear definition of objectives, needs and specific requirements. Politicians are not always good at clearly identifying what needs to be achieved. Government is often nervous about engaging widely with stakeholders in an iterative way. Systems engineering can help to develop effective ways to do so.

Now, although we want to use this approach to constructing that system of systems now, it does not provide a perfect map which will solve every problem. It is more about selecting the right set of analytical tools, whether economic modelling to examine different pathways to the future, consumer testing to work out which strategies are most effective. etc. It is a matter of gathering as much evidence as possible which feeds into the decision-making.

Making a big decision, which changes the whole of a system, without fully understanding the true situation is not going to work. Good systems thinking then spends as much time considering implementation and integration - i.e. how it all fits together on a local level. Of course, verification is also an essential component, checking that the planned change has actually led to the desired outcomes. We should be honest that we are not going to get everything right but we learn. Climate and net zero strategies involve complex systems, so verification and validation are absolutely essential.

The creation of a whole new low-carbon hydrogen system within 30 years will involve a complete transformation of heating and transport. 

 

Underpinning everything is the search for continuous improvement. This is not hugely different from how Government approaches policy challenges. Yet there are some subtle and very important differences, which could be absolutely transformative for problems like net zero and other complex challenges.

A key issue for Government is the degree of central coordination required. Now, when someone in energy starts talking about central coordination, there is a suspicion that we are trying to recreate the Central Electricity Generating Board (CEGB). That is very far from the case. However, designing the future energy system does involve a consideration of the way the markets work, where the innovation challenges might be and the particular options that might be trialled.

So, will the resulting system be highly centralised or highly distributed? Net zero will have elements of both because of its complexity and size – and the pace of change. So there is a case for some degree of central direction and there will be a need for system designers, but that is really a question for Government to think about.

If Government – and indeed all of us – are serious about a systems approach to net zero, what tools are currently missing? First, there needs to be a formal system-of-systems map. After all, net zero is a complex problem and this large set of information needs to be organised. A good analogy is the Tube map, a useful guide for getting from A to B. The catapult is building a first version of that map, which will include some understanding of interactions and feedback loops. Some institutional memory is therefore crucial, in order to make sure we learn from previous mistakes and successes, and adapt as necessary.

The preferences of consumers will be a massive challenge for the next wave of decarbonisation.

Next, there needs to be a much more agile approach to governance and regulation in the energy system. That includes a structured approach for stakeholder input, not just talking to the usual suspects but really thinking broadly about the right people to engage with.

There have been some good examples recently, including the Energy Data Taskforce and the Electric Vehicle (EV) Energy Taskforce, taking a large group of several hundred stakeholders, some of them not familiar with the energy system, in order to understand what they need for their transition.

We need market simulation and modelling. This is not just about scenarios for 2050. We really need to understand how the money is going to flow in different market arrangements.

Consumer preferences

The preferences of consumers must be factored in. This will be a massive challenge for the next wave of decarbonisation. How to test what consumers really want, whether in terms of low carbon heating, electric vehicles, or all of the other challenges. Trial environments that really work do not yet exist. Understanding consumer behaviour will help to understand their effect on the network.

We could pick two or three places across the country to really see how these different strategies work in practice. Ultimately, this is about creating a set of living, credible roadmaps that are actually going to get us to net zero. It is not just what we need to do, it is how it is going to work in practice and which measures need to implemented in what order. It is the equivalent, as one engineer said to me, of trying to totally rebuild an aircraft engine while the plane is still flying: that is how difficult the net zero challenge is. And a systems approach can be a huge help in delivering that.