Carbon Neutral Roadmap: Preferred Strategy

Carbon Neutral Roadmap

Preferred Strategy Report

R.170/2021

1

 Introduction

1. Jersey has a good record of tackling its contribution to global climate change, although progress appears to have slowed in recent years and the Island will need to take significant action to decarbonise faster in the coming years. Steps to date have successfully reduced on-Island carbon emissions[1] by over a third since 1990. The Island continues to take its global responsibilities seriously, acting in accordance with ratified international treaties on climate change.
2. A comparison of emissions reductions for each Crown Dependency, France and the UK, relative to their 1990 baseline, as well as their projected decarbonisation pathways, is set out at Figure 1.
3. Jersey has lower per capita carbon emissions than many jurisdictions of a similar size, and the lowest of all jurisdictions in the British Isles. From this base, the States Assembly, in May 2019, voted to declare a climate emergency (P.27/2019, as amended)[2]. In February 2020, the Assembly agreed a Carbon Neutral Strategy (P.127/2020, as amended).
4. The Carbon Neutral Strategy adopted by the States Assembly rejects the view that, because of its small size, it is not worth Jersey becoming carbon neutral when other countries have not committed to do the same. Instead, the States Assembly, in agreeing the Carbon Neutral

Strategy, recognised that the strongest moral and ethical responsibility is to the generations of Islanders that will live in and look after Jersey in the future. This responsibility is not lessened because others fail to act; it still falls to the current generations of Islanders to improve Jersey's

air quality, protect and enhance its natural environment, create the infrastructure to lead healthier lives and replace polluting technologies for the longer-term.

5. As required by the Carbon Neutral Strategy, representatives of all age groups – from those in their late teens to those in their early nineties – were drawn together through random selection, to form Jersey's Citizens' Assembly on Climate Change. The report of the Citizens' Assembly, published in June 2021[3], is clear, and its ambition reflects and validates that which ministers, and members of the States Assembly have shown to date.

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Indexed emissions (MtCO2e)

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UK projected

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France projected 120 (WAM)

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Figure 1: Indexed emissions: Crown dependencies, France, and UK.

6. The report of the Citizens' Assembly on Climate Change was considered by members of the States Assembly during an in-committee debate held in July 2021[1]. The Minister for the Environment has prepared a detailed response to the themes and issues raised by States Members, which is published alongside this strategy.
7. Building on the work to date, and a wide-ranging evidence base (Appendix 1), this Preferred Strategy sets a strategic policy framework for the preparation of the Carbon Neutral Roadmap). By publishing these policies early, Islanders can begin to consider their implications and can also see the intended direction for the Carbon Neutral Roadmap. Early development of the strategic policies also provides a framework against which the recommendations of the Citizens' Assembly can be tested and enables the development of policies based on a consistent strategic direction.
8. Each strategic policy contains an explanation of the associated issues and available evidence, together with a policy statement set out in a navy-blue box. These policy statements provide the fundamental assumptions used in planning and preparing the Carbon Neutral Roadmap.
9. The strategy has been developed by a steering group of ministers and non-executive States Assembly members, chaired by the Assistant Minister for the Environment, Deputy Gregory Guida, and is endorsed by the Council of Ministers. The membership and Terms of Reference for the group is included in Appendix 2.
10. A response to the Citizens' Assembly on Climate Change Recommendations report can be found in Appendix 3 to this Preferred Strategy.
11. The Preferred Strategy should be read alongside the Carbon Neutral Strategy[2], which sets out the scientific and strategic context, people-powered approach and high-level policy analysis, which are not repeated here.
12. The strategic policies established by Preferred Strategy will be incorporated into the Carbon Neutral Roadmap. Once published, the Carbon Neutral Roadmap will undergo a final period of public consultation and will be considered by the Environment, Housing and Infrastructure Scrutiny Panel, before being debated in the States Assembly.

Structure and content

The Preferred Strategy is set out in several sections, as set out below.

1. Introduction    1
2. Structure and content   4
3. The Carbon Neutral Roadmap   6
4. Strategic Policy 1: Jersey's net-zero emissions pathway   8

• Our current scope 1 carbon emissions  8

• Progress along our previous emission reductions pathway   9

• The Paris Agreement on Climate Change  12

• Extending The Paris Agreement to Jersey  12

• Achieving net-zero by 2050   13

• The emissions pathway    13

• Offsetting residual emissions    13

• Summary: Jersey's net-zero emissions pathway   14

5. Strategic Policy 2: Island energy market   16

• Part 1 – The energy trilemma': our future energy choices and the shape of the market  17

• Part 2 - The future energy landscape: electricity   19

• Part 3 - The future energy landscape: biogas, biofuels and hydrogen   22

• Summary: Island energy market   25

6. Strategic Policy 3: Financing strategy   27

• The costs and benefits of carbon neutrality    27

• The Climate Emergency Fund    29

• Medium and longer-term financing strategy  31

7. Strategic Policy 4: Policy programme and development  34

• Choosing and prioritising policies 34

• Tackling pollution, building capacity and capability    35

• Delivering together   36

• Ensuring a Just Transition   36

• Summary: Policy programme and development   37

8. Strategic Policy 5: Becoming carbon neutral  39

• Defining carbon neutral  39

• The role of offsets in an early transition to carbon neutrality  41

• The potential for sequestration   42

• The views of the Citizens' Assembly and members of the States Assembly   43

• Summary: Becoming carbon neutral    44

9. Conclusion and next steps  46
10. Appendices  47

• Appendix 1 – List of published evidence base   48

• Appendix 2 – Carbon Neutral Steering Group: membership and terms of reference  53

• Appendix 3 – Minister for the Environment's Response to the recommendations made by the Citizens' Assembly on Climate Change  54

• Appendix 4 – Overview of key activities covered in each greenhouse gas inventory sector 93

• Appendix 5 - Overview of energy technologies considered  95

• Appendix 6 – Ideas generated as part of Jersey's Climate Conversation  98

The Carbon Neutral Roadmap

1. From the start, work to develop the Carbon Neutral Roadmap has recognised that decarbonising Jersey's economy is a long-term challenge. It is important to take action now, but also to focus on increasing our capacity to decarbonise in future years.
2. The Carbon Neutral Strategy[3], agreed by the States Assembly in February 2020, sets out to establish: "a mature approach, aimed at creating the foundations for long-term social and economic change[that]will require us all to make time and space for the reasoned, long-term thinking that this issue requires."  
3. The Strategic Policies in this document are a contribution to developing these long-term foundations. They build on other foundational work, particularly the people-powered approach taken through Jersey's Climate Conversation[4], which included the Citizens' Assembly on Climate Change, and the discussions that followed in the States Assembly in-committee debate[5].
4. In planning for major long-term change, a balance must be struck between taking early decisions that give certainty and create the context for action, and the need to take time to get decisions right and to respond to events and new evidence and understanding. It is the job of the Carbon Neutral Roadmap to achieve this balance, by:

• establishing a staged pathway in which delivery plans are updated in each new term of government,

• introducing a package of policies and actions for the first stage (2022-26), with supporting investment from the Climate Emergency Fund, and

• setting milestones for future key decisions and the introduction of future policies.

5. The published Roadmap will include a visual depiction of what actions need to be taken immediately, and when other decisions must be made, and actions taken, to deliver the plan to stay on the right road to Jersey's low carbon future.

Carbon Neutral Roadmap Strategic Policies

Carbon Neutral Roadmap- Strategic Policy 1

Jersey's net-zero transition pathway

Carbon Neutral  Carbon Neutral Roadmap-Strategic  Roadmap- Policy 5 Strategic Policy 2 Becoming carbon  Carbon  Island energy

neutral Neutral  market Roadmap

Strategic

Policies

Carbon Neutral

Roadmap-Strategic  Carbon Neutral Policy 4 Roadmap-Strategic

Policy  Policy 3 programme and  Financing strategy development

Figure 2: 5 Strategic Policies of the Carbon Neutral Roadmap.

Strategic Policy 1: Jersey's net-zero emissions pathway

1. In line with other jurisdictions, Jersey monitors the emission of six greenhouse gases. These are converted into carbon equivalents' to create a standard index of emissions that is measured in tonnes of CO2 equivalents.
2. In simple terms, an emissions pathway is a forward projection of the anticipated level of carbon pollution in future years. The pathway is used to show how much carbon is expected to be emitted in each year and is a fundamental building block of the Carbon Neutral Roadmap.
3. This Strategic Policy establishes the intention to secure the extension of the Paris Agreement on Climate Change to Jersey. This brings several advantages, including showing global and local commitment to a science-led approach to decarbonisation; creating clear targets that help government, Parishes, businesses, and individuals all see the role they will need to play in the coming years; and leaving the door open to become carbon neutral at an early date.
4. The policy sets a minimum emissions pathway for Jersey. This will be tested alongside the development of specific policies designed to reduce carbon emissions to the levels required by the pathway. If that analysis shows that a faster transition might be accommodated, that will be set out in the Carbon Neutral Roadmap.

Our current scope 1 carbon emissions

5. Jersey's previous greenhouse gas emissions are well understood and have been independently measured since 1990[6] (the baseline year set by the Kyoto Protocol).
6. The majority of our emissions come from on-Island road transport, fossil fuel heating systems in our homes, business and government buildings and transport to and from the Island by ferries and planes. Smaller emissions sources include agriculture, the treatment of solid waste in the energy from waste facility to produce electricity, air conditioning units and changes in land use. This is shown in Figure 3.

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-5% Transport Residential Business ESnuepplyrgy Agriculture ManWageastmee nt InPdurocestrsiasl LaChnad nUsgee

Sector

Figure 3: Scope 1 emissions by inventory reporting sector. Jersey's 2019 inventory figures. Greenhouse gas inventories are reported to the UNFCCC by countries and are used for

policymaking, monitoring progress in carbon reductions and for modelling in the scientific community. An overview of the activities covered in each sector can be found in Appendix 3.

7. Emissions from on-Island activities (principally from heating and transport) are relatively low at about 3.8 tonnes of carbon per person annually compared to 6.8 tonnes per person annually in the UK. Jersey benefits from an already decarbonised electricity supply and a lack of heavy industry on the Island which explains the per capita difference. It is important to note that this per capita figure does not include scope 3 emissions generated off-Island in the production of goods and services that are consumed in Jersey (see the Carbon Neutral Strategy[7] for a full description of different scope of emissions).

Progress along our previous emission reductions pathway

8. In 2014, the States Assembly agreed a carbon reduction plan, Pathway 2050 – An Energy Plan for Jersey[8]. This Plan responded to the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC), adopted in 1997. Under this protocol, Jersey must reduce on- Island emissions by 80% by 2050, compared with 1990 levels.
9. In line with our Kyoto obligations, successful implementation of the polices in Pathway 2050 should deliver the projected reduction in scope 1 emissions shown by the grey line Figure 4: nearly 80% lower than 1990 levels by 2050. Without any policies to reduce emissions,

conservative projections are that emissions will follow a no interventions' pathway indicated by the upper orange line.

10. Figure 4 shows that emissions were expected to be 263,000 tonnes in 2030; this would be 58% of the 1990 baseline of 628,600 tonnes of carbon per year.
11. We can track our actual progress in reducing emissions as of 2019 (the most recently verified data available shown in navy-blue) against the red no interventions line and the blue Pathway 2050 interventions' line. It is clear that actual progress, in recent years, is tracking far closer to the no interventions' line than the with interventions' line that would put us on track for an 80% reduction in emissions on 1990 levels by 2050[9].
12. This is sobering. The international scientific community has made it clear that an 80% reduction on 1990 levels is insufficient to prevent dangerous climate change hence the move under the Paris Agreement to net-zero' by 2050.
13. Despite having agreed Pathway 2050: An Energy Plan for Jersey (gov.je)[10] and policies to reduce carbon emissions locally, we are already quite a long way off-track with what is now agreed to be too conservative a level of emissions reductions, let alone zero emissions by 2030 or even 2050.

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Pathway 2050 interventions Kilotonnes of carbond1ioxi0de0 equivalent  Net-zero interventions

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Figure 4: Jersey previous emissions reductions pathway as agreed in Pathway 2050– An Energy Plan for Jersey. The grey dotted line shows trend line of historic emissions based on emissions from 2000

onwards after the first electricity interconnector was installed.

14. There are some obvious explanations why progress in recent years has not delivered the carbon reductions that were anticipated, including:

• Background population growth has been in excess of the modelled assumption.

• The funding behind Pathway 2050 was limited (£1M per annum) and was substantially reduced in later budget rounds.

• The policies and action statements were not linked into long term strategic planning, beyond the political cycle within which the Energy Plan was agreed.

• Policies do not always have the anticipated impacts. For example, an evaluation of the government's retrofit scheme showed that, in practice, many residents took the thermal improvements as comfort (i.e., heating their homes more for the same cost) rather than as energy reductions.

• The pathway model – like all policy models – is illustrative: it is based on assumptions and uses a simple linear approach when, in practice, progress will always be uneven and should be observed over a long period to truly assess the trend.

15. Some of these factors can be mitigated and potentially avoided in the design of the Carbon Neutral Roadmap.

The Paris Agreement on Climate Change

16. In 2015, at the Conference of Parties meeting (COP21), The Paris Agreement was reached with the aim of limiting the global average temperature increase to well below 2°C, preferably to 1.5°C, compared to pre-industrial levels. It was adopted by 196 Parties and entered into force in November 2016.
17. The Paris Agreement is the first of its kind; a legally binding agreement that brings all nations into a common cause to combat climate change. The Paris Agreement works on a 5-year cycle of increasingly ambitious climate action carried out by countries. In 2020, countries submitted their plans for climate action. These are known as Nationally Determined Contributions (NDCs).

Extending The Paris Agreement to Jersey

18. Since the drafting of Jersey's Carbon Neutral Strategy[11] in 2019, international progress and dialogue on the climate emergency and climate change policy has accelerated. Coupled with this increased sense of urgency there have been significant moves by the United States (re-joining The Paris Agreement in September 2020) and China strengthening its emission reduction commitments (pledging to achieve carbon neutrality before 2060).
19. As part of the preparations for COP26 in Glasgow, Jersey is working closely with the UK government and the other Crown Dependencies, to reach agreement that The Paris Agreement commitment will be extended to cover Jersey and the other Crown Dependencies. Work is currently underway to extend The Paris Agreement to Jersey.
20. Article 4 of The Paris Agreement[12] sets out that "Parties aim to reach global peaking of greenhouse gas emissions as soon as possible, recognsing that peaking will take longer for developing country Parties, and to undertake rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, on the basis of equity, and in the context of sustainable development and efforts to eradicate poverty."
21. Extension will require Jersey to evidence its commitment to reach net-zero emissions, and to adopt an emissions pathway of equal or greater ambition than that adopted by the UK (which in June 2019 committed to reaching net-zero emissions by 2050 with an interim target of reducing emissions by 68% by 2030). The Paris Agreement also provides for a reporting framework to ensure progress is monitored and assessed transparently. That reporting framework operates first by considering the UK's nationally determined contribution' (NDC) every five years, which details what it intends to achieve, and the domestic mitigation measures it will implement to achieve

those targets. In negotiating the extension of The Paris Agreement, the government will seek to ensure that Jersey can play the fullest possible role in reporting, transparently, our decarbonisation plans and achievements, as part of the UK's NDC. Jersey will continue to publish an annual inventory of greenhouse emissions and the information necessary.

Achieving net-zero by 2050

22. The Intergovernmental Panel on Climate Change (IPCC) define net-zero as "when anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period"[13]. To achieve net-zero: "an actor reduces its emissions following science- based pathways, with any remaining green-house gas emissions attributed to that actor being fully neutralised by like-for-like removals (e.g., permanent removals for fossil fuel carbon emissions) exclusively claimed by that actor, either within the value chain or through purchase of valid offset credits".
23. There are two significant differences between the concepts of net-zero and carbon neutral: the emissions pathway that must be followed, and the type of offsets that are acceptable.

The emissions pathway

24. Carbon neutrality doesn't require emissions reductions to follow a certain pathway: one could choose to reduce emissions by 80% and offset 20%; equally, one could choose to reduce emissions by 20% and offset 80%; in both instances carbon neutrality is achieved[14].
25. To be net-zero one must be follow an emissions reduction pathway in line with the science- based global emissions reduction targets that are needed to limit global warming to 1.5°C and avoid the worst impact of climate change.
26. In this case, net-zero is a stronger concept as it focuses actions on policies that cause emissions reductions on a pathway in line with the recommended science.

Offsetting residual emissions

27. Both net-zero and carbon neutral recognise that carbon offsets have a legitimate role to play in decarbonisation.
28. Carbon neutral policies can utilise offsets that create carbon reductions, efficiencies, or sinks. This could include, for example, offsets resulting from a project to increase the uptake of low energy light bulbs in Mozambique. This project would not result in any greenhouse gas emissions being removed from the atmosphere but rather would avoid new additional greenhouse gases being emitted.

29. Net-zero can only be achieved through the purchase of carbon offsets that are issued for projects that remove carbon from the atmosphere (rather than projects that avoid the further release of carbon into the atmosphere)[15].
30. In this case net-zero is a stronger concept as it only allows offsets to be used that remove greenhouse gases from the atmosphere.

Summary: Jersey's net-zero emissions pathway

31. International best practice on climate change policy has clearly shifted towards net-zero, and this is reflected in the ambition set out in The Paris Agreement. The Preferred Strategy is to align to net-zero.
32. Carbon neutrality remains a legitimate position on the pathway to net-zero and is considered in Strategic Policy 5.
33. Jersey's proposed minimum emissions pathway is set out in the Strategic Policy 1. The final agreed pathway will be set out in the Carbon Neutral Roadmap.

Jersey's Net-Zero Emissions Pathway Carbon Neutral Roadmap: Strategic Policy 1

To ensure the international integrity of our environmental targets, and aspire to the highest level of ambition, Jersey will follow an emissions reduction pathway in line with our commitments under The Paris Agreement. This pathway will:

• as a minimum, reduce emissions by 68% compared to our 1990 baseline by 2030; and reduce them to 78% from baseline by 2035,

• deliver net-zero emissions by 2050, and

• stay in line with, and respond to further evidenced change in, science-based global emissions reduction targets that are needed to limit global warming to 1.5°C.

The pathway is indicated in the graph below. The final agreed pathway will be set out in the Carbon Neutral Roadmap.

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Kilotonnes of carb1ond0io0xide equivalent  Pathway 2050 interventions

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Strategic Policy 2: Island energy market

1. Jersey's energy market is well served by a range of products, and a landscape of providers that manage some relatively complex supply chains and logistics for our small marketplace of c.45,000 homes and population of c.108,000 people.
2. Energy supply and distribution is expensive, involving multi-million-pound investment decisions in infrastructure that lasts decades. Many investments in Jersey are also linked closely to Guernsey as we share Channel Island distribution networks and suppliers for electricity, LPG, and oil products.
3. This Strategic Policy sets the framework for establishing whole-of-market transition plans over the coming years to respond to the urgent need to decarbonise our energy supply while ensuring our market is able to flex, respond and adapt over this relatively short period. The policy is structured in three parts, as suggested in Figure 5.

Part 1

The energy trilemma:

establishes strategic issues across the energy market

Part 2

Considers electricity and the potential future for decarbonisation (including renewable generation) and decentralisation

Part 3

Considers the role that other low carbon products could play in the energy market, including biogas, biofuels and hydrogen

Figure 5: 3 parts of energy market transition policy.

Part 1 - The energy trilemma': our future energy choices and the shape of the market

4. The energy trilemma' refers to the need to balance energy affordability and security with decarbonisation, as suggested in Figure 6.

Figure 6: The energy trilemma.

5. The Carbon Neutral Strategy[1] relies on – and did not change – the underlying policies of affordability and security of energy of supply that are set out in Pathway 2050. Further work in these areas was anticipated to be undertaken in 2020 but was delayed by the impact of the COVID-19 pandemic.

Sustainability

6. Jersey currently enjoys access to low-carbon electricity from France, which has proved a mature and economically viable source that makes a significant contribution to meeting decarbonisation and sustainability targets. The Carbon Neutral Strategy confirms that "anyviable route to carbon neutrality by 2030will require the rapid electrification of a large proportion of road transport and space heating in Jersey "[2].
7. As set out below, the pathway for delivering cost-effective decarbonisation with alternative technologies is more uncertain, as it requires the technologies to mature to the point of having large-scale commercial deployment potential, and for greater levels of enabling infrastructure investment to be undertaken.

Security and resilience

8. Relying entirely on electricity imports from France (or other parts of the European energy market) does not, however, provide Jersey with energy sovereignty, and may be exposed to new risks if energy markets become more volatile in the future. To diversify its energy mix, Jersey could consider other sources of large-scale generation, and support this with increased use of smaller scale energy generation as technologies mature.
9. Security of supply concerns also arise for alternative technologies. Jersey is unlikely to produce sufficient biogases, biofuels, or hydrogen on-Island to fully decarbonise transport and heating systems, even if the technologies become commercially competitive. This is because of the limited availability of feedstock and crops necessary for biogases and biofuels respectively; and insufficient sources of green power generation necessary to meet the production needs of green hydrogen.

Affordable and available

10. It is important to recognise that our current electricity model has served the Island well, and provides an affordable, low carbon, reliable and secure product with strong investment and a good return to shareholders (the Government of Jersey is a 62% shareholder). It is recognised though that the price-premium of the decarbonised electricity supply that Jersey currently enjoys, may increase in future.
11. Diversifying the Island's energy mix is likely to create additional costs in the short- to medium- term, although could lead to lower overall costs over the longer-term. Diversification could also pose network management challenges that might manifest as increased intermittency, depending on the nature and pace of transition.

Balancing the trilemma

12. Balancing these related but at times competing interests in a small jurisdiction is a delicate challenge, but one that Jersey's energy market has successfully achieved in recent decades. Going forward, the decarbonisation policy will continue to evolve in a measured way that recognises the interplay with energy sovereignty and security, and end-user affordability.
13. Recognising the significance of energy market policy, the draft Bridging Island Plan[3] includes a strategic proposal to undertake a review of long-term energy requirements that, amongst other things, will consider regulatory or other economic requirements, along with infrastructure and land use requirements linked to future energy use.
14. This review provides a process for progressing energy market policy in a holistic and objective way. As part of the work government will: establish new research and advisory partnerships with energy systems experts; explore opportunities to trial, appropriately, new and emerging energy solutions in Jersey; and will work with the Energy Forum[4] to solicit decarbonisation transition plans from all current Island energy providers.

15. The review will need to consider how we might ensure that those working in the energy sector can flex and enhance their skills to accommodate new products or market structures. Similarly, those whose living relies on selling or maintaining vehicles will also need to be considered, and support offered to ensure people can gain the necessary skills to support decarbonisation and take advantage of the creation of new green jobs.

Part 2 - The future energy landscape: electricity

The role of large-scale renewable generation

16. Electricity can be thought of as a carrier of energy that is generated upstream; it is only as sustainable as the method of generation: electricity generated by solar panels, wind turbines or nuclear is a low-carbon product; electricity generated by coal-fired power stations and gas turbines is carbon heavy.
17. Locally our electricity supply is managed through a centralised transmission and distribution network that is connected by sub-sea cables to the European electricity grid. Jersey Electricity plc (JEC) operate a vertically integrated natural monopoly in the electricity supply chain that is non- competitive at some stages. This is not an unusual model for small isolated markets although the associated regulatory framework pre-dates emerging technology changes (see the section on decentralised generation).
18. JEC can form purchase contracts with suppliers of their choice in a liberalised European electricity market. Their decision to switch first to nuclear (low-carbon), and now to a nuclear: hydropower (renewable) generation mix has been the principal driver of decarbonisation in Jersey to date.
19. While access to low-carbon electricity can be maintained, switching to other forms of low-carbon generation at either the utility scale (for example wind or tidal generation) or more local sustainable generation (for example PV panels on roofs) will not provide further carbon reductions, or though it could bring other benefits for energy security and (in some use cases, in particular for those generating energy) affordability.
20. JEC's access to low-carbon electricity is currently contractually assured until 2027. Jersey is a long-standing customer in this market with good experience of securing contracts that fulfil our requirements. Continued access to well-priced decarbonised electricity in the medium- to

longer-term though will depend on commercial renegotiation in a rapidly decarbonising European energy market.

21. Jersey's location and geography do provide access to renewable energy sources: St Aubin's bay could be suitable for energy generation[5]; the Island has a high coastline-to-land ratio, which is relevant for offshore wind production, and more hours of sunshine than anywhere else in the British Isles.
22. There may be other reasons to generate our own electricity rather than rely on the European grid, such as sovereignty and security of supply, long-term resilience, and local economic and employment benefits. However, we will only make carbon savings if this electricity replaces fossil- hydrocarbons and not current grid electricity. (The Citizens' Assembly Renewable Energy Factsheet[6] discusses this in more detail).
23. Security benefits are likely though to be offset (certainly in the short- to medium-term) by increased energy prices (and other potential charges) necessary to cover the cost of infrastructure investment. Most power produced from renewable sources currently receives government subsidies which reduces the costs for the consumer. These subsidies are not currently available in Jersey so if we invested in utility scale renewable energy, we are liable for non-subsidised costs and would have to find funding.
24. As technologies become more commercially competitive costs are expected to fall, as they have recently with onshore wind. Government policy remains open to consideration of all potential business cases for renewable generation, and both officials and ministers are in regular and on- going discussions with a range of potential providers, including JEC. Accordingly, enabling policies to facilitate the uptake of renewable energy generation at the appropriate time and on a case-by-case basis are proposed in the draft Bridging Island Plan[7].

Decentralisation and distributed generation

25. Smaller scale renewable generation presents a decentralised solution (see Figure 7-2) that is different to the centralised import and distribution model that exists in Jersey (see Figure 7-1).

Model of current centralised generation

1. Generation  2. Transmission and Distribution  3. Customer

Centralised electricity system – one way traffic

Certainty & stability gives the operator confidence to make long term investment in large

infrastructure assets

Generation by a limited  Local transmission and distribution by Jersey Electricity.  The customer is a mostly number of large-scale  Security and resilience ensured through import capacity and  passive recipient of the European sources and  in-Island last resort back up.  service, concerned primarily imported to the Island  with how they use

by Jersey Electricity  Jersey and Guernsey markets remain linked through inter- electricity as a product. under a supply contract.  Island cables.

Figure 7-1: A model of centralised generation.

Future with decentralised generation, storage and distribution

1. Generation  2. Transmission and Distribution  3. Customer

De-centralised electricity system – many more p  layers, both large and small, in market place and the opportunity to participate at multiple points

Generation by many  Large scale transmission and distribution from a centralised  The customer no longer fragmented sources –  grid. Peer to peer transmission and distribution possible  needs to be a passive including large scale  between local generators. Security and resilience still needs  recipient, but could also be European sources and  to be ensured through import capacity and on-Island last  a generator, a trader and local generation at both  resort back up. Risk that investment in the grid by  holder of storage through utility and domestic  centralised utility providers is weakened as overall they have  batteries.

scale potentially  lower unit sales. Additional resilience from local generation

including solar PV, wind,  and storage held by affordable battery technology

tidal, air source heat  (including vehicles) which also mitigates the challenge of

pumps.  intermittency from renewables. Jersey and Guernsey

markets remain linked through inter-Island cables.

Figure 7-2: A model of decentralised generation.

26. The existing electricity law provides for new entrants to the electricity market, which is anticipated (particularly in the areas of generation and retail). In light of this, P.88/2017 requested ministers

to bring forward proposals to update the Electricity (Jersey) Law 1937[8], and in adopting P.127/2019 (the Carbon Neutral Strategy[9]) the Assembly agreed that this work be encompassed within the wider review of long-term energy market requirements referred to above.

27. The potential transition from centralised to decentralised systems presents a significant challenge to electricity suppliers world-wide. Consumers expect a supplier of last resort' to be able to generate, transmit and distribute electricity when decentralised systems cannot meet demand, for example when the sun doesn't shine, or the wind doesn't blow. Yet at the same time, consumers in this scenario buy less electricity, and so the funding for central providers to invest in maintaining the grid is reduced.
28. In this context, the relationship between the main grid and distributed generation technologies at the household level needs to be carefully managed. In particular, feed-in-tariffs for electricity sold back into the grid need to take into account the cost of exporting electricity to the grid. Tariff design needs to avoid a situation that encourages wealthier households to invest in self- generation (for example solar PV installations) while leaving a higher share of grid maintenance costs to be borne by those households that do not have the money to invest in this way.
29. In the context of the energy trilemma, any transition to a more decentralised electricity system in Jersey faces similar challenges to the development of large-scale renewables. There are obvious benefits of sovereignty and security, and decarbonisation benefits where the generated electricity replaces fossil-fuels energy sources; and there are both benefits and costs in the relation to energy affordability, with structural challenges to ensure that legacy costs do not accrue to those households least able to invest in local generation and storage systems.

Part 3 - The future energy landscape: biogas, biofuels and hydrogen

30. Some fuel suppliers already provide a low-carbon product, others are beginning a transition to lower/low-carbon products whilst others have yet to define their decarbonisation pathway. In tandem, several new technologies and products are emerging at the large and small scale. These will impact the current actors in the energy marketplace as we move to a decarbonised economy.
31. To inform this Strategic Policy evidence paper, a general review of the role that the low-carbon technologies could play in the decarbonisation of transport and heating, with reference to international precedent, was commissioned[10]. The technologies considered by the review are defined in Figure 8 and an expanded overview is included at Appendix 5.

Figure 8: Technologies considered in the low-carbon technologies commissioned report.

32. The review considered the production, transport, and distribution of each of these fuels in order to provide an evaluation of the relative market maturity and applicability to the Jersey context. This assessment considered the upstream (production), midstream (transportation and infrastructure) and downstream (consumer) futures for each energy source.
33. Figure 9 provides a visual summary of the maturity of the three groups of energy source – biogas and biomethane, biofuels, and hydrogen – in the transport and heating sectors respectively. Figure 10 sets out the factors that determine the speed of take-up for each of these.

Figure 9: Timescales for prospective maturity of fossil fuel alternatives in transport and heating[11].

The broad timescales shown in Figure 9, above, are expanded in Figure 10 with reference to relevant technology applications that are currently feasible, and that may be feasible in the coming 15-20+ years, with reference to international precedent.

Figure 10: Overall feasibility of technologies by use case1.

Summary: Island energy market

34. There are a number of available and emerging non-fossil hydrocarbon products and new energy sources that are entering the marketplace in all sectors. They will reach maturity and commercial availability over the next three decades and have the potential to contribute to Jersey's decarbonisation journey. Some new products, particularly biofuels, are direct substitutes for existing fossil-hydrocarbons making transition simpler assuming supply and demand align, and prices are competitive enough to encourage uptake.
35. There will be a need to accommodate changes to our energy system in the future, as products change and with increased potential to democratise power generation, distribution, and storage.
36. There are challenges to bring new energy sources to the Island where they require new infrastructure and supply lines (for example, hydrogen).
37. We expect to see a decentralisation of electricity generation in the forthcoming decades, and we will need to consider the impact of this on our current electricity market and infrastructure.
38. As the cost of generating utility scale (offshore) renewable energy falls we might want to consider investment to provide the Island with energy sovereignty and resilience.
39. Responding to these related challenges requires a clear and long-term government led energy strategy with clear and accountable political leadership. A new ministerial portfolio for energy and climate change is recommended to oversee the planned energy market review, which will need to ensure our statutory and regulatory framework remains fit-for-purpose in a new energy future to balance security, energy affordability, sustainability, and security of supply issues.

Island Energy Market

Carbon Neutral Roadmap – Strategic Policy 2

Jersey's energy market currently supplies a variety of energy products to consumers with a reasonable level of resilience and security considering the Island's small size and logistical challenges.

Globally, energy markets are rapidly decarbonising and to some degree decentralising.

The future for Jersey requires significant electrification, particularly in transport; the replacement of some fossil-hydrocarbon fuels with non-fossil hydrocarbons, and potentially hydrogen, will also be required.

The Carbon Neutral Roadmap will include policies in the first stage of delivery that:

• seek to support faster adoption of low-carbon electric solutions in key emissions sectors, and non-fossil hydrocarbons, such as second-generation renewable diesel, and

• invest in the skills needed in the future decarbonised economy.

At the same time (and as proposed in the draft Bridging Island Plan) we will undertake a strategic review of Jersey's long-term energy requirements to inform a future government-led energy strategy. This work will consider, amongst other things, economic, regulatory infrastructure and land use requirements linked to future energy use; and will provide a process – and appropriate political governance – to develop energy market policy in a joined- up and evidence-based way.  

To support this work, government will establish new research and advisory partnerships with energy systems experts; explore opportunities to trial, appropriately, new and emerging energy solutions in Jersey; and work with the Energy Forum to solicit decarbonisation transition plans and market insights from all current Island energy providers. A new ministerial portfolio for energy and climate change is also recommended.

Strategic Policy 3: Financing strategy

1. The transition to a decarbonised economy is a major macro-economic challenge. It requires an investment by current generations in measures that will benefit future generations.
2. The Government of Jersey's Chief Economist, and economic consultants Oxera, gave evidence to the Citizens' Assembly on Climate Change who were able to question them in relation to the likely costs and funding sources for carbon neutrality. The Citizens' Assembly recommendations[1] show a high ambition for the nature and scale of policy interventions, but also a recognition that many of these would have significant costs.
3. This Strategic Policy describes how the first stage of the Carbon Neutral Roadmap will be supported with investments made from the Climate Emergency Fund. It also sets out the research into additional fiscal levers that ministers have endorsed and frames the longer-term financing challenge that will need to be addressed in the coming years.

The costs and benefits of carbon neutrality

4. While the decarbonisation challenge is relatively clear in Jersey – with a need to focus on transport and heating, cooking and cooling – there are many different ways that this might be approached. The Carbon Neutral Roadmap will set out an initial set of costed policies, but it will take longer to understand the right steps to take in later years because decisions will need to allow for progress to be made in, for example, energy technologies.
5. As such, it is not possible to put a single cost' on delivering against the net-zero pathway, or an early transition to carbon neutral. This was recognised in the report of the Citizens' Assembly, which says, "We are aware that there is a cost implication to our recommendationsand we have allowed for exceptions where the technology is not yet available to transition."
6. Strategic Policy 4 explains how both the costs and benefits will be analysed as part of identifying policies in the Carbon Neutral Roadmap. At this stage, the Citizens' Assembly and States Members have been able to consider the costs and benefits of different transition scenarios based on research published earlier in 2021[2]. These findings are summarised in Figure 11.

Emissions reductions

Social and Cost effectiveness  environmental

benefits

Benefits of fewer  Economic benefits practical constraints

Reputational benefits

2030  2040  2045  2050

Figure 11: Summary of the relative costs and benefits of different dates of carbon neutrality.

7. A high-level assessment of the costs of potential policies[1] was also carried out as part of the evidence for the Carbon Neutral Strategy. The Carbon Neutral Strategy[2] considered the direct cost to government of paying for cost emissions reduction policies, and recurrent costs arising from offsetting residual emissions. The analysis suggested an indicative cost to government of up to £300M by 2030, based on a specific set of policy options plus an estimated recurring cost of £2-5M per annum for offsets. This was compared the social cost of carbon, which is proxy for the negative impacts of carbon emissions that would be avoided, that was assessed to be as high as £600M if no abatements were made in the areas of transport and heating[3].
8. The Carbon Neutral Strategy was not able to assess the wider societal costs – such as the cost to a household of buying a new electric vehicle – or the distributional impacts of such costs. Infrastructure costs associated with a shift to forms of active and other low-carbon forms of travel were also not included. This work will be completed alongside the development of detailed policies in the Carbon Neutral Roadmap.

The Climate Emergency Fund

9. The Climate Emergency Fund was established in the Government Plan 2020-2023[4]. It is a States Fund' and provides a route for the hypothecation of income to provide a defined source of expenditure for initiatives that tackle the climate emergency and reduce carbon emissions. In setting up the Climate Emergency Fund it was accepted that:

• While some early policies were supported from the Climate Emergency Fund, the majority of the funding would be allocated to the detailed policies outlined in the Carbon Neutral Roadmap, which would be developed following the people-powered process set out in the Carbon Neutral Strategy.[5]

• The initial funding allocated to the Climate Emergency Fund was insufficient to meet the estimated costs of transition, and that a financing strategy would be developed to respond to Part b of P.27/2019 (as amended)[6], which accepts the need for new fiscal levers to be introduced in Jersey.

10. The Climate Emergency Fund was first established with £5M from the consolidated fund. The Climate Emergency Fund can also receive further income from any other sources as agreed in a Government Plan and has received income from an escalating above RPI increase in fuel duty, of 4ppl in 2019, 2ppl in 2020 and a proposed 3ppl in 2022. The Government Plan 2022-25 also proposes increases in Vehicle Emissions Duty that would be ringfenced to the Climate Emergency Fund.
11. The income and expenditure estimates set out in the proposed Government Plan 2022-25 are described in Figure 12. Around £23M of investment is available to support policies in the first stage of the Carbon Neutral Roadmap.

Figure 12: The Income and expenditure table for the Climate Emergency Fund from Government Plan 2022-2025. Note the income figures have been adjusted to account for recent actual fuel sales which have been lower than projected when the Fund was set up in 2019.

12. In line with the delivery plans set out in the Carbon Neutral Strategy[7] and Sustainable Transport Policy[8], the Climate Emergency Fund is already supporting:

• decarbonisation policies, including due diligence trials of the use of Hydrotreated Vegetable Oil (green diesel') in the public service and Liberty Bus fleets; and infrastructure improvements including new bus and cycle shelters, improvements to the western cycle route in St Helier and a new bus priority gate at Liberation Station,

• development work including delivery of the Citizens' Assembly, the Island wide Climate Conversation'[9] and the Sustainable Transport Policy's Rapid Plans, and

• projects to tackle the biodiversity crisis, such as work to address invasive non-native species and to improve tree protection.

13. Policy development and biodiversity work will continue to be funded from the Climate Emergency Fund, but most of the expenditure will support the first stage of policies set out in the Carbon Neutral Roadmap. As the expenditure table at Figure 13 indicates, this provides additional ringfenced funding, in the short-term, of between £3.7M and £6.3M per annum.

Figure 13: The expenditure table for the Climate Emergency Fund from Government Plan 2022-2025. The line labelled Carbon Neutral Initiatives will include expenditure on the agreed policies in the Carbon Neutral Roadmap including sustainable transport initiatives.

Medium and longer-term financing strategy

14. The Carbon Neutral Strategy[10] recognised that the identified funds would be insufficient to decarbonise our economy over the medium and longer-terms. Work has continued, therefore, to frame a financing strategy that can address these challenges in the context of the opportunities and challenges of wider government fiscal strategy.

Medium-term

15. The Revenue Policy Development Board, comprising ministers, States Members and independent experts, established an environmental taxes' sub-group, chaired by the Assistant Minister for the Environment, Deputy Gregory Guida.
16. The Board agreed a work programme to bring forward proposals for new economic instruments in the following areas for consultation:

• road user charges – to replace revenue lost from diminishing returns from fuel import duty as the fleet moves away from internal combustion engines,

• reinvestigation of commercial solid waste charges – to fairly charge commercial users for the waste they create; to drive behaviour change that minimises waste generation and increases recycling; and to raise revenue to maintain and invest in infrastructure,

• car parking charges – a strategic review of the public parking system as required by the Sustainable Transport Policy[11] (P.128/2019), and

• travel duty – investigations into a very modest travel duty to signal the impact of carbon- based off-Island travel, recognising the requirement for some off-Island travel to support the economy.

17. The distributional impacts of any new measure on individuals, businesses and the whole economy would be considered as part of this work, in line with Principle 5 of the Carbon Neutral Strategy, which states that "We will make sure that carbon neutrality policies do not overall increase income inequality." [12]
18. The medium-term work programme is planned to conclude in 2023, and associated measures will be incorporated in the Government Plan 2024-27.

Longer-term

19. Alongside the medium-term work programme, an on-going assessment is required of whole- economy fiscal implications of decarbonisation. In order to support the long-term sustainability of the public finances, this work will have to address the expected drop in government revenues, and particularly a drop in fuel import returns, as people switch away from polluting behaviours.

20. Jersey is not alone in facing this challenge and there are several avenues to explore. A review was commissioned to ensure Jersey is appraised of the full range of potential funding mechanisms being explored globally. The report[13] sets out a range of funding routes that are used in other jurisdictions, as listed in Figure 14, and includes case studies of the more innovative approaches being taken.

Figure 14: An analysis of the typology of funding options – these are not presented in any priority and it is recognised that not all options apply to Jersey.

21. The development of a longer-term financing strategy is planned to conclude in 2024, with associated measures incorporated into the Government Plan 2025-28, recognising that any significant shift in the use of major economic instruments, may require legislative change.

Financing Strategy

Carbon Neutral Roadmap – Strategic Policy 3

The Climate Emergency Fund will maintain a hypothecated revenue stream to fund Jersey's decarbonisation.

Additional funding will be required to fully decarbonise Jersey's economy. Three stages are proposed to identify this funding:

• Short-term: the Carbon Neutral Roadmap will fully allocate the resources currently available in the Climate Emergency Fund to support policies in the first stage (2022-26),

• Medium-term: government will bring forward in 2022, in time for potential inclusion in the Government Plan 2023, proposals for new economic instruments that generate income ring-fenced to the Climate Emergency Fund (in whole or in part) in the following areas:

o Road user charges

o Reinvestigation of commercial solid waste charges

o Car parking charges

o Travel duty, and

• Longer-term: bring forward in 2023, in time for potential inclusion in the Government Plan 2024, a long-term financing strategy that considers all available options to continue to fund the decarbonisation of the economy at the pace required to achieve the emissions trajectory established in Carbon Neutral Roadmap – Strategic Policy 1.

At each stage, work to develop the financing strategy will:

• accord with Principle 5 of the Carbon Neutral Strategy, so that carbon neutrality policies do not overall increase income inequality,

• ensure that those most affected by the transition are included in the process, and that the impacts of all carbon neutral policy options are assessed to ensure a just transition, and

• proceed within established governance and Treasury and Exchequer systems and processes.

 Strategic Policy 4: Policy programme and development

1. A full suite of carbon reduction policies for the first stage of transition to net-zero (2022-26) will be included in the Carbon Neutral Roadmap. This Strategic Policy sets the approach to policy development and prioritisation, building on the people-powered approach established in the Carbon Neutral Strategy[14].

Choosing and prioritising policies

2. The Climate Emergency Fund currently provides around £23M of resources to invest in decarbonisation policies through to 2026. A wide range of work exists to inform the development of these policies, including:

• ideas generated as parts of Jersey's Climate Conversation (Appendix 6),

• the recommendations of the Citizens' Assembly on Climate Change,

• recommendations of the Jersey Youth Parliament and from on-going youth engagement,

• practical experience from the delivery of Pathway 2050,

• priorities established in community, Parish, and youth climate action plans,

• the analysis of policy options and choices in other jurisdictions, including that set out in the Carbon Neutral Strategy,

• the quantitative analysis of transport and heating, cooling and cooking options published alongside the Carbon Neutral Strategy[15], and

• a range of other published reports that form the evidence base for the Carbon Neutral Roadmap (Appendix 1).

3. A robust, staged approach is being followed to ensure that policy prioritisation makes best use of available resources, is informed by evidence and experience, and establishes a foundation that can scale up in coming years as the decarbonisation process gathers pace.
4. As part of the first stage, this Preferred Strategy sets a Strategic Policy framework for the preparation of the Carbon Neutral Roadmap, which enables the development of policies based on a consistent strategic direction and helps set expectations. At the same time, a long list of potential policies that align with the strategic direction has been prepared. A policy appraisal methodology has been designed, which brings together an assessment of carbon abatement potential and a multi-criteria analysis of potential costs and co-benefits.

5. The second stage requires an initial application of the policy appraisal tools, along with a range of stakeholder engagement discussions. This process is overseen and supported by the political steering group, members of which will recommend a prioritised short list of policies to the Council of Ministers.
6. Finally, draft policies are updated and tested against the policy appraisal tools for a second time, incorporating feedback from stakeholders to produce the impact assessment.

Tackling pollution, building capacity and capability

7. The Carbon Neutral Roadmap is intended both to increase the pace of decarbonisation, and to build the capacity and capability of all parts of the economy (including government) to understand and adapt to the changes required over the long-term. Accordingly, both pollution reduction policies and supporting policies will be set out in the Carbon Neutral Roadmap.
8. Figure 15 summarises the clusters of policies that are currently being developed to feature in the Carbon Neutral Roadmap.

Community  Transport  

engagement &  emissions Heating, global  cooling &

emissions cooking emissions

Carbon  

Energy  Neutral  

infrastructure &  Roadmap  

future  policy  Other technology clusters emissions

Strategic  Paying for Governance &  carbon

Leadership neutrality

Policies to enable delivery and implementation Policies to target sources of pollution

Policies to provide future financing

Figure 15: clusters of policies expected to feature in the Carbon Neutral Roadmap.

Delivering together

7.9. The Carbon Neutral Strategy establishes a people-powered approach to tackling the climate emergency. It requires that the policy development process should: "explore opportunities to put individual citizen and community action at the heart of our response, creating the conditions in which bottom-up initiatives flourish and Islanders support each other to change their behaviours and adapt to lower carbon lifestyles."[1]

7.10. This approach directly informed Jersey's Climate Conversation and the use of the Citizens' Assembly on Climate Change, which together have helped shape the policies under consideration. It requires a policy response that supports people in Jersey to respond as citizens

– with shared agency in the transition to a net-zero response to climate change – not just as consumers.

7.11. The people-powered approach also directly informs consideration of how, in line with Principle 5 of the Carbon Neutral Strategy, Jersey can affect a Just Transition, and ensure policies do not, overall, have an adverse impact on income inequality.

7.12. The extent to which future policies facilitate community, youth, Parish, and business engagement will be assessed as part of the policy appraisal process set out above. In addition, it is intended to:

• Explore the role that an appropriately constituted community impact fund might play in supporting the development and delivery of grass roots climate action through the provision of small grants, and

• Scope out the creation of a business-led alliance of organisations to support the delivery of the Carbon Neutral Roadmap, promote understanding of Jersey's transition at home and abroad, and take forward defined projects.

Ensuring a Just Transition

13. Principle 5 of the Carbon Neutral Strategy states that: "We will make sure that carbon neutrality policies do not overall increase income inequality. The impacts of all carbon neutral policy options will be assessed to ensure a Just Transition to carbon neutrality."
14. In meeting this requirement, it is particularly important to consider the impact of decarbonisation on workers currently employed in the energy sector and those in low-income households, as well as the wider Island community. The impacts of the transition, when considered in the round, should be distributed fairly, and those most affected by the changes should be involved in the process.

15. The development work of the Carbon Neutral Roadmap is closely aligned to the Future Economy Programme (FEP) which provides a mechanism for creating good green jobs and new opportunities for those whose jobs will no longer exist in a decarbonised economy.
16. The multi-criteria analysis used to prioritise policies for the Carbon Neutral Roadmap considers relevant socio-economic and political criteria, including the impact of policies on employment and how acceptable they might be to the public overall. That analysis plays a key role in identifying areas where policies might have more unjust impacts in order that, where such policies are supported, other steps might be taken to seek to mitigate those effects.
17. A Just Transition also requires that the interests of future generations are considered, and that they are not left either to live with the impacts of inaction now, or to bear a disproportionate burden of the costs to mitigate and adapt to climate change. Amongst other steps, the Carbon Neutral Strategy[1] will be subject to a full Childrens' Rights Impact Assessment.

Summary: Policy programme and development

18. This Strategic Policy sets the approach to policy development and prioritisation, building on the people-powered approach established in the Carbon Neutral Strategy.

Policy Programme and Development

Carbon Neutral Roadmap: Strategic Policy 4

The Carbon Neutral Roadmap will include carbon reduction policies for the period 2022-26.

Policies funded from the Climate Emergency Fund will be developed and prioritised in a staged process, drawing on:

• the ideas generated in Jersey's Climate Conversation,

• the recommendations of the Citizens' Assembly on Climate Change and other available evidence and advice,

• an understanding of carbon abatement potential,

• an analysis of potential costs and co-benefits,

• a distributional analysis of the impacts of policies on different sectors of the Island's community,

• input from stakeholders, and

• appropriate political guidance.

The Policy Programme set out in the Carbon Neutral Roadmap and subsequent associated delivery plans will:

• take a people-powered approach, supporting people in Jersey to respond as citizens – with an active part to play in the transition to net-zero – not just as consumers,

• ensure a Just Transition, and

• not, overall, increase income inequality.

Strategic Policy 5: Becoming carbon neutral

1. Having established an ambitious pathway to net-zero in Strategic Policy 1, the question about whether Jersey should seek to become carbon neutral, by 2030 or at any other date, remains open.
2. This Strategic Policy explores the relationship between carbon neutral and net-zero – and specifically the role that offsets play in becoming carbon neutral. It ensures that the option to become carbon neutral remains available to Jersey while work continues to fully understand the associated costs and benefits, ahead of a future decision being taken in the next term of government.

Defining carbon neutral

3. The terms carbon neutral and net-zero both work on the overarching principle that there should be no overall global contribution of greenhouse gas emissions that result from a product, business, or jurisdiction. However, as noted in Strategic Policy 1, net-zero requires adherence to a science-led emissions pathway, and the use of offsets that remove carbon from the atmosphere (rather than avoid carbon being emitted).
4. The Carbon Neutral Strategy[1] (2019) sets five defining principles of Jersey's approach to achieving carbon neutrality and tackling the climate emergency. These are set out in Figure 16 and – as by forming this Strategic Policy – are incorporated into the policy framework for the Carbon Neutral Roadmap.

1. Principle 1

We will adopt a strategic focus on all emissions

This carbon neutral strategy, and the long-term climate action plan that we will develop together in 2020, will recognise and have a strategic focus on Jersey's scope 1, 2 and 3 emissions.

It is important that we understand the impact our local choices have across the world, including recognising the impact that Jersey based businesses can have.

2. Principle 2

We will work within a definition of carbon neutrality

Carbon neutral is defined as balancing the scope 1 and 2 emissions we produce against any activity that captures, absorbs or reduces global emissions so that they are equal. By including scope 2 emissions we are exceeding our international legal obligations.

Scope 3 emissions are recognised, and the long-term climate action plan will include policies and programmes to support people, businesses and government to make more sustainable choices that reduce Scope 3 emissions created on our behalf across the world, but Scope 3 emissions do not form part of the baseline for carbon neutrality.

3. Principle 3

We will require high standards in the use of carbon offsetting

It is appropriate to use carbon offsetting where emissions cannot be abated, but offsets on their own are not a route to carbon neutral and should only be used where they are accompanied by a robust and ambitious measures to reduce emissions.

As a responsible and ambitious jurisdiction any offset arrangements that Jersey enters into will be of the highest recognised standards.

4. Principle 4

We will make sure that everyone can play their part

Whole Island ownership of the climate challenge is critical to its success. Government will use all available options to deliver the long-term climate action plan, but government action must form part of a wider, collaborative approach.

5. Principle 5

We will make sure that carbon neutrality policies do not overall increase income inequality.

The impacts of all carbon neutral policy options will be assessed to ensure a just transition to carbon neutrality. A quantification of the economic impact assessment of the policy proposals will be carried out as part of the process of developing the long-term climate action plan.

Figure 16: the defining principles of the Carbon Neutral Strategy.

5. The definition of carbon neutral set out in the Carbon Neutral Strategy[1] remains robust. The principles it establishes are well considered and evidence-led; they are stricter than many situations in which the term carbon neutral' is used. Based on this definition becoming carbon neutral could function as a legitimate milestone on the pathway to net-zero.

The role of offsets in an early transition to carbon neutrality

6. The Carbon Neutral Strategy recognises that carbon offsets will be necessary as part of any early transition to carbon neutrality:

"the adoption and implementation of an ambitious set of carbon abatement policies will significantly reduce Jersey's carbon emissions but will not be sufficient to eliminate them

completely. Regardless of how well these policies perform, there will remain some unavoidable activities for which carbon-free solutions have not yet been developed. To achieve its carbon neutral objective, Jersey will have to acquire emission allowances against its unavoidable emissions."

7. Figure 17 seeks to show the interplay between the net-zero transition pathway established in Strategic Policy 1 (the navy-blue bars), and an aligned transition to carbon neutral (as provided for in Strategic Policy 5) which, in this case, takes place in 2030. In simple terms, provided ambitious carbon reductions policies are in place and having the required impact, carbon neutrality can be achieved at the point that equivalent offsets are acquired on a recurring annual basis.
8. At present, the global offset market is both volatile and uncertain. This was recognised in the Carbon Neutral Strategy and no greater certainty has emerged since. Current analysis suggests that offsetting 200,000 tonnes of carbon on the voluntary carbon market would be expected to cost between £2.9M per annum (at c£15 per metric tonne) and £7.3M per annum (at c£37 per metric tonne). For the official carbon market, the price is likely to be higher. A plausible EU Emissions Trading Scheme price of c.£60 per tonne in 2030 would take the cost up to around £12M per annum. Costs would also be influenced by the associated investment strategy, and particularly any decisions to hedge against future price increases.

 400

Emissions Off-sets  350

 300

 250

e)

2 200

 150

(ktCO

 100

 50

Kilotonnes of carbon dioxid -e equivalent

2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050

Figure 17: Illustration of how offsets are paid annually after a decision is made to become carbon

neutral. The quantum of offsets diminishes as residual emissions also decrease.

9. At the same time, the scale and nature of any potential economic or environmental benefits that might accrue locally remains unclear. Benefits might, for example, be derived from such expenditure acting as a stimulus to innovation in the Island's financial services sector; a driver of greater global connectivity and influence; or an opportunity to leverage associated research or technology opportunities.

The potential for sequestration

10. Drawing down carbon into Jersey's land and/or marine environments is also a way to balance out unavoidable emissions and can bring co-benefits like improvements in biodiversity.
11. Carbon sequestration[1] is the act of capturing carbon dioxide from the atmosphere, storing it, and preventing it from being re-released. This typically includes a range of artificial and natural processes that capture carbon as part of industrial, agricultural, and land-use activities. It is important to note that carbon sequestered could be released back into the atmosphere. For example, carbon could be temporarily released by a forest fire and re-captured by re-growth or permanently released through the conversion of a forest to a settlement.
12. Natural carbon sequestration is a cycle that's been happening on the planet for billions of years. In Jersey, on-Island sequestration includes activities like tree and hedgerow planting and

changing land-use to increase the amount of carbon our natural environment can absorb. These activities also have positive impacts on biodiversity and help support both nature's recovery and wider social and economic objectives. Natural sequestration can be enhanced in a number of ways:

• large scale reforestation in Jersey would achieve a net reduction of around 1% of our current scope 1 emissions. Nevertheless, it remains important to protect what we have,

• healthy soils play an important role in sequestering carbon and improving soil organic matter through changes in land use practices can increase the drawdown of carbon into soils, and

• blue carbon[2] is the carbon dioxide that is captured and stored in coastal and marine ecosystems such as mangroves, marshes, and seagrass meadows. Although currently marine carbon isn't accounted for in international greenhouse inventories, this is an active area of investigation globally, and the potential of Jersey's offshore and onshore blue carbon resources are currently being studied (with results suggesting that Jersey has some habitats that are important carbon sinks).

13. Artificial carbon sequestration is the capture and storage of carbon dioxide produced, generally by large factories and power plants. This technology, while operational in limited scale, is expensive and currently unproven at the levels necessary to make a significant impact on global climate change. It will remain important though to track the development of carbon capture and storage technology in the coming years.

The views of the Citizens' Assembly and members of the States Assembly

14. Following wide-ranging deliberations, the Citizens' Assembly on Climate Change chose 2030 as the date Jersey should be carbon neutral, recognising this is the date when we would start purchasing carbon offsets (of the highest recognised standards).
15. Although 53% of the Citizens' Assembly participants voted for 2030, there was a great deal of discussion around purchasing offsets at this time and not everyone felt they were legitimate or represented best value. Some participants expressed concern that the government would need to spend large amounts of money on offsets that could otherwise be spent on reducing our emissions.

16. Comments from the Citizens' Assembly include the following:

"Use of offsets feels like a cop-out, kicking the can down the road. A minefield".

"What's the point of spending money on offsets just so we can say we are carbon neutral'?

Better to spend the money at home, on driving down our own emissions."

17. Other Citizens' Assembly participants did recognise the reality that the Island was:

"not able to avoid carbon offsets. Some things cannot be reduced by 2050. All depends on

the timing that will shape what we do with our money at that point."

18. Concerns were also raised by States Members in the in-committee debate held in the States Assembly:

"I am firmly on the side of reducing carbon emissions as opposed to buying offsets. There are 2 reasons for this: reducing carbon emissions is the long-term solution to this crisis; and the second thing is offsets allow a mindset that we can carry on as we are and just plant a few trees or buy those carbon offsets somewhere else. I do not think that is the way forward." ( Deputy Rob Ward ).

"this is something we can keep up our sleeve but only for the 11th minute of the 11th hour. What we have to do as a community is try and achieve what we have set out to achieve."

( Deputy Carolyn Labey ).

Summary: Becoming carbon neutral

19. Offsets would be required as part of an early transition to carbon neutrality and are likely to play a role – at some point – as part of Jersey's pathway to net-zero. They remain a contentious issue and are likely to impose significant costs for currently uncertain local benefits.

20. A sequential approach is apparent in which the first stage of the Carbon Neutral Roadmap should focus on:

• driving down carbon emissions through the application of new policies, in line with the adopted net-zero transition pathway,

• increase support for local sequestration projects, and

• continue to explore the costs and benefits of offsetting, ensuring that the option to become carbon neutral remains available to Jersey.

Becoming Carbon Neutral

Carbon Neutral Roadmap – Strategic Policy 5

International markets in offsets are still evolving, and the costs, potential benefits and availability of offsets that would fulfil localaspirations are currently uncertain.

Having committed to a science-led emissions trajectory (Carbon Neutral Roadmap – Strategic Policy 1), becoming carbon neutral in 2030 (or at a different date) remains a legitimate step on the pathway to net-zero.

The Carbon Neutral Roadmap will:

1. set out the steps that government will take to ensure that Jersey can become carbon neutral
2. provide support for sequestration projects that use local carbon sinks in the terrestrial or marine environment (blue carbon), before the purchase of off-Island offsets; and require funded sequestration projects to contribute to improvements in biodiversity.

Conclusion and next steps

1. The analysis set out here shows that Jersey needs to do more to speed up the decarbonisation of its economy and get back on the track towards net-zero.
2. Along this pathway lie some obvious challenges, and the conclusions of the Carbon Neutral Strategy[3], that "whole Island ownership of the climate challenge is critical to its success", clearly remains true.  
3. There are also opportunities along the way: to re-skill and modernise on-Island industries, creating new green jobs; to support local youth and community action on biodiversity, environmental protection, and other matters; to become healthier and reduce congestion, air pollution and other social and environmental harms; and to contribute to the global challenge of preserving our planet for future generations.  
4. The Carbon Neutral Roadmap, to be published in December 2021, will seek to respond to these challenges and embrace the opportunities. It will strike a balance between taking early decisions that give certainty and create the context for action, and the need to take time to get decisions right and to respond to events and new evidence and understanding.
5. The Carbon Neutral Roadmap will introduce a package of policies and actions for the period 2022-26, with supporting investment from the Climate Emergency Fund, and set milestones for future key decisions and the introduction of future policies.
6. For now, this the Preferred Strategy sets out a Strategic Policy framework that supports the preparation of, and will be incorporated into, the Carbon Neutral Roadmap. Once published, the Carbon Neutral Roadmap will undergo a final period of public consultation and will be considered by the Environment, Housing and Infrastructure scrutiny panel, before being debated in the States Assembly, as set out in Figure 18.

Autumn 2021  Dec 2021 Jan - March 2022 April 2022 Preferred Strategy for

the Carbon Neutral  RoCaadrbomapn pNuebultirashled Pubalincdc oscnrutsulitnay tion  States Assembly Roadmap  debate

Figure 18: Expected milestones in the development of the Carbon Neutral Roadmap.

10. Appendices

Appendix 1 – List of published evidence base

These are the main evidence-based documents that were used to inform the Carbon Neutral Roadmap.

Appendix 2 - Carbon Neutral Steering Group: membership and terms of reference

Membership

• Minister for the Environment, Deputy John Young

• Assistant Minister for the Environment, Deputy Gregory Guida

• Minister for Infrastructure, Deputy Kevin Lewis

• Assistant Minister for Economic Development, Tourism, Sport and Culture, Deputy Kirsten Morel

• Assistant Minister for Treasury and Resources, Deputy Lindsay Ash

• Chair of the Comité des Connétable s, Connétable Deidre Mezbourian .

• Chair of the Economic and International Affairs Scrutiny Panel, Deputy David Johnson .

Notes:

• Other ministers will be invited to attend and discuss specific topics as and when required.

• The Minister for the Environment will chair the meeting in the absence of the Chair.

Purpose

The purpose of the Steering Group (the Group') is to approve the strategic principles presented by officers. This will include, amongst other items, consideration of strategic financing options, policy impact heatmaps and impact assessments.

The strategic principles approved by the Group will inform the development of policies for the Carbon Neutral Roadmap and the Preferred Strategy Report (the Report') by the Strategic Policy, Planning and Performance team.

The Report will be presented to the Executive Leadership Team and the Council of Ministers

Appendix 3 – Minister for the Environment's Response to the recommendations made by the Citizens' Assembly on Climate Change

The Minister for the Environment, on behalf of Council of Ministers and all members of the States Assembly has put on record his thanks to the participants in the Citizens' Assembly for their remarkable contribution of over 1500 hours of their collective time and effort. The high quality and diligence of the considerations clearly demonstrates the level of commitment they brought to the task, and Islanders can be proud of the manner in which they were represented through this process.

In early June 2021 the Citizens' Assembly published a report, including their recommendations, which they asked the States Assembly to consider. This report is available to read in full on the States Assembly website.[4] As requested, on 23 July 2021, the States Assembly held an in-committee debate that considered the recommendations from the Citizens' Assembly[5].

The Minister for the Environment has set out below a detailed response to the Citizens' Assembly, whose recommendations are presented in their own words. This response is based on initial analysis of the recommendations.

The recommendations from the Citizens' Assembly have been a key input into the development of the Preferred Strategy[6]. The recommendations have also been tested against the strategic policies set out in the Preferred Strategy in order to inform the response.

The Citizens' Assembly recommendations will continue to feed into the development of the detailed policies that will be published in the full Carbon Neutral Roadmap in December 2021.

A response to the Sustainable Finance recommendations will be provided in the Carbon Neutral Roadmap published in December as part of our Scope 3 emissions proposals, which will include specific policy or policies aimed at developing, encouraging and promoting Sustainable Finance within the local finance sector. We will work through this with Jersey Finance, who have put in place a strategy for scaling up sustainable finance in Jersey Jersey for Good – A Sustainable Future[7]' and the Sustainable Finance Steering Committee and other key industry stakeholders.

Summary of responses

The categories of response, and number of responses in each categroy, are set out in the table below. Ministers have accepted the majority of the recommendations and hope to accept more once further work has been undertaken.

Detailed responses

There were 14 high-level recommendations made by the Citizens' Assembly on Climate Change. Seven recommendations on transport and seven recommendations on heating, cooking and cooling. Each recommendation was supported by supplementary recommendations. The Citizens' Assembly also made a statement on Sustainable Finance.

The response to each recommendation is outlined below. Firstly, at the high level, and then the response to each supplementary recommendation.

Each high-level recommendation is responded to in the order presented by the Citizens' Assembly. The supplementary recommendations are ordered by the Minister for the Environment's response to the recommendation, so it is easier to see those that have been accepted, are under consideration or rejected.

Detailed Responses to the Transport Recommendations

Transport Recommendation from the Citizens' Assembly on Climate Change (T1):

The Government should introduce and financially support currently available new carbon reduction technologies for all modes of transport immediately. All Jersey appropriate future transport carbon reduction technologies should also be introduced immediately as they become viable.

Response: Accept

Comments / Justification:

In line with the financing strategy (Strategic Policy 3), the Climate Emergency Fund wil be used to provide a programme of incentives for low carbon technologies. The nature of these incentives will be set out in the Carbon Neutral Roadmap. A review of the Roads Law is underway, informed by the Sustainable Transport Policy1, that will include ensuring that appropriate legal provision is made for future low carbon forms of transport.

Transport Recommendation from the Citizens' Assembly on Climate Change (T2):

An immediate and just transition to low-carbon transport by 2030 that ensures financial support for both low-income households and small businesses.

Response: Accept

Comments / Justification:

The vision established by the Sustainable Transport Policy1 is that, by 2030, our transport system will make our everyday lives better, support businesses, encourage us and our children to be healthier and make our Island greener. In line with the financing strategy (Strategic Policy 3), ministers will ensure a Just Transition.

Transport Recommendation from the Citizens' Assembly on Climate Change (T3):

Decarbonise the current public transport in Jersey by 2025, as well as making it more accessible and affordable, so that more people use public transport as their primary mode of transportation on the Island.

Response: Accept

Comments / Justification:

This recommendation is accepted and will be incorporated into the bus service development plan required by the Sustainable Transport Policy. A decarbonised service will feature as a requirement in the re-contracting of the public bus service due to be undertaken by 2025.

Transport Recommendation from the Citizens' Assembly on Climate Change (T4):

A change in mindset and culture causing a reduction in the demand for travel particularly commuting, car usage, air travel and freight.

Response: Accept

Comments / Justification:

Each of the plans required by the Sustainable Transport Policy, as well as associated projects and actions will seek to support this change in mindset. The Jersey mobility hierarchy establishes that single-occupancy car travel is the least sustainable form of transport, and the draft Bridging Island Plan includes policies to support reduced demand for travel and increased provision of safe walking and cycling infrastructure.

Transport Recommendation from the Citizens' Assembly on Climate Change (T5):

Encourage walking and cycling by making Jersey a safe and enjoyable environment for cyclists and pedestrians through investment in infrastructure and education. We want legislation to ensure a walking and cycling first transport model.

Response: Accept

Comments / Justification:

The Jersey mobility hierarchy – which promotes safe walking and cycling ahead of motor vehicle use – is already established as a non-statutory policy principle adopted by the States Assembly in the Sustainable Transport Policy. The Climate Emergency Fund is already investing in new cycling and public transport infrastructure. As set out in Strategic Policy 4, the Carbon Neutral Roadmap will include further policies to support increased use of sustainable transport.

Transport Recommendation from the Citizens' Assembly on Climate Change (T6):

Phase out fossil-fuelled private cars and reduce overall car use through the provision of safe, convenient, and affordable alternative modes of transport for all.

Response: Accept

Comments / Justification:

The need to phase out fossil-fuelled private cars is recognised and as set out in Strategic Policy 4; the Carbon Neutral Roadmap will include further policies to support increased use of sustainable transport. In line with the financing strategy (Strategic Policy 3), the Climate Emergency Fund will be used to provide a programme of incentives to increase the uptake of low-carbon transport technologies.

Transport Recommendation from the Citizens' Assembly on Climate Change (T7):

Jersey will achieve a phased transition to (all) green transport, with no new registration of fossil fuel vehicles after 2025.

Response:

Under active consideration – Carbon Neutral Roadmap

Comments / Justification:

The vision established by the Sustainable Transport Policy is that, by 2030, our transport system will make our everyday lives better, support businesses, encourage us and our children to be healthier and make our Island greener. The role that a registration ban might play in incentivising uptake of low-carbon technologies is under active consideration as part of the development of a programme of incentives (see T1: a).

Detailed Responses to the Heating, Cooling and Cooking Recommendations

Heating, Cooling and Cooking Recommendation from the Citizens' Assembly on Climate Change (H1):

Ensure Building Standards and Planning Law specify carbon neutral standards for all buildings by 2023.

Response:

Under active consideration – Carbon Neutral Roadmap.

Comments / Justification:

The need to ensure planning policy and building bye-laws require enhanced energy efficiency standards is recognised. A review of building bye-laws is being scoped currently, this includes exploring how long such a review might take.

Heating, Cooling and Cooking Recommendation from the Citizens' Assembly on Climate Change (H2):

Reduce carbon emissions from rental properties, both residential and commercial, by implementing a system of Energy Performance Certificates by the 1st of January 2025.

Response:

Under active consideration – Carbon Neutral Roadmap

Comments / Justification:

In line with the financing strategy (Strategic Policy 3), the Climate Emergency Fund will be used to provide a programme of incentives for low carbon technologies. The role that energy certification will play in providing evidence of need as part of that incentive programme is under active consideration.

Heating, Cooling and Cooking Recommendation from the Citizens' Assembly on Climate Change (H3):

To educate and support Jersey consumers and Island suppliers to transition to carbon neutral ways of studying, living and working so Jersey and its environment are protected and improved by 2030.

Response: Accept

Comments / Justification:

The importance of education is recognised and as set out in the Strategic Policy 4, the Carbon Neutral Roadmap will include policies to support community and business engagement.

Heating, Cooling and Cooking Recommendation from the Citizens' Assembly on Climate Change (H4):

Government to enable and empower communities to become carbon neutral by creating policy and funding frameworks for communal power generation and energy efficiency measures related to heating, cooling and cooking. This will be underpinned by an Island-wide feasibility study and energy audits.

Response: Accept

Comments / Justification:

The value of greater community energy generation is recognised, and Government currently offer a subsidy towards the home energy audit. In line with the financing strategy (Strategic Policy 3), the Climate Emergency Fund will be used to provide a programme of incentives for low-carbon technologies, including energy efficiency measures related to heating, cooking and cooling. As set out in Strategic Policy 2, a strategic review of Jersey's long-term energy requirements will be undertaken to inform a future government-led energy strategy, and the value of providing funding for communal power generation will be considered as part of this.

Heating, Cooling and Cooking Recommendation from the Citizens' Assembly on Climate Change (H5):

Appointing a Minister for Energy as soon as possible but no later than 2022 (when a new Government is installed), advised by an independent expert panel, to take overall responsibility for the transition to becoming zero-carbon by 2045 or sooner and with biofuels having a temporary role until we can achieve this with the help of a variety of local renewable energy sources.

Response: Accept

Comments / Justification:

Strategic Policy 2 recommends that the incoming Council of Ministers in 2022 allocate a new ministerial portfolio for energy and climate change. Strategic Policy establishes a minimum net-zero transition pathway for Jersey, which provides for a transition to net-zero by 2050 but with very minimal emissions in the final years of this period. Strategic Policy 2 establishes that the Carbon Neutral Roadmap will include policies to support the faster adoption of non-fossil hydrocarbons such as second-generation renewable diesel.

Heating, Cooling and Cooking Recommendation from the Citizens' Assembly on Climate Change (H6):

All new and existing government and commercial properties to become carbon neutral by 2030, with the Government leading the way immediately through the introduction of legislation, standards, and practical assistance.

Response:

Under active consideration – Carbon Neutral Roadmap

Comments / Justification:

The Carbon Neutral Roadmap will recognise the objective of retrofitting commercial

properties, and in line with the financing strategy (Strategic Policy 3) the Climate Emergency Fund will be used to provide a programme of incentives for low-carbon technologies. The principle of government leading the way is accepted, and the draft Bridging Island Plan1 includes policies that require enhanced energy standards in all government back new developments. Significant additional market capacity would need to be created to provide the hardware, skills and labour to fully retrofit all commercial properties by 2030, and as such the suggested target date remains under active consideration.

Heating, Cooling and Cooking Recommendation from the Citizens' Assembly on Climate Change (H7):

Government to develop a strategy for retrofitting of residential buildings to ensure optimal energy efficiency and share their recommendations with Islanders by the end of 2022. This will include financial options, education programmes and incentive schemes, prior to enforcement commencing in 2030.

Response:

Under active consideration – Carbon Neutral Roadmap

Comments / Justification:

It is recognised that significant government support for a scaled up retrofit programme will be required, and in line with Strategic Policy 4, the Carbon Neutral Roadmap will set out policies to decarbonise heating and cooling. The recommendation to develop a retrofit strategy is under active consideration but to have this in place by the end of 2022 is challenging.

Appendix 4 – Overview of key activities covered in each greenhouse gas inventory sector88

Agriculture – This includes emissions from livestock, crop production and fertiliser application. In 2019, this sector contributed 6% to total greenhouse gas emissions in Jersey.

Business – This includes emissions from fuel use in the commercial and industrial sector as well as some specific industrial processes relating to the use of aerosols in air conditioning and refrigeration. In 2019, this sector contributed 15% to total greenhouse gas emissions in Jersey.

Energy supply – This sector includes emissions from fuel combustion for the generation of energy, predominantly the production of public electricity. For Jersey, this includes emissions from the Energy Recovery Facility where energy is generated from burning solid, non-biogenic waste and on-island energy generation. In 2019, this sector contributed 12% to total greenhouse gas emissions in Jersey.

Land use change – This sector consists of emissions or removals from the conversion of

land from one use to another, for example the conversion of cropland to settlements. In 2019, this sector contributed -0.3% to total greenhouse gas emissions in Jersey. The negative value

means that overall, this sector was a sink for emissions rather than a source.

Residential – This sector includes emissions from combustion of fuels in homes, for heating and cooking, as well as some smaller sources such as metered dose inhalers and other aerosols used in a domestic setting. In 2019, this sector contributed 21% to total greenhouse gas emissions in Jersey.

Transport – This sector includes emissions from road transport, domestic aviation and domestic shipping. The largest source in this sector is passenger cars. This sector is the largest emissions source in Jersey in 2019, contributing 44% to total greenhouse gas emissions.

Waste management – This sector includes emissions from the treatment of domestic wastewater. In 2019, this sector contributed 3% to total greenhouse gas emissions in Jersey.

Industrial processes – This sector includes emissions from the use of N2O as a propellant in squirty cream. In 2019, this sector contributed 0.02% to total greenhouse gas emissions.

Not included - CO2 emissions from the burning of biofuels are not included in the Jersey inventory, in accordance with Intergovernmental Panel on Climate Change (IPCC) Guidelines and are therefore not included in national total emission estimates. Biogenic emissions are excluded in greenhouse gas inventories as biocarbon is renewable and naturally circulates in the environment.

88 Guide to the Jersey Greenhouse Gas Inventory (Aether)

Appendix 5 - Overview of energy technologies considered (extract from commissioned research89)

Biofuels

Biofuels are fuels that are produced from organic matter, including corn, starch and vegetable oils, or waste and debris. Made from plants which take in carbon as they grow, they are associated with reduced carbon emissions relative to the fossil fuels that they replace. They can be used in both transport and heating, either in pure form or blended with fossil fuels. In general, the more highly concentrated blends are able to reduce greenhouse gas emissions to a greater extent: the higher the concentration of biofuel, the higher the reduction in greenhouse gas emissions.

The two most mature and commonly used biofuels are as follows.

Short-term opportunity:

• Bioethanol can be used in petrol-fuelled vehicles. Most commonly used in the blended forms at 5% or 10%, bioethanol and is particularly well suited to fuelling road vehicles in the short term. Bioethanol blends cannot deliver zero emissions but can help reduce emissions from road transport at a relatively low cost. Higher bioethanol blends, particularly E85 and pure bioethanol, have the potential to further reduce carbon emissions, but come require the widespread replacement of engines and vehicles. Bioethanol has limited relevance at present for other areas of transport and heating.

Short and medium-term opportunity – biodiesel in road transport:

• Biodiesel can be used in diesel-fuelled vehicles and appliances. There are two types of biodiesel that are produced commercially on a large scale: Hydrotreated Vegetable Oil and Fatty Acid Methyl Ester. This is commonly used as a generic term for biodiesel derived from renewable sources. When used neat, the reduction in carbon emissions relative to fossil diesel ranges from 41% to 90%, depending on the oils from which the biodiesel is made, and the upstream processes involved. It is already mature for use in road transport and heating, with the potential to be scaled up in aviation and shipping in the near future.

Long-term opportunity – biodiesel in maritime and aviation:

Recently the take-up of high-biodiesel blends and pure biodiesel has increased significantly and could play an important role in decarbonising heavy goods and maritime transport. In aviation, sustainable aviation fuels have great potential in significantly reducing carbon emissions. Heavy goods, maritime and air transport vehicles cannot currently be electrified to a significant extent and are likely to continue to depend on low-carbon liquid or gaseous fuels into the medium and long-term.

89 The Oxera Future Technology report will be published on 1 November 2021 on gov.je.

We are observing a transition in the road transport fuel sector with non-fossil replacement fuels. For example, some distributors now sell green' second generation biodiesel which is a non-fossil hydro- carbon diesel that can directly replace fossil hydro-carbon diesel without the negative climate impacts that fossil hydrocarbons cause. Currently this product has a price premium. Similar progress has also occurred in the local petrol market where a non-fossil hydrocarbon component is blended with fossil hydrocarbon, immediately reducing tail pipe emissions by 10% (E10) with no additional purchase cost.

Liquid Petroleum Gas/Biogas, biomethane and liquefied biomethane for use in transport and heating

Biogas and biomethane are different products with different applications, but they both originate from organic feedstocks whose potential is underutilised today. In the production process, organic waste materials such as crop residues, animal manure, municipal forest waste and forestry residues, and wastewater are converted into biogas and biomethane via a process called anaerobic digestion. As biogas and biomethane are produced from renewable sources that capture carbon dioxide when growing, these sustainable fuels do not produce any net emissions over their lifecycle.

• Biogas is a gaseous mixture of methane, carbon dioxide and other gases which can be used to meet heating demand. Biogas offers a sustainable solution where access to the grid does not exist or where heating demand cannot be met by carbon-neutral electricity.

• Biogas can be upgraded to biomethane by removing the carbon dioxide and other impurities. Biomethane has similar properties to natural gas and can therefore be transported and used in the same way. Use cases include cooking, heating, transport, and electricity generation. Biomethane

can be taken directly off pipelines or local production facilities for usage in cars that run on compressed natural gas.

• Biomethane can also be liquefied, producing liquefied biomethane (LBM), also known as Bio-

LNG. The advantages are that it can be transported relatively easily by trucks and dispensed directly to vehicles that run on liquefied natural gas or compressed natural gas. The main disadvantage is that liquid biomethane needs to the cooled down to -160°C, which uses a lot of energy and makes

it more expensive than biomethane. Liquefied biomethane can be stored in, and used by, the same infrastructure as liquefied natural gas.

Biogas (or biomethane) can help to cut emissions from heating in buildings with natural gas. However, the limited gas grid in Jerseyand the distribution of liquefied petroleum gas rather than natural gas reduces the immediacy and cost-effectiveness with which biogas or biomethane could be substituted for gas on the Island.

Biogas, biomethane and LBM could play a role in decarbonising transport and heating in the medium term. The big advantage of this technology is that it can generally be used with the existing natural gas infrastructure upstream, midstream, and downstream. If this infrastructure is in place, BG, BM, and LBM can therefore be a low-cost way of decarbonising sectors that are hard to electrify, such as HGVs and maritime transport.

Hydrogen

Hydrogen is a non-toxic, odourless, and highly combustible gas. Its molecular properties mean that it can be used in a variety of industry sectors andcruciallyit produces zero carbon emissions when burned. It is the most abundant chemical substance in the universe, but in order to use it as a fuel or heat source, it usually needs to be produced using a chemical reaction.

The most established methods to produce hydrogen are colour-coded as follows.

• Grey hydrogen: most hydrogen today comes from natural gas, which is bonded with carbon and can be separated from it via a process called steam methane reforming (SMR). However, the excess carbon generates CO2. This hydrogen is called grey' whenever the excess CO2 is not captured.

• Blue hydrogen: hydrogen is considered blue' whenever the emissions generated from steam methane reforming are captured and stored underground via industrial carbon capture and storage (CCS), so that these are not dispersed in the atmosphere. Because of the carbon capture and storage technology involved, blue hydrogen is currently more expensive to produce than grey hydrogen. To deliver against decarbonisation objectives, the use of blue (rather than grey) hydrogen is required.

• Green hydrogen: hydrogen can also be produced via a process called water electrolysisi.e., using electricity to decompose water into hydrogen gas and oxygen. If the electricity used is generated from renewables, it is carbon-free and therefore is categorised as green'. Today, less than 0.1% of global dedicated hydrogen production comes from water electrolysis.

• Pink hydrogen: pink hydrogen is hydrogen produced via electrolysis using nuclear power instead of renewables.

Most of the hydrogen today is used either in the petrochemicals industry, where it is used to split heavier oils into lighter petroleum products, or to produce ammonia for fertilisers. Similar to biogas and biofuels, its largest potential, however, is believed to lie in to hard-to-decarbonise sectors such as heavy goods vehicles (HGVs), aviation, shipping and heating applications. In addition to being used directly in fuel cells and boilers, hydrogen could in future serve as the main input for synthetic fuels.

Hydrogen, too, might be an alternative for Heavy Good Vehicles, aviation and shipping in the long term. Indeed, a high level of investment and experimentation in the use of hydrogen for transport is being undertaken. Both hydrogen and biogas could become the long-term steady-state solution for heavy goods transport, depending on cost developments (in production and supply chains) and the availability of each. The role of hydrogen in the long run is likely to be focused on hard-to-electrify sectors because of the lower energy efficiency (i.e., high conversion losses) of hydrogen use.

One of the greatest challenges with hydrogen remains transporting it to where it is needed. Storing and transporting the highly combustible gas is not easy: it takes up large amounts of space and requires a converted pipe network as its transport tends to make steel pipes and welds prone to failure. The bulk of hydrogen transport will require dedicated pipeline networkswhich would be costly to buildpressurising the gas or cooling it to a liquid for transport via ships.

Hydrogen might be a solution to heating in the long term, but the technology has not yet been proven to be commercially viable on a large scale. Significant investments in the infrastructure at all levels of the supply chain would be necessary to switch to hydrogen as a main heating source.

In summary, zero-carbon hydrogen has been identified as critical for meeting net-zero, particularly in hard to electrify' UK industrial sectors. However, the production, distribution and downstream appliances that enable the use of hydrogen in heating and transport are largely immature today. At all levels of the supply chain, hydrogen still needs to be developed for commercial use at large scale.

Hydrogen has significant potential to decarbonise our economies in the long run. In particular, hydrogen can play an important role in decarbonising sectors which are otherwise hard to decarbonise, such as heavy goods transport, shipping and aviation. In other sectors of our economysuch as private transport and heatingmore cost-effective technologies such as electrification are available.

Hydrogen is particularly useful if the enabling infrastructure is already in place i.e., if gas-fired power plants allow the attachment of carbon capture and storage and steam methane reforming, or if green surplus power enables electrolysis, and a well-developed natural gas network allows for efficient transport. Neither of these conditions hold in Jersey and that makes the transition towards hydrogen less attractive. Using hydrogen for heating and private passenger cars is also less efficient than electrification, as large amounts of energy are lost during the conversion process.

Using hydrogen in heating and transport requires significant investments in the upstream, midstream and downstream market segments.

98

Appendix 6 – Ideas generated as part of Jersey's Climate Conversation

R.170/2021