Net Zero Strategy: Build Back Greener

20/10/2021

According to the UK Government, now is the time the world needs to go further and faster to tackle climate change and the UK is stepping up to that challenge. The Net Zero Strategy, the first of its kind in the world of a major economy, sets out policies and proposals for decarbonising all sectors of the UK economy to meet the net zero target by 2050. The full strategy and how they plan on implementing it can be found here. Atticus Communications has summarised the key highlights of the Net Zero Strategy: Build Back Greener below.

Overview

Since 1990 the UK has reduced its greenhouse gas emission by 44%, while growing our economy by over 75%. This strategy sets out the Government’s long-term plan to finish the job and end the UK’s domestic contribution to man-made climate change by 2050. The Government will tackle the approach with four key principles:

1. They will work with the grain of consumer choice: no one will be required to rip out their existing boiler or scrap their current car.

2. They will ensure the biggest polluters pay the most for the transitions through fair carbon pricing.

3. They will ensure that the most vulnerable are protected through government support in the form of energy bill discounts, energy efficiency upgrades, and more.

4. They will work with businesses to continue delivering deep cost reductions in low carbon tech through support for the latest state of the art kit to bring down costs for consumers and deliver benefits for businesses.

The strategy is a long-term plan for a transition that will take place over the next three decades, meaning that many of the policies in the strategy will be phased over the next decade or longer. It sets out clear policies and proposals for keeping the UK on track for the coming carbon budgets, the ambitious National Determines Contribution (NDC), and then sets out the vision for a decarbonised economy in 2050.

What is in the strategy?

One of the Government’s main headlines was how the strategy would create 440,000 jobs across sectors and across all parts of the UK in 2030. However, digging deeper, what else was there?

Power

The policies and proposals for power in the Net Zero Strategy will (1) provide support for up to 59,000 jobs in 2024 and up to 120,000 jobs in 2030; (2) start to mobilise additional public and private investment of £150-270 billion, in line with our 2037 delivery pathway; and (3) fully decarbonise our power system by 2035.

Key policies:

- By 2035 the UK will be powered entirely by clean electricity, subject to security of supply.

- Secure a final investment decision on a large-scale nuclear plant by the end of this Parliament, and launch a new £120 million Future Nuclear Enabling Fund, retaining options for future nuclear technologies, including Small Modular Reactors, with several potential sites including Wylfa in North Wales.

- 40GW of offshore wind by 2030, with more onshore, solar, and other renewables- with a new approach to onshore and offshore electricity networks to incorporate new low carbon generation and demand in the most efficient manner that takes account of the needs of local communities like those in East Anglia.

- Deployment of new flexibility measure including storage to help smooth out future price spikes.

Fuel Supply and Hydrogen

The policies and proposals for power in the Net Zero Strategy will (1) support up to 10,000 jobs in 2030 in fuel supply; (2) start to mobilise additional public and private investment of £20-30 billion, in line with the 2037 delivery pathway; and (3) deliver 5GW of hydrogen production capacity by 2030, whilst halving emissions from oil and gas.

Key policies:

- The Government has set up the Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme to fund the new hydrogen and industrial carbon capture business models. They will provide up to £140 million to establish the scheme, including up to £100 million to award contracts up to 250MW of electrolytic hydrogen production capacity in 2023 with further allocation in 2024.

- Introducing a new climate compatibility checkpoint for future licencing on the UK Continental Shelf and regulating the oil and gas sector in a way that minimises greenhouse gases through the revised Oil and Gas Authority strategy.

Industry

The policies and proposals for industry in the Net Zero Strategy will (1) support up to 54,000 jobs in 2030 in industry; (2) start to mobilise additional public and private investment of at least £14 billion in industry, in line with the 2037 delivery pathway; and (3) deliver four carbon capture usage and storage (CCUS) clusters, capturing 20-30 MtCO2 across the economy, including 6 MtCO2 of industrial emissions, per year by 2030.

Key policies:

- Following the Phase 1 of the Cluster Sequencing process, the Hynet and East Coast Clusters, will act as economic hubs for green jobs in line with our ambition to capture 20-30 MtCO2 per year by 2030. This puts Teesside and the Humber, Merseyside and North Wales, along with the Northeast of Scotland as a reserve cluster, among the potential early SuperPlaces which will be transformed over the next decade.

- Future-proofing industrial sectors, and the communities they employ through the £315 million Industrial Energy Transformation Fund (IETF).

- Incentivise cost-effective abatement in industry at the pace and scale require to deliver net zero, through the UK ETS by consulting on a net zero consistent UK ETS cap.

Heat and Buildings

The policies and proposals for heat and buildings in the Net Zero Strategy will (1) support up to 100,000 jobs in the middle of the 2020s and up to 175,000 in 2030; (2) start to mobilise additional public and private investment of approximately £200 billion, in line with the 2037 delivery pathway; and (3) set a path to all new heating appliances in homes and workplaces from 2035 being low carbon.

Key policies:

- An ambition that by 2035, no new gas boilers will be sold.

- A new £450 million three-year Boiler Upgrade Scheme will see households offered grants of up to £5,000 for low-carbon heating systems so they cost the same as a gas boiler now.

- A new £60 million Heat Pump Ready programme that will provide funding for pioneering heat pump technologies and will support the government’s target of 600,000 installations a year by 2028.

- Delivering cheaper electricity by rebalancing of policy costs from electricity bills to gas bills this decade.

- Further funding for the Social Housing Decarbonisation Scheme and Home Upgrade Grants, investing £1.75 billion. Additional funding of £1.425 billion for Public Sector Decarbonisation, with the aim of reducing emissions from public sector buildings by 75% by 2037.

- Launching a Hydrogen Village trial to inform a decision on the role of hydrogen in the heating system by 2026.

Transport

The policies and proposals for transport in the Net Zero Strategy will (1) support for up to 22,000 jobs in 2024 and up to 74,000 in 2030; (2) start to mobilise additional public and private investment of around £220 billion, in line with our 2037 delivery pathway; and (3) remove all road emissions at the tailpipe and kickstart zero emissions international travel.

Key policies:

- A zero-emission vehicle mandate to improve consumer choice and ensure we maximise the economic benefit from this transition by giving a clear signal to investors. This will deliver on our 2030 commitment to end the sale of new petrol and diesel cars, and 2035 commitment that all cars must be fully zero emissions capable.

- Further funding of £620 million for zero emission vehicle grants and EV Infrastructure, including further funding for local EV Infrastructure, with a focus on local on street residential charging.

- Allocating a further £350 million of the up to £1 billion Automotive Transformation Fund (ATF) to support the electrification of UK vehicles and their supply chains.

- Building on the success of the £20 million zero emission road freight trials, they will expand these to trail three zero emission HGV technologies at scale on UK roads to determine their operational benefits, as well as their infrastructure needs.

- £2 billion investment which will help enable half of journeys in towns and cities to be cycled or walked by 2030.

- £3 billion to create integrated bus networks, more frequent services and bus lanes to speed journeys.

- Transformation of local transport systems, with 4,000 new net zero buses and the infrastructure to support them, and a net zero rail network by 2050, with the ambition to remove all diesel-only trains by 2040.

- Building on the success of the Clean Maritime Demonstration Competition, they will be extending this to a multi-year programme, delivering real-world demonstrations and technology trials of clean maritime vessels and infrastructure to decarbonise the maritime sector.

- Significant investment in rail electrification and city rapid transit systems.

- Aim to become a world-leader in zero emission fight and kick-starting the commercialisation of the UK sustainable aviation fuel so people can fly and connect without guilt. Their ambition is to enable delivery of 10% SAF by 2030 and will be supporting UK industry with £180 million funding for the development of SAF plants.

National Resources, waste and fluorinated gases

The policies and proposals for natural resources, waste, and fluorinated gases in the Net Zero Strategy will (1) new employment opportunities across the UK, afforestation in England could support up to 1,900 jobs in 2024 and 2,000 jobs in 2030; (2) start to mobilise additional public and private investment of approximately £30 billion, in line with their 2037 delivery pathway; and (3) treble woodland creation rates in England, contributing to the UK’s overall target of increasing planting rates to 30,000 hectares per year by the end of this Parliament.

Key policies:

- Supporting low-carbon farming and agricultural innovation through the Farming Investment Fund and the Farming Innovation Programme to invest in equipment, technology, and infrastructure to improve profitability, benefit the environment and support emissions reductions.

- They will boost the existing £640 million Nature for Climate Fund with a further £124 million of new money, ensuring total spend of more that £750 million by 2025 on peat restoration, woodland creation and management- above and beyond what was promised in the manifesto. This will enable more opportunities for farmers and landowners to support Net Zero through land use change.

- Restoring approximately 280,000 hectares of peat in England in 2050 and trebling woodland creation rates in England, contributing to the UK’s overall target of increasing planting rates to 30,000 hectares per year by the end of Parliament.

- £75 million on net zero related R&D across Natural Resources, Waste and F-gases, to inform our pathway to 2037.

- To support our commitment to explore options for the near elimination of biodegradable municipal waste to landfill 2028, they are bringing forward £295 million of capital funding which will allow local authorities in England to prepare to implement free separate food waste collections for all households from 2025.

Greenhouse Gas Removals

The policies and proposals for GGRs in the Net Zero Strategy will provide (1) new, highly skilled, jobs in the industrial heartlands; (2) start to mobilise additional public and private investment of around £20 billion, in line with the 2037 delivery pathway; and (3) an ambition to deploy at least 5 MtCO2 per year of engineered GGRs by 2030.

Key policies:

- Delivering £100 million of investment in GGR innovation could enable further deployment of GGRs, which in turn will leverage private investment and demand for transferrable engineering expertise from the UK’s oil and gas sector.

- Explore options for regulatory oversight to provide robust monitoring, reporting and verification (MRV) of GGRs, following the recommendations of the BEIS-led MRV Task and Finish Group involving experts from industry and academia.

Supporting the transition with cross-cutting action

Key policies:

- Deliver at least £1.5 billion of funding to support net zero innovation projects.

- Use the UK Infrastructure Bank (UKIB) to crowd in private finance, support more than £40 billion of investment, and pull through low carbon technologies and sectors to maturity and scale.

- Introduce a new Sustainability Disclosures Regime, including mandatory climate related financial disclosures and a UK green taxonomy.

- Reform the skills system so that training providers, employers and learners are incentivised and equipped to play their part in delivering the transition to net zero.

- Publish an annual progress update against a set of key indicators for achieving our climate goals.

What’s missing?

Undoubtedly, many will argue that key topics have been overlooked in what is still a fairly sizeable list of measures. Nonetheless, critics will still argue that such a substantial policy and generational challenge requires a fully comprehensive approach. Further commitments on ending new licenses oil and gas exploration are absent, while meat and dairy farming have been avoided altogether. While it’s easy to poke holes in what is absent, delivery is of course a critical aspect. The Government has committed to phasing out coal power completely by 2024 to cut carbon emissions, but it is still used when it is better value than gas and was used only recently during the pricing chaos. Opponents will question how likely a strategy is to be adhered when the path of least political resistance can be more easily travelled.

Looking into the future

The science could not be clearer, by the middle of this century the world must reduce emissions to as close to zero as possible, with a small amount of remaining emissions absorbed through natural carbon sinks like forests, and new technologies like carbon capture. If this is achieved, global emissions of greenhouse gases will be ‘net zero’. Delivering this requires urgent global action, including ending coal fired power generation, retiring petrol and diesel engines from all cars, and halting deforestation. These are the steps that the UK is calling for at COP26, the global climate change talks in Glasgow next month.

The timing of this strategy and the others announced in recent days is no coincidence. The UK wants to be a leader on climate change and in achieving Net Zero. Expect to hear much more in the coming weeks and months.