Insight

Build back greener: Highlights from the UK’s long-awaited net zero strategy

22.10.21

Earlier this week, the UK government published its long-awaited net zero strategy alongside HM Treasury’s final net zero review. The strategy sets out the government’s plan for delivering on the UK 2030 Nationally Determined Contribution (NDC) and other commitments that it has made in relation to decarbonising and achieving net zero emissions for the UK by 2050.

While this is undoubtedly a positive step, there are some notable gaps when compared to the expectations that IIGCC shared in a letter to the UK Prime Minister earlier in the year, including less ambitious targets for the phase-out of fossil fuel car and van sales and no commitment in relation to emissions from the cement sector. However, the majority of the expectations outlined in our letter are at least partially met, and the direction of travel is clearly positive.

Power

The strategy highlights that reliable and affordable power is key to the functioning of modern society, but that it is also critical in decarbonising the economy and reaching net zero. The government has committed to taking action to deliver a fully decarbonised power system by 2035, with all electricity coming from ‘low carbon sources’, subject to security of supply. This accelerates the previous commitment to decarbonise the power system by 15 years, is in line with recent recommendations from the IEA and aligns with the recent global sector strategy on electric utilities published by IIGCC as part of the Climate Action 100+ initiative.

The strategy references the role that nuclear energy will be play in the transition to net zero power, with a commitment to secure a final investment decision on a large-scale nuclear plant by 2023 or sooner and plans to establish a new £120 million Future Nuclear Enabling Fund. There are also plans for more onshore and offshore wind, solar and other renewable sources of energy, with a new approach to incorporating these as efficiently as possible and deployment of new flexibility measures to help smooth out future price spikes.

Fuel supply and hydrogen

While electricity will have an integral role to play in the transition to a net zero economy in the UK, access to cleaner fuels will still be important. The government commits to significantly reducing emissions from traditional oil and gas fuel supplies, while scaling up the production of low carbon alternatives including hydrogen and biofuels. IIGCC recently published a net zero standard for oil and gas companies, which outlines the steps that oil and gas companies would need to take in order to align with net zero.

The UK’s net zero strategy will deliver 5 GW of low carbon hydrogen production capacity by 2030, whilst halving emissions from oil and gas. In addition, the UK will introduce a new climate compatibility checkpoint for future licensing on the UK Continental Shelf.

Industry

The government has already committed to supporting the decarbonisation of industry in line with a net zero goal, supporting the switch to cleaner fuels and helping to improve resource and energy efficiency whilst continuing to attract inward investment. Developing industrial capabilities in low carbon hydrogen alongside carbon capture, usage and storage (CCUS) and renewable energy will accelerate decarbonisation, with an initial focus on ‘clusters’ that make up around half of UK industrial emissions. The government will also focus on incentivising cost-effective abatement in industry at the pace and scale needed to achieve net zero.

Heat and buildings

Heating for homes and workspaces makes up almost a third of all UK greenhouse gas emissions – in order to achieve net zero, improvements need to be made to energy efficiency with the UK strategy aiming for all new heating appliances to be based on low carbon technologies, such as electric heat pumps or hydrogen boilers. It commits to phasing out the installation of new and replacement gas boilers by 2035 and aims to make heat pumps as cheap to buy and run as gas boilers within this decade. In addition to this, it will launch a hydrogen village trial to assess the future role of hydrogen in the heating system by 2026.

Transport

Policies focused on transport are intended to transform cities and towns, with access to greener, faster and more efficient transport. A zero emissions vehicle (ZEV) mandate will increase the number of ZEVs on roads. This gives a clear signal to investors on the UK’s commitment to end the sale of new petrol and diesel cars and vans from 2030 and all non-zero emissions vehicles by 2040, including motorcycles, buses and HGVs.

In addition to this, £2 billion will be invested in towns and cities to increase the number of journeys that can be cycled or walked by 2030, £3 billion will be invested in improving integrated bus networks and all diesel-only trains will be removed by 2040, with significant investment committed to improving rail electrification and city rapid transit systems.

Finally, the UK intends to become a world-leader in zero emission flight and kickstart the commercialisation of sustainable aviation fuel (SAF) in the UK, with the ambition to deliver 10% SAF by 2030 and planned investment of £180 million for the development of SAF plants.