UK Net Zero Strategy: a tech-centric approach

In the lead up to the COP26 United Nations climate summit which the UK is hosting in Glasgow, the UK government published its much-anticipated Net Zero Strategy, Heat & Buildings Strategy and the outcome of the Treasury’s Net Zero Review. 

The Net Zero Strategy builds on the government’s Ten Point Plan for a Green Industrial Revolution, which was published in November 2020. The overall aim is to create conditions for the private sector to invest with confidence “unleashing the unique creativity of capitalism to generate and grow new green industries” so that the UK can reach net zero by 2050. The Prime Minister in the foreword to the Net Zero Strategy focuses on three key elements to the UK’s net zero transition: power, vehicles and boilers (more on that below).

Key to the government’s Net Zero Strategy is a tech-centric approach. The Prime Minister thinks we can build back better “without so much as hair shirt in sight”: 

“In 2050, we will be driving cars, flying planes and heating out homes, but our cars will be electric gliding silently around our cities, our planes will be zero emission allowing us to fly guilt-free, and our homes will be heated by cheap reliable power drawn from the winds of the North Sea.”

The current energy crisis (which goes much wider the UK’s own borders) is also refocusing the government’s mind on security of energy supplies and the renaissance of nuclear power in particular (more on that below).

The UK government says that the exact technology and energy mix in 2050 cannot be known now and that the UK’s path to net zero will have to respond to innovation and adoption of new technologies. However, the UK Net Zero Strategy relies heavily on the following four key green technologies to achieve net zero by 2050:

• electricity from low carbon generation and storage technologies;
• low-carbon (blue and green) hydrogen to complement the electricity system, especially in areas that are harder to electrify (e.g. parts of industry, heating, and heavier transport such as aviation and shipping);
• carbon capture usage and storage (CCUS) to capture CO2 from power generation, hydrogen production and industrial processes; and
• biomass combined with CCUS.

“These new technologies could transform our energy system by 2050. Electricity, low carbon hydrogen, and BECCS (bioenergy with CCS) could all scape up, while reliance on fossil fuels will drop considerably and can be combined with CCUs technology to abate emissions, with any residual emissions offset by greenhouse gas removals.”

The Net Zero Strategy sets out key policies for the following sectors.

Power 

• The government wants to fully decarbonise the UK’s power system so that the country is powered entirely by clean electricity by 2035 (subject to security of supply).
• This will include a final investment decision on a large-scale nuclear plant by the end of this Parliament and the launch of a new £120 million Future Nuclear Enabling Fund which will look at options such as Small Modular Reactors in a number of potential sites including Wylfa in North Wales.
• It will also involve 40GW of offshore wind by 2030 with more onshore wind, solar and other renewables and a new approach to onshore and offshore electricity networks – as well as “moving towards” 1GW of floating offshore wind by 2030.
• The government also wants to deploy new flexibility measures including storage, gas with CCS and hydrogen.

 Fuel Supply & Hydrogen 

• The government wants to deliver 5GW of hydrogen production capacity by 2030, including through the new £140m Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme to fund new industrial carbon capture and hydrogen business models - initially committed to providing up to £100 million to award contracts of up to 250 MW of electrolytic hydrogen production capacity in 2023 with further allocation in 2024.
• A funding envelope (to be announced in 2022) enabling the award of the first contracts to industrial carbon capture facilities and CCUS-enabled hydrogen production projects from 2023 through the Cluster Sequencing process, to deliver up to 3 MtCO2/yr of industrial carbon capture and up to 1GW of CCUS-enabled hydrogen by the mid-2020s.
• Further allocation rounds for all types of eligible low carbon hydrogen production and industrial carbon capture from 2025, to enable the UK to meet its 2030 deployment ambitions of 6MtCO2/year of industrial carbon capture, 5 GW hydrogen production capacity, and four CCUS clusters.
• From 2025 at the latest, all revenue support for hydrogen production to be levy funded, subject to consultation and legislation.
• The government also intends to introduce “climate compatibility checkpoints” for future licensing on the UK Continental Shelf and regulating the oil & gas sector in a way that halves GHG emissions.
• The government points out that the current gas price spikes underline the need to “get off hydrocarbons as quickly as possible”.

Industry 

• The government wants to deliver four CCUS clusters by 2030, with Teeside, the Humber, Merseyside and North Wales along with the North East of Scotland as a reserve cluster.
• It will also consult on a net zero consistent UK Emissions Trading Scheme to incentivise cost-effective abatement in industry.
• The intention is to mobilise additional public and private investment of at least £14 billion in line with the government’s 2037 delivery pathway.

Heath & Buildings

• The ambition is that by 2035, all new heating appliances in homes and workplaces will be low carbon (so no new boilers to be sold from 2035).
• This will involve a new £450 million 3-year Boiler Upgrade Scheme, a new £60 million Heat Pump Ready Programme, a Hydrogen Village trial by 2026 and delivering cheaper electricity by rebalancing costs from electricity bills to gas bills this decade.
• For more information, see our summary of the Heat & Buildings Strategy.

Transport

• The government had already announced last year that it will be bringing forward the end of sales of new petrol and diesel cars to 2030 and that it wants all cars to be fully zero emissions capable by 2035.
• This will involve significant new investment in vehicle grants and EV infrastructure. The government wants to start mobilising additional public and private investment of around £220 billion in line with its 2037 delivery pathway.
• It is also planning zero emission road freight trials, more new zero emission buses, a net zero rail network by 2050 and is aiming to become a world leader in zero emission flight by enabling delivery of 10% sustainable aviation fuel (SAF) by 2030.
• For more information, see our summary of the government’s Transport Decarbonisation Plan (which the government released this summer).

Natural resources, waste & fluorinated gases 

• In recognition of the role that nature-based solutions have in helping to capture carbon, the government wants to treble woodland creation rates in England and support farmers to implement a range of low carbon farming practices (e.g. agroforestry).
• The government also wants the UK to move towards a more circular economy, improve resource efficiency and achieve near elimination of biodegradable waste to landfill.

Greenhouse Gas Removals

• The government sees greenhouse gas removals (GGRs) (e.g. bioenergy with carbon capture and storage (BECCS) and direct air capture of CO2 with storage (DACCS) as well as more nature-based solutions) as playing an important role in balancing residual emissions from sectors that are the hardest to decarbonise (e.g. aviation, agriculture and heavy industry).
• It wants to support early commercial deployment of GGRs in the short term (with £100 million of investment in GGR innovation) with the aim of moving towards a market-based framework for GGRs.
• The government also wants to explore options for regulatory oversight to provide robust monitoring, reporting and verification (MRV) of GGRs.

So the UK’s exact route to net zero will depend on the availability and deployment of key green technologies. The government is aiming to deliver at least £1.5 billion of funding to support net zero innovation projects and use the UK Infrastructure Bank (UKIB) to provide leadership to the market in the development of new technologies, particularly in the scaling early-stage technologies that have moved through the R&D phase. 

Also, in the same week it published the Net Zero Strategy, the government also published its Greening Finance Roadmap in which it outlined a vision for how a new integrated sustainability disclosure regime (the SDR) that will be linked to the forthcoming UK Green Taxonomy can help redirect private capital to economic activities that are in line with the UK’s net zero goals (see here).

The government expect the costs to continue to fall as green technology advances, industries decarbonise and private sector investment grows. It estimates that most of the costs are the additional capital costs (and associated financing) of low carbon technologies and that the net cost will be equivalent to 1-2% of GDP in 2050. Which means it thinks the significant benefits of net zero more than offset the costs (for more on this see the outcome of the Treasury’s Net Zero Review). The UK government is not the only one who think that the cost of inaction is much higher than the cost of the net zero transition, and that economic growth and the net zero journey can go hand-in-hand. Many of those gathering now at COP26 share that view.

Whether or not the UK will succeed in becoming the birthplace of the “Green Industrial Revolution” remains to be seen. The Jetson Family themselves could not have come up with a more futuristic plan if they’d tried. But this much reliance on green technologies, some of which are not yet ready for commercialisation at scale, has its risks. Some would argue (including the government’s own climate change expert committee, the CCC) that you cannot get to net zero by 2050 without changing some elements of consumer behaviour as well (such as reducing energy demand and changing transport patterns and eating habits).

For more information on the net zero journey, see the Linklaters:

• COP26 and beyond microsite
• Net Zero System microsite 
• Getting Hy microsite