The Department for Business, Energy and Industrial Strategy (BEIS) has released the eagerly anticipated Chris Skidmore MP independent review into the UK’s net zero prospects.
The Mission Zero: Independent Review of Net Zero publication collected over 1,800 responses to its call for evidence and held more than 50 roundtables in a bid to collect enough evidence to guide the UK’s net zero prospects and support the energy transition.
Economic opportunity for net zero
One of the most prominent outcomes from the review is the economic impact that net zero could have on the UK. The review indicates that “net zero is the economic opportunity of the 21st century” and should be actively pursued to increase the prosperity of the nation. This could open up various crucial areas of development across the nation including the creation of green jobs and supporting neighbouring countries in their own net zero ambitions.
Evidence presented to the review has shown that the UK is taking advantage of the economic growth opportunity, but the global community is also eyeing opportunities. The publication stated “with more than 90% of global GDP covered by a net zero target there is now huge global momentum to reach net zero and capture the economic opportunities. This is driven by businesses of all sizes who have recognised that net zero can help them grow.”
The UK in particular has been identified as a nation that could be able to take advantage of this growing economic interest. However, there is a requirement to act decisively in order to capitalise on this opportunity, which McKinsey has estimated could be worth up to £1 trillion for British businesses by 2030.
But how is the UK uniquely positioned to capitalise on the growing renewable market? The region holds an “advantage” over other advanced economies in several areas, the review stated. This includes developments being achieved in offshore wind, carbon capture and storage and green finance.
In doing so, a large market could open up export opportunities for the UK and its domestic businesses to support renewable projects across the globe, should it scale its own net zero profile.
The UK is however making significant progress in realising its renewable potential – particularly in the wind generation sector. Earlier this week, a new wind generation record was set, with the technology generating over 21.6GW on 10 January.
This sector is expected to receive further support in the future with the UK government having overturned the de facto ban on onshore wind farms. Central to the government’s new proposed changes to planning policy is that planning permission should be dependent on a project demonstrating local support and satisfactorily address impacts identified by the local community.
The changes would still ensure communities are “at the heart of decisions on onshore wind”, the government said, adding that the changes introduced in 2016 to put local councils in charge of onshore wind applications as opposed to permission being granted through the Nationally Significant Infrastructure Project regime will remain.
Along with the change to national planning policy, the government is also set to launch a technical consultation to explore how local authorities can demonstrate local support and respond to the views of the community with regards to onshore wind generation in the local area.
The new digital engagement techniques that will be used during the planning process will ensure that those in the local community can make their views known. Supporting onshore wind developments helps to maintain the UK’s net zero target and could enable the country to become “industry experts” in the global wind market.
The Net Zero Review additionally emphasised the need to improve international partners in a bid to access the latest technologies and innovate within the renewable sector. Several investment policies and strategies had been referenced within the report including the US’ $369 billion Inflation Reduction Act, France’s 2030 invest plan and the EU’s Fit for 55 programme. All of which could grant opportunities to the UK in the race to net zero.
Despite these positives in having these international partners, it emphasises the need for the UK to scale its net zero prospects. In a bid to cement itself as a “prime destination” for international capital and unlock export opportunities, the UK must act quickly to seize opportunities – a failure to do so could be detrimental to the economy.
Crucially, the review identified that “investing in net zero today will be cheaper than delaying as well as increasing the economic and climate benefits”, highlighting the need to support the sector in achieving its goal in relation to decarbonisation.
To showcase this urgent need to support decarbonisation, the review said “delaying action by ten years could mean UK debt could be 23% of GDP higher in 2050, doubling the fiscal cost of achieving net zero and not capitalising on economies of scale”.
Obstacles on the path to net zero
Various obstacles have been identified on the pathway to net zero in the UK. The government’s Net Zero Strategy outlined a pathway to successfully decarbonise until 2037 in a cost-effective method. This would also help create a net zero energy system by 2050.
The analysis from the Skidmore review has stated that the strategy continues to maintain the correct method in achieving this and the policies should be pursued to enact this strategy. Delaying this could be detrimental to the UK’s net zero goals and could put its net zero by 2050 target in jeopardy.
To further strengthen the need to scale net zero policies and developments, the benefits of achieving this sooner could be much stronger than delaying these until a further date.
Positive strides have been realised within several sectors in the UK, including EVs and offshore wind, however the publication also states that “too often we heard of problems hampering business and local areas from going as far and as fast as they want to”. This could be applied to a range of technologies, most notably the government’s failures associated with the rollout of heat pump installations and stringent planning systems.
These have had a huge impact on businesses that have desired to integrate low carbon technologies and those that have looked to get ahead in decarbonisation to boost their own economic prospects. Solving these bottlenecks, such as grid connection delays, must be accelerated for the UK to meet its net zero ambitions and capitalise on the opportunities it can grant.
The review implies that the UK currently stands at a crossroads. The nation should fully commit to enhancing and supporting net zero technologies, boosting the economy as a result, and put the UK on the map as a leader in the global community. Alternatively, failure to invest and capitalise on the net zero opportunity could see world-leading sectors deteriorate, taking high-paying jobs and high-skilled workers to other areas of the globe.
‘Ten missions’ to capitalise on the net zero opportunity
To enable the decarbonisation of the UK, maintain its net zero prospects and support pro-growth and pro-business transitions, the review identified ten priority missions that must be supported by 2035.
The first of these missions is centred around grid and infrastructure – a key enabler of many renewable technologies and distributing low carbon energy to various businesses and homes. The review indicates a strategic framework and delivery plan for the critical networks of the future are needed to turbocharge onshore and offshore developments.
This includes accelerating the implementation of the British Energy Security Strategy, a cross-sectoral infrastructure strategy by 2025 and reforming the approach to planning to help unleash solar and onshore wind projects.
The second mission aims to bolster the solar sector. For this, the review advises the full-scale deployment of solar including what is dubbed a “rooftop revolution” in a bid to harness one of the cheapest methods of generating clean energy. Mobilising this could increase the UK’s energy independence – an area that has been amplified since the Russian invasion of Ukraine – and deliver up to 70GW of British solar generation by 2035.
Scotland has made progress in supporting rooftop solar installations having outlined plans to reform its planning rules to incentivise the use of large solar installations on Scottish roofs.
Onshore wind is another renewable generation technology in which the review believes should be further supported. In this mission, the correct credentials must be put into place to pave the way for onshore deployment while developers should be called on to work closely with communities to help deliver local benefits, the review argued.
Nuclear energy could also prove to be a catalyst in the UK’s net zero ambitions. To unlock its potential, the Review advises that a programmatic approach for a net generation fleet of nuclear projects could be created. This would in turn then support high-tech British industry covering the whole supply chain.
A clear plan for industry decarbonisation must also be built around long-term investment in carbon capture utilisation and storage in addition to scaling the hydrogen sector to help decarbonise hard-to-abate sectors.
Companies around the globe have been pouring capital into green hydrogen innovation and producing technologies that are able to provide that last percentage required for full decarbonisation.
But the UK government has been cautious in its approach to hydrogen. Despite major backing, its initial Hydrogen Strategy set a goal of just 5GW of low-carbon hydrogen production by 2030 – significantly lower than countries such as the US, Germany and Australia. A negative response from industry prompted this figure to be increased to 10GW, with 5GW to come from green hydrogen.
The review has also called for the creation of a circular economy to solve issues surrounding waste. To do this, the UK must stimulate the efficiency and circular use of resources across the economy. Doing so could galvanise action on recycling and the reuse of critical materials.
Another area that is vitally important to solve is the planning system. Central to this is the need to unlock the planning system and reform the relationship between central and local government to give local authorities and communities the boost needed to act on net zero opportunities in regions of the UK.
One of the most significant calls made in the review is to work towards gas free homes by 2035. Central to this is regulating now for the end of new and replacement gas boilers by 2033 at the latest and ensuring sufficient support is provided to innovative technologies such as heat pumps. A new Net Zero Performance Certificate should also be provided to give consumers greater understanding on household carbon emissions.
Alongside these measures, the review believes the government should bring forward all consultations and work to mandate the Future Homes Standard by 2025 and ensure all homes sold by 2033 are EPC C.
The UK must also embed nature and habitat restoration throughout the transition plans, the review indicated, to help maximise the co-benefits for climate and nature wherever possible.
The final mission should be to scale research and development and innovation in low carbon technologies to help lead a global push for net zero. To achieve this, a roadmap for both these factors should be created to 2050, agile regulation to be initiated and three ten-year demonstrators should be created.
The review additionally calls for the creation of an over-arching government financing strategy by the end of 2023, a long-term pragmatic approach to net zero projects and long-term funding certainties, and the creation of an Office for Net Zero Delivery.