Last week saw the publication of the highly anticipated Net Zero Review, led by Chris Skidmore MP, which cited the need to increase the deployment and adoption of low carbon technologies in a bid to reach the UK’s net zero targets.
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.
The importance of investment
One of the most prominent outcomes from the review is the economic impact that net zero could have on the UK. The publication indicated 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.
RenewableUK’s CEO Dan McGrail highlighted the importance in creating a viable investment opportunity in the UK’s renewable sector and called on the UK government to support such means.
“Chris Skidmore’s review emphasises the importance of creating a tax and regulatory environment which encourages investment into the UK at a time when we are struggling to compete for investment against countries with attractive incentives for renewable energy like the USA,” McGrail said.
“That’s why it’s vital that the government considers the signals Treasury is sending to clean energy investors following the introduction of the Electricity Generators Levy, which kicked in at the start of this year and is now putting investment at risk.
“A stable policy environment is vital at a time renewable developers and their supply chain are under massive financial pressures just like any other sector, to ensure we maximise investment in renewables. Given this, the government needs to look at what more could be done to increase investor confidence.”
The review indicated that the UK could be able to take advantage of this growing economic interest in renewable technologies. 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. However, investment will be required to help achieve this.
“The opportunity for the UK to lead the way on net zero will not come for free and the need for investment comes at a time when there are competing priorities for public funds,” said Rob Doepel, UK and Ireland managing partner at EY Sustainability.
“To achieve its goals, the government must accelerate the mobilisation of private sector capital to ensure the UK invests in net zero and can finance the large-scale infrastructure projects we will need.”
The establishment of renewable targets
As stated by Doepel, McGrail, and also emphasised within the review itself, there is a need for investment opportunities to arise in the UK renewable sector for the nation to achieve its net zero ambitions. Increasing investor confidence in low carbon technologies by facilitating renewable enhancing policies could provide a crucial stepping-stone in accelerating innovation and adoption.
In particular, the inclusion of targets for onshore wind and solar capacity, which the review believed should stand at 70GW by 2035, could unlock new private investment in the renewable sector, McGrail stated.
“If the government is looking to increase the economic benefits of the UK’s decarbonisation ambitions, the review sets out some really clear easy wins,” McGrail said. “Setting targets for new onshore wind and solar capacity would certainly increase investor confidence and ensure we can decarbonise our electricity system by 2035.”
The solar sector in particular has welcomed the call for a 70GW solar target by 2035. There have been increasing calls for the establishment of a higher solar generation capacity – particularly in Scotland.
“It’s no surprise that solar energy, one of the cheapest and greenest sources of power, has been backed so strongly in Chris Skidmore’s review of how to reach net zero while maximising economic growth,” said Solar Energy UK chief executive Chris Hewett.
“We very much hope that Whitehall will embrace his calls to establish a joint taskforce with the solar industry to work on a roadmap for reaching 70GW of solar by 2035 – about four and a half times what we have now.”
To help attain these newly established targets, the review proposed the creation of taskforces and roadmaps to help guide the UK’s renewable future and ensure many of the pre-established targets are attained. In doing so, there will be increased confidence in developing renewable projects.
“We welcome the recommendations to establish taskforces for solar, onshore and offshore wind, as well as the calls to align government, regulators and industry to create accelerated deployment roadmaps and greater regulatory integration,” said Doepel.
“These steps should help to reduce much of the red tape that has accumulated across many years of incremental policy and regulation; doing so will be crucial in rapidly accelerating our national energy transition.”
Hewett additionally welcomed the creation of taskforces – particularly for the solar industry. With this, he has already identified one of the most crucial areas the taskforce must address – grid connectivity.
“The number one priority of this group will have to be unblocking access to the grid – which is pushing back the completion of many large projects well into the next decade. In time, it should lead to a sector deal, like those agreed for aerospace, construction, offshore wind power and other industries,” Hewett said.
Alongside clearing the substantial grid connectivity delays witnessed in the UK energy sector, the Skidmore review also called for a reform of the planning system to help enable the creation of renewable generation projects – a call that has been echoed by industry.
“We echo Mr Skidmore’s call for reforms to our planning system, putting decarbonisation at the heart of local action, and backing businesses to go green,” said Phil Thompson, CEO of Balance Power.
Not enough for low carbon heating
The Net Zero Review investigated a range of technologies and one that continues to draw more questions is the decarbonisation of homes – especially regarding heating. Many in the industry agree with the assumption made in the review that heating is “one of the biggest decarbonisation challenges facing the UK” and more needs to be done by the government to support this sector.
“Chris Skidmore’s thorough review rightly highlights that one of the biggest decarbonisation challenges facing us is how we heat our homes. Too much policy uncertainty and a lack of action means that the government is currently far from reaching its target of having 600,000 heat pumps installed every year from 2028; last year we only reached 10% of that target,” said Steven Ashurst, head of heat at LCP Delta.
“The report highlights the impact of a lack of relevant skills that are needed to sell, install and maintain low carbon heating solutions and we agree that without action, we cannot expect a vibrant low carbon heating market to develop.
“However, we would warn government from placing too much emphasis on focusing solely on air source heat pumps as a silver bullet solution. By putting in place clear signals, such as legislating for a ban on high carbon emitting boilers, this will enable a market to develop for low carbon heating solutions that is both competitive and provides quality to customers.”
Despite this, one solution that hadn’t been highlighted as a prominent area to support is energy efficiency. This has brought scrutiny from Jonathan Maxwell, founder and CEO of Sustainable Development Capital.
“Of course, we welcome the recommendations that relate to energy efficiency, and in particular support the proposals for regulations to be set for existing buildings to achieve minimum energy efficiency standards by 2030 and the need for the public sector to lead by example. But there is an urgent need for the government to do much more, and much more quickly,” Maxwell said.
“We are astonished that none of the ‘ten priority missions’ involve the largest and lowest cost source of carbon emission reductions and productivity gains for the UK, which is energy efficiency improvements in the commercial, industrial, public and transport sectors. Energy efficiency for households is identified as a priority, but this is dealing with a smaller part of the biggest problem.
“Efficiency should be the priority. We simply don’t have the time or energy to waste.”