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Government publishes Net Zero Strategy in ‘substantial step forward’

The Net Zero Strategy has been published in the same week as the Heat and Buildings Strategy. Image: Getty

The Net Zero Strategy has been published in the same week as the Heat and Buildings Strategy. Image: Getty

The government has laid out its plans for reaching net zero by 2050, including new EV charging funding, a review of the frequency of Contracts for Difference (CfD) auctions and green finance and innovation commitments.

The Net Zero Strategy, published today (19 October), builds upon other policy documents such as the Transport Decarbonisation Plan, Smart Systems and Flexibility Plan and Heat and Buildings Strategy, and outlines four key principles:

  1. Working with the grain of consumer choice
  2. Ensuring the biggest polluters pay the most for the transition through fair carbon pricing
  3. Ensuring the most vulnerable are protected through government support
  4. Working with businesses to continue delivering deep cost reductions in low carbon tech

“We didn’t have a plan before, now we do,” the CCC’s chief executive Chris Stark has said in response to the strategy, which he described as a “substantial step forward”.

“It provides much more clarity about what lies ahead for businesses and individuals and the key actions required in the coming decades to deliver a net zero nation. It also gives the UK a strong basis to be president of the forthcoming COP26 summit. The critical next step is turning words into deeds,” he said.

Reaching a net zero electricity system by 2035

Commitments to the decarbonisation of the electricity system largely focus on meeting the recently announced target of a net zero electricity system by 2035.

As such, measures include accelerating the deployment of low-cost renewable generation, such as wind and solar through the CfD scheme by undertaking a review of the frequency of the CfD auctions, something which the Association for Renewable Energy and Clean Technology (REA) has previously called for, specifically asking for six monthly CfD auctions.

The government will also secure a final investment decision on a large-scale nuclear plant by the end of this Parliament while taking measures to inform investment decisions during the next Parliament on further nuclear projects. The adoption of new nuclear is a "step in the wrong direction", according to Richard Lum, co-CIO of Victory Hill Capital Advisors, with the technology depending on an eco-system of manufacturing materials, fuels and disposal which "are far from being sustainable".

Technologies that should instead be focused on, according to Lum, include longer duration storage of electricity, carbon capture and reuse technologies and other forms of renewable power generation.

Long-duration storage was given a mention in the strategy, with the government to explore the system need and case for further market intervention for long-duration storage and hydrogen in power. In July, it issued a call for evidence on how to enable long-duration energy storage, while it is aiming to achieve 5GW of UK low carbon hydrogen production capacity by 2030.

It will also work to deliver the actions in its Smart Systems and Flexibility Plan and Energy Digitalisation Strategy to maximise system flexibility, and will provide £380 million for the UK’s offshore wind sector, investing in supply chains, infrastructure and early-coordination of offshore transmission networks.

Also detailed in the strategy were plans to reform system governance so that the whole system can achieve net zero and meet consumers’ needs, with the government to also consider whether broader reforms to our market frameworks are needed to unlock the full potential of low carbon technologies to reach net zero.

A new four-year policy framework is also to be introduced to drive the market-wide rollout of smart meters through the introduction of fixed minimum annual installation targets for energy suppliers from 1 January 2022.

The smart meter rollout has seen targets go unmet previously, with over half of suppliers failing to reach their 2019 smart meter installation milestones, while more than 10% were outside of the tolerance allowed. The same year, the government announced it would be extending the deadline for energy suppliers to install smart meters in homes to 2024, with a new regulatory framework to support this.

Lastly, the government will also ensure the planning system can support the deployment of low carbon energy infrastructure.

David Smith, chief executive of Energy Networks Association, said: "The Prime Minister has made it clear that customer choice is a central component of the Net Zero Strategy. The variety of technologies being developed and deployed for heat, transport, buildings and industry provides this exact choice."

Decarbonising the transport sector

Policies to decarbonise transport have already been detailed in documents such as last year's Ten Point Plan, which included the 2030 ban on the sale of new petrol and diesel cars, and the Transport Decarbonisation Plan, which included commitments such as a new £90 million Local EV Infrastructure Fund, an EV infrastructure guide for local authorities and plans to regulate to ensure all private chargepoints have smart capability.

In today's strategy, the government outlined its intentions to ensure the UK’s charging infrastructure network is reliable, accessible and meets the demands of all motorists. Later this year, it will publish an EV infrastructure strategy, which is to set out its vision for infrastructure rollout and the roles for the public and private sectors in achieving it.

Building on the £1.9 billion from Spending Review 2020, the government said it has committed an additional £620 million to support the transition to electric vehicles. This funding will support the rollout of charging infrastructure, with a particular focus on local on-street residential charging and targeted plug-in vehicle grants.

Green finance and innovation

Key among the government’s green finance commitments include using 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.

It will also continue to issue green gilts following the success of the UK’s debut sovereign green bond in September 2021, which aims to raise a minimum of £15 billion this financial year.

The strategy states that it is “essential” that public investment catalyses significant flows of private investment into innovative companies and activities. However, this means creating the right conditions for all businesses to innovate as well as giving them the confidence to do so.

These right conditions will often involve de-risking capital in the forms of grants and concessionary capital, the strategy said. Providing the private sector with clarity on government R&D priorities can also help to build the confidence to invest in innovative companies and activities, with a Net Zero Research & Innovation Framework to set out a structure for this.

This framework is also to set out the key research and innovation challenges for the next 5-10 years, with there to also be a future update to demonstrate how the government is delivering against these.

The government is also to deliver a government programme of innovation to enable decarbonisation, with funding of at least £1.5 billion during the next spending review period, expanding a portfolio of cross government net zero innovation to fund BEIS-led programmes on power, buildings and industry; DfT-led programmes across transport; and DEFRA-led programmes on natural resources, waste and F-gases, to target priorities aligned with the Net Zero Research & Innovation Framework.

This spending includes new programmes set out in the strategy such as the £60 million Heat Pump Ready programme, which was also announced in the Heat and Buildings Strategy.

Modelling for net zero

The government modelled three scenarios all reaching net zero by 2050 through the same pace of decarbonisation, demonstrating a range of practical ways in which net zero could feasibly be delivered with technology and resources known today.

This included a high electrification, which sees UK electricity generation increasing to around 690TWh, more than doubling from today, and low carbon hydrogen production scaling up to 240TWh by 2050.

Sectors such as road transport and buildings reach near zero emissions in this scenario through widespread electrification, while the majority of buildings use electric heating, with the remainder using connected low carbon district heat networks.

Additionally, electricity generation is overwhelmingly decarbonised, through widespread deployment of renewables alongside other low carbon generation including nuclear power and gas with carbon capture, usage and storage (CCUS).

The high resource scenario looked at the impact of using low carbon hydrogen more extensively, with this seeing low carbon hydrogen generation increase to around 500TWh, while electricity demand and therefore generation is lower than in scenario 1 at 610TWh.

Meanwhile, the third scenario - high innovation - explored a world in which successful innovations enable lower residual emissions to be reached in aviation, while higher capture rates increase the impact of carbon capture technologies.

This pathway sees electricity and low carbon hydrogen generation requirements in between the two scenarios explored previously, at 670TWh and 330TWh respectively.

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