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What the UK must do to meet its 2030 net zero targets

Phil Hodges is Country Market Director, Energy UK, at Ramboll. He understands how Downing Street can cut 68% of emissions by 2030, from energy transition to Contract for Difference and carbon capture.

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It’s now just over three months since the COP28 summit was hailed by many as a landmark event, not least in delivering a global consensus on the necessity of phasing out fossil fuels. A significant step towards addressing climate change.

Unfortunately, the lack of specific commitments and the softened language in the final document highlights the complexities of international climate negotiations. It also lays bare the realities of delivering on this kind of multifaceted challenge.

For the United Kingdom, the implications of COP28 are nuanced. With firm commitments to reaching net-zero already in place, there may not be any obvious change in policy. However, there is an enduring obligation for the UK to deliver on its own targets and lead the global energy transition. But how will that happen?

woman walking up on wooden staircase on grass covered mountain during day

Steady Progress; More to Do

The UK is committed by law to achieve net-zero emissions by 2050, compared to 1990 levels – a cornerstone of current environmental and industrial policy. There has arguably been good progress over the past decades, during which the UK has achieved a 48% reduction in emissions.

However, in June 2023, the Climate Change Committee (CCC), noted a ‘significant delivery gap to the UK’s Nationally Determined Contribution (NDC) of reducing emissions by 68% by 2030’. As we approach this important milestone, the rate of decarbonisation required to meet the target increases significantly; requiring clear and consistent policy to drive public sector bodies and incentivise industry and consumers to act.

Inconsistency Delays Development

Despite the UK’s clear targets, domestic and international perception of its climate ambition has weakened, owing to mixed messages relating to new fossil fuel developments and the softening of some Net Zero policies during the Prime Minister’s speech in September 2023. Whilst the Government can rightly claim that it is ‘maintaining all our international commitments’, the underlying message to industry, investors and supply chains is less convincing.

Unfortunately, the narrative around the UK’s green investment has also been impacted by announcements from the main opposition party, with Sir Keir Starmer standing down the Labour Party’s £28bn green investment pledge. Notwithstanding the reasons for the change in commitments, the overall impact on the market is confusion, and those who once looked at the UK as a prime target for green investment and growth may now be looking elsewhere.

The Energy Act: A Catalyst for the UK’s Green Transition?

The Energy Act 2023, enacted on 26 October 2023, is arguably the largest and most significant piece of energy legislation to date. Intended to bolster the UK’s energy security and independence, the Act aims to unlock £100bn in private investment for energy infrastructure.

The Act covers a variety of technologies and mechanisms, including provisions to accelerate offshore wind development, enhance the heat network market, and pave the way for hydrogen projects and carbon capture and storage (CCS) technologies.

Whilst investors and developers may have been underwhelmed by the political narrative, the Act and recent increases to Contract for Difference (CfD) Allocation Round 6 strike prices, indicate firm commitment from the Government and should be acknowledged as a cause for genuine optimism.

white concrete building near body of water during night time

Leading the Global Energy Transition

The net-zero transition will require, among other factors, rapid and accelerated deployment of a variety of low-carbon generation and storage technologies, as well as giga-scale upgrades to the electrical grid and supporting infrastructure, to create a more robust and balanced energy system. Further focus is needed on decarbonisation of industry, both heat and electricity, and support for innovative solutions to produce low-carbon or green steel and concrete.

The CCC estimated that 65% of emission reductions to 2035 will need to involve some form of public choice, requiring an improvement in the perception of energy use and action to address cost and availability barriers to green solutions, including electric vehicles and domestic heat pumps. This in turn will help achieve a shift from the ‘not in my back yard’ position to a ‘yes in my back yard’ viewpoint.

The UK Government must continue to incentivise investment into green energy, and other measures to achieve its targets, through consistent policy, communication and messaging – this extends to cross-party political support. There should be no question about whether the UK is committed to its targets or leading the way in the global energy transition.

The Government must create the market conditions under which developers, investors, suppliers and consumers can be confident on the return on investment and/or the benefits of going green. Mechanisms already exist for direct investment, to support development of new technologies such as hydrogen and carbon capture, as well as financial mechanisms such as the CfD auctions for more established solutions. These schemes must remain agile and relevant under the ever-changing market conditions to ensure the UK is viewed as a European leader for green technologies.

Finally, the UK must leverage its considerable international influence and relationships to ensure a continued presence at the head of the global energy transition.

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Images: Milada Vigerova (top) / Wayan Parmana (middle) / Yaopey Yong (bottom)

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