The UK's Net Zero Strategy: Cop out or COP26 ready?

Clean Energy

According to the Net Zero Strategy, by 2035, the UK will be powered entirely by 'clean electricity' (subject to security of supply). This will require the mobilisation of £150-270 billion of public and private investment. According to a Carbon Brief report published last week, the UK’s power system has already seen the biggest drop in emissions for any sector, falling 72% between 1990 and 2019.

The Net Zero Strategy proposes that 40GW of offshore wind will be active by 2030 and that a £120 million Future Nuclear Enabling Fund will be launched that will retain options for future nuclear technologies, including 'small modular reactors'.

Industrial Emissions

The strategy towards industry is aimed at reducing emissions from heavy industry while simultaneously encouraging innovation and new technologies to assist with the net zero transition. The strategy builds on the industrial decarbonisation strategy, released earlier this year and estimates that indicative emissions could drop by 63-76% by 2035. Key to the latter of these sub-strategies, is the use of hydrogen as a fuel, set out in the Government's ambitious August 2021 "UK Hydrogen Strategy" policy.

Changes to domestic energy consumption

The UK Government published a separate heat and buildings strategy on the same day as the Net Zero Strategy, which outlines the importance of improved energy efficiency in homes and an ambition that by 2035, no new gas boilers will be sold. A new £450 million three-year boiler upgrade scheme will see households offered grants of up to £5,000 for low-carbon heating systems.

The strategy foresees that this will require a mobilisation of approximately £200 billion of public and private investment as well as further funding for the Social Housing Decarbonisation Scheme and Home Upgrade Grants, investing £1.75 billion and £1.425 billion for Public Sector Decarbonisation, with the aim of reducing emissions from public sector buildings by 75% by 2037.

Transport

Transport remains a key focus for the Net Zero Strategy, making up the largest share of UK emissions – 27% - of which more than half comes from cars. Central to the strategy therefore is the commitment to end the sale of new petrol and diesel cars by 2030 and to ensure all cars are zero emissions capable by 2035. Taken alongside the announcements of a £2 billion investment in helping increasing walking and cycling, and a further £3 billion investment in improving bus networks, the strategy envisages emissions from domestic transport falling 65-76% by 2035 from 2019 levels.

Much of the funding for transport projects is underway and the new commitments announced in the strategy aim to bolster and improve on previously established pledges. However, to achieve the levels of emissions reductions in the sector it is estimated that an additional £220bn of public and private investment will be needed.

Carbon capture and sequestration

Funding will also be used to deliver four carbon capture usage and storage clusters by 2030. This carbon storage strategy is intended to complement the UK Emissions Trading Scheme.

Measures are being taken to sequester carbon through natural means in addition to reducing emissions. The Net Zero Strategy outlines plans to treble woodland creation rates in England, contributing to the UK’s overall target of increasing planting rates to 30,000 hectares per year by the end of this Parliament. Linked to this is a boost to the existing £640 million Nature for Climate Fund with a further £124 million of new money, ensuring total spend of more than £750 million by 2025 on peat restoration, woodland creation and management.

Innovation

Despite the policies and commitments outlined above, it is acknowledged that emissions will still be produced and so there is a need for future innovation, specifically in connection with greenhouse gas removal from the atmosphere ("GGR"). This will be achieved by delivering £100 million of investment in GGR technology innovation, which in turn could enable further deployment of GGR technology on a wider scale in the future.

The Institute for Fiscal Studies has estimated that the cost of the UK's Net Zero Strategy will be in the region of £1tn over 30 years (although the cost of inaction is, almost universally agreed to be, far greater).

The UK Government knows that private investment alone will not be sufficient in order for the UK to meet its NDC and wider carbon budget. Although some of the funding will need to come from private sources, it is still anticipated that the Government will need to rely heavily on taxpayer money, which appears to have been the subject of disagreement within the Government itself.

For instance, alongside the Net Zero Strategy, the Treasury released its Net Zero Review which made it clear that "the transition has material fiscal consequences" and that the change will "place demands on public spending" which may require the Government to consider "changes to existing taxes and new sources of revenue".

The inclusion of these statements in the Net Zero Review, which was published on the same day as the Net Zero Strategy, suggests that it may be an uphill battle within the Government itself in order to deliver on the policies and changes outlined above, and also emphasises the importance of voters being onboard with the transition, given it may lead to additional taxes.  

Initial responses to the Net Zero Strategy have been, in many cases, fairly positive. Chris Stark, the UK's Climate Change Committee's (the "CCC") Chief Executive said last week that:

"We didn’t have a plan before, now we do. This is a substantial step forward that lays out clearly the government’s ambitions to cut emissions across the economy over the coming 15 years and beyond. 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."

The CCC added to this positive message this Tuesday, saying that the UK now had the most comprehensive Net Zero Strategy in the G20. They suggested that this would strengthen the position of the UK as it prepares to preside over the COP26 summit in November.

On the other hand, a number of key stakeholders have met the publishing of the Net Zero Strategy with significantly less optimism. The head of politics at Greenpeace UK, Rebecca Newsom, said: "Extra cash for tree planting and progress on electric vehicles doesn’t make up for the lack of concrete plans to deliver renewables at scale, extra investment in public transport, or a firm commitment to end new oil and gas licences."

Kevin Anderson, a professor of energy and climate change at the University of Manchester, said: "The UK’s net zero strategy falls far short of both its Paris and G7 temperature and equity commitments. Scour the associated spreadsheets and the numbers reveal a story of subterfuge, delusion, offsetting and piecemeal policies – all dressed up as a shiny new strategy for COP26."

Despite this criticism, the Net Zero Strategy should undoubtedly be seen as a move in the right direction, particularly in advance of what is expected to be a challenging COP26.

With news that the presidents of China, Xi Jinping, and Russia, Vladimir Putin, are unlikely to attend COP26 and that pledges on greenhouse gas emissions cuts from major economies may fall short of what is needed, the outcome of COP26 still hangs in the balance.

The Prime Minister of the UK, Boris Johnson, said on Monday that he was very worried that COP26 might not secure the agreements needed to tackle COP26. The fact that some key targets have already been missed, such as the goal to mobilise $100bn in climate finance per year by 2020, which was set in 2009 and now is not expected to be achieved until 2023, add to the sense that the Paris Agreement goal is slipping further away.

The UK's level of ambition has been lauded by many, but there appears to be a policy delivery gap and a sense that at times the Government's commitments are undermined by Government policy. For instance, earlier this month the Government reversed a series of amendments to the long-awaited Environment Bill made by the House of Lords, which would have had the effect of strengthening the bill's ability to combat environmental degradation, and within the last few weeks the Government has signalled its intention in signing off on the Cambo oilfield off the Shetland Islands, which would produce up to 170m barrels of oil.  

That said, there are reasons to be hopeful. As said by John Kerry, special envoy for climate to the United States, at COP26 "we will have the largest, most significant increase in ambition [on cutting emissions] by more countries than everyone ever imagined possible."

Comments therefore from the CCC in the lead-up to COP26 deeming the UK's Net Zero Strategy to be both achievable and affordable, are certainly very welcome, suggesting that the Net Zero Strategy will play an important part in hopefully helping to set the tone for a series of ambitious multilateral commitments in the coming few weeks.

For more information on COP26, and to keep updated on our latest articles and video briefings, see our dedicated COP26 page.