This week the UK Government set out its pathway to net zero carbon in a landmark strategy.
The document sets out how the UK will deliver on its commitments to meet net zero carbon emissions by 2050, including measures to support businesses and consumers, create jobs and leverage up to £90 billion of private investment by 2030.
Below some of AG's energy and sustainability lawyers provide commentary and analysis around key announcements set out in the strategy.
Ending the sale of new petrol and diesel cars and vans by 2030 – the Government has declared that all new cars must be fully zero emissions capable by 2030. Government is providing further funding of £620m for zero emission vehicle grants and electric charging infrastructure, in particular by way of street charging points. Furthermore, car makers will need to sell a proportion of clean vehicles each year, and accordingly, the Government has promised an extra £350m to assist the automotive supply chain in the move to fully electric.
This initiative is clearly an important step in the journey to moving away from vehicle reliance on fossil fuels. However, the Government's plan appears to offer little by way of direct help to people who may struggle financially with the move to electric cars. Paul Dight, Co-Head of AG's Low Carbon Group, explains, "Street charging and the problems that it presents has always been one of the biggest barriers to the uptake of EVs, particularly in major urban areas. It is good, therefore, to see Government acknowledging this and earmarking funds to support the development of on street-charging solutions as part of its package of measures on electric vehicles."
Powering the UK entirely by clean electricity by 2035 – the Government has announced its intention that at least one new large nuclear plant be built by 2024, and has promised a new fund of £120m to develop technology for possible future reaction. The Government makes clear that renewables will be a key focus, with the stated aim of 40GW of offshore wind power by 2030 and the creation of more onshore wind and solar energy supplies.
AG Commentary: “The publication of the net zero strategy is welcome. It is good to see support for CCUS and hydrogen, although more will be needed for the UK to develop these as successfully as offshore wind. The government is also starting to grasp the nettle of domestic heat with the initiative on heat pumps, but these are tentative early steps in what will be a hugely challenging journey.”
Investment in hydrogen production – the Government has committed to the delivery of 5GW of hydrogen production capacity by 2030, and to halving emissions from oil and gas. In so doing, the Government is committing £140m to promoting carbon capture and storage to produce hydrogen, with hubs in the North-West of England and North Wales, and Teesside and Humberside on the East coast of England. The Scottish Grangemouth to Peterhead cluster is being progressed as a reserve option. The Government has announced its intention that heavy industries in these areas be fuelled by hydrogen split from natural gas, and with the resulting CO2 emissions pumped offshore for storage. This is seen as controversial because some commentators believe that hydrogen should be obtained only through electrolysis, using surplus wind energy to avoid producing CO2 in the first place.
Alex Hirom, AG Partner, says: "The economic case for the hydrogen economy is still far from certain but hydrogen may yet have a place as a solution to some of the harder problems to solve as part of an industrial decarbonisation strategy."
10% sustainable aviation fuel by 2030 – the Government's ambition is that 10% of fuel used by airlines by 2030 shall be sustainable, and the Government is committed to £180m in funding for the development of sustainable aviation fuel plants.
Cash to upgrade home heating systems from gas boilers to heat pumps – the Government is pledging £5,000 grants to help 90,000 households install home heat pumps and other low-carbon heating systems over the next three years.
This initiative has been criticised by a number of individuals, including Ed Miliband (Shadow Secretary for Business, Energy and Industrial Strategy) who considers that the "plans fall short on delivery" and environmental group, Friends of the Earth, criticised the strategy as "riddled with holes and omissions". Paul Dight confirms that: "The decarbonisation of heat is one of the biggest challenges the UK faces in its ambition to achieve Net Zero. We've known for some time that heat pumps are a major part of Government's heat decarbonisation strategy and whilst the grant monies pledged are welcome, unless costs of production and installation fall dramatically in the next few years, many suggest this scheme will fall way short. Government suggests it is market leading in this space. But it does seem like an opportunity missed to do something much bolder and show real commitment through positive action, with the UK about to host the most significant global climate event, COP 26, in the next weeks."
Green Mortgages – the Government has also indicated that it is exploring plans to link mortgages to green home improvements by imposing targets for lenders, to help decarbonise the UK’s ageing housing. Measures being considered include voluntary targets for banks to improve the average energy performance certificate rating of the homes in their lending portfolio to at least band C by 2030. Targets could even become mandatory “if insufficient progress” is made.
The Government's Net Zero Strategy: Build Back Greener paper also has some key omissions. It does not contain recommendations around meat and dairy consumption, and there is no commitment to end new licences for oil and gas exploration, and to phase out production.
It is also unclear how the Government's strategies will be funded. The Treasury has warned of a significant loss of revenue for example, income from fuel duty drops when people switch to electric. And the Government has indicated that future governments "may need to consider changes to existing taxes and new sources of revenue" rather than relying on higher borrowing.