Skip to main content

From net zero to net reality: The UK’s climate leadership in transition 

May 25, 2023

Leaders can no longer ignore geopolitical and geoeconomic considerations when it comes to climate and energy policy. The war in Ukraine and European energy crisis have laid bare the importance of energy security, and we have seen rapid-response efforts to address it with schemes designed to expand deployment of clean energy technology around the world. For the UK, these larger shifts come at a time when climate action has stalled. Despite the fact the country has reduced its emissions by a larger share than any other advanced economy since 1990, further reductions look more and more difficult to achieve. 

Climate change is, in part, an infrastructure challenge with many chicken-and-egg problems. Barriers to deployment have begun to emerge as speed limits to implementation. BloombergNEF research shows that grid connection queues are slowing down new renewables capacity, with 596 GW of solar and wind projects in the UK, Italy, Spain, France and Germany waiting in connection queues at the end of 2022. As such, focus is slowly shifting towards implementation and planning, especially in the power sector. But a more comprehensive and risk-aware evaluation of our strategies is still needed to ensure we are aware of the barriers and working to resolve them. 

Policymakers are also becoming increasingly aware of the limitations of different decarbonisation strategies, such as limited land availability and critical mineral supply. BloombergNEF estimates that almost $10 trillion of metals will be required to get to net-zero emissions between now and 2050. And the International Energy Agency estimates that about two-thirds of the world’s batteries for electric cars and nearly three-quarters of all solar modules are currently produced in China. In response, there has been a revival of industrial policy as the U.S. and the EU seek to onshore supply chains to effectively compete in the new energy economy and hedge against geopolitical risk.  

Whilst the agreement of the Windsor Framework is an early indication that relations between the UK and the EU are starting to warm, we are now beginning to understand the true impacts of Brexit, especially in terms of investment and trade, which will have manifold unintended impacts on the available choices for climate policymakers. It is another example of how effective climate policy can no longer be generated in a bubble. 

All of this points to the need for a shake up to achieve the UK’s climate targets. Chris Stark, Chief Executive of the Committee on Climate Change, stated that FOMO — “fear of missing out” — is “one of the most compelling political forces” now driving momentum on climate change in the UK. And the UK should fear missing out on the burgeoning decarbonisation industry – its investment in the clean energy transition fell by 10% from 2021 to 2022, whilst the US and Germany’s investment rose by 24% and 17% respectively. Leaders must quickly match the long-term funding certainty that the Inflation Reduction Act has brought, and fast. A plan to wait until the autumn is likely to limit the impact of any UK response. 

The UK has always been considered a leader, but real deployment is lacking 

Internationally, the UK has long been regarded as a climate leader, and there are important things to learn from the UK’s experience. It was the first major economy to legislate for net zero and the first to set legally binding carbon budgets. The UK also has a successful history of policy innovation, modelling new approaches to policy and legislation that have subsequently become widely adopted practices. The UK’s Contracts for Difference (CfD) scheme has helped drive investor confidence in and bring down the cost of offshore wind – with the most recent allocation round seeing prices of £37.35 per MWh, an almost 70% reduction since the first CfD auction in 2015. Furthermore, as former COP26 Presidency, the UK spent over three years leading international climate diplomacy under the auspices of the UNFCCC, where it worked closely with the US and the EU to launch the Global Methane Pledge. The UK’s extensive diplomatic experience and reach provides an opportunity to further its global partnerships and share its experience internationally. 

However, the UK’s legislative agenda on climate has largely been dormant as Brexit, COVID, and a series of short-lived new governments have stalled ambition and progress on implementation. Recent research from Green Alliance found that only 28% of emissions cuts needed for the fifth carbon budget were matched by firm policy, and the 2023 “Energy Security Day” did little to push forward the delivery of the UK’s climate commitments. In fact, the Government admitted that it does not have the policies in place to meet Carbon Budget 6 (2033-2037) or its Nationally Determined Contribution. With COP26 receding in the rear-view mirror, the UK’s domestic policy is out of the spotlight, and there is no longer a driving force at the centre of Government (in the form of the Cabinet Office’s COP26 Unit) to fight for ambitious climate policy. The UK is therefore at risk of ceding its global leadership position on climate, and with it its ability to seriously compete in the industries of the future. 

An opportunity to reignite a dormant climate flame 

With a change of Government increasingly likely, this is the first moment in half a decade for the UK to secure climate breakthroughs at the national level, even if the long-run impacts of previous crises continue to complicate the picture. Climate remains a top concern amongst voters, and will become an even bigger priority in the next five years.

The focus for the UK’s re-commitment to climate policy must be on accountability and implementation, moving from ambition to action and finally making good on the UK’s earlier leadership on climate. CATF is therefore focusing on realistic and systems-centred solutions that will enable the UK to match its world-leading ambition with world-leading delivery, with a particular spotlight on: 

  • Effective planning and infrastructure deployment: According to the National Infrastructure Commission, the UK Government is only delivering in eight out of 30 areas critical for UK climate plans. Whilst recent announcements, including updates to National Energy Policy Statements and the publication of the Nationally Significant Infrastructure Project Action Plan are positive, a whole-systems and all-of-Government approach is needed to manage the interdependencies of decarbonisation, energy security, manufacturing, and economic growth. As part of the upcoming consultation on proposals for fast-track consenting, the UK should consider how to accelerate the pace of infrastructure deployment, including through permitting and ensuring public acceptance for siting of infrastructure projects. 
  • Curbing methane emissions: A recent study found that the UK is severely underestimating its methane emissions, with as much as five times more methane being leaked from oil and gas production than reported. The IEA has shown that oil and gas operators in the UK can waste 72% less methane by tackling methane leaks, venting and flaring, with existing technologies, much of which would be profitable actions for companies. As a first step, the UK should therefore accelerate the end to routine flaring from 2030 to 2025 and begin a process to develop comprehensive methane mitigation policies, not just for oil and gas, but for all sectors. 
  • A clearer direction for carbon capture, removal and storage technologies: The UK has strong technical expertise in CO2 capture and offshore storage, and has huge storage potential (an estimated 78 Gigatonnes around UK shores). This provides a significant economic opportunity for the UK. The Government’s announcement of up to £20 billion of funding for Carbon Capture and Storage (CCS) is positive, but further clarification on the future of CCS, including additional support and clarity for projects outside of the prioritised clusters, is needed to enable commercial scale-up of the technology. The UK must also work to resolve issues surrounding the transport and storage of CO2 from the EU to the UK, which is currently not possible following the UK’s departure from the EU Emissions Trading System.   
  • Scaling and speeding up the transition to zero-carbon fuels: Whilst the UK recognises the need for low-carbon hydrogen production to replace fossil fuels in ‘hard to electrify’ industries, a clear roadmap is needed to facilitate investment in production, transport and storage of hydrogen in no-regrets sectors. The upcoming low carbon hydrogen certification scheme must also align with other international standards to facilitate imports and exports of hydrogen across borders. 
  • Creating a bankable pipeline of new nuclear projects: The Secretary of State for Energy Security and Net Zero, Grant Shapps, has been clear that nuclear will form a key part of the UK’s future energy mix. With the creation of Great British Nuclear, the UK has an opportunity to set out a clear pathway for nuclear energy going forward. While we must ensure that existing planned projects, such as Hinkley Point C (which EDF estimates could rise above £32bn) can be delivered, the sector needs to be radically transformed to allow for reactors to be delivered on time and at much lower cost. This could be made possible by a mass-manufacturing model. British expertise in Small Modular Reactors, where Rolls Royce is taking a leading role, should also be harnessed to enable the UK to emerge as a leader in this field. 
  • Innovation and investment in new technologies: Reaching the goals of the Paris Agreement requires the international community to employ the full range of tools capable of delivering zero- or very-low-carbon energy. The UK has a strong commitment to exploring all potential solutions, and is quickly emerging as a leader in visionary fusion technology. It needs a long-term vision to develop and deploy all available low-carbon energy sources; the upcoming Energy Bill must help to create a policy context that maximises investment in emerging energy solutions such as nuclear fusion and superhot rock geothermal energy. 

The UK needs to get back on the climate horse to maintain its track record of pushing forward the international climate policy agenda. That has to begin at home, with real and rapid decarbonisation across the economy proof that an options-focused and innovative approach can deliver results. 

Related Posts

Stay in the know

Sign up today to receive the latest content, news, and developments from CATF experts.

"*" indicates required fields