Ahead of the COP 26 summit next week, the Government has published a Net Zero Strategy setting out how the UK will reach net zero emissions by 2050.
The Strategy sets out an economy-wide plan for how British businesses and consumers will be assisted in making the transition to clean energy and will support the creation of thousands of high-skilled jobs in new industries across the UK.
Four government documents were issued and below is a link to each document and a very short comment.
UK Government Net Zero Strategy https://www.gov.uk/government/publications/net-zero-strategy
This is the overarching strategy of how to reach the UK’s 2050 Net Zero target and the interim milestones of a 68% cut by 2030 and 78% by 2035. It is the first such national strategy in the world.
Heat and Buildings Strategy https://www.gov.uk/government/publications/heat-and-buildings-strategy
Moving Buildings towards Net Zero is a combination and balance of making buildings more energy efficient and providing non-fossil fuel based heating systems (e.g. heat pumps, heat networks or hydrogen). In this Strategy the withdrawal of gas boilers in favour of heat pumps looms large, with insulation and retrofit taking a low profile. There seems little acknowledgement that a whole house approach is needed if heat is to be provided by a heat pump, i.e. are the radiators suitable, is there a water cylinder to store heat. There does seem more optimism than reality that the price of a heat pump will plummet in a very short time period to be equivalent to the price of a gas boiler. Installing such kit will in any case require that a house is well insulated otherwise the heat pump is likely to fail to deliver the comfort required.
The grants announced to be available from April 2022 will help only 90,000 homes install low carbon heating solutions. The target is for 600,000 heat pumps to be installed annually from 2028. Heat pumps currently are much more expensive than gas boilers, are rather large, need an outside wall and require an internal water cylinder for heat storage.
(For an excellent overview of what is required for a home to have an efficient heating system using a heat pump read the HHIC report: Heating Up to Net Zero).
Another area of controversy is the validity of using EPC band C as meaning that a home has an efficiency rating suitable to help us reach Net Zero – many experts very much disagree and this has been well documented in a number of reports.
Tucked away in a quiet corner is the announcement of a consultation on a market-based mechanism for low carbon heat which is to introduce an obligation on the manufacturers of gas and oil boilers sold on the UK market to achieve the sale of a certain number of heat pumps, and potentially other low-carbon heating appliances, proportional to their boiler sales in each period. Lets hope consumers are willing to buy the heat pumps produced !
The potential opportunities of hydrogen will await the outcome of current pilot trials.
Treasury’s Net Zero Review https://www.gov.uk/government/publications/net-zero-review-final-report
Without financing the Net Zero Strategy remains a wish list, and it is widely reported that the Chancellor is not fully on board as to how to pay for the Net Zero transition, especially with the decline of fuel duty as people make the switch to electric cars. Clearly the tax regime will need a fundamental review. The Review “considers the potential macroeconomic effects of the transition; the potential economic opportunities and risks of the transition; the factors affecting a household’s exposure to the transition; the policy levers that could support the transition; and the likely fiscal implications of the transition”.
“Treasury Greening Finance: A Roadmap to Sustainable Investing https://www.gov.uk/government/publications/greening-finance-a-roadmap-to-sustainable-investing
This is about ways to ensure that information on sustainability is available to financial market decision-makers, that they act upon it, and that “financial flows across the economy shift to align with a net zero and nature-positive economy”. Existing disclosure requirements will be streamlined – such as the UK’s commitment to make reporting aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) mandatory – with new requirements, including on reporting environmental impact.
Further information is available on the Government’s Net Zero Strategy is available here.
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