For example, the Natural Environment Investment Readiness Fund (NEIRF)118, launched by Defra and the Environment Agency in 2021, will build the portfolio of potential investments for net zero 116 Mark Carney and the COP26 Private Finance Hub – in partnership with the UNFCCC Climate Actions Champions and the Race to Zero campaign and the COP26 Presidency- have launched a coalition that combines existing and new net zero finance initiatives into a wider strategic The Glasgow Financial Alliance for Net Zero (GFANZ). GFANZ aims to raise ambition in the financial sector by allowing firms to demonstrate collective commitment to net zero. 117 BloombergNEF (2021), Database accessed 12/10/2021 118 Defra, Environment Agency, Natural England (2021), ‘Innovative nature projects awarded funding to drive private investment’,

232 8th National Communication Some of these technologies may also avail of venture capital to allow them to scale rapidly. Government has shown its support for this necessary innovation underpinning its clean growth objectives with a £20 million cornerstone investment in the venture capital Clean Growth Fund119. This Fund aims to accelerate the deployment of innovative clean technologies that reduce greenhouse gas emissions, alongside catalysing the UK clean growth venture capital market and leveraging private sector funding into earlystage clean tech start-ups. For example, the fund led a £4.7 million investment round into Piclo (the independent energy trading marketplace) with coinvestment from Mott MacDonald Ventures. The BBB is a government-owned economic development bank with a mission to drive sustainable growth and prosperity across the UK, and to enable the transition to a net zero economy, by improving access to finance for smaller businesses. UK Government has worked with the BBB on their new mission and objective to support the UK’s transition to a net zero economy and incorporate environmental, social and governance issues across of its activities. The new net zero objective will support firms looking to move towards net zero, helping the UK reduce its energy consumption and mitigate the impacts of climate change. Going beyond SME finance to larger scale infrastructure finance, there are significant pools of private finance ready to deploy into UK projects but there can be a mismatch between market appetite and the risk profile of projects. Infrastructure investment is vulnerable to market failure, as it is often complex, large, novel and longterm. Launched in June 2021, the new UK Infrastructure Bank can play a pivotal role in this space, crowding in private sector investment in important areas and helping to kick start new sectors. Across the Bank’s full mandate (also covering regional growth), it has £12 billion of equity and debt capital and will be able to deploy £10 billion of government guarantees. We expect the Bank to use this to crowd in private investment as a cornerstone investor or guarantor to enable more than £40 billion of investment in the areas most prone to market failure, and to help deliver its dual policy focus of tackling climate change and supporting regional and local economic growth. Furthermore, the Bank will play a pivotal role in catalysing the role of local government in the transition, by financing strategic infrastructure projects led by local authorities, and providing advice and expertise in order to strengthen the pipeline of investable projects. Industries will need to be supported in their transition away from high carbon emitting operations. For example, the IDHRS scheme will provide a revenue mechanism to enable deployment of industrial carbon capture and hydrogen production. UK Export Finance (UKEF)’s Transition Export Development Guarantees (TEDG), launched in 2020, will ensure that businesses, including those in the supply chain, are supported at all stages of their transition journey. This product can be used by a company for working capital, capital expenditure or R&D needs, provided they have a credible transition plan. The first TEDG was announced in August with UKEF providing an 80% guarantee on the £430 million commercial loan to Wood Plc. This support from UKEF will help Wood to continue to capitalise on opportunities linked to clean energy, hydrogen and decarbonisation. Furthermore, this instrument will support the export of low carbon technology from the UK as evidenced by this guarantee which will support Wood to take advantage of green trade opportunities. The UK financial system is also taking a global leadership role transition financing and sustainable finance more widely. An example of transition finance leadership is the London Stock Exchange Group (LSEG) which was the first exchange globally to launch a dedicated Transition Bond Segment. This distinct transition label is the application of globally recognised 119 BEIS (2020), ‘Government launches new £40m Clean Growth Fund to supercharge green start-ups’, [Press release]

Chapter 3 Policies and Measures 233 standards, enhancing visibility and providing assurance to issuers and investors. We have seen the financial sector in the UK take the lead in net zero transition (for example, through the Glasgow Financial Alliance for Net Zero120) as well as leading financial innovation (such as Green Home Finance Innovation fund). The Chancellor, in his Mansion House speech121 in July 2021, set out how the government will ensure that the financial system in the UK plays a major role in the delivery of the UK’s net zero target and ambition for a ‘nature positive’ future. This will build on the investment principles outlined in the 25 Year Environment Plan including ‘do no significant harm’ to the environment with investment, and implement a series of programmes aimed at building the portfolio of investable assets across the UK. This will involve providing grant programmes like the Natural Environment Investment Readiness Fund (NEIRF) to help nature-based projects become investment ready, but also providing capital through public-private impact funds such as the Big Nature Impact Fund to leverage in private finance. In addition to investing in climate and environmental solutions, government is also committed to ensuring sufficient private capital is available for investment into adaptation and resilience measures. Furthermore, the government is supporting the development of a Taskforce on Nature- Related Financial Disclosures (TNFD).
This will provide a framework for corporate and financial institutions to report and act on evolving nature-related risks to support a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes. This market-led, global initiative will build, consult on, and test, its framework over the next year and a half and will be designed to complement the TCFD by building on its 4-pillar approach and drawing on its lessons learnt. These interventions are important to driving the desired ‘nature-positive’ future. As set out in the Prime Minister’s Ten Point Plan, we hope that the UK will also become a leader in high- quality voluntary carbon markets (VCMs). For these private markets to scale successfully in support of net zero, their integrity and use as an addition (rather than alternative) to rapid decarbonisation will be critical. The government is closely following the important work of various sector-led initiatives the Taskforce for Scaling Voluntary Carbon Markets (TSVCM); the Voluntary Carbon Markets Integrity Initiative UK VCM Forum; and the Financing In 2021, the UK issued two Green Gilts with a total transaction size of £16bn. The first transaction of £10bn represented the largest debut transaction size for any country and achieved the biggest ever order book for a sovereign green transaction (in excess of £100bn). The second 32-year bond was also the longest maturity of such bond to date. In doing so the UK has become the third largest national issuer of green bonds just a month after beginning its issuance programme. This followed the successful publication of the UK Government Green Financing Framework on 30 June 2021, which outlines how proceeds raised from the green gilts will help tackle climate change, biodiversity loss and other We have also launched via NS&I the world’s first sovereign retail green savings bond which allows savers to contribute towards the Government’s green initiatives. These are the first standalone retail product to be tied to a sovereign’s green bond framework and will allow 120 Chaired by Mark Carney, is bringing together over 160 firms from the leading net zero initiatives across the financial system to accelerate the transition to net zero emissions by 2050 at the latest. 121 Chancellor sets out how UK financial services can create prosperity at home and project values abroad in first Mansion House services-can-create-prosperity-at-home-and-project-values-abroad-in-first-mansion-house-speech

234 8th National Communication all UK savers to contribute to the fight against climate change and the government’s other environmental objectives. It gives UK savers the opportunity to take part in this collective effort to tackle climate change by contributing to public spending on green, whilst increasing awareness in the government’s green initiatives. We are also committed to tracking finance flows, to complement how we measure carbon. Hence, we will be working with external partners and data providers to better track private investment into the net zero economy going forward. This will enable the UK to robustly, and regularly, assess the alignment of the UK’s financial flows with net zero. The UK launched the Green Finance Education Charter in our 2019 Green Finance Strategy122, reflecting the need for UK and global financial services industries to develop the capabilities of their workforce in green finance principles and practice. Since then, twelve leading professional bodies representing over 1 million finance professionals have signed up to the Charter, hosted by the Green Finance Institute. To further build UK capacity, capability and climate leadership, we will look to expand Charter membership to universities and others, and work with the Institute for Apprenticeships and Technical Education (IfATE). We will also seek to internationalise the Charter by encouraging similar development overseas. Financing the technologies required for our transition to net zero is only part of the solution. The transition represents both a risk and an opportunity for the real economy and the financial system that supports it. It is therefore vital that climate-related financial risks and impacts are factored into investment decisions and reflected in the cost of finance for different technologies and companies. To achieve this, we will harness the international reputation of the UK’s leading financial sector to encourage private investment to support low carbon innovation and manage climate-related financial risk. As the Chancellor outlined in his Mansion House speech123, the Government intends to introduce economy-wide Sustainability Disclosure Requirements covering the whole economy. This will include requirements to report on businesses and investment products impact on the climate and environment, as well as the risks and opportunities these impacts pose to business. Our approach is detailed in Greening A Roadmap to The UK has already established itself as a world leader on green finance regulation, becoming the first G20 country to make disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations fully mandatory across the economy by 2025. As part of the roadmap to delivery, the Government implemented mandatory climate- related financial disclosures by publicly quoted companies, large private companies and the largest Limited Liability Partnerships (LLPs), which came into force from 6th April 2022. Following widespread support for the proposals, we will shortly be setting out regulations to bring this into force, including a requirement for scenario analysis – a powerful tool to support companies in their assessment of climate-related risks and opportunities. Alongside measures to implement mandatory disclosures aligned with the TCFD recommendations for companies and 122 BEIS (2019), ‘Green Finance Strategy’, 123 Chancellor sets out how UK financial services can create prosperity at home and project values abroad in first Mansion House services-can-create-prosperity-at-home-and-project-values-abroad-in-first-mansion-house-speech

Chapter 3 Policies and Measures 235 • The Financial Conduct Authority intr oduced a listing rule for premium listed companies which commenced on 1 January 2021. This requires companies to include a statement in their annual financial report which sets out whether their disclosures are consistent with the recommendations of the TCFD, and to explain nment introduced regulations, in force from 1 October 2021, to require pension schemes with £5 billion or more in assets to report line with the TCFD’s recommendations.
By October 2022, over 80% of members of occupational pension schemes – and more than 70% of assets under management – are schemes reporting in line with the TCFD recommendations. Our stated objective is to increase the quantity and quality of climate-related financial disclosures in a proportionate manner. This is to ensure market participants have better information to adequately understand climate-related financial risks and opportunities to support the transition to net zero. In November 2020, the Chancellor announced that the government is implementing a UK Green Taxonomy. This will clearly set out the criteria which specific economic activities must meet to be considered environmentally sustainable. The first two Technical Screening Criteria (TSC) on climate change mitigation and adaptation are expected to be made by the end of 2022. To support the development of the TSCs, we have announced the appointment of a Green Technical Advisory Group (GTAG) in June 2021. Made up a of range of financial and business stakeholders, taxonomy and data experts, and subject matter experts, and chaired by the Green Finance Institute, this provides independent, non-binding advice to the government on developing and implementing a Green Taxonomy in the UK context. For example, we have established an Energy Working Group as part of the GTAG to provide advice on key technologies such as hydrogen and carbon capture and storage. Taken together, these enhanced Sustainability Disclosure Requirements will support companies to communicate clear and credible low carbon transition plans needed by investors. Key to delivering enhanced disclosure on climate change is the availability of data financial institutions can use. The UK Centre for Greening Finance and Investment (CGFI) is a national centre established to accelerate the adoption and use of climate and environmental data and analytics by financial institutions internationally. CGFI will equip financial institutions with the tools and capacity required to effectively allocate capital to meet net zero ambitions and ensure global UK leadership in green finance and green finance data and analytics. Progress since the publication of the Net Zero Strategy The UK is continuing to build our r eputation as a global thought leader on green finance to crowd in private capital to deliver the investment required to deliver our net zero objectives. Our 2019 Green Finance Strategy set out how we will harness the strength of the UK’s world leading financial sector to catalyse green investment and accelerate delivery of net zero. We have committed to providing an update to e have helped shape the UK Infrastructure Bank (UKIB) which will provide targeted support to UK infrastructure projects that deliver on the government’s domestic agenda, including commitments to transition to net zero by 2050 and to level up economic opportunities across the country. UKIB has 12 billion of equity and debt capital and will be able to deploy £10 billion of government guarantees and is expected to be able to crowd in private investment as a cornerstone investor or guarantor to enable more than £40 billion of investment in UK

236 8th National Communication • In 2021, the UK issued the second of its two Green Gilts taking the total . The first transaction of £10bn represented the largest debut transaction size for any country and achieved the biggest ever order book for a sovereign green transaction (in excess of £100bn). The second 32-year bond was also the longest maturity of such a bond to date. The UK became the third largest national issuer of green bonds just a month after beginning its issuance programme. In addition to the inaugural green gilts we launched a new environmental retail savings product to be offered by NS&I, which is the world’s first green retail savings bond to be linked to a sovereign’s green bond framework. The government has continued to support the Bank of England and Financial Conduct Authority in fulfilling their updated remits to reflect the importance of environmental sustainability and the transition towards net zero. Additionally, the government has continued to support the British Business Bank (BBB) in its adjusted mission with a stronger focus on net zero (“To drive sustainable growth and prosperity across the UK, and to enable the transition to a net zero economy, by improving access to finance for smaller businesses”). eady established itself as a world leader on green finance regulation, becoming the first G20 country to make disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations fully mandatory across the economy by 2025. The UK will also implement a UK Green Taxonomy, a common framework for determining which activities can be defined as environmentally sustainable – which will improve understanding of the impact of firms’ activities and investments. In November 2021 the Prime Minister announced mobilise the scale-up in private investment required to support the transition to a net zero economy. The roadmaps show exactly how we will deliver our green commitments and will be used to work with business, investors and regulators to encourage investment and industries in the UK. The first 3 of these, EV, Hydrogen and CCUS have now been published. The Scottish Government’s 10-year Just Transition Fund is committed to accelerating the transition of the North East and Moray region of Scotland, in a way that is fair and leaves no- one behind. It has been announced in recognition of the particular need to pivot the strengths of the region toward supporting and capitalising on the opportunities presented by Scotland’s ongoing transition to net zero. New Infrastructure Investment Strategy Our new Wales Infrastructure Investment Strategy (WIIS) is the successor to the previous Wales Infrastructure Investment Plan, and was published alongside the draft Budget in December 2021. This sets out a 10-year vision for the outcomes that our infrastructure investments should enable, and sets out the framework for allocations of our capital budgets. The WIIS is built around the four well-being themes of economic, environmental, social and cultural well-being.
In particular, the strategy has a clear focus on addressing the Climate and Nature Emergencies, and delivers on our Programme for Government commitment for a 10- year infrastructure strategy to support a zero-carbon economy. Chapter 3 Policies and Measures 237 3.16.8 No rthern Ireland Executive A £100m Northern Ireland Investment Fund (NIIF) Fund was established in 2017, providing loans and equity to private sector led developments on a repayable basis. The NIIF Fund Manager (contract currently held by CBRE) investment decisions are guided by an over- arching Investment Strategy which was agreed by the Executive. The Strategy has two overriding objectives, one of which is “To address market failures and accelerate and increase investment in private sector led development, infrastructure and low carbon projects.” Beneath the over-arching objectives are a list of ‘eligible activities’ the Fund should target. This list includes, under the heading Low Carbon, ‘Investment to drive the growth of a low carbon economy through capital investment in energy efficiency, energy storage and generation projects, including heat networks, non-domestic and domestic energy efficiency, photovoltaic, wind and hydro energy generation and waste to energy projects. Circular economy projects would also be considered such as projects which focus on resource efficiency/re-use’. The Fund has yet to make its first investment in the Green space. 3.17 G reen jobs, skills and industries • Publish sector and supply chain development plans for key low carbon sectors and work with business to encourage investment in gr een skills and industries in the UK. • Publish a UK Critical Minerals strategy , setting out our approach to securing technology-critical minerals and metals. • Support the development of a skilled, competitive supply chain for key green Reform the skills system so that training pr oviders, employers and learners are incentivised and equipped to play their part in delivering the transition to net zero – including by legislating for skills required for jobs that support action on climate change and other environmental goals to be considered in the development of new local skills improvement plans. Deliver a Lifetime Skills Guarantee and gr ow key post-16 training programmes (such as apprenticeships, Skills Bootcamps and T levels) in line with the needs of employers in the green economy, helping individuals get the training they need for a job in the green economy, either at the start of their careers or when retraining or upskilling once already in the workforce. oduce a sustainability and climate change strategy for education and children’s services which will include a focus on equipping children and young people with the knowledge and skills they need to contribute to the green economy. The national and global shift towards net zero provides a once in a generation opportunity to level up the country, create new green jobs, and put the UK at the forefront of growing global markets in green technologies. Delivering on this promise, whilst meeting our ambitious climate and environmental targets, will be in a large part dependent on having a sufficiently skilled workforce and robust, competitive supply chains in the UK. Recent developments have thrown into sharp relief the inherent vulnerabilities associated with complex global supply chains and shocks to the global economic system. The transition to net zero will change the nature of the UK’s critical supply chains. Our aim is to help ensure that supply chains critical for the transition to net zero are secure, ensuring that we

238 8th National Communication have access to the materials, minerals, and chemicals that our growing green economy will need. Our approach is that there is no “one size fits all” model for building resilience in individual supply often a combination of levers may be the best solution to address We will need tens of thousands of engineers to build and maintain new offshore wind farms off the coasts of northern England and Scotland, construct nuclear power stations in the South of England, and manufacture electric vehicles in the Midlands; skilled builders and trades people to retrofit homes and buildings across the country; and conservation and biodiversity professionals to deliver nature-based solutions to climate change. Alongside a broader shift to digitisation and automation, we can expect the transition to net zero to be one of the dominant labour market trends in the next 30 approximately 6.3 million jobs in the UK, about one in five, are likely to be affected by the transition to a green economy, with workers experiencing either an increase or decrease in the demand The government’s ambition is • Support up to 480,000 jobs acr oss net zero industries in 2030, contributing towards a broader pivot to a greener economy which could support 2 million jobs in green sectors or by greening existing sectors orking with business to grow green industries, supply chains and skills in the UK, and ensure our resilience to international changes in supply chains; and, o policy and funding to promote the growth of green skills and • Enable workers, industries, and places to transition to a net zero economy by 2050, and support industry to develop the skilled workfor ce to deliver a green industrial • Reforming the skills system to make it mor employers, so that training providers, employers, and workers are incentivised and equipped to support the transition to net zero; • Ramping up support for workers in the high carbon economy to orking with business to ensure people from all backgrounds can access the opportunities in the green economy, including through career advice; and, oviding children and young people with the high-quality education and training they need to work in a future green career, through improving teacher training and development in STEM and other key subjects, and expanding post-16 training programmes in line with the needs of the green economy.
124 LSE Grantham Institute (2021), ‘Green how the transition to net-zero could affect UK jobs across the country’, could-affect-uk-jobs-across-the-country/

Chapter 3 Policies and Measures 239 3.17.4 Working with business to grow green UK industries and resilient supply chains The investment needed for the transition to net zero will primarily be delivered by the private sector. As such, our first priority is to provide businesses, investors, workers, and skills providers with policy certainty to unlock investment, ensuring we support green industries to Our Net Zero and Energy Supply Strategies build on our Ten Point Plan and are our blueprint for a green industrial revolution – these commitments will unlock up to £100 billion of private investment by 2030 and support up to 480,000 well-paid jobs in green industries in 2030. UK and international investment have backed the vision of a Green Industrial Revolution since the Prime Minister’s Ten Point Plan was launched, with nearly 68,000 green jobs across the UK economy either already online or in the pipeline over the next decade – including in electric vehicle manufacturing in Sunderland, Hydrogen facilities in Teesside, and offshore wind in Northumberland, Yorkshire and Humber In line with Build Back Our Plan for Growth, we are taking action across a range of low carbon industries with the greatest economic potential and competitive strength. In doing so, we will support the growth of UK supply chains and create new opportunities for UK businesses and level up the country. We are acting to build green industries such as offshore wind in North East England and in Scotland, carbon capture and hydrogen production in our industrial heartlands, electric vehicles manufacture in the midlands and Northeast of England, and the restoration and protection of nature in rural areas. We also recognise that the starting position when building resilience in critical supply chains should be to take a market-first approach. The UK prospers under an open economy and openness itself confers resilience. We will leverage the UK’s competitive strengths across the supply chain, while deploying those levers available to the Government – including UK Export Finance and the new Office for Investment – to ensure that we exploit our strengths, while supporting those areas that could be vulnerable to global shocks. In addition, the UK ETS market supports supply-chain resilience by providing long term certainty, enabling businesses to invest with confidence and build the right supply chains. We are working in partnership with our world-class sectors to enable them to take part in the transition, for example through the North Sea Transition Deal, which committed to focusing on supporting the transformation of the oil and gas supply chain to service the low carbon energy sector. Building on this, we have established the Energy Supply Chain Taskforce (UKESC) as a joint enterprise between industry and government to guide policy making and maximise the jobs and business opportunities from the transition in the UK. The UKESC cover all energy sectors and regions of the UK and, building on work already underway, it will map the energy project pipeline and identify higher value segments of the supply chain to The Integrated Review Security, Defence, Development and Foreign Policy committed to ‘a resilient UK able to withstand and proactively tackle the challenges of today and the future’, including a specific focus on supply chain resilience, committing to ‘using all our economic tools and our independent trade policy to create economic growth that is distributed more equitably across the UK and to diversify our supply chains in critical goods’. Similarly, the Plan for Growth outlines the importance of international markets to ensuring diverse supply sources for the goods and services we need, improving the resilience of our supply chains The development of resilient, efficient, and competitive supply chains will be a collaborative strategic endeavour. To support this, in May 2021 we published the CCUS Supply Chain

240 8th National Communication Roadmap, which sets out how government and industry can work together to harness a strong UK supply chain, and we have committed to publish a hydrogen sector development action plan in 2022, which will outline how the government will support companies to secure supply chain opportunities, skills and jobs in the sector. We will build on this by working with industry to publish further sector and supply chain development plans for those low carbon sectors where the UK has the potential to capture an economic advantage. This will include ensuring we are resilient to international changes in supply caused by external shocks, including climate-related disruption, spikes in global demand, rising commodity costs, or artificial constraints on supply. For example, we will need to ensure we have access to a diverse range of sources of chemicals, given they feed into 95% of our manufacturing base. As we move forward, where possible, government will provide more visibility around planned deployment cycles to increase the opportunity for suppliers to invest in long-term production, 3.17.5 Supporting workers, industries and places to transition and develop the skills There are urgent and emerging skills challenges across the green economy which we will need to address over the short and long term if we are to meet our ambitions for a Green Industrial Revolution. Through the British Energy Security Strategy we are stepping up our ambitions in offshore wind, new nuclear, solar power and hydrogen, all of which will require thousands of skilled workers to deliver.
In the construction and heating sectors, up to 230,000 skilled trades people could be required in 2030 to deliver the retrofitting of houses125and to meet our ambition of installing 600,000 heat pumps a year by 2028, we will need to rapidly increase the number of qualified installers from around 3,000 to 35,000 within the next 7 years.126 As the automotive manufacturing sector transforms to producing electric vehicles, as many as 50,000 workers in the UK’s automotive manufacturing sector could need reskilling by 2025.127 In forestry and its supporting sectors, industry estimates point to projected labour demand of approximately 2,000 jobs over the next five years.128 As well as specialists in these sectors, employers will also need workers with wider cross- cutting skills to deliver net zero, including digital and data skills, project management, communications and change management.129 There will also be increased need to work in a multidisciplinary way due to the way work will change in some sectors. For example, whole house retrofitting will need knowledge of multiple technologies. The impact of the transition on the labour market will not be evenly spread across the UK, reflecting the geographical distribution of where existing industries will need to adapt and others new ones will flourish.130 However, there are opportunities for workers in transitioning sectors, such as oil and gas, to utilise their specialist skills in key important green sectors, 125 ITB (2021), ‘Building Skills for Net Zero’, reports/search-our-construction-industry-research-reports/building-skills-for-net-zero/ 126 Heat Pump Association (2020), ‘Building the Installer Base for Net Zero Heating’, org.uk/wp-content/uploads/2020/06/Building-the-Installer-Base-for-Net-Zero-Heating_02.06.pdf 127 BEIS (2021), ‘Green Jobs Taskforce Report’, 128 Forestry Skills Forum (2021) ‘Forestry Workforce Research’, forestry-workforce-research-final-report-august-2021.pdf 129 BEIS (2021), ‘Green Jobs Taskforce report’, 130 BEIS (2021), ‘Green Jobs Taskforce report’,

Chapter 3 Policies and Measures 241 sectors such as hydrogen and CCUS with these two sectors expected to grow from the orking with industry and key partners to support good green jobs and skills Industry and government will need to take action to ensure the UK has the skilled workforce to deliver net zero and that workers, industries and places are supported on the transition. This will be particularly important given the pace and scale of the change, and the specific challenges faced by smaller companies in some sectors and supply chains. To drive this forward, we have announced a Green Jobs Delivery Group to include representatives from industry, the skills sector and other key stakeholders to support the development and delivery of the Government’s plans for green jobs and skills. The Green Jobs Delivery Group met for the first time on 11 May 2022, and will be the central forum through which government, industry and other key stakeholders work together to ensure that the UK has the workforce needed to deliver a green industrial revolution. The Group includes Ministerial representation from BEIS, Defra, DWP and DfE and will be co-chaired by an industry representative. The Group will be active for the duration of this Parliament and will aim to drive forward industry ensuring we have the skilled workfor ce to deliver net zero and wider environmental goals in line with the UK’s levelling up agenda; 2. ensuring workers and communities in high carbon sectors are supported with the transition in the wider context of the UK’s levelling up agenda; essing barriers to recruitment, retention and 5. building on the work of the Gr een Jobs Taskforce to develop a clearer understanding of the green economy and how to define and measure it. To support this work, and monitor our progress, it is vital that we continue to develop the evidence on how net zero will impact jobs and skills. The Office for National Statistics will seek to refine our understanding and measurement of the green economy as the UK transitions to net zero, including looking at such issues as quality of work and diversity within Join up between local bodies, employers and local communities will be key to ensuring an effective transition. Building on the measures set out in the Local Climate Action chapter in the Net Zero Strategy, and our skills system reforms, we will assess how local areas are working to support workers and communities with the net zero transition across England. We want to see continuous improvement in the quality of jobs in the UK, both in the creation of new high-quality jobs which support Government priorities such as net zero, and through While skills policy is a devolved matter, the Government also welcomes close engagement with the devolved administrations, Mayoral Combined Authorities and the Greater London Authority, on this agenda, to ensure everyone across the UK has access to green We are driving forward reforms to put employers at the heart of the skills system and ensure colleges are responsive to the needs of local economies. As demand for green skills

242 8th National Communication continues to grow across the UK, employers in the green economy must prioritise investment in the retraining and upskilling of their workforce, and actively take the opportunity to engage with education providers to shape local provision. Central to our strategic reforms are the plans set out in the Skills for Jobs White Paper, which will enable local employers to set out their green skills needs to drive provision in local colleges. The programme is made up of two local skills improvement plans and the First, the Trailblazers for local skills improvement plans, led by employer representative bodies will identify and articulate unmet and future local skills needs and work with further education providers to adapt their technical training offer so that it becomes more responsive to employers’ needs.
Through the Skills and Post-16 Education Bill, we are legislating to put the employer leadership of these plans on a statutory footing and ensure they have regard to skills needed to help deliver on our net zero target, adaptation to climate change, and other Second, our £65 million Development Fund pilots in 2021-2022 will support work to identify employers’ skills needs, design provision to respond, and build the capacity of local further education providers to deliver. Where local areas identify a skills need, for example increasing the number of trained retrofitters, providers could use this funding to purchase equipment, train their staff, bring in industry expertise to provide training, or deliver new provision. The majority of the 18 pilots announced in July 2021 include a project focused on green skills, covering areas including decarbonisation, renewable energy, and electric vehicles. Alongside this, we want people to get the advanced technical and higher technical skills they need to get good jobs. Colleges’ place at the centre of their local communities and economies means that they are key to unlocking opportunities across the country and to building back better. We are, therefore, reforming the adult skills funding and accountability system for further education colleges and other training providers in a way that will help improve our skills provision. We are consulting on a range of proposals to make sure colleges are better supported to focus on helping their students into good jobs; reduce the complexity of funding so that colleges can focus on their core role of education and training; and define clearer roles and responsibilities for the key players in the system. This means that, for the first time, we will be able to reflect the value that relevant courses deliver to the taxpayer in the funding rate colleges receive for putting on courses. This will encourage providers to put on courses in subjects where there is strong demand from employers. We will hold colleges to account for delivering good outcomes, and are consulting on proposals to introduce new Accountability Agreements setting out national priorities against which we expect colleges to deliver, for example enabling students to access opportunities in the green economy. Supporting the transition through the skills system will require teachers in the further education sector to have a strong understanding of sustainability. To deliver this, we have worked with employers to develop a refreshed apprenticeship standard for further education teaching (Level 5 Learning and Skills Teacher), which came into effect in September 2021. For the first time, all further education teachers training via an apprenticeship will be required to integrate sustainability into their teaching, including through modelling sustainable practices and promoting sustainable development principles in relation to their subject specialism. Early estimates from the Trailblazer Group suggest around 1,500 teachers each year could train using this apprenticeship standard. This standard will soon be incorporated into all future further education teaching qualifications, so that all teachers across all subject areas will be able to embed and promote sustainability in their teaching. Chapter 3 Policies and Measures 243 3.17.6.2 Ramping up support for workers in high carbon sectors to transition to Over 80% of the workforce of 2030 is already in work today131, as such meeting our ambitious targets for climate action in the next decade, and reaching net zero by 2050, will require government and industry to work together to ensure workers in high-carbon sectors can retrain and upskill as they move into jobs in the green economy. Much of this will take place in industry (see the case study below) and we will support this through our targeted programmes for industries and workers. In key sectors, we will ramp up our support to develop UK supply chains and enable workers to access green jobs. This will include working with industry on a Heat Network Skills Programme to increase the capacity and capability of the UK supply chain to support the sector to reach its growth potential. Our Public Sector Low Carbon Skills Fund will enable public sector organisations to acquire expert skills in order to unlock decarbonisation projects. Alongside this, we will work with industry to support training and new routes of entry to help boost heat pump installer numbers and other areas of skills shortage to support the decarbonisation of buildings. We will also support the development of new green skills for hydrogen, CCUS and industrial decarbonisation to ensure the UK workforce is ready to deploy low carbon technologies. Our funding for the Aberdeen Energy Transition Zone will position the region as an exemplar for low carbon development, supporting the transition of existing oil and gas skills to renewable energy sectors. We also will continue to support the forestry sector to improve its training and career services. Through the Lifetime Skills Guarantee, we are supporting workers to gain the skills they need to transition to the green economy, including through targeted support for retraining. As part of this, through the National Skills Fund (NSF) investment we are delivering Skills Bootcamps, which are short, flexible courses covering digital, technical and green skills. Green Skills Bootcamps are available in areas such as housing retrofit, solar, nuclear energy and vehicle electrification. Overall, we expect there will be approximately 16,000 Skills Bootcamp places available across the country in financial year 2021-22. We will undertake robust evaluation of this exciting training model to explore potential future plans. In addition, our Free Courses for Jobs offer has, since April 2021, been supporting adults that do not have a qualification at Level 3132 or higher to access over 400 Level 3 courses for free. The offer currently includes qualifications linked to green sectors such as Agriculture, Building and Construction, Engineering, Environmental Conservation, Horticulture and Forestry and Science. An estimated 11 million adults over the age of 24 in England are eligible for the Free Courses for Jobs offer.
We will continue working closely with employers to understand where the offer could be extended further to enable more adults to access qualifications to give them skills needed for the net zero transition. This will be underpinned by the Lifelong Loan Entitlement (LLE) from 2025, which will provide individuals with a loan entitlement equivalent to up to four years of post-18 education to use over their lifetime. As part of the pathway towards the LLE, we will trial short course provision at Levels 4-6 to support in-work adults to upskill and retrain, enabling learners to flexibly build towards a full qualification in subjects crucial for net zero including STEM and 131 Industrial Strategy Council (2019), ‘UK Skills Mismatch 2030 – research paper’, industrialstrategycouncil.org/uk-skills-mismatch-2030-research-paper 132 What Qualification Levels Mean, GOV.UK,

244 8th National Communication Through the NSF we are also delivering an Emerging Skills Project in electrification and battery technology, which commenced in June 2021. Alongside this, our NSF funded In-Work Skills Pilot, launched in September 2021, will seek to respond to immediate skills shortages required for net zero, stimulate demand for short course provision at levels 4-5 across STEM sectors, and boost worker’s career and progression opportunities in key green sectors, such as electrification in the auto industry and low carbon engineering. Given the pace and the scale of the transformation, we are considering how government can work more closely with sectors in the future to support them in the green transition, and identifying where we can adapt and enhance our support for people at risk of redundancy to support a transition to green jobs. This builds upon our existing work coach interventions and targeted provision including Sector-based Work Academy Programmes (SWAPs), traineeships, apprenticeships and other skills provision which are ensuring jobseekers can develop the right skills to move into green jobs. 3.17.6.3 Working with business to support people from all backgrounds to have a We support the Green Jobs Taskforce’s recommendation that industry should prioritise ensuring that people from all backgrounds can work in green jobs, building on existing good practice and capitalising on the unique opportunity of young people’s interest in climate change and the environment. A more diverse workforce will aid the transition by expanding the talent pool, encouraging new ways of thinking, enhancing innovation, and boosting profitability and productivity across the economy.133 To drive this important work forward we will continue to encourage industry to ensure there is equal opportunity for all to work in the green economy, building on our support for industry initiatives such as the POWERful Women campaign and commitment under the ‘Equal by 30 Campaign’ to close the pay gap, improve female representation in senior roles and opportunity for women in the global clean energy sector by 2030. Through the cross-cutting delivery group we will explore what actions can be taken across industry to improve diversity in the green economy, including improving data collection and transparency. Alongside this, we will continue to work with green employers to raise awareness of the opportunities in the green economy through an integrated careers information, advice and guidance offer through schools, colleges, universities, and employers to raise awareness of different career pathways in low carbon sectors. To further break down perceived barriers to working in the energy sector, boost diversity and increase STEM skills, our Build Back Better campaigns will seek to inspire people from all walks of life to work in the green economy, and raise awareness of green education, The UK’s joint presidency of COP26 brought a unique opportunity to showcase green careers to a new generation of children and young people. We capitalised on this by working with industry to launch the Faces of The Energy Transition campaign to showcase the inspiring people, projects and organisations working to achieve the clean energy transition, and supporting green careers events at COP26 in Glasgow. 133 BEIS (2021), ‘Green Jobs Taskforce report’,

Chapter 3 Policies and Measures 245 3.17.6.4 Building a foundation for future green careers Schools and colleges will play a vital role delivering high-quality education and training to equip young people with the knowledge and skills required for the green economy. This will help to grow the pipeline of skilled workers needed to help deliver the net zero transition. The science, geography and citizenship programmes in the National Curriculum at both primary (KS1-2) and secondary (KS3-4) cover key content which supports knowledge and understanding of sustainability and climate change. An environmental science A level was introduced in 2017. Equipping students with secure knowledge and skills in STEM and other key subjects will be critical in supporting them to progress to skilled jobs in the green economy. We are, therefore, supporting teachers to deliver high-quality teaching in these subjects by creating a world-class teacher development system that builds from initial teacher training through to early career support, specialisation and onto school leadership. Our vision is that a golden thread of training, support and professional development – informed by high-quality evidence – will run through each phase of a teacher’s career. We are also funding several initiatives to support subject-specific professional development in STEM subjects across all key stages. We are working with Oak National Academy to give teachers access to high-quality curriculum resources to support their teaching, including in subjects that cover sustainability and climate change. We are also working with industry, through programmes such as Tomorrow’s Engineers Code, to showcase the diversity of roles and people that make up the STEM sector, encouraging more young people from different backgrounds to choose a career in the sector. The Department for Education has recently published its Sustainability and Climate Change Strategy, with the Department engaging with the sectors and young people to capture and reflect their ideas and views. The Strategy sets out how our children’s services, education and skills systems will support the UK to meet its net zero target, become more resilient to climate change and improve biodiversity.
It includes a focus on ensuring excellence in education for a changing world, which will prepare children and young people with the knowledge and skills they need to contribute to the green economy. At post-16 level, we will continue to build on our apprenticeship reforms, set out in the Skills for Jobs White Paper, to align the majority of post-16 technical education and training with employer-led standards by 2030. A strengthened system of employer-led standards, underpinning apprenticeships, T-levels and new higher technical qualifications will ensure employers, including in low carbon sectors, have a central role in designing and developing To ensure this system reflects the needs of the green economy, the Institute for Apprenticeships and Technical Education (IfATE) has convened a Green Apprenticeships Advisory Panel (GAAP) to work with employers to align apprenticeships to net zero objectives. Work is underway to map existing apprenticeship standards against green occupations and identify opportunities to create new standards in areas including retrofit, agri-tech and renewable energy and the GAAP has endorsed existing apprenticeships which support green career pathways. We have already seen positive engagement in the energy sector with over 1,000 apprenticeship starts in Wind Turbine Maintenance and Operations Engineering Technician standards in 2019/20. The GAAP will build on this list into 2022, in line with the Ten Point Plan and the findings of the Green Jobs Taskforce. The work of the GAAP will also support other key post-16 programmes that are underpinned by the same standards as apprenticeships (such as T levels and higher technical qualifications) to align with the needs

246 8th National Communication In 2021, we introduced the first occupational traineeships, in collaboration with sector bodies, to provide a clear, planned transition to an apprenticeship at Level 2-3 for young people aged 16-24. Going forward, we will consider the potential to develop and introduce other occupational traineeships, including in priority and green sectors to ensure that young people secure the jobs of the future. We are continuing to roll out T Levels that support green careers, providing high quality technical qualifications as an alternative to A Levels which are underpinned by the same employer-led approach as apprenticeships. The building services engineering for construction T Level, launched in September 2021, will cover housing retrofit and heat pump installation. From September 2022, new T Levels will be available in Engineering, Manufacturing, Processing and Control, with Agriculture, Land Management and Production available by September 2023. IfATE is exploring the suitability of potential future T Levels and occupational specialisms, focusing on areas to support green skills. IfATE has introduced an approval process for Higher Technical Qualifications (HTQs) at Levels 4 and 5. HTQs will be rolled out for teaching from September 2022, covering eleven occupational routes – including qualifications in digital, construction and engineering – coming on stream up to 2025. Future roll-out will continue supporting the development of skills for the transition to net zero as a key government priority. The goal is to grow the number of learners undertaking high-quality level 4 and 5 qualifications to meet skills needs at this level. Earlier this year, we launched an £18 million higher technical education provider growth fund to allow investment in new equipment that will support providers to expand technical studies, and boost local employer links. Our growth fund is supporting 15 universities and 87 FE colleges to teach HTQs from next year. Finally, our network of Institutes of Technology (IoTs) across England are utilising their state- of-the-art facilities to offer training in green skills. This includes the East London IoT which offers training in green and zero carbon energy production, and the Greater Birmingham and Solihull IoT which focuses on sustainable engineering. The network is supporting increased participation from under-represented groups, including women, helping to grow the pipeline of individuals with STEM skills needed for green jobs. We are investing £120 million in the second wave of IoTs, to be up and running by 2022. The policies set out in this chapter represent a first step in addressing the challenges identified by the Green Jobs Taskforce. We will progress further work through the Green Jobs Delivery Group, maintaining the momentum generated by the Taskforce to drive action across the green skills agenda. Working alongside industry through the Green Jobs Delivery Group, we will continue to build the evidence on the skills gaps which could hamper the net zero transition if left unaddressed, assess how far existing interventions are on course to address those skills gaps, and where appropriate identify further opportunities to flex key skills programmes to support green sectors and occupations. The Scottish Government’s Climate Emergency Skills Action Plan134 sets out short and long term actions to support the skills needed for a green recovery and just transition to net zero. Actions include establishing a new Green Jobs Workforce Academy135 to support 134 135

Chapter 3 Policies and Measures 247 existing employees, and those who are facing redundancy, to assess their existing skills and undertake the necessary upskilling and reskilling they need to secure green job opportunities The Scottish Government’s Green Jobs Fund136 supports businesses providing low carbon products and services with capital grants. The fund will secure and create jobs by supporting businesses and their supply chains to develop and grow. We have an important part to play in ensuring that skills are a key enabler for net zero, promoting fair work alongside good and safe employment in social partnership with trade unions and employers. We will develop a Net Zero Wales Skills Action Plan, which we intend 3.17.9 Northern Ireland Executive Innovation is key to the disruptive transition required. ‘10X Economy’ sets out the vision for the 2020s as a decade of innovation bringing opportunity and growth. The focus on innovation is reinforced in the Green Growth and Energy Strategies which both strongly advocate innovation, research and development. New skills will be critical to allow innovation to flourish into delivery.
The Skills Strategy137 consultation recognises that a transformational change in skills is required to take advantage of Northern Ireland’s scale, yet addressing the challenges in the skills sector. There are a number of skills gaps in the short, medium and long term. In the short term there will be a requirement to upskill engineers for the increased installation of heat pumps. In the medium term there will be increased need for Civil and Electrical engineers, which will be required for infrastructure along with digital and analytical experts to help understand how we consume energy. Finally in the long term there will be an ever increasing need for engineers and a requirement for project managers to help with the increased renewable and green production of the energy we consume. To take one example, the decarbonisation of gas infrastructure will involve the development of new supply chains for production of bio-methane from anaerobic digestion plants and development of hydrogen production technologies, which will support green jobs and new Colleges in Northern Ireland also offer direct innovation and R&D support to employers and provide assistance to bring new ideas in the renewable energy and sustainable technology sectors to the market. This includes support for new product and process development in areas such as biogas, biomass, low energy construction (including Nearly Zero Energy Buildings and Passive House techniques) and industrial energy conservation. This support is channelled through College Innovation Centres and one example is the Centre for Renewable Energy and Sustainable Technologies (CREST) at South West College (SWC). CREST provides industry R&D, demonstration and testing facilities for new renewable energy products. The facilities are available to SMEs across Northern Ireland, who have ideas for new products or process developments but who do not have the physical and/or technical 136 137 Available at

248 8th National Communication capacity to develop, test and commercialise them. These state-of-the-art facilities include laboratory space, testing equipment, demonstration technologies and the assistance of technical staff to help bring ideas and concepts to the next stage of development. The CREST Centre itself was the catalyst for the new award winning Passive House premium rated Erne campus which was completed in 2021. This is the first educational and largest premium rated building in the world. Coupled with this, the campus also successfully attained a BREEAM Outstanding accreditation therefore making it a unique and world leading example of large scale sustainable design and construction. The development of the campus has earned international recognition and was instrumental in the College being assigned the designation of a United Nations High Performance Building Centre of Excellence at COP26 last year. This global standard has already begun to pay dividend from a curriculum delivery perspective with the development of links for student visits to USA and Canada planned In the Hydrogen services sector, Ulster University has developed post graduate courses for hydrogen specialisms (safety and technology) with additional operational, maintenance and design skills coming for 2025. 3.18 P ublic Embedding Net Zero in government e the government to reflect environmental issues in national policy making through consideration of five environmental principles. e that decisions taken on government spending are informed by their impact es to reduce emissions from Government’s £292 billion procurement spending – and ensure suppliers have plans for achieving net zero on major Continue to fund the Public Sector Decarbonisation Scheme at £475 million per year to drive ambitious emissions reductions in schools, hospitals, and other public buildings, whilst taking further action on skills, r ogress update against a set of key indicators for achieving • Expand climate change training to ensure the Civil Service has the skills and people Net zero is a complex and transformative undertaking for the UK. The way the government operates must rise to meet this challenge. This means reducing the public sector’s own carbon footprint – but also changing how we are organised and how we take decisions. Building on our recent historic progress, we are now going further to ensure the whole government meets the challenge of net zero. Since setting the net zero target, a huge effort has been made across government to ensure we are set up in the right way to deliver on our climate ambitions. We have gone further than ever before to put the climate at the heart of our decision-making. This Establishing two Cabinet Committees dedicated to climate change;

Chapter 3 Policies and Measures 249 • Announcing as part of the Integrated Review of Security, Defence, Development and Foreign Policy that tackling climate change and biodiversity loss will be the nment‘s number one international priority; onment Bill to require the government to reflect environmental considerations in national policy making through consideration of five aking new approaches to embed net zero in spending decisions; • Establishing the No.10 Delivery Unit to ensur e the government maintains a sharp focus on delivering the country’s key priorities. One of the four priorities for this Unit is the delivery of net zero; and, Setting out in collaboration with key net zero delivery departments, a high level strategy for delivering on the UK’ s net zero commitments through the BEIS Outcome Delivery Plan 2021-2022. This plan identified key programmes critical to delivery and set out an evaluation plan to monitor and assess progress. These efforts put climate change at the heart of our decision-making and have led to the ambitious announcements set out in recent the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, dedicated strategies for key sectors of the economy, and this Net Zero Strategy; and set us up to deliver on those commitments. Our goal is to go even further to embed net zero across government activity. This will mean that government takes net zero into account when taking decisions, public sector buildings will emit less carbon, our procurement decisions will lead to greener supply chains, and civil servants across government will have the skills they need to deliver this mission.
To do this we must understand the interactions between climate change and other UK priorities. The measures set out in this chapter are crucial for ensuring that the UK takes a whole system approach to tackling climate Multiple forums – including Cabinet Committees – that bring together dif perspectives on net zero and its interaction with other priorities; • Delivering climate skills and training across the Civil Service – not just to civil elationships with local government and the Devolved o in a wider range of decision-making levers. et zero in government decision-making In the last two years the Government has made commitments to strengthen governance around net zero. Two Cabinet committees were established in 2020 to rationalise climate governance and put net zero at the heart of government decision-making. This is driven by the Prime Minister, who chairs the Climate Action Strategy Committee (CAS). This Committee considers matters relating to the delivery of the UK’s domestic and international climate strategy. In addition, the Climate Action Implementation Committee (CAI) which is chaired by the COP President Designate. It considers the delivery of COP 26, net zero and building the UK’s resilience to climate impacts. These committees’ ability to scrutinise progress and take whole system decisions will be strengthened by the new measures described in this chapter. 250 8th National Communication These committees are supported by well-established and robust governance at official level. This includes a cross-government Director General group that was established in 2019 to ensure a whole-of-government approach to climate policy, with oversight at the most senior levels. Chaired by the BEIS Director General for Net Zero and International, this group brings together officials from across government, creating a whole system perspective, to support the delivery of significant climate announcements, including those contained in this Strategy. nsistency of approach across the UK To reach net zero we must take a UK-wide approach. The UK Government and the Devolved Administrations are committed to working together to deliver coordinated policy action to meet respective emissions reduction targets across the UK. Combined, Scotland, Wales and Northern Ireland produced 22% of UK emissions in 2019,34 and accounted for 16% of the UK’s population, 13% of economic activity 138 and nearly half of the UK’s land area (46%)139. Powers and policies to deliver ambitious emissions reductions in the Devolved Administrations Scotland, Wales and Northern Ireland are partly reserved to the UK Government and partly devolved. The UK Government and the Devolved Administrations have established governance arrangements to ensure a joined-up and collaborative approach to climate change. At the bimonthly Net Zero, Energy and Climate Change Inter-Ministerial Group, UK Government ministers meet with Devolved Administration counterparts to discuss emerging policies that will contribute to delivery of net zero targets across the UK, such as delivering a UK- wide Emissions Trading Scheme, and the level of the sixth carbon budget which was set in law in June 2021. The Group is supported by the official-level Net Zero Nations Board on mbedding net zero in government decisions Climate change is a major issue for all governments in the 21st century. Our mission to reduce emissions, seize economic opportunities, and adapt to extreme weather events will affect many more of the decisions that the Government takes than it would have done in previous decades. To that end, it is essential that we put in place new levers to ensure that all the Government’s decisions adequately take climate change into account. This Strategy sets out key measures we will take to ensure a climate-focus on key future decisions made by We are using the Environment Bill to require the government to reflect environmental issues such as climate change in national policy-making through consideration of five The integration principle is the principle which states that policy-makers should look for opportunities to embed envir onmental protection in other fields of policy that have impacts on the environment. evention principle means that government policy should aim to prevent, ectification at source principle means that if damage to the environment cannot be prevented it should be tackled at its origin. 138 ONS (2021), ‘Regional gross domestic all ITL regions’, 1998 - 2019 139 CCC (2020), ‘Sixth Carbon Budget’,

Chapter 3 Policies and Measures 251 • The polluter pays principle is the principle that those who cause pollution or damage onment should be responsible for mitigation or compensation. ecautionary principle states that where there are threats of serious or irreversible environmental damage, a lack of scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent The duty to consider these principles should be applied in the early stages of policy development and considered throughout. In doing so, the extent to which a policy will contribute to climate change should be considered alongside other impacts of the policy on the environment. Net zero will therefore be facilitated by the principles where they are applied The integration principle will create a prompt for policy makers to embed environmental protection in policy making, triggering consideration of the government’s priorities for environmental protection (such as net zero) and whether these priorities can be supported through the new policy. The polluter pays and prevention principles could also help to contribute to net zero targets, through encouraging policies that reduce carbon emissions and prevent adverse impacts on climate where possible. These principles will ensure the environment is at the heart of policymaking across government. Ensuring spending decisions contribute to net zero is a major priority for HM Treasury. The Green Book already mandates the consideration of climate and environmental impacts in spending. It has been updated so that policies must be developed and assessed against how well they deliver on the Government’s long-term policy aims such as net zero. Spending reviews are critical moments for the Government to look strategically at the country’s priorities and make spending decisions based on these.
At Spending Review 2020 (SR20), guidance required departments to state the greenhouse gas emissions of bids, and their impact on meeting Carbon Budgets and net zero. Allocations to departments were informed by this information, and £12 billion was committed to green measures. We have reviewed the learning from this exercise to further embed climate change in spending decisions in the next spending review and in the long term. In September 2021, the Government published updated guidance on how impacts on greenhouse gas emissions should be measured in policy decisions. As a result, departments must place a significantly higher value on emissions in determining policy, as the values now fully reflect the UK’s increased ambitions on climate. This complements wider considerations on natural capital impacts in policy decisions – and represents a significant step forward in incorporating environmental impacts into policy development. As set out in the Green Investment chapter, we have also taken steps to ensure net zero is embedded in government funding and regulation of the financial system. Arm’s-length bodies, such as the British Business Bank, have adopted net zero as a core objective. This will expand the flow of finance to those innovative firms that will help us reduce our energy consumption and mitigate the impacts of climate change. This builds on important announcements in the 2021 Budget, particularly the new UK Infrastructure Bank that will use its £22 billion of financial capacity to crowd-in private investment to support economic growth, accelerate our progress to net zero, and help level up the UK. One of the Bank’s objectives is to help the UK transition to net zero

252 8th National Communication We will make sure that the reformed planning system supports our efforts to combat climate change and help bring greenhouse gas emissions to net zero by 2050. For example, as part of our programme of planning reform we intend to review the National Planning Policy Framework to make sure it contributes to climate change mitigation and adaptation as 3.18.4.3 Supporting UK businesses We are considering net zero through our support to business too across government activity. Innovate UK is the UK’s Innovation Agency, it drives productivity and economic growth by supporting UK businesses to commercialise new ideas and address the big societal challenges facing the UK today. As the UK moves to a net zero economy, Innovate UK is supporting businesses to exploit new ideas, develop supply chains, and thrive in growing global markets. Last year Innovate UK committed to spend £276 million with UK businesses to tackle net zero. 3.18.4.4 Net zero in the work of regulators Many of the UK’s regulators will play a role in facilitating delivery of the infrastructure, technologies and activities that will deliver the net zero transition. Several examples are set out in the sector focused chapters in this strategy. The government is also considering whether and how the functions of those regulators most important to the transition can For example, to provide strategic guidance to Ofgem on the government’s energy policy, the Energy White Paper committed the government to consulting on an energy sector strategy and policy statement (SPS) for Ofgem during 2021. The SPS will set out the strategic priorities and policy outcomes of the government’s energy policy, with net zero as the driving theme. This will impose a legal obligation on Ofgem to have regard to the strategic priorities and policy outcomes when exercising its regulatory functions. To provide clear legal accountability, Ofgem will be required to report on how it intends to implement the SPS at the outset, and then report annually on its performance and its plans for the coming year. The Competition and Markets Authority (CMA) is reviewing how the UK can better use the tools available under competition and consumer law to achieve net zero and our sustainability goals. This follows recent CMA work on misleading environmental claims, its market study into electric vehicles and its publication of information to businesses on The National Infrastructure Strategy committed to taking a long-term approach to investment for the benefit of both investors and consumers, responding to the findings of the National Infrastructure Commission’s report on the future of economic regulation in key infrastructure. The government also committed to publishing an overarching policy paper. The policy paper will set out next steps on key issues the consideration of duties in the round to ensure they reflect new challenges such as achieving net zero, promoting coherence, and supporting a transparent strategic framework; and the exploring of the merits of a cross- sector-strategic Policy Statement to provide clarity on government’s overarching strategic vision for the regulated sectors. In addition, the Government has recently consulted on proposals for reforming the UK’s regulatory framework. When the consultation response is published, it will include the Government’s decisions on how regulators can be encouraged to consider themes such as competition, innovation and net zero in their regulatory activities. For example, the consultation sought views on whether regulators might be granted more flexibility by

Chapter 3 Policies and Measures 253 government to choose how they intervene in their sectors, to allow more agile, smarter regulation. The Government would like to see a consistent approach taken across the various regulated sectors and will set out more thinking on this in due course. emonstrating progress towards net zero ncreasing transparency of progress Every year the government comprehensively reports the UK’s historic emissions since 1990 and publishes projections of future emissions140. The UK’s ‘Energy and Emissions Projections’ is a world-leading approach to projecting the UK’s annual emissions, by sector, according to United Nations Framework Convention on Climate Change guidelines. We are now going further to clearly demonstrate the tangible milestones that the UK will have to reach to achieve net zero, and to communicate and invite scrutiny on this It is critical for public and industry confidence that the UK has a clear plan for achieving net zero – and that we are transparent about how this plan progresses and changes over time.
The Journey to Net Zero chapter of this Strategy report set out a delivery an indicative trajectory of emissions reductions based on potential in each sector of the economy, which keeps us on track to meet the sixth carbon budget ending in 2037. Sector chapters set out policies and proposals in line with this indicative pathway to ensure we are on track for net zero. While it is impossible to predict every path to net zero, this pathway sets out the decisive action we know is needed and acts as the best plan we have to measure We are therefore committing to provide a public update every year on progress in the previous year against the delivery pathway to net zero set out in this Strategy. ogress against the targets and ambitions set out in this Strategy, building on this list over time to incorporate additional Government targets and wider non-Government indicators of progress; Commentary on contextual changes that might affect the exact pathway to meeting decarbonisation commitments; and, eas of progress made against this pathway the policies and We will publish an updated Net Zero Strategy when we set the next Carbon Budget. Strengthening delivery oversight of net zero projects and programmes ecarbonising the public sector Government and the wider public sector will lead by example during the transition to net zero. As well as ensuring that net zero is reflected in our structures and practices, we will continue to take ambitious action to reduce public sector emissions, showing leadership to the wider economy, and making a direct contribution to reaching net zero. 140 BEIS (2021), Final UK greenhouse gas emissions national statistics. BEIS (2020), Updated energy and

254 8th National Communication Direct emissions from public sector buildings account for around 2% of total UK emissions, and the public sector has reduced its emissions by around 40% since 1990141. We intend to act in three areas to ensure we are on track to achieve net investment, transparency, and capacity and capability, and in doing so will aim to reduce direct emissions from public sector buildings by 75% against a 2017 baseline, by the end of Carbon Budget 6. Reducing direct emissions from public sector buildings requires investment in measures to reduce fossil fuel use, including the installation of low carbon heating and complementary energy efficiency improvements, and the installation of low carbon electricity systems such as rooftop solar PV. The Public Sector Decarbonisation Scheme is providing over £1 billion in grants over 2020/21 and 2021/22 for public sector bodies to fund heat decarbonisation and Building on the success of the Public Sector Decarbonisation Scheme, we will continue and extend the scheme to ensure that public sector bodies have access to finance to continue decarbonising their estates , investing a further £1425 million over 2022/23 to 2024/25. High standards with transparency Public sector organisations should be taking steps to achieve net zero now should report their progress so they can be held accountable and as publicly funded organisations. Government departments and their arm’s length bodies already set and report against targets to reduce their greenhouse gas emissions in Greening Government Commitments. The updated Greening Government Commitments framework for 2021-25 will ensure the public estate continues to reduce its environmental footprint, align with commitments in our 25 Year Environment Plan and be consistent with a trajectory to achieving net zero greenhouse gas All public sector bodies should now be monitoring their energy use and have targets to reduce emissions, particularly, to reduce the direct emissions for which they are responsible. To ensure we are on track to reach net zero, emissions from the public sector should be reported and monitored on a consistent and coherent basis. We will provide guidance to make clear the government’s expectations in this regard. We will also legislate to enable us to require the reporting of public sector emissions on a consistent and coherent basis if this is not done on a voluntary basis, and, if insufficient progress is made on reducing emissions in the public sector, to require that all public sector organisations are working toward and reporting against a legally-binding target to reduce their Reducing emissions requires specialist skills and expertise, as well as funding. Action at an unprecedented scale is required to reduce emissions from public sector estates in line with net zero, and organisations need the right skills and structures to deliver on this. We will continue to work with partners across government and the wider public sector to understand these needs, and provide the support needed to address them. 141 Collection Final UK Greenhouse gas emissions national statistics, BEIS, collections/final-uk-greenhouse-gas-emissions-national-statistics

Chapter 3 Policies and Measures 255 3.18.6.2 Delivering net zero through public procurement The Government is determined to leverage public procurement to help achieve net zero. We will use our buying power to drive decarbonisation and to create the policy tools and training to enable public procurers to grasp this opportunity. Clearly establishing the strategic importance of net zero at project design stage, as described above, will mean that it is easier to draw through this ‘golden thread’ when reaching procurement stage. The government has recently announced three distinct new policies that can all help public procurers fully embed net zero into their work. These all kick in at different stages of the commercial cycle, complementing each other in terms of their scope The National Procurement Policy Statement (NPPS), published in June 2021, sets out clear principles that contracting authorities should be following organisationally. Tackling climate change and achieving net zero is one of the key considerations established – this should then be woven through individual procurements (for qualifying procurements). The Procurement Policy Note on Taking account of carbon reduction plans in the procurement of major government contracts came into effect from Autumn 2021. This will impact over £50 billion of procurement spend.
For qualifying contracts, it requires suppliers who are bidding on central government contracts (over £5 million p/a in value) to commit to achieving net zero by 2050 and to detail their organisation’s UK greenhouse gas emissions via the publication of a Carbon Reduction Plan. Failure to do so may mean exclusion at supplier selection stage. Government will continue to take action to reduce emissions, and this policy is an important step in ensuring our supply chain is sharing this ambition and taking similar steps to reduce their emissions. The Social Value Model requires government to expressly evaluate environmental, social and economic benefits, with these factors comprising a minimum of 10% of the evaluation score for qualifying procurements142. Throughout the development of these policy measures, government has been working with departments, suppliers and industry bodies to raise awareness of how environmental considerations can be brought into the commercial process, and to build capability in understanding and assessing suppliers’ commitments. Several thousand buyers across government have completed Social Value training to develop the skills required to embed environmental policy outcomes and improve the sustainability of government contracts. We will continue to support the adoption and implementation of environmental policy measures to deliver the best commercial and environmental impact for the UK. These measures provide a platform for even stronger action. We have embarked upon a programme of major domestic procurement reform. This will enable us to use flexibilities provided by our departure from the EU to give even greater consideration to environmental factors in our decision making. One specific example is the proposal to break the subject matter of contract link so that a company’s wider environmental proposals for the project can be factored into procurement decisions. Domestically we also want to make it easier for procurers to balance carbon against cost. We want to underpin our net zero target and COP26 ambitions by developing tools to help us decarbonise the government’s supply chains and stimulate innovation and growth in the UK’s 142 Government Commercial Function, ‘Guide to using the Social Value Model’. 3 December 2020. assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/940827/Guide- to-using-the-Social-Value-Model-Edn-1.1-3-Dec-20.pdf

256 8th National Communication green economy. This work also takes into account the Climate Change Committee’s (CCC) call for credible, quantifiable pathways for sectoral decarbonisation. We will also explore the possibility of establishing a new single unit for all sustainable procurement policy within government to strengthen performance, coordination, and oversight. Our ambition is necessarily high – we are changing the expectations on ourselves when it comes to utilising £292 billion of annual procurement spend. In doing so we are also sending a clear signal to the data on carbon impact, and immediate ambition to reduce it, will be increasingly important in how we choose to do business with you. howing leadership on domestic and international standards The BSI, in its role as the UK’s national standards body, works across the sectors and topics that will be critical in achieving net zero, including greenhouse gas management, energy transition, biodiversity and sustainable finance. This work is helping the UK to take a global leadership role in net zero and influence change on a global scale. To this effect BSI and the International Organization Standardization have developed the London Declaration – a commitment to actively consider climate change in the development and revision of all international standards and to facilitate the involvement of civil society and those most Through BSI’s international reach, the UK will be able to help stakeholders reach consensus in international climate change standards and lead change globally in support of net zero. nsuring the right skills and talent in government The government has established the Government Skills and Curriculum Unit (GSCU) to oversee the delivery of better training, knowledge and networks that the over 440,000 people working in the Civil Service will need today and in the future. Net zero will continue to be a priority for the government until 2050 and beyond. To that end, BEIS and GCSU are reviewing the skills, training and networks that civil servants need to lead the UK’s future efforts to decarbonise. We are expanding the curriculum for civil servants to include specific training on climate change. We are also establishing climate specific training within the Civil Service Fast We have also embedded climate considerations in the Policy Profession Standards, the competency framework that supports professional development for all civil servants developing policy. For the first time, this makes explicit that good policymaking requires an awareness of the potential for all policy areas to contribute or undermine our climate goals. We are establishing a new climate focus within the Civil Service Fast Stream Generalist Scheme, which will focus on providing relevant skills and opportunities to some of the future The NHS has a unique responsibility when to comes to climate change. According to its landmark Delivering a Net Zero NHS Report, as of 2020 the NHS in England was responsible for some 24.9Mt of emissions. This would equate to around 4% of national emissions. This includes major contributions to the UK’s emissions footprint through the NHS’s procurement of goods and services (calculated by NHS England at around 19 Mega tonnes 2 equivalent), which are around 62% of the overall NHS footprint. In addition, NHS organisations manage over 25 million square meters of land in acute care alone, supporting key government ambitions on biodiversity, air quality, and waste reduction. Chapter 3 Policies and Measures 257 Given this background, the Government has recently taken steps to formalise the NHS’s responsibilities on climate change in law. The Health and Care Act (2022) places a duty on NHS Trusts, Foundation Trusts, Integrated Care Boards and NHS England to have regard to the government’s key ambitions on climate change and the natural environment in This will give vital legal grounding to the excellent work underway across the NHS, which has already achieved a 30% reduction on 2010 emissions.
The NHS is now publicly committed to achieving Net Zero for its direct emissions by 2040, and by 2045 for its entire Across the system, Net Zero is pursued through Green Plans at both the individual NHS provider (Trust) and regional (Integrated Care System) level. The 2021/22 NHS Standard Contract set out the requirement for trusts to develop Green Plan to detail their approaches to reducing their emissions in line with the NHS’s national trajectories. Green Plans provide a structured way for each trust and ICS to set out the carbon reduction initiatives over three- year periods. All 212 NHS Trusts in England now have a green plan, setting out actions they will take to reduce their impact on the environment. The Green Plans focus in particular on the need to decarbonise the NHS estate, and this will be a major priority over the next decade. NHS direct emissions account for a third of all public sector direct emissions, and the majority of these are from NHS buildings. The Government has already invested over £550m in NHS estate decarbonisation through the Public Sector Decarbonisation Scheme (PSDS). BEIS has recently confirmed a further £1.425 billion in public sector Net Zero funding for this Spending Review period. The first tranche of this funding is currently being allocated for 22/23. With regard to estates operations, the NHS is committed to ensuring NHS Trusts purchase 100% renewable energy. The NHS also continues to take meaningful steps to decarbonise its significant supply chain emissions. In September 2021, NHS England set out clear expectations of suppliers between now and 2030, supported by a framework for suppliers to self-certify their decarbonisation achievements and benchmark against requirements, initially voluntarily. NHS England is due to launch the NHS sustainable supplier framework in 2022. It will also be used to simplify and provide consistency for the purchasing of low-carbon goods and services. They have also set out an intended timetable for when contractual requirements come into place. With regard monitoring, since 2008, the NHS has tracked and reported its carbon footprint, regularly improving its methods and monitoring across the NHS. Annex 2 of Delivering a Net Zero National Health Service report describes the analytical approach to this in detail. To support the NHS’s net zero and wider environmental ambitions, new data collection methods are being developed to enable the more granular calculation of carbon footprints and environmental impacts at regional, ICS and trust levels. The Greener NHS Data Collection was launched on 30 April 2021 to understand actions that are taking place over 2021/22 and provide a baseline from which progress can be understood. Climate change is embedded across the Scottish Government through a robust ministerial and corporate governance framework as described in Chapter 1. In addition, the Climate Change (Scotland) Act 2009 requires that the Scottish Government set out the greenhouse gas emissions impacts of its spending decisions. A “carbon

258 8th National Communication assessment” of the budget is produced annually alongside any document setting out draft proposals for the use of resources in any financial year143. Since 2016, public bodies in Scotland (including councils and the NHS) have been required to submit annual reports on their organisational emissions, procurement and adaptation. Public consultation in 2019 demonstrated strong support for public sector bodies being required to set targets for when they will achieve zero direct emissions, and for reduced indirect emissions. Subsequently, reporting duties were strengthened to include requirements on targets, where applicable, alongside other measures including a requirement to report Examples of specific commitments and action by the Scottish public sector on climate ease in reported emissions across local authorities between s capital programme of new hospitals and health facilities being governed by their recently strengthened commitment to net zero by 2040; s colleges’ commitment to net zero by 2040, and universities’ ater’s target of net zero by 2040. In addition to the annual reporting of statutory emissions reduction target outcomes. the Scottish Government also reports annually to the Scottish Parliament on progress towards the delivery of Climate Change Plans for meeting emissions reduction targets monitoring framework used for this reporting lies at the heart of Scotland’s ‘learning by doing’ approach to delivering emissions reductions. This approach reflects the inherent uncertainties in areas such as further technological innovation, market development and wider take up and adoption as well as action by others. The independent UK Climate Change Committee (CCC) also publishes independent annual assessments of Scotland’s progress in reducing emissions The public sector has an important role, in not only removing carbon from its own estate but within their span of leadership influence and operations. 143 A carbon assessment of the Scottish Budget 2022-23 is available scottish-budget-2022-23-carbon-assessment/documents/ 144 Public Bodies Climate Change Reporting 2019/20, Sustainable Scotland Network, available sustainablescotlandnetwork.org/uploads/store/mediaupload/1343/file/SSN_AnalysisReport_2021.03.15.pdf 145 The first annual statutory monitoring report required under the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 was published in May 2021 and is available . climate-change-plan-monitoring-reports-2021-compendium/ 146 Available on the UK Climate Change Committee website

Chapter 3 Policies and Measures 259 Our ambition is for the Welsh public sector to be collectively net zero by 2030, radically reducing emissions from over 780 organisations. These organisations deliver vital public services including health and social care, protecting people and the environment, education, culture and the arts – they support and shape communities and have a shared focus on improving the economic, social, environmental and cultural wellbeing of everyone in Wales. Given the diverse nature of the organisations within the public sector the Net Zero Wales plan focuses on the highest emissions areas (sustainable procurement, mobility and transport, net zero buildings and land use) together with the actions of the largest emitting organisations (NHS Wales and local government). Sustainable procurement is also a key area requiring change. Research undertaken within the Welsh public sector has identified that the supply chains supporting the Welsh public sector account for circa 60% of their carbon emissions.
With £7bn spent annually by the public sector there is significant scope to leverage our spending power to consider alternatives to purchasing and where necessary to buy differently factoring in net zero Wales. The responsibility for this transformation lies with the public sector budget holders at the earliest stage of decision making and then transmitted through the procurement process and contract management. We want the public sector to procure from businesses that embrace net zero emissions and in doing so support low carbon suppliers as part of our wider transition to a net zero society. The below provides an overview of the support tools available and best practice and reiterates the mandated actions the public sector need to be leveraging to drive real progress. All public sector organisations should use the Routemap and Reporting Guide to develop and publish plans by Mar ch 2023 to achieve a collective net zero elsh Government’s plan to achieve net zero as an organisation by 2030 will elsh Government to include Net Zero Wales commitments in remit letters and sponsor arrangements with public bodies in Wales • Make Carbon Reduction Plans a mandatory part of tenders for W procurement contracts over £5m from April 2022 and prioritise products which are fully recyclable, multi-use or able to be re-purposed as part of a more circular All new public sector cars and light goods vehicles should be zero/ultra-low emission by 2025 and heavy goods by 2030 All public sector organisations should understand the sequestration potential of land in their ownership by Mar ch 2023 and commit to taking action to realise this ales is committed to the collective net zero ambition by 2030 delivering through the NHS Decarbonisation Strategic Delivery Plan ales and LG Social Care Decarbonisation Plan will be created to support the achievement of a collective net zero by 2030 In addition to the above policies, key commitments for 2021-2025 and strategic planning for both the Health and Social Care sector and local authorities have been mapped out in the

260 8th National Communication 3.18.10.2 Monitoring and evaluation Welsh legislation was designed to assess overall progress against the targets and budgets, by including reporting requirements after the end of each budgetary period. The Environment (Wales) Act 2016 requires Welsh Ministers to prepare and lay a statement after each budgetary period setting out whether Wales has met the budget and relevant interim targets. The statement must explain what the Welsh Ministers consider to be the reasons why the carbon budget and interim target has, or has not, been met. In particular, it must include the Welsh Ministers’ assessment of the extent to which their proposals and policies for meeting the carbon budget for the period have been carried out and have contributed to the carbon budget for the period being met (or not being met). This report must be laid before the end of the second year after the budgetary period, allowing time for the emissions data to be compiled from the Greenhouse Gas Inventory, which requires 18 months from the close of year. The Carbon Budget 1 period was from 2016 – 2020, which means we will report on the Carbon Budget 1 period in 2022, and we will report on Carbon Budget 2 in 2027. Under the Well-being of Future Generations framework we already have a monitoring approach that measures national progress in achieving the seven well-being goals. Our national well-being indicators tell the story of progress towards these goals and include measures of greenhouse gas emissions (both on a domestic and consumption basis). These are the national indicators most directly related to monitoring the impact of our Plans, but there are also many other indicators that the policies and proposals will influence. The Net Zero Wales Plan monitoring and reporting framework allows for more detailed tracking of the policies, including implementation. It provides insight into how the policies set out in the Plan contribute to meeting the targets and budgets for the period. The Monitoring, Reporting and Verification (MRV) system consists of a suite of quantitative performance indicators within a tiered structure, which seek to track progress from the national level down 3.18.11 Northern Ireland Executive The overall objective of the planning system is to further sustainable development. The Northern Ireland Regional Development Strategy 2035 (RDS) and the Strategic Planning Policy Statement for Northern Ireland (SPPS) provide the key guiding principles for planning in Northern Ireland and both recognise the need to mitigate and adapt to climate change. Engaging with a range of stakeholders; and applying best practice will ensure that the planning system is fit for purpose; evolves to reflect key developments in respect of sustainable development and climate change and that existing planning strategy, policy and legislation continue to address the climate change challenge. Northern Ireland has 100% of schools registered on the Eco-Schools Programme. The Eco-Schools Green Flag, awarded to schools with high achievement in their programme, is a recognised and respected eco-label for environmental education and performance. In Northern Ireland, the Eco-Schools Programme is operated by Keep Northern Ireland Beautiful, an environmental charity, and is supported by the Department of Agriculture, Environment and Rural Affairs and other organisations. Northern Ireland is ranked fourth out of the sixty-four participating countries for number of Green Flag Status Schools and was also the first country in the world to award a Green Flag to one of its schools. Chapter 3 Policies and Measures 261 3.18.11.3 Electricity Contracts The Department of Finance’s (DoF) Construction and Procurement Delivery (CPD) has established a collaborative contract for the supply of metered electricity to public sector buildings throughout Northern Ireland. The contract is sourced from 100% renewable electricity. This is an established approach which is now considered business as usual. CPD’s current unmetered electricity contract is also sourced from 100% renewable electricity and this approach will continue as contracts come up for renewal.
The Department of Infrastructure (DfI) is leading implementation of a Long Term Water Strategy for Northern Ireland (2015-2040), the objective of which is to deliver more sustainable, environmentally friendly and green solutions to managing our water. 3.18.11.5 Benefits of Hybrid Working Policy The Coronavirus (Covid-19) pandemic response demonstrated Northern Ireland Civil Service’ (NICS) ability to successfully adapt and innovate, and effective new ways of working and communicating emerged. A Hybrid Working policy is being rolled out across the NICS from June 2022. This will facilitate the majority of employees (c.75%) to adopt a mix of workplace- based and remote/home working. The Service is also continuing a roll out of 11 Connect2 hubs that will support hybrid working in the NICS by providing well-equipped remote working spaces in regional locations. One of the many advantages of these new ways of working is that it enables departments to achieve carbon reduction objectives with associated environmental benefits. The contributing factors are expected to be reduced daily commuting and less staff travel, the majority of which has necessarily been by car. 3.18.11.6 Scoring Social Value in Procurement The Executive has implemented a policy to enhance the delivery of social value from public procurement. The Policy includes themes and outcomes to target zero carbon in supply chains. From 1 June 2022 all public sector tenders for works and services must include a minimum weight of 10% for social value in assessing and awarding contracts. This 10% minimum will apply to contracts for services and works above the threshold where the Procurement Regulations apply. Measures, impacts and outcomes will be reported annually. The first report will be published in June 2023. The Northern Ireland Executive’s Energy Management Strategy147 aims to establish effective energy management processes that unlock value and lower net energy consumption by 30% by 2030 across Government (from a 2016/17 baseline year). The Department of Health, for example, continues to work with its Arms Length Bodies to promote the Public Sector Energy Management Strategy to realise energy efficiency savings through targeted investment to save. The Department of Justice (DoJ) is currently developing a Sustainability Strategy. It is anticipated that the Strategy, which will include actions on Travel and Transport, Energy and Carbon Emissions (non-travel), Water Management, Waste Management, Procurement, Biodiversity and Ecosystem and Corporate Social Responsibility will be submitted to the DoJ Board for approval in late spring 2022. 147

262 8th National Communication Ulster University has taken a strategic approach to managing its climate impact, involving multiple strands of providing vital research input, accelerating and mainstreaming tertiary level education for sustainable development, and estates and professional services strategically prioritising activities towards achieving net zero campuses – see Ulster University’s Sustainability Steering Group and associated Sustainable Leadership Working Groups provide a key forum for student, academic staff and professional services staff to collaborate and share best practice in a way that prioritises strategies towards Ulster University’s climate action and sustainability agenda. Ulster University has reduced its scope 1 and 2 carbon footprint by 60% since 2005/06. This reduction is attributed to a wider carbon management programme which has included significant investments in green buildings and infrastructure including building to BREEAM Excellent sustainability standards, a combined heat and power system, a ground source heating system, along with two large wind turbine generators and eight solar photovoltaic generation schemes which together generate 14.5% of the university’s electricity demand. For further information Queen’s University has invested some £10 million across its campus to date in over 80 energy efficiency projects, and more than half of the electricity consumed by the University is now generated on-site using low carbon technology. These initiatives will be strengthened further by the roll out of their forthcoming Strategy 2030. er expectations on how central and local government interact in the • Build on existing engagement with local actors thr ough the Local Net Zero Forum, which brings together national and local government senior officials on a regular basis to discuss policy and delivery options on net zero. o Programme to support all local areas with their capability and capacity to meet net zero. This includes provisions o Hubs) to support all areas of England to reach net zero, including those lacking capacity and capability, or those facing omote best practice and support local authorities to develop net zero projects that can attract commercial investment. ease knowledge sharing to demonstrate and share successful net zero Devolved and local government play an essential role in meeting national net zero ambitions. Across the UK many places have already made great strides towards our net zero future, having set their own targets and strategies for meeting local net zero goals. Taking a place- based approach to net zero is also vital to ensuring that the opportunities from the transition support the government’s levelling up agenda. Chapter 3 Policies and Measures 263 The combination of devolved, local, and regional authorities’ legal powers, assets, access to targeted funding, local knowledge, and relationships with stakeholders enables them to drive local progress towards net zero. Not only does local government drive action directly, but it also plays a key role in communicating with, and inspiring action by, local businesses, communities, and civil society. Of all UK emissions, 82% are within the scope of influence of Local leaders are well placed to engage with all parts of their communities and to understand local policy, political, social, and economic and environmental nuances relevant to climate action. The government currently works with the Core Cities Group, for instance, which undertakes a range of activities to promote climate change adaptation, raise awareness and foster leadership in cities. There is also the work of the Local Adaptation Advisory Panel, a forum between central and local government to promote adaptation locally.
Local government decides how best to serve communities and is best placed to integrate activity on the ground so that action on climate change also delivers wider benefits – for fuel poor households, for the local economy, for the environment and biodiversity, as well as the provision of green jobs and skills. Despite the excellent work already underway, we understand that there remain significant barriers to maximising place-based delivery on net zero. We know that some places are moving faster than others and that places and communities will face different challenges when meeting net zero commitments and adapting to climate change. and some of the hardest hit local economies that face multiple development and growth challenges are proportionally home to a greater number of lower skilled workers. Many of these areas are also where high-carbon industries are located. We also recognise that certain types of communities, such as rural and coastal communities, face significant and unique challenges. For example, the increased age of rural housing makes it both more difficult and expensive to introduce energy efficiency measures and rural communities also have greater reliance on cars. Similarly coastal communities face significant challenges as they may be vulnerable to more frequent flooding, rises in sea level, and accelerated coastal erosion which will have the potential to affect public services and infrastructure. However different types of localities may also have opportunities available to them that do not exist everywhere. For instance, coastal communities may be able to utilise tidal energy or industrial scale water source heat pumps, and rural areas may have access to There are currently no net zero statutory targets on local authorities or communities in the UK, and we do not believe that a new general statutory requirement is needed. This is because of the existing level of local commitment with the sector, and because it is difficult to create a uniform requirement that reflects the diversity of barriers and opportunities local places experience – we also do not want to place additional demands on the sector. However, we do understand that there is a real need to ensure local leaders across the board are supported by enhancing the capacity and capability of local areas to deliver net zero, coordinating engagement with local authorities, and clarifying expectations at a national level to accelerate local progress towards net zero. Central and local government will need to work closely together to deliver net zero and our interim carbon budgets. Government analysis suggests that over 30% of the emissions 148 European Commission Free allocation of allowances in the EU ETS,

264 8th National Communication reductions needed across all sectors to deliver on our Carbon Budget 6 target, as set out in this strategy, rely on local authority involvement to some degree.149 The government will continue to set UK-wide priorities for meeting carbon budgets and for assessing how each sector will help meet those budgets. Local government has a key role in integrating delivery at a local and regional level to deliver more cost-effective routes to net zero and derive local co-benefits that embed climate action in the heart of local places and services. By taking this approach, we can achieve even more for net zero and for the economy locally and nationally; we recognise that a one-size-fits-all approach will not work. We want to build strong partnership working between central, devolved, and local government, increase the co-ordination and better support all levels of government to utilise the influences available to them. We want to continue to empower our local leaders to take the actions which will lead to the biggest gains in emissions reduction, including the potential opportunities in building back greener and meeting our ambitions to level up the country. While the Coronavirus (Covid-19) pandemic has severely impacted our communities, it has also reshaped how we think about place, community, and our natural and built environment. Community empowerment, engagement, and action can play a role in supporting the UK’s transition to net zero and enable communities to access the benefits that it brings, from greener jobs to improved health. Communities are especially well placed to help raise awareness and engage people in adopting net zero behaviours. For example, community ownership of renewables and other assets, often in partnership with other organisations, can be an important driver of reducing local emissions. It can also enable people to learn more about climate change and build sustainable behaviours. We will continue to provide support for public and private investment opportunities in local places that will enable the local delivery of emissions savings across the sectors. In the sector chapters we have shown the range of programmes from building retrofit, heating, electric vehicle charging and many others where funding will go to local government to deliver action nabling local areas to deliver net zero To support all local government in developing and delivering their net zero delivery plans, we have committed to act in three key • Setting clearer expectations for local places clarifying how the partnership with nment should work, and considering how action at national, regional, local, and community levels fits together to tackle the emission and climate risk challenges we face, and the wider benefits the transition brings. Providing resources for local places to deliver national net zero targets, across dedicated funding streams for net zero and non-ringfenced funding, noting the number of broader priorities on which local 149 BEIS, Free allocation of allowances in the UK ETS, participating-in-the-uk-ets/participating-in-the-uk-ets#free-allocation

Chapter 3 Policies and Measures 265 • Building capacity and capability at the local level to support ambition and share best practice, while also providing support in areas that may not have made as To act effectively across these areas, and for local government to translate national goals into local action, we will build on our existing engagement to improve the way local and national government collaborate on net zero.
The Department for Business, Energy and Industrial Strategy (BEIS) has overall responsibility for improving coordination with local government and other local actors on the effective design and delivery of local net zero policies, as part of the Department’s overall responsibility and wider leadership on delivering net zero. Other departments lead on their specific policy areas such as Department for Transport on the decarbonisation of transport. We are building on many of the existing ways of working together to provide more consistency and clarity over roles and responsibilities between national and local government. We have established a Local Net Zero Forum to ensure that there is direct input from local leaders. Chaired by BEIS, the Forum will be cross departmental and bring together national and local government senior officials on a regular basis to discuss policy and delivery The Forum will build on our existing engagement mechanisms through the representative bodies such as the Local Government Association (LGA), Association for Public Service Excellence (APSE), Core Cities Group and the Association of Directors of Environment, Economy, Planning and Transport (ADEPT). The creation of the Forum also draws on the recommendations for a policy framework put forward by member network UK100. The Forum will support the establishment of clearer delivery roles for local government and provide a single engagement route into HM Government in a coordinated and coherent way. On adaptation, local actors will be supported through increased Environment Bill powers to take effective action, reduced financial burdens from waste management and stronger abilities to improve health and social outcomes for local citizens. Achieving our aims requires national decision makers to have the right knowledge and awareness to understand the local impacts of decisions. BEIS will work with other departments and stakeholders to demonstrate successful net zero system solutions by creating a network of experience that amalgamates learning through case studies and non- We have already developed a Carbon Literacy toolkit for the delivery of Carbon Literacy training for local authorities. This training has been made available to all local authority staff and aims to increase awareness and ability to reduce emissions across all the policies and programmes local government work on. BEIS has created a sector course and places like Manchester and Sheffield are among the early adopters who have trained staff Funding for local climate action comes from a combination of the Local Government Finance Settlement, other government grants and support schemes, borrowing, and private finance. Collectively, this means there is a range of funding available for local authorities to act on climate change, including innovative financing structures and partnership working. An important part of the funding landscape is the diverse range of grant funding schemes provided by HM Government to support local delivery. We recognise that longer term and more co-ordinated funding streams can enhance innovation and investment, reduce

266 8th National Communication bureaucracy, and encourage more efficient and integrated decision making. We are exploring how we could simplify and consolidate funds which target net zero initiatives at the local level where this provides the best approach to tackling climate change. Building on the vision in the Prime Minister’s Ten Point Plan, we also will work across departments to explore how we can give certainty to investment in longer-term programmes supported by In addition to the above, the UK Infrastructure Bank (UKIB) will lend to local authorities for strategic and high value projects and invest in projects alongside the private sector, crowding in private sector capital. It has twin objectives of helping to tackle climate change, particularly meeting the UK’s net zero emissions targets and helping to support regional and local economic growth across the UK. The UKIB will offer loans to local authorities for high value and strategic projects of at least £5 million. To complement this investment activity, over time, the UKIB will develop an expert advisory service to help local authorities develop and finance projects. The UKIB will build partnerships across the UK including with government departments, government sponsored bodies, local authorities and relevant representative organisations to foster collaboration and drive value for money. As it engages with the market, the UKIB will continue to learn and adapt, which will ensure that its loans to local authorities The UKIB is currently operating in an interim form, as it expands its capability and capacity. It will continue to refine the Local Authority Lending Function over the coming months. BEIS will continue to work with partners and the finance sector to develop new finance and business models to support local delivery. These business models will look to develop aggregated projects and portfolios of projects building up scale and spreading delivery risk more effectively for investors. 3.19.4.2 Sectoral priorities at a local level We understand that for local areas to deliver net zero they will need specific support to plan and identify priorities across different sectors. Decarbonisation of our buildings, transport systems and energy system will require significant action at a regional and local level. Generation and storage are becoming increasingly decentralised, with solar and batteries being deployed in buildings, vehicles, and local communities. Heat and transport decarbonisation in particular needs to be delivered in a way that meets local needs and with the involvement of local decision makers. Decarbonisation will require strong co-ordination across electricity, heat, hydrogen, transport, and buildings. That means local actors can be strong drivers of change, enabling coordinated non-spatial planning and engagement with markets, and supporting cleaner, cheaper and more efficient energy whilst providing a significant contribution towards local economic strategy. Better engagement and information sharing across organisations can enable better forward- planning and a more coordinated approach. BEIS has work underway with Ofgem to develop a better understanding of the opportunities and challenges presented by local area energy mapping and planning (LAEMP) and are considering the most appropriate policy options to take forward. This work could help to bring together key local stakeholders to explore the impact of decarbonisation choices across sectors and how different technology options may impact on local energy networks.
The Government has committed up to £104 million of funding through the Industrial Strategy Challenge Fund to Prospering from the Energy Revolution (PFER). This is an innovation

Chapter 3 Policies and Measures 267 programme which develops smart local energy systems to provide investable, scalable local business models and finance mechanisms using integrated approaches to deliver cleaner, cheaper energy services. The Programme is running until 2023 and to date has co-funded and developed several initiatives ee large-scale smart energy systems demonstrator projects to show how integrated intelligent local systems can deliver power, heat, and mobility to users in 10 detailed design projects undertaking analysis of the energy assets and consumers in specific local areas and assessing the technology options for oaches to accelerate the journey to net-zero. Concurrently, they are also developing the business models, market approaches and investment options for implementing the final energy system designs in these cities and regions. ojects to research and develop key technology components that could make smart local energy systems more efficient and effective. ogramme also funds two important initiatives to increase knowledge and share best practice, for the benefit of everyone working to make the energy revolution a reality. These are EnergyRev, a large multi-university research consortium, and the Energy Revolution Integration Service (ERIS) run by the Energy Systems Catapult. ERIS has developed Net Zero Go, an online platform to offer practical support to help more councils deliver clean energy projects that help meet net zero targets, and support a homegrown, secure UK energy system. The PFER programme is designed to work across a range of different areas including big urban conglomerations, cities, towns, industrial regions, regeneration projects and rural communities. Each of these face different challenges and opportunities in reaching net zero and the programme seeks to identify the economic as well as the social and environmental benefits of delivering integrated smart local energy systems, not just for the place but The government also provides funding to deliver programmes that support decarbonisation through the Local Net Zero Programme which is supporting Local Enterprise Partnerships, local authorities, and communities in England to play a leading role in decarbonisation and clean growth. Almost £24.5 million has been invested in the Local Net Zero programme to date, including funding for the creation and continuing support of 5 Local Net Zero Hubs. The Hubs promote best practice and support local authorities to develop net zero projects that can attract commercial investment. To date, the Hubs have leveraged £71.9 million private investment and are currently supporting local authorities to develop a project pipeline with a capital value of £3.6 billion, including a £2 billion Industrial Decarbonisation project in Local Authorities have been, and will continue to be, key delivery partners when it oving the housing and building stock across the country, especially through integrating activity on energy efficiency, heating and retrofit. This has been recognised in recent years through their delivery of Green Home Grants, Home Upgrade Grant, and heat networks. As demonstrated in previous chapters (Heat and Buildings), local delivery of these schemes has been integral in reducing carbon emissions and supporting local economies. For example, over 200 local authorities have taken part in phase 1 of the Green Home Grants Local Authority Delivery Scheme (LAD) which is focused on low-income households in homes that most

268 8th National Communication need energy efficiency upgrades. Phases 1 and 2 of the Local Authority Delivery schemes aim to support around 50,000 households who will benefit from energy efficiency upgrades, making it easier and cheaper to heat their homes. Through the first two phases of the scheme, over £500 million was awarded to local authorities. The Social Housing Decarbonisation Fund will upgrade a significant amount of ently below EPC C up to that standard, delivering warm, energy-efficient homes, reducing carbon emissions and fuel bills, tackling fuel poverty, and supporting green jobs. The 2020 Summer Economic Update announced the SHDF Demonstrator project, launched in 2020, which has awarded around £60m of funding to social landlords across England and Scotland to test innovative approaches to retrofitting at scale, seeing up to 2000 social homes improved to at least EPC band C and supporting around 1,200 local jobs. Wave 1 of the SHDF will look to provide around a further £179m of funding for the SHDF for financial year 2021/22, with delivery to 2023. SHDF Wave 1 will see energy performance improvements to around 20,000 social housing properties, reducing bills and carbon emissions. As part of the 2021 Spending Review process, £800 million of additional funding was secured for the Social Housing Decarbonisation Fund (SHDF) for the period of FY2022/23 to FY2024/25. nment has also delivered the Public Sector Decarbonisation scheme which provides grants for public sector bodies to fund heat decarbonisation and energy efficiency measures. We have already made over £1 billion available through the Public Sector Decarbonisation Scheme over 2020/21 and 2021/22 to support heat decarbonisation and energy efficiency in the public sector, and a further £1.425 billion will be invested over 2022/23 to 2024/25. eferenced in our Net Zero Strategy and Heat and Buildings strategy, decarbonising public sector buildings will demonstrate leadership, encouraging action in other sectors as well as making a direct contribution to Net Zero. National planning policies already recognise the importance of sustainable development and make clear that reducing carbon emissions should be considered in planning and decision making. The National Model Design Code provides tools and guidance for local planning authorities to help ensure developments respond to the impacts of climate change, are energy efficient, embed circular economy principles, and reduce carbon emissions. The government is considering how the planning system can further support our commitment to reaching net zero. We will make sure that the reformed planning system supports our efforts to combat climate change and help bring greenhouse gas emissions to net zero by 2050.
For example, as part of our programme of planning reform we intend to review the National Planning Policy Framework to make sure it contributes to climate change mitigation and adaptation as fully as possible. July 2021, the government published its Transport Decarbonisation Plan, which sets out the commitments and the actions needed to decarbonise the entire UK transport system. One of the six strategic priorities of the plan is developing solutions that consider the needs of different locations, highlighting the importance of tackling emissions at a local level to ensure that every place in the UK has its own net zero transport network by 2050, serving the unique To support this, we will publish new guidance on local transport plans that will support local transport authorities to bring their local transport plans in line with current government priorities including decarbonisation. Alongside the updated local transport plan guidance we

Chapter 3 Policies and Measures 269 will publish standalone guidance for local transport authorities on quantifiable reductions in local transport in line with the commitment made in the Transport Decarbonisation Plan, to make quantifying carbon reductions a fundamental part of planning and funding. Both pieces of guidance will be published in Autumn 2022. We have also published a Local Authority Transport Decarbonisation Toolkit to help local authorities reduce emissions from transport. It provides guidance to local authorities in planning and delivering measures to reduce carbon emissions from transport by highlighting the benefits of different interventions, setting out the key actions local authorities can take, sharing best practice and lessons learnt and signposting to other published guidance Local green infrastructure and the environment As outlined in Chapter 5, we understand that many issues concerning green infrastructure and the environment are geographic and context specific. In responding to localised climate change risks, we commit to work closely with local authorities to ensure communities are consulted in planning, designing, and implementing activity in this space. The Environment Act 2021 established a new system of spatial strategies called Local Nature Recovery Strategies (LNRS) to target action for nature and to drive the use of nature-based solutions to tackle wider environmental challenges like climate change. It is expected that there will be around 50 Local Nature Recovery Strategies covering the whole of England with no gaps and no overlaps. Preparation of each LNRS will be locally led (likely by County Councils or Combined Authorities), evidence-based and collaboratively produced, involving public bodies, land owners/managers and stakeholders. This will provide local government with a new tool through which they can work with local partners to identify where effort to create or restore habitat would have greatest benefit for climate mitigation, whilst also having positive benefits for nature and the wider environment. On green infrastructure, the Government committed in the 25 Year Environment Plan to introduce stronger new standards for Green Infrastructure (GI). Natural England will launch the new GI Framework in 2022, and has already published GI Principles and Mapping to help planning by local authorities and developers. As part of the £200 million Flood and Coastal Resilience Innovation Programme, we have allocated £36m over 6 years, to develop a ‘Coastal Transition Accelerator Programme’ to trial opportunities, in a small number of coastal areas at significant risk of coastal erosion, to transition and adapt to a changing climate. The EA is currently working with coastal authorities on a £1 million refresh of Shoreline Management Plans (SMPs) to ensure that they are up to date, using the best evidence in their recommendations and focus attention on priority areas for investment and adaptation. 3.19.5 A universal offer to harness opportunities across the UK We are committed to supporting all local areas and communities, ensuring that none are left behind and creating net zero solutions which work for all of them. As we are reducing emissions across the economy, we must also ensure that the transition to net As outlined above, BEIS runs the Local Net Zero Programme to support all local areas capability and capacity to meet net zero and government. The programme has developed over time and now takes a place-based approach to tackling net zero in the round, covering all net zero issues. The programme directly helps places make faster progress towards net

270 8th National Communication zero, improves cost-effectiveness, and significantly increases the economic benefits of the green industrial revolution by attracting commercial investment and supporting green jobs. The programme focuses on all areas of England, including those lacking capacity and capability, or those facing unique challenges, such as rural and coastal communities. The programme ensures that all local areas can engage on issues relating to net zero. Case Investing in industrial heartlands The government has invested £95 million for two new offshore wind ports to be constructed in the Humber region and Teesside, boosting the UK’s world-leading industry, and creating thousands of new jobs in the North. Able Marine Energy Park, on the South Bank of the River Humber, will receive up to £75 million government investment, and Teesworks Offshore Manufacturing Centre, on the River Tees, will benefit from up to £20 million. Construction will begin later this year to upgrade the two ports with new infrastructure – helping to revitalise these historic industrial heartlands. Together these new ports will have the capacity to house up to 7 manufacturers to support the development of the next-generation offshore wind projects, boosting the UK’s offshore wind manufacturing base while directly creating up to The Government has embedded a net zero principle in initiatives which target different types of places, such as the Levelling Up Fund, the Towns Fund, and the Shared Prosperity Fund. This is to ensure that all funded schemes have considered how to align with our net zero ambitions. We will continue to monitor the impacts of these schemes and strengthen these criteria if necessary.
We will take the same approach with other new schemes and priority The Levelling Up White Paper set out the future role for Local Enterprise Partnerships (LEPs), ensuring local businesses continue to have clear representation and support in their area to drive the green recovery from the Coronavirus (Covid-19) pandemic. LEPs have played a significant role in providing advice and incentives for businesses to reach net zero. As LEPs are integrated into Mayoral Combined Authorities and other local government institutions, we remain committed to ensuring a strong local business voice is retained, particularly to support businesses to transition to net zero. In England, the government works closely with local government, and Defra hosts the Local Adaptation Advisory Panel (LAAP), a forum for dialogue on climate change adaptation between local authorities, central government, and delivery bodies. This group produced a good practice guide on adaptation for local government, with the Association of Directors of Environment, Economy, Planning and Transport (ADEPT), who published it in 2019 Case the Green Recovery Challenge Fund The government’s £80 million Green Recovery Challenge Fund is kickstarting over 150 nature projects across England. For example, the Wildfowl and Wetlands Trust was awarded £1.58 million to create and restore 130 hectares of nature-rich wetland habitat along the Somerset coast. This habitat will help increase flood resilience, improve soil, water quality, and help absorb carbon, increasing the robustness of the county’s coastline overall. The GRCF is also support green jobs and is currently on track to support up to 2,000 jobs by the end of 2021, rising to up to 2,500 by the time all projects are

Chapter 3 Policies and Measures 271 3.19.5.1 Working with local communities To ensure that all parts of the UK benefit from the transition to net zero we also want local communities to take bold action that supports the transition. Local communities benefit from strong relationships and ties to their areas and their local authorities; these can be key to reducing emissions across the economy and making sure people stay engaged in the process. Where local authorities and communities work together effectively, we have already seen significant improvements in both delivery and in wider public engagement. Some very ambitious campaigns on food, recycling, water, and other areas critical to climate action, have been launched and run by pioneering local communities and activists. Community projects can also act as a catalyst for raising public awareness and Community groups can bring together people, finance, and ideas to have a real impact on the behaviours, infrastructure, and attitudes locally. Community cohesion and grassroots initiatives are also central to locally based resilience to climate change risks, such as Government understands the important role that communities have in the transition to net zero. Through the introduction of UK-wide growth funding schemes, such as the UK Shared Prosperity Fund, the Levelling Up Fund, and the Towns Fund, Government is enabling local areas to tackle net zero goals in ways that best suit their needs. For example, The Towns Fund has awarded over 23.6m to Glastonbury Town which includes the Glastonbury Clean Energy project that aims to generate renewable energy for use by other projects within the Plan, as well as local businesses and residents. Government also works with community groups, both geographic and communities of interest, such as sports clubs, faith groups, and youth groups, on net zero issues. For example, BIES is supporting the Greener and Cleaner Bromley Project in South London, which is a community space, run by local people wanting to support their community with greener and more sustainable living, from drop-in conversations and questions answered to workshops, talks, lending schemes and more. Clay Cross, in Northeast Derbyshire, was one of the 101 Towns invited to develop a Town Investment Plan. The plan, submitted to Government in October 2020, set out their ambition to establish the town as an exemplar at the forefront of the low carbon revolution. This involved working with established local businesses, including the key local employer Worcester Bosch, to deliver innovation in clean energy and showing the potential to deliver a net zero economy. By 2030 they hope to be able to show significant reductions in the overall levels of emissions by ensuring clean growth principles underpin investment. These ambitions will be realised through a cohort of projects which include the development of a low carbon energy strategy for the town, a low carbon energy demonstrator project linked to the rebuilding of the local leisure centre, low carbon workspace and housing proposals, and a skills and enterprise training centre, which will have an emphasis on providing energy industry related skills. 272 8th National Communication Community Energy is an example of how communities can come together to reach local and Government has provided support to community energy projects through the Rural Community Energy Fund (RCEF), a £10 million fund to supporting community-run projects in England that benefit the energy transition to net zero. The fund is currently in delivery stage and has provided development grants to 208 projects which focus a variety of technologies including solar, wind, low carbon heating and electric vehicle charging. Communities have predominantly financed their schemes commercially through share offers and borrowing. The Government is also supporting Community Energy Groups to work closely with Local Authorities by funding a Pathways programme with Community Energy South. The Pathways programme provides local authorities with support to develop community led energy groups and projects across England, this helps to both reduce emissions and ensure that communities can benefit from locally owned renewable energy. In addition, BEIS has worked closely with Community Energy England to develop and maintain their knowledge sharing role which includes peer mentoring. This resource can help communities develop their own schemes across heat and power generation, transport, energy efficiency, and also wider Ofgem also supports community energy projects and following a consultation process has announced that it plans to welcome applications from community interest groups, co-operative societies, and community benefit societies to the Industry Voluntary Redress Scheme.
This will allow groups to apply for funds to deliver energy related projects that support energy consumers in vulnerable situations, support decarbonisation, and will benefit people in England, Scotland, and Wales. To build on our existing actions, we intend to continue to work closely with Community Energy England and have established a Community Energy Contact Group. to strengthen our engagement with the community sector. As well as seeking to embed climate objectives into all Scottish Government community funding programmes, there are a number of grant funds that directly support local climate action. This includes funding for active travel infrastructure and for community and local energy projects through mechanisms such as the Community and Renewable In addition to grant funding, the Scottish Government is building a network of regional community climate action hubs across Scotland to provide a strategic regional approach to climate change action. These will support communities to identify the actions that are most appropriate for their needs, promote collaboration between groups, foster peer-to-peer learning, develop new community climate action and help groups take advantage of funding opportunities. Two pathfinder hubs were launched in September 2021. In addition, the Climate Action Towns initiative announced in March 2021 involves seven small towns, in the first instance, providing them with support to develop local plans focused on climate action. 150 HMT (2021), ‘Net Zero Review’

Chapter 3 Policies and Measures 273 3.20 E mpowering the public and business to make green choices e how to improve and enhance public facing climate content and advice on gov.uk. We will also enhance our digitally-led Simple Energy Advice (SEA) service to provide homeowners with personal, tailored advice on improving and decarbonising their homes, including tailored retrofit advice in local areas, and links to local, accredited, trusted installers. Continue supporting UK businesses to meet their net zero commitments, including exploring a government-led advice service that consolidates and simplifies advice ease awareness of net zero and empower businesses and the public to make green choices, by building on government communications and engagement, and exploring providing environmental impact labelling of products, goods, and services. een choices affordable and easy by working with businesses and industry to set strong regulatory signals and collaborating to reduce costs and provide better quality, longer lasting and lower environmental impact products, and services. Together we are moving towards a net zero society, led by technological innovation. We will see transformations to our economy, society, and the way we live and new low carbon technologies, infrastructure and job opportunities; cleaner air, greener spaces and reduced flooding; and changes to everyday life such as in the way we travel, heat our homes and save our money. To reach net zero, everyone will need to play their part. We know that public concern about climate change is high – with 80% in the UK either concerned or very 151. We also know that people and businesses recognise that change must happen – 80% of respondents in a recent survey believe the way we live our lives will need to change 152. Equally, however we know that the public is unsure of what net zero will mean in practice, what steps they can take, or they face barriers that stop them from 153 This chapter sets out how government will support individuals and businesses to make green choices – an act of choosing the more, or most, sustainable option from a range of possibilities, such as using an electric vehicle instead of a petrol or diesel vehicle when it is time to change your family car, replacing an old gas boiler with a heat pump, or switching to innovative green financial products. Our goal is to make the act of choosing green significantly easier, clearer and cheaper. We recognise that the best way to do this is to go with the grain of existing behaviour and trends and by working closely with partners like Local Authorities, voluntary sector organisations, social enterprise regulators, and businesses, who all play an important role in how we use and choose different services. 151 BEIS Public Attitudes Wave 37 – Key findings, 152 BEIS Research Report 2021/034, ‘Climate change and net public awareness and perceptions, Annex 1: data tables. 153 BEIS (2021), ‘Net zero public dialogue’

274 8th National Communication 3.20.4 T he role of green choices in meeting net zero There are numerous individual actions – some one-off and some we take regularly – that people can take to contribute to our pathway to net zero. These individual actions combine to create wider systemic change required to meet net zero. New analysis on green choices has helped us to identify choices and behaviours that impact on net zero, broadly falling into Adopting new low carbon technologies, such as switching to zero , technologies, or services more efficiently, such as using smart meter- enabled ‘time of use’ tariffs which reward consumers financially for using energy at off-peak times, or when there is excess clean energy available. Everyday business and consumer choices, such as choosing green financial oducts like the recently launched NS&I Green Savings Bond, or seeking more responsibly invested pension schemes. We want to better understand the behavioural factors that need to be considered in the policies required to meet net zero. The Government Chief Scientific Adviser and Government Office for Science will be producing a scenario-based foresight report to understand the system wide implications of these factors, to be published this year. ur approach for supporting green choices We know that people want to play their part in achieving net zero. Our approach for how government will empower everyone to make green choices is underpinned by six principles. 155Although they were developed with the public in mind, many of them equally apply to green choices taken by businesses, particularly medium or small enterprises. The principles reflect wider public engagement from across the country and Parliament. Public engagement, including through communications campaigns such as Together for Our Planet, plays a significant role in driving green choices.
We will deliver public engagement Communicate a vision of a net zer o 2050, build a sense of collective action, improve understanding of the role different actors play in reaching net zero, and how and e there is trusted advice and support for people and businesses to • Mobilise a range of actors and stakeholders to increase and amplify their communication and action on net zer • Give people opportunities to participate in and shape our plans for reaching net o, thereby improving policy design, buy-in and uptake of policies. 154 Net Zero Societal Change Analysis Project, Energy Systems Catapult Research, June 2021. 155 This draws on work commissioned by BEIS from the Behavioural Insights Team ‘Net principles for successful behaviour change initiatives’, The Behavioural Insights Team. BIT conducted a rapid evidence review of relevant literature, compiled a total of 87 policy case studies from OECD countries and consulted with 10 experts from a range of behavioural and social sciences. Chapter 3 Policies and Measures 275 3.20.6 Principles underpinning green public and business choices 3.20.6.1 Principle 1: Minimise the ‘ask’ by sending clear regulatory signals By targeting measures at an industry level, rather than at the individual consumer, we can make green choices much simpler for the consumer. This will also help grow a stronger market for low carbon goods and give businesses clear, early signals. The UK ETS does this through enshrining in law the cap and its decreasing trajectory and therefore sending a clear signal to businesses to decarbonise. Other examples include, the 2030 phase out date for petrol and diesel cars and vans sends a signal to industry and will improve the availability and quality of zero emission vehicles on the market. Similarly, as set out in the Heat and Buildings Strategy, we will introduce a range of policies that will bolster the low carbon heating market, creating new opportunities for business, and better choice for the consumer. We are taking action to ensure that products are more sustainable, both in relation to their energy efficiency during use and use of materials over their lifetime (resource efficiency) through developing proposals for new regulatory product standards and better consumer information. We are exploring updating and expanding ‘Ecodesign’ product regulation which sets minimum requirements to phase out the least energy and resource efficient products 3.20.6.2 Principle 2: Make the green choice the easiest By addressing all the major, practical barriers to individual behaviours we can make it easier for people to make green choices. We will ensure that we take a consumercentred approach to net zero policy design, removing frictions and minimising disruptions to people’s lives. In our Transport Decarbonisation Plan, we have committed to better integrating transport modes, with more bus routes serving railway stations and improved integration of cycling and walking networks, so that opting to make a green travel choice is easier. This is in addition to delivering interventions to enable more people to walk and cycle for short journeys such as a national e-cycle support programme. Our vision is that half of all journeys in towns and cities will be cycled or walked by 2030. We are also committed to increasing road vehicle occupancy. This will help decarbonise and decongest our roads. In April 2022, we published guidance for local authorities on support for shared car ownership and shared occupancy schemes and services156 and are continuing to build our evidence base to understand the barriers and potential policies to increase the uptake of shared mobility. We are committed to removing inconvenience and increasing availability of green choices. Following the commitments made in our Resources and Waste Strategy, the Environment Bill will introduce powers that will allow us to require separate food waste collections in all local authorities in England, which will help people to reduce emissions from food waste with ease. 3.20.6.3 Principle 3: Make the green choice affordable We are already seeing the upfront cost of green choices, such as electric vehicles, drop. We are looking across all sectors to see how we can continue this trend and make green choices Through the Smart Export Guarantee (SEG) energy suppliers are moving to increasingly innovative tariffs which support electric vehicle deployment while continuing to enable households to access a market-led route for exporting and receiving payment for their unused electricity. As committed to in our Heat and Buildings Strategy, the Boiler Upgrade 156

276 8th National Communication Scheme will provide grants to help households transition to low carbon heating. We are also supporting motorists through plug-in vehicle grants, which provide support towards the upfront purchase of eligible cars, vans, motorcycles, and trucks. We are supporting the public to both save and contribute towards public spending that helps the UK reduce its emissions through the NS&I Green Savings Bond. The Green Finance Institute and Abundance Investment, supported by UK100, Local Partnerships and Innovate UK, have also launched a national campaign to help local authorities issue a type of municipal finance investment – Local Climate Bonds. For citizens, the Local Climate Bond provides a low-risk and fixed return investment, and a way to mobilise their savings to help tackle the 3.20.6.4 Principle 4: Empower people and businesses to make their own choice. Consumer preference can shape producers’ decisions, but sometimes consumers and businesses lack clear information to make informed choices. As announced by the chancellor in his Mansion House speech in July 2021, we will work with the Financial Conduct Authority to introduce a sustainable investment label – a quality stamp – so that consumers and retail investors can clearly compare the impacts and sustainability of their investments for We plan to help empower people to make informed choices about the goods and products they buy and services they use by exploring how we better label these with their emission intensity and environmental impact.
We are also exploring the use of product labelling to show the durability, repairability and recyclability of products, as well as their environmental footprint with a view to stimulating demand for better quality items. We continue to explore the evidence base for environmental labelling within food production and disposal, including the most accurate methodologies to monitor and verify the carbon emissions, and environmental impact, of food items. We are providing tailored advice and support to homeowners on what they can do to improve their homes. Our Simple Energy Advice service has already had over 1.7 million users, providing homeowners with personal, tailored advice for improving and decarbonising their homes and links to local, accredited, trusted installers. Homeowners can also find out about government schemes for which they may be eligible. We will enhance the digitally led service and are considering options to support tailored retrofit advice in local areas, supported by tailored local advice. This includes moving our Simple Energy Advice service to gov.uk, which will improve user experience, and supporting local advice provision. We are also reviewing other existing digital information and advice services related to net zero and exploring how to improve wider existing public-facing net zero content and We know that technologies can also improve public understanding of energy use and energy efficiency. In-Home Displays for smart meters give accurate information about energy consumption to help households easily understand how to use less energy and save money on their bills. Building on this, the Smart Energy Savings initiative is trialling how innovative products and services can use smart meter data to provide consumers with advice on how to manage their energy use. At the end of March 2022, there were 28.8 million smart and advanced meters in homes and small businesses across Great Britain.157 157 Smart metering statistics, Quarterly update March 2022,

Chapter 3 Policies and Measures 277 3.20.6.5 Principle 5: Motivate and build public acceptability for major changes Achieving our net zero target must be a shared endeavour. It is therefore vital that we listen to the publics views on how to reach net zero. We already regularly invite the public to shape policies on net zero through consultations and deliberative dialogues. Since 2019, we have run, funded, or are still running deliberative dialogues on a range of net zero issues, such as green choices, homes, heating, transport decarbonisation, green savings, hydrogen, food, Carbon Capture Use and Storage (CCUS) and Advanced Nuclear Technologies (ANT). To ensure that the transition to net zero is fair and affordable, and does not negatively impact disadvantaged groups, we are committed to assessing the impact of our net zero policies. We consult on policy changes, and we will continue to make it easier for people and businesses, including those who are most marginalised, to feed into key policy The Devolved Administrations have a range of initiatives aimed at engaging and motivating the public around net zero and climate The Scottish Government launched a draft Public Engagement Strategy for Climate Change in December 2020, and the final report of Scotland’s Climate Assembly was laid in Scottish The Welsh Government Engagement Approach for Low Carbon Delivery Plan 2 was published in June 2021, encouraging collective action on climate change through four In March 2021, the Northern Ireland Executive unveiled a new digital climate action campaign, delivered by MyNI in the run up to the COP26 conference. It aims to raise climate awareness, encourage change, enable action, and exemplify climate leadership. 3.20.6.6 Principle 6: Present a clear vision of how we will get to net zero and what the role of people and business will be Businesses have significant power to drive change towards achieving our domestic net zero goal. Our approach to supporting businesses to deliver this change will need to be differentiated by business size and sector, as these factors will influence the ease with which a net zero target and other relevant actions can be adopted. We have seen significant numbers of companies signing up to science based targets alongside sector-specific ambition being put forward already. For example, Water UK has launched the world’s first sector-wide plan to deliver net zero carbon emissions by 2030. We know that businesses account for 18% of UK territorial emissions and so encouraging them to take action to reduce their emissions is important158. But just as vital is the role businesses are playing in designing the ground-breaking new technologies, world leading products and innovative approaches that we need to develop the low carbon economy and enable others to reach net zero. Collaboration across sectors and value chains will enable us to innovate faster, create stronger incentives for investment and drive down costs for low carbon alternatives through the global mechanisms laid out in the Paris Agreement. To underline the importance of this area, the Prime Minister appointed a net zero Business Champion, Andrew Griffith MP , to spearhead business engagement nationwide in the year to COP26. Already over half of the FTSE100 companies have committed to Science- 158 ONS, Provisional UK greenhouse gas emissions national statistics 2020: statistics/provisional-uk-greenhouse-gas-emissions-national-statistics-2020

278 8th National Communication Based Targets by joining the global Race to Zero campaign. Alongside engaging large corporates, the Net Zero Business Champion has led a campaign targeting small and micro businesses across the UK. Over 1,900 have joined the Race to Zero to date by visiting the Business Climate Hub, developed in partnership with a global business coalition led by the International Chambers of commerce. Companies, particularly large businesses, once they have joined the Race to Zero, should work with others to drive breakthroughs in their sectors, regions, and support SMEs in their value chains to take action. We’re encouraging Business Representative Organisations (BROs) to become Race to Zero Accelerators by recruiting members into the Race to Zero. To be recognised officially as an Accelerator, businesses must recruit at least 20% of members not already in Race to Zero by COP26.
Many businesses across the UK have said they want to tackle climate change, but that they don’t know where to start159. Through the small business campaign, government has taken an important step towards making net zero relevant to SMEs by helping them access the support they need. Beyond COP26 we will continue to support UK businesses to meet their net zero commitments, including exploring a government-led digital advice service that consolidates and simplifies advice, funding, and other support on net zero. For larger businesses, we want to ensure businesses are aware of their energy and carbon use so they can take action towards reaching net zero. Climate risks must be assessed and disclosed through the Task Force on Climate-related Finance Disclosures (TCFD). This is complemented by Streamlined Energy and Carbon Reporting, which requires energy and emissions reporting in all UK large businesses to improve awareness of energy costs. We also require large businesses and their corporate groups to carry out a broader assessment of their energy use from buildings, transport and industrial processes every 4 years under the Energy Savings Opportunity Scheme (ESOS), which is designed to identify practicable and cost-effective energy saving opportunities. In the future building users and decision makers will be able to compare the performance of their buildings to other similar buildings using a performance-based energy rating to support targeted investments. Government will work in partnership not just with businesses themselves, BROs, sector- based trade associations, business groups in the Devolved Administrations and local and regional organisations to translate the pathways within this strategy into business specific The Scottish Government’s work to encourage and enable a shift in climate change behaviours is closely aligned with the Public Engagement Strategy which is 3.20.8 Northern Ireland Executive One of the key principles of NI’s Energy Strategy is to place consumers at the heart of our energy future by making energy as simple as possible for everyone and developing policies that enable and protect consumers through the energy transition. In order to achieve this vision, the Strategy includes an objective to ensure the public and businesses are informed, empowered, supported and protected to enable them to transition to decarbonised solutions 159 BEIS W11 Kantar Attitudes Tracker, Jan 2021 (Question: % agree that as a business we have a responsibility to reduce our carbon emissions to tackle climate change)

Chapter 3 Policies and Measures 279 The Energy Strategy includes a number of key policies to empower the public and business • Establish a ‘one stop shop’ to deliver trusted information, advice and eness campaigns on energy decarbonisation; and • Develop policies that facilitate active consumers and energy communities in decentralised and smart energy systems. Empowering the public and business also cuts acr oss many areas of the Energy Strategy and will require a joined-up approach to delivering the Strategy and a sharp focus on consumer interests during the development of policies. Examples of these cross cutting areas are smart meters, support for energy efficiency measures, micro-generation and low carbon heat technologies as well as creating a roadmap to cleaner, greener transport systems and developing frameworks for Citizen Energy Communities and Active Consumers. This chapter presents information from the most recent full update to the UK’s GHG Energy and Emissions Projections (EEP) 2019, published in October 2020.1 It includes estimates of future energy demand and GHGs in the UK up to 2040. The analysis for EEP 2019 was completed before the coronavirus (Covid-19) pandemic, so these projections take no account of the impacts of this on future energy demand or emissions. This section reports on updated emission projections for 2030 and 2040. The key points s Energy and Emissions Projections (EEP) are estimates of the future level of energy consumption and greenhouse gas emissions and only include existing and planned policies deemed to be sufficiently quantified by August 2019, which was the cut-off point for inclusion in EEP 2019. They therefore represent a counterfactual, showing what the UK would expect to happen in the absence of further more recent policies such as those included in the UK’s Net Zero Strategy, published in October 2021, which set out policies and proposals to keep the UK on track for meeting carbon budgets and the 2030 Nationally Determined Contribution. Chapter 3 contains information on more recent policies and measures not included On this basis, the projections show that by 2030, UK emissions of the basket of ed by the Kyoto Protocol would be expected to be approximately 365 MtCO2e, or 55% lower than the 1990 level; and by 2040, the projections show equivalent figures of 361 MtCO2e and 55% lower respectively.The UK projects emissions of CO2, CH4 and N2O of 52%, 68% and 60% respectively below 1990 levels by 2040. As new policies and measures are developed and implemented, the resulting emissions savings will be factored into future projections. The UK projects that (joint) emissions of the fluorinated HFCs, PFCs, SF6, and NF3 will be 83% below their 1990 levels by 2040. 1 See

282 8th National Communication 4.3 Overall projections of GHG emissions The projections presented in this National Communication focus on the With Existing Measures (WEM) policy scenario. EEP 2019 also includes a With Additional Measures (WAM) this includes additional policies that were classed as planned at the cut-off date of August 2019. The projection models incorporate information from the UK’s 1990-2018 GHG Inventory publication (published in 2020). The historic statistics presented here and in Chapter 2 are from the UK’s 1990-2020 GHG Inventory (published in 2022). The UK’s 1990- 2020 GHG Inventory includes additional emissions from application of methodologies in the IPCC 2013 wetlands supplement which were not included in the 1990-2018 GHG Inventory. This gives rise to a discontinuity between historic and projected data presented in this chapter. However, the UK does not expect broad patterns of the emissions profile to change significantly when this new information2 is incorporated into the next edition of the projections.
The WEM scenario includes policies that had been implemented or adopted by August 2019 but excludes planned measures. In addition, the UK provides selected data from the WAM scenario, which includes planned measures as at the same policy cut-off date. Both projection scenarios exclude any use of flexible mechanisms such as the UK Emissions Trading Scheme (ETS) or Joint Implementation and Clean Development The figures within this National Communication include British Crown Dependencies and Overseas Territories. These territories are excluded from UK Carbon Budget’s legislation and do not appear in the EEP report. According to the UK’s 1990-2020 GHG Inventory, these regions were responsible for 0.9% of total emissions on average between 2017 and 2020 (inclusive). Throughout this chapter, the geographical scope of the presented figures includes the UK and its Crown Dependencies and Overseas Territories as denoted by the label ‘(UNFCCC coverage)’ unless otherwise specified. Under the WEM scenario, the UK projects GHG emissions including LULUCF of 365 MtCO2e, about 55% below the 1990 level by 2030, and roughly 361 MtCO2e by 2040. The percentages are very similar if LULUCF is excluded3. Tables 4.1 and 4.2 show overall projections for each gas under WEM and WAM scenarios respectively. This shows that additional planned policies as of August 2019 are expected to mainly affect CO2 emissions, reducing them by 11 Mt more in the year 2040 than in the equivalent projection under the WEM scenario. 2 This statistical release explains how the Inventory has ( government/uploads/system/uploads/attachment_data/file/1051408/2020-final-greenhouse-gas-emissions- 3 We report LULUCF emissions in full to be consistent with Inventory Convention reporting. This scope is wider than that under Articles 3.3 and 3.4 of the Kyoto Protocol and includes estimates for all anthropogenic

Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 609 571 571 570 510 420 324 303 296 291 295 Methane 135 129 111 90 67 56 52 46 44 43 43 Nitrous oxide 50 40 30 26 23 22 21 21 20 20 20 Hydrofluorocarbons 14 19 8 9 12 14 12 7 4 2 2 Perfluorocarbons 2 1 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Sulphur hexafluoride 1 1 2 1 1 <0.5 <0.5 <0.5 1 1 1 Nitrogen trifluoride <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 810 760 723 697 613 512 410 378 365 358 361 Change from 1990 (%) -6 -11 -14 -24 -37 -49 -53 -55 -56 -55 Aviation bunkers 16 20 30 35 32 33 14 37 37 37 37 Marine bunkers 9 9 8 9 12 11 9 11 11 11 11 Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 609 571 571 570 510 420 324 302 292 284 284 Methane 135 129 111 90 67 56 52 46 43 42 41 Nitrous oxide 50 40 30 26 23 22 21 21 20 20 20 Hydrofluorocarbons 14 19 8 9 12 14 12 7 4 2 2 Perfluorocarbons 2 1 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Sulphur hexafluoride 1 1 2 1 1 <0.5 <0.5 <0.5 1 1 1 Nitrogen trifluoride <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 810 760 723 697 613 512 410 377 360 349 348 Change from 1990 (%) -6 -11 -14 -24 -37 -49 -54 -56 -57 -57 Aviation bunkers 16 20 30 35 32 33 14 37 37 37 37 Marine bunkers 9 9 8 9 12 11 9 11 11 11 11 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage

284 8th National Communication 4.3.1 Projected progress across territorial emissions 2008 2013 2018 2023 2028 2033 2038 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage The UK projects in the WEM scenario that the energy supply and business sectors make up around 23% of UK emissions in 2030. With the existing policies and measures in place, emissions from these sectors are projected to increase by 3% between 2030 and 2040 and emissions from the remaining sectors (excluding LULUCF) are projected to fall by 4% between 2030 and 2040. In the WAM scenario, projected energy supply and business emissions decrease by 5% over the same period. The UK no longer reports emissions against Traded and Non-Traded sectors according to European Union Emissions Trading System (EU ETS) definitions since leaving the EU in 2020. Tables 4.3 and 4.4 show the main impact of additional planned policies. By 2040, the UK projects that the additional impact of these measures could leave emissions

4.3.1.1 P rojected progress of total territorial UK emissions 2010 2015 2020 2025 2030 2035 2040 Emissions total exc. LULUCF 609 509 406 386 371 361 362 Total 613 512 410 378 365 358 361 2010 2015 2020 2025 2030 2035 2040 Emissions total exc. LULUCF 609 509 406 385 366 352 349 Total 613 512 410 377 360 349 348 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage Sector 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Transport 130 131 135 138 126 125 100 113 103 92 85 Energy supply 281 239 224 233 209 147 85 62 62 62 64 Business 113 111 114 106 90 83 74 61 55 53 54 Residential 80 82 89 86 88 68 67 68 71 74 78 Agriculture 54 53 51 49 46 47 45 48 48 48 48 Waste management 65 68 61 48 29 19 18 16 15 15 15 Industrial processes 60 51 27 21 13 13 10 9 9 9 8 Public 13 13 12 11 10 8 7 8 9 9 9 Total 810 760 723 697 613 512 410 378 365 358 361 Change from 1990 (%) -6 -11 -14 -24 -37 -49 -53 -55 -56 -55 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage 2030 and 34% lower by 2040.
The UK expects that measures to improve vehicle efficiency, 2 emissions regulation and the design of the Zero Emission Vehicles (ZEV) mandate for new cars and vans, will directly reduce emissions by mandating greater use of biofuels and providing incentives to encourage the adoption of electric vehicles. 286 8th National Communication Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 127 128 132 136 125 124 99 112 101 90 84 Methane 1 1 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Nitrous oxide 2 2 2 1 1 1 1 1 1 1 1 Total 130 131 135 138 126 125 100 113 103 92 85 Change from 1990 (%) 1 4 6 -3 -4 -23 -13 -21 -29 -34 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage The UK projects energy supply emissions of 78% lower than 1990 levels by 2030 and 77% projections show a further gradual decline in fossil fuel-based generation up to the late 2020s as it is displaced by an increase in renewable electricity generation. From the late 2020s natural gas generation is projected to gradually increase in the WEM scenario, alongside the continued more rapid growth in renewables to meet increasing electricity demand. The projections show that emissions from electricity production will fall steadily to the late 2020s before rising slightly to 2040. Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 245 211 206 220 199 139 80 56 56 57 59 Methane 34 27 17 11 9 7 5 6 5 5 5 Nitrous oxide 1 1 1 1 1 1 1 1 1 1 1 Total 281 239 224 233 209 147 85 62 62 62 64 Change from 1990 (%) -15 -20 -17 -26 -48 -70 -78 -78 -78 -77 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage 2030, and 53% lower by 2040. The UK attributes improvements over time to the impact of policies that encourage energy efficiency, such as building regulations and minimum energy efficiency standards for new products, together with economic measures such as the Streamlined Energy and Carbon Reporting (SECR) and the Renewable Heat Incentive. Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 112 109 109 97 78 70 62 53 50 50 51 Methane <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Nitrous oxide 1 1 1 1 1 1 1 1 1 1 1 Hydrofluorocarbons <0.5 <0.5 2 6 10 12 11 6 3 1 1 Perfluorocarbons <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Sulphur hexafluoride 1 1 1 1 <0.5 <0.5 <0.5 <0.5 <0.5 1 1 Nitrogen trifluoride <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 113 111 114 106 90 83 74 61 55 53 54 Change from 1990 (%) -2 <0.5 -7 -21 -26 -35 -47 -51 -54 -53 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage The long-term driver of emissions from UK households is the increase in household numbers over the whole period, due to population growth in the UK and a continuing trend for by the impact of existing energy and emission reduction policies through, for example, improved insulation of homes. The overall impact of these factors is projected to lead to a rise in domestic emissions of 7 MtCO 2e (10%) between 2030 and 2040. Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 79 80 86 83 85 65 65 66 68 71 76 Nitrous oxide <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 80 82 89 86 88 68 67 68 71 74 78 Change from 1990 (%) 2 11 7 9 -16 -17 -15 -12 -8 -3 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage These projections show emissions from the agriculture sector remaining constant between

288 8th National Communication Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 6 7 5 6 5 5 6 10 10 10 10 Methane 29 29 28 27 25 26 25 25 25 24 24 Nitrous oxide 18 18 17 16 15 15 15 14 14 14 14 Total 54 53 51 49 46 47 45 48 48 48 48 Change from 1990 (%) -1 -5 -9 -15 -14 -17 -10 -11 -11 -11 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage The UK’s WEM projections show annual GHG emissions from waste management falling to fall because more waste is being preferentially disposed of in alternative ways, such as through recycling, Biological Waste Treatment (BWT) and incineration, and because small improvements in landfill efficiency continue to be made. The Landfill Directive drove the historical reductions in emissions from waste. Emissions reductions should continue for a time as emissions lag behind disposal. The UK projects that increases in BWT emissions and domestic wastewater emissions should partially counteract the decrease in landfill emissions. Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 1 1 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Methane 63 66 60 46 27 18 16 14 13 13 13 Nitrous oxide 1 1 1 1 1 2 2 2 2 1 1 Total 65 68 61 48 29 19 18 16 15 15 15 Change from 1990 (%) 4 -6 -27 -56 -70 -73 -76 -77 -77 -77 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage 1990 levels by 2030 and 86% below by 2040.
Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 20 18 17 17 11 12 9 9 8 8 8 Methane <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Nitrous oxide 24 14 5 3 2 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Hydrofluorocarbons 14 18 3 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Perfluorocarbons 2 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Sulphur hexafluoride <0.5 <0.5 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 60 51 27 21 13 13 10 9 9 9 8 Change from 1990 (%) -15 -54 -65 -79 -79 -84 -84 -85 -86 -86 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage The UK’s projections show emissions from public services rising slightly in the mid 2020s and Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 13 13 12 11 9 8 7 8 9 9 9 Methane <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Nitrous oxide <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 13 13 12 11 10 8 7 8 9 9 9 Change from 1990 (%) -1 -9 -16 -29 -40 -44 -38 -35 -33 -30 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage

290 8th National Communication 4.4.9 L and Use, Land Use Change and Forestry (LULUCF) The amount of carbon stored in UK trees has increased since 1990. However, the UK expects that this balance will change in the future as forests mature and are felled and replanted over the sustainable forest management cycle. UK experts suggest the GHG Inventory includes modelling updates to wetland areas that have increased historical emissions in the LULUCF sector. As EEP 2019 modelling is based on an earlier version of the inventory, this is not yet reflected in projections of emissions. Gas 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Carbon dioxide 6 4 1 -1 -3 -3 -3 -10 -7 -4 -2 Methane 5 5 5 5 5 5 5 <0.5 <0.5 <0.5 <0.5 Nitrous oxide 2 2 2 2 2 2 2 2 2 2 2 Total 13 11 8 5 4 3 4 -8 -5 -3 <0.5 Change from 1990 (%) -18 -37 -59 -72 -76 -71 -161 -141 -119 -104 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage projections for overall emissions of GHG gases to 2040. 2010 2015 2020 2025 2030 2035 2040 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage

transport, energy supply, residential, business. By 2030, the UK projects CO2 emissions that are 51% lower than 1990 values, and by 2040 the UK projects CO2 emissions that are 52% Sector 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Transport 127 128 132 136 125 124 99 112 101 90 84 Energy supply 245 211 206 220 199 139 80 56 56 57 59 Business 112 109 109 97 78 70 62 53 50 50 51 Residential 79 80 86 83 85 65 65 66 68 71 76 Agriculture 6 7 5 6 5 5 6 10 10 10 10 Waste management 1 1 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Industrial processes 20 18 17 17 11 12 9 9 8 8 8 Public 13 13 12 11 9 8 7 8 9 9 9 Total 609 571 571 570 510 420 324 303 296 291 295 Change from 1990 (%) -6 -6 -6 -16 -31 -47 -50 -51 -52 -52 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage The two biggest emitters of CH 4 in 2020 were agriculture and waste management. The UK projects a decline in CH4 emissions between 2020 and 2030 of 7 MtCO2e. This means that by 2030, emissions of CH4 are projected to be 67% lower than 1990. By 2040, the WEM Sector 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Transport 1 1 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Energy supply 34 27 17 11 9 7 5 6 5 5 5 Business <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Residential 2 1 1 1 1 1 1 1 1 1 1 Agriculture 29 29 28 27 25 26 25 25 25 24 24 Waste management 63 66 60 46 27 18 16 14 13 13 13 Industrial processes <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Public <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 135 129 111 90 67 56 52 46 44 43 43 Change from 1990 (%) -4 -17 -33 -50 -59 -62 -66 -67 -68 -68 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage

292 8th National Communication Most nitrous oxide emissions come from agriculture. The UK projects a modest decline in N2O emissions out to 2040, projecting emissions in 2030 that are 59% lower than in 1990, and 60% lower than 1990 in 2040. Sector 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Transport 2 2 2 1 1 1 1 1 1 1 1 Energy supply 1 1 1 1 1 1 1 1 1 1 1 Business 1 1 1 1 1 1 1 1 1 1 1 Residential <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Agriculture 18 18 17 16 15 15 15 14 14 14 14 Waste management 1 1 1 1 1 2 2 2 2 1 1 Industrial processes 24 14 5 3 2 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Public <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 50 40 30 26 23 22 21 21 20 20 20 Change from 1990 (%) -20 -39 -47 -54 -55 -58 -59 -59 -59 -60 Primary UK GHG Inventory 2022.
EEP 2019, uplifted to UNFCCC coverage Almost all HFCs are emitted by the business sector. In 2030, the UK projects HFC emissions of 8 MtCO2e less than in 2020, equivalent to a 72% decline since 1990. The UK projects a reduction in HFC emissions in 2040 of 86% compared to 1990 levels. Sector 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Business <0.5 <0.5 2 6 10 12 11 6 3 1 1 Industrial processes 14 18 3 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 14 19 8 9 12 14 12 7 4 2 2 Change from 1990 (%) 29 -46 -36 -16 -2 -15 -51 -72 -84 -86 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage

PFC emissions remain at low levels over the projection period. Sector 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Business <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Industrial processes 2 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 2 1 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Change from 1990 (%) -64 -65 -76 -83 -84 -90 -77 -77 -77 -77 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage 6 emissions remain at low levels over the projection period. Sector 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Business 1 1 1 1 <0.5 <0.5 <0.5 <0.5 <0.5 1 1 Industrial processes <0.5 <0.5 1 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 Total 1 1 2 1 1 <0.5 <0.5 <0.5 1 1 1 Change from 1990 (%) 4 50 -15 -45 -66 -66 -60 -57 -53 -53 Primary UK GHG Inventory 2022. EEP 2019, uplifted to UNFCCC coverage 4.6 T otal effect of policies and measures The WEM scenario projections in this chapter include the impact of the UK’s implemented and adopted policies and measures as reported in EEP 2019, for which the policy cut-off point was August 2019. They therefore represent a counterfactual, showing what the UK would expect to happen in the absence of further policies such as those included in the UK’s Net Zero Strategy, published in October 2021. The name, sector, GHG(s) and activity affected, and descriptions of these policies and include planned policies, but those are included within domestic reporting and are therefore Since Biennial Report 4, the UK has continued to update its analysis of policies and measures expected to help meet both Nationally Determined Contributions and the targets for Carbon Budgets set under the UK Climate Change Act (2008). Some further policies introduced after time, the UK’s projections will include newer or more recently announced policies as they progress to the impact assessment stage. 294 8th National Communication Total CHG emissions, MtCO2e Projected emissions with existing measures The UK treats the policies adopted before 2009 as part of a ‘baseline’, because carbon estimated emissions savings attributable to policies adopted between April 2009 and August 2019, as published in the 2019 UK EEP . For example, in 2030 the UK projects that UK policies (excluding planned policies) will deliver emissions reductions of around 103 MtCO2e. Differences in projected emissions between scenarios do not exactly match the sum of emissions reductions provided by individual policies. This is due to price interactions and adjustments to policy impacts to improve accuracy. The Net Zero Strategy4 (published 2021) delivers a comprehensive set of measures to support and capitalise on the UK’s transition to net zero by 2050. It sets out how the UK will end its domestic contribution to climate change with an approach where ‘green’ and ‘growth’ go hand-in-hand. It is a cross-economy strategy which keeps the UK on the path to net zero, including action the UK will take keep on track to meet Carbon Budgets and the UK’s 2030 Nationally Determined Contribution. 4

Emissions excluding the impact of measures adopted between 2009-19 (baseline) 474 463 476 495 Emissions including all implemented or adopted measures (excluding planned policies) 373 361 354 357 Savings from measures adopted 2009-19 (excluding planned policies) 99 103 126 146 4.7 Projection methods by sector The UK projections of emissions of CO2 and combustion-related emissions of other GHGs (CH4 and N2O) are based on the UK’s EEP modelling suite used for its annual publication and internal analysis. This models the UK energy market, including final sector energy use and the electricity supply sector. It includes a top-down econometric model of energy demand and combustion-related GHG emissions for the UK economy with a bottom-up supply side Dynamic Dispatch Model (DDM). The top-down econometric energy demand projections are adjusted for the impact of policies which are modelled separately using more detailed sectoral models. The sector classification and the principal source of past energy statistics is the Digest of UK Energy Statistics (DUKES). Energy use projections are converted to emissions projections using fuel emissions factors from the UK GHG Inventory. Additional calibration is used to account for energy use not captured in DUKES. Industrial process emissions are calibrated by comparing historic emissions in the UK’s GHG Inventory to industrial production. The UK’s model suite projects emissions using projections for fossil fuel prices, carbon prices, economic growth, and demographics. Key assumptions for projections are given in The UK’s domestically published projections include variant scenarios for high and low fossil fuel price assumptions, high and low GDP growth rates, and a pre-2009 policy baseline. Projections of energy demand by fuel and sector start from a baseline econometric ‘business as usual’ projection, from which savings due to policies and measures are subtracted. The overall modelling approach is similar to that used in previous Biennial Reports submitted by the UK, although there have been incremental improvements to the projections which are described in the UK’s domestic EEP publications5. The CO2 road transport model is an econometric response surface model integrated into the economy-wide Energy Demand Model (EDM) and calibrated against the Department for Transport’s (DfT’s) National Transport Model (NTM).
The econometric model is multi-modal as it includes cars, light good vehicles (LGVs), heavy goods vehicles (HGVs), and public service vehicles (PSVs). It includes a population driver for cars and a manufacturing Gross Value added (GVA) driver for HGVs as well as price, motor spirit/diesel engine share, and fuel efficiency and biofuel substitution effects. Most energy efficiency improvements are policy-driven, such as by new car emissions intensity targets and complementary measures such as lower rolling resistance tyres for 5 See

296 8th National Communication HGVs. Unlike for other demand sectors, impacts of policies and measures on road transport fuel demand are modelled within the EEP modelling suite. Road vehicle efficiencies, motor spirit/diesel engine shares, and biofuel use under different policy scenarios are used to calculate mitigation impacts from differences in demand between scenarios. Electricity demand from electric cars and LGVs is passed to the Dynamic Dispatch Model (DDM) which models a demand-side response. 2 road transport emissions projections follow a bottom up calculation methodology in line with the historical time-series of emissions. The activity data (vehicle distances travelled) is projected using 2018 DfT traffic forecasts. DfT’s projected traffic growth, the planned electrification of existing track, and the construction of new lines such as Crossrail and High Speed 2 underpin the rail Projections for UK commercial aviation involve estimates of future UK GDP , consumer expenditure, population, and oil prices. The Fleet Mix Model captures efficiency improvements, for example the model assumes increasing use of biofuels. DfT provides more detailed information about methodology and assumptions with its aviation forecast. The modelling has extrapolated trends in the GHG Inventory to extend aviation emissions projections to UNFCCC coverage. The UK projects that national navigation will remain largely static. The UK uses the DDM to project investment and generation in the electricity supply sector. The DDM is a market-based model that simulates the operation of the electricity market and the investment decision of the market participants in detail. It is a profit-maximisation model incorporating the effect of Government policies such as Contracts for Difference which incentivise low-carbon generation through market mechanisms. The DDM also models investment in the supply of heat and electricity from Combined Heat and Power plants, mostly in industry. For emissions projections, the UK breaks manufacturing down into sectors using the Standard Industrial Classification (SIC). The manufacturing sectors in the EDM

The UK projects Gross Value added (GVA) for each of these sectors using GDP , interest rates, and, in some cases, terms of trade (the relative prices of imports and exports). The UK projects total energy demand for each sector from GVA and energy prices. Except for iron and steel, the model splits total energy demand into different fuels using historical fuel demands and projections of relative fuel prices. In iron and steel, the UK estimates energy demand using sector GVA and the tonnages of steel produced using electricity or by the Basic Oxygen Steel (BOS) process. Energy demand is projected by commercial services from sector GVA, using the average growth rate since 1991 and temperature. The overall demand is then split into fuels. To project business electricity demand from business, it is included in non-domestic demand and passed to the DDM. Emissions from fuels combusted on-site are included in the The UK projects the residential emissions from gas, oil and solid fuels use separately. The estimates depend on assumptions about the percentage of households using each fuel as their main heating source. The primary drivers of residential energy demand are household numbers, fuel prices, temperature and income. Residential demand for electricity is projected using the same drivers and UK agriculture uses a relatively small amount of energy. Therefore, projections of its combustion emissions come from simple trend models. The UK uses Food and Agricultural Policy Research Institute (FAPRI) methodology6 to provide projections of activity, such as livestock numbers, crop production, fertiliser nitrogen use, and non-CO2 emissions to 2030. Projections for later years are held constant. The FAPRI projections come from an economic model that assumes a specific set of international prices for agricultural commodities and a path for the sterling exchange rate. Together, these factors are important determinants of the returns to farmers and hence of total agricultural production. The UK converts these FAPRI activity projections to emissions using the latest agriculture model in the UK’s GHG Inventory. Projections of CH4 from landfill depend on UK projections of tonnages of municipal waste going to landfill and on figures for commercial and industrial waste. Waste composition is projected from knowledge of changes to BWT processes and from projections These projections of waste going to landfill are then run through MELMod, the landfill emissions calculation model. The MELMod model is based on the IPCC’s first-order decay methodology, which the 2014 GHG Inventory report summarises. UK population projections underpin predictions of emissions of CH4 and N2O from domestic wastewater and sewage/ sludge decomposition. Industrial wastewater emissions are predicted to stay constant. BWT emissions from multiple sources are combined. Some are projected to be constant, and 6

298 8th National Communication some are extrapolated from the latest year of historical data using sector experts’ estimates Manufacturing sub-sector GVA projections or energy demand projections are used to project CO2 emissions from industrial processes where there is evidence of correlation. Other CO2 emissions are projected to remain constant at the last actual value from the UK’s GHG Many methods are used for projections of non-CO 2 emissions from industrial processes. Some sources use manufacturing sector GVAs while others use more detailed assumptions about future activity. Annex N of the UK’s domestic EEP publication7 provides more information on non-CO2 emissions projection methods. Sector employment levels are used as the main driver in modelling non-electricity energy demand from public services. The projections assume that the historical trend of improving energy efficiency per employee will continue. Temperature also affects public sector demand.
The models break non-electricity energy demand into fuels using the same proportions as in Electricity demand is trended to use only public sector employment as a driver and is included in the non-domestic demand we pass to the supply-side modelling. Public services emissions modelling does not consider energy prices as a driver. and Use, Land Use Change and Forestry (LULUCF) The Centre for Ecology and Hydrology and Forest Research model LULUCF emissions using approaches that are consistent with the current inventory methodology. They produce four scenarios – Baseline, Central, High and Low – for future emissions. Each makes assumptions about afforestation, wildfires, peat extraction, land use change and deforestation. They developed these scenarios with a policy maker stakeholder group and updated them in 2016 following discussions with UK Devolved Administrations. Broadly, their central scenario is a continuation of current policies and activity rates. This is the scenario used in generating emissions projections for this report. stimation of emissions in Crown Dependencies and Overseas Territories The UK’s Crown Dependencies and Overseas Territories are not included in the projections which the UK produces annually to monitor progress against its own carbon budgets. The projections in this report supplement the UK annual figures with forecasts for areas that are consistent with the UK’s 1990-2018 GHG Inventory. The latter are simple linear trends of the emissions in each National Communication sector based on observations from the previous 9 years. Emissions in these territories are only a small proportion of UK emissions, making up 0.9% of the UK’s UNFCCC coverage emissions in recent years. Strengths of the projection methodology The UK’s modelling methodology has the following • The initial starting point for the UK’ s Energy and Emissions Projections is the latest historical data from the GHG Inventory and DUKES. In the case of EEP 2019, this 7 See

was based on the UK’s GHG Inventory 2020 (latest actuals 2018) and 2019 energy statistics (latest actuals 2018). These are well established sources of information; • The main Energy Demand Model (EDM) uses econometric methods e long-run relationships between economic activity, energy • The detailed model of electricity generation captures both short-run fuel switching and long-term investment strategies; ojections regularly as part of the monitoring of UK national • Models use authoritative national and inter e is a rolling programme of review and update for the projection methodologies and econometric models, and modelling performance is tested by back-casting to see how well the model predicts what happened in the recent past; The projections distinguish between business as usual emissions and the emission eductions due to mitigating policies and measures; and • The modelling estimates the mitigation impacts of policies using a common cr eaknesses of the projection methodology The UK’s modelling has the following • The modelling generally assumes that historical relationships will continue in the e, which can fail to capture structural changes and new technologies where these fall outside the scope of included policies and measures; • Analysis for EEP 2019 was completed befor e the coronavirus (Covid-19) pandemic and prior to publication of the Net Zero Strategy, so these projections take no account of the impacts of these on future energy demand or emissions. Similarly, analysis assumed that the drivers of uncertainty were similar to previous years; e is considerable recognised uncertainty in economic and social projections • Econometric modelling is subject to estimation err ors and the possibility of incorrect identification energy use drivers. A set of key assumptions about UK economic growth, demographic changes and future fuel price trajectories underpin the UK’s projections. The main sources of projected assumptions are the forecasts made by the UK’s Office for Budget Responsibility (OBR) and Office for National Statistics (ONS), and supplemented by International Monetary Fund projections of world growth. Fuel prices are produced by the Department for Business, Energy and The UK released EEP 2019 in October 2020. UK GDP forecasts to 2021 were from the March 2019 Economic and Fiscal Outlooks and beyond 2021 GDP came from the January 2017 Fiscal Sustainability Report. The UK’s ONS produced the population projections in 2016 alongside a supporting methodology description. It produces population and household

300 8th National Communication projections. The ONS released information about changes in methodology since the previous population projection alongside the 2018 population projections. The household projections updated socio-economic growth assumptions. Change 2025 2030 2035 2040 BEIS updates the fossil fuel price and carbon prices projections annually, which are subject Price 2025 2030 2035 2040 Crude oil (Brent 1 month), $/bbl 68.45 79.53 90.60 90.60 Gas (NBP), p/therm 53.00 59.00 64.00 64.00 Coal (CIF ARA), $/tonne 68.38 72.72 77.0 6 77.0 6 EU ETS carbon price (at time of modelling), £/tCO2 28.79 43.49 43.49 43.49 Exchange rate 2025 2030 2035 2040 Euros (€ per £) 1.10 1.15 1.2 1.2 US Dollars ($ per £) 1.39 1.45 1.5 1.5 4.7.14 Quality assurance and quality controls Quality assurance of modelling is a high priority within UK Government, and analysis for the EEP follows the BEIS quality assurance guidelines. A small group of BEIS analysts produces the energy and emission projections, and owns, maintains and updates the EDM which underpins the projections. The EEP team liaises with other modelling teams, both inside and outside BEIS, to quality assure and compile the data which go into the overall projections. Figures relating to electricity come from iteratively solving two specialised models with the EDM. These are the DDM and the Prices and Bills Model of retail electricity prices. This cycling ensures that electricity demand is in equilibrium with prices. The co-ordinators of

these models also assure projections results. Projections for non-energy non-CO2 emissions are produced by the BEIS Science division. The Centre for Ecology and Hydrology produces the UK’s LULUCF projections under contract; this is overseen by the BEIS Science and Innovation for Climate and BEIS bases transport sector modelling on, and calibrates it against, the detailed models for road, rail and air used by the Department for Transport (DfT).