Powering Up Britain: Net Zero Growth Plan - GOV.UK
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This was published under the
2022 to 2024 Sunak Conservative government
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This publication is available at https://www.gov.uk/government/publications/powering-up-britain/powering-up-britain-net-zero-growth-plan
Energy security and net zero are two sides of the same coin. The energy transition and net zero are among the greatest opportunities facing this country and we are committed to ensuring that the UK takes advantage of its early mover status. Global action to mitigate climate change is essential to long term prosperity – the overall costs and risks of global warming to be equivalent to losing between 5% and 20% of global
GDP
each year. After decades of reliance on imported fossil fuels, the new Department for Energy Security and Net Zero’s mission is to replace them with cheaper, cleaner, domestic sources of energy. In response to high household energy bills resulting from Putin’s invasion of Ukraine, the government stepped in, paying around half of the average household’s energy bills over winter and around half of wholesale energy costs for some businesses. But the way to maintain lower cost energy for everyone is to move to cleaner and cheaper energy to protect us from volatile international energy markets, while underpinning our clean energy transition, so the UK becomes a net zero economy by 2050. It will also help us make sure Britain has among the cheapest wholesale electricity prices in Europe by 2035. The UK has already made huge progress in decarbonising its economy and decoupling emissions from economic growth. Thanks to the Climate Change Act (2008) and Environment Act (2021), we have a strong legal framework for reaching net zero emissions by 2050. Between 1990 and 2021, we have cut our emissions by 48%, decarbonising faster than any other G7 country, whilst growing the economy by 65%. The UK was also the first G7 country to sign net zero greenhouse gas emissions by 2050 into law. Figure 1
: Greenhouse Gas emissions for the UK and major economies, 1990 – 2021
Our transition to a green and sustainable future will provide new opportunities to grow and level up the UK economy and support hundreds of thousands of green, high skilled jobs, whilst ensuring the environment is in a better state for the next generation. The policies and ambitions we have committed to will help leverage around £100 billion of private investment as we develop new industries and innovative low carbon technologies, and our ambitions will support up to 480,000 jobs in 2030. The ‘Net Zero Strategy’, published in October 2021, was the first document of its kind for a major economy. It set out the government’s vision for a market-led, technology- driven transition to decarbonise the UK economy and reach net zero by 2050. The path to net zero outlined in the strategy is still the right one; developments in the last 18-months have only reinforced that view. Putin’s illegal war in Ukraine and high global energy prices only strengthen our resolve to propel ourselves away from expensive fossil fuels towards a cheaper, cleaner, greener economy. There has been further evidence, at home and abroad, of the potential consequences of not keeping the 1.5°C Paris Agreement goal in reach, for example, record-breaking temperatures across the UK and devastating floods in Pakistan. While we accelerate our efforts to reach net zero, we are also ensuring that the country is prepared for the effects of climate change that we are already experiencing. The Third National Adaptation Programme, which we will publish in 2023, will set out the actions we are taking across government to increase our resilience to climate change. Our ambition is to hit our net zero targets while delivering among the cheapest wholesale electricity prices in Europe. This is why the Prime Minister pledged at
COP27
to achieve our ambitious net zero commitment and Nationally Determined Contribution (
NDC
), create new high-wage jobs and protect UK energy security. Further, as the Prime Minister set out at
COP27
, ‘there can be no solution to climate change without protecting and restoring nature’. In January this year, we set out our vision in the Environmental Improvement Plan, providing a blueprint not just to halt the decline of nature in our country, but to reverse it. As a principle, we will pursue options that leave the environment in a better state for the next generation and benefit our health by improving biodiversity, air quality, water quality, natural capital, and resilience to climate change. To help achieve these aims, we are publishing our Nature Markets Framework which sets out government’s approach to supporting and accelerating growth in nature markets, a key mechanism to help deliver our joint nature and climate goals. Protecting our natural environment and adapting to climate change, including through investing in nature-based solutions such as tree planting and peatland restoration, goes hand in hand with our net zero future and government will continue to take an integrated approach to ensure co-benefits are maximised. With this ‘Net Zero Growth Plan’, we are bolstering our delivery.
This plan:
Responds to the expert recommendations made in the Independent Review
of Net Zero report, the outcome of the independent review into net
zero, chaired by the
Rt Hon
Chris Skidmore
MP
, which explores how we
can achieve net zero in the most pro-growth, pro-business way; Demonstrates the actions we will take to ensure the UK remains a leader in the net zero transition, by ensuring we drive investment into key green industries like offshore wind, carbon capture, usage and storage (
CCUS
), and nuclear; Strengthens delivery with a focus on the action we can take today to keep us on track to meet our carbon budgets, acting as our annual update against the Net Zero Strategy, both on a national and local level; Meets our statutory obligations under the Climate Change Act (2008) to:
Respond to the Climate Change Committee’s (
CCC
’s) 2022 Progress Report to Parliament; and
Provide a Carbon Budget Delivery Update that sets out a package of proposals and policies that will enable us to meet carbon budgets. In autumn 2022, the government commissioned an ‘Independent Review of Net Zero’. Led by former Energy minister the
Rt Hon
Chris Skidmore
MP
, the Independent Review of Net Zero was tasked with assessing the government’s approach to net zero, to ensure it was pursuing the most economically efficient path to meeting its climate change commitments, given the changed economic context. The ‘Independent Review of Net Zero’ concluded that the transition to net zero will provide the economic opportunity of the 21st century, driving economic growth and opportunity across the UK. Mission Zero: Independent Review of Net Zero, published in January 2022, was unequivocal in its assessment that the plan set out in the Net Zero Strategy was the right one, whilst providing recommendations to strengthen our delivery. The
CCC
’s 2022 Progress Report to Parliament further confirms our approach. The global transition to net zero will see trillions of pounds reallocated to new low carbon products and services. McKinsey estimates a global market opportunity of £1 trillion for British businesses in the period to 2030. We are not alone in recognising the economic benefits the transition will bring. Through our
COP26
presidency, we encouraged an increase in net zero pledges from 30% to more than 90% of global
GDP
. Since the publication of the ‘British Energy Security Strategy’ and ‘Net Zero Strategy’ we have seen the US take decisive action through the Inflation Reduction Act and the EU has set out its ambitious plans to grow green industries through the ‘Green Deal Industrial Plan’. The UK welcomes increased ambition on climate change. All economies will need to take decisive steps to reduce global emissions. Indeed, increased investment in net zero technologies globally will unlock innovation and drive costs down, as well as create opportunities for UK exports (such as, for
CCUS
and Hydrogen). Alongside our partners and allies, we remain convinced that a multilateral approach is necessary to tackle climate change. We will continue to work with partners to ensure that the clean transition does not come at the expense of our trusted global supply chains and the rules-based international system. We do not wish to participate in a discriminatory subsidy race, which will be harmful to many nations’ intentions to transition. Our focus is on responding to investor and industry calls to provide the long-term certainty, strategic de-risking, and confidence, they need to invest in the technologies and infrastructure necessary to deliver our energy security and net zero objectives. Investment is the key to delivering our energy security, carbon targets and seizing the economic benefits – the jobs, exports, and productivity gains – of the transition. We need investment at scale across a range of sectors to rapidly rollout existing technologies and bring through transformative new technologies. Established technologies, such as offshore wind turbines, need to be constructed at pace to meet our ambitions for decarbonising power and delivering wholesale UK electricity prices that rank among the cheapest in Europe by 2035. Meanwhile, a significant proportion of technologies we will need for 2050 are currently at the demonstration or prototype phase. Innovation is central to our approach and creates opportunities to develop new technologies, business models and systems to reach net zero and facilitate investment to support further development. Figure 2
: Low carbon-investment as % of
GDP
This is supported by investments from across the UK’s public financing institutions. There are roles for the UK Infrastructure Bank (
UKIB
), British Business Bank (
BBB
), and UK Research and Innovation (
UKRI
) – as outlined in our 2023 Green Finance Strategy. The
UKIB
alone has £22 billion of financial capacity and a central mission to tackle climate change and promote economic growth across the UK. The
UKIB
expects clean energy to be the largest sector in its portfolio and is building a strong pipeline of opportunities in areas such as hydrogen,
CCUS
, electricity storage and clean transport. The
BBB
, the government-owned economic development bank, supported £505 million of equity investment in clean technology companies between 2014 and end of August 2022. Our vision for a transition to a green and sustainable future will provide new opportunities to grow and level up the UK economy and support hundreds of thousands of green jobs. The low carbon transition should be fair and affordable and not negatively impact businesses. In fact, world leading hydrogen hubs in places like Teesside, are bringing back investment to areas that experienced significant decline during the 20th century. Through our North Sea Transition Deal, we’re helping to decarbonise oil and gas and protecting thousands of existing jobs. If we don’t support the economy wide net zero transition, not only will we miss our carbon targets, but we will miss out on the opportunities green growth presents business and consumers. Investments have been made across the UK, providing a substantial boost to regional growth.
Figure 3
: Investments contributing to net zero across the UK since autumn 2021
Octopus Energy, Craigavon
Acquired Northern Irish heat pump manufacturer Renewable Energy Devices, to expand current factory and scale heat pump production capacity to over 12,000 heat pumps a year; bringing
100 new green jobs
to Northern Ireland. SeAH Wind, Teesside
Investing over
£400m
to build a new factory, producing steel monopile foundations for offshore wind turbines, creating up to
800 jobs
by 2030. Siemens Gamesea, Hull
Invested
£186m
in expanding its offshore wind blade factory, more than doubling its size, creating and safeguarding over
1,000 jobs
. Mitsubishi Electric, Livingstone
Mitsubishi invested a further
£15.3m
in its Livingstone manufacturing facility with Scottish Enterprise support, to significantly increase its productivity, efficiency and research and development (R&D) capabilities. LanzaTechUK, Port Talbit
Developing a commercial scale plant in Port Talbot to convert industrial waste gases into more than 100 million litres of sustainable aviation fuel annually. HMG awarded the project
£3.1m
through the Green Fuels, Green Skies competition and
£25m
through the Advanced Fuels Fund. Bristol City Leap, Ameresco and Vattenfall Heat UK, Bristol
A game-changing approach towards decarbonisation at city-scale. During the first 5 years of the 20-year partnership, the private sector will invest almost
£500m
in low carbon energy infrastructure including heat networks to help Bristol meet its targets of becoming carbon neutral by 2030. Geothermal Engineering Ltd, Cornwall
Secured
£15m investment
from Kerogen Capital and Thrive Renewables to fund the UK’s first deep geothermal plant at United Downs in Cornwall as part of its mission to provide 25 MWe of baseload electricity and 100
MWh
of heat energy across its geothermal portfolio by 2038. SSEN, Orkney
As part of its
£41m
programme of strategic investment, SSE is delivering
£2.7m
in the network near Kirkwall in Orkney, to upgrade 16k of overhead power lines that are fed from Kirkwall Primary substation, creating 7.3MW of additional network capacity in the local area. Alongside enabling growth of electric vehicles and heat pumps, the investment will support the development of the UK’s first low carbon, operationally-based aviation test centre. Dogger Bank, Port of Tyne & North East coast of England
Dogger Bank Wind Farm is being built more than 130km off the North East coast of England. SSE Renewables, Equinor and Vårgrønn are investing
£9bn
to build 3. 6GW
, sufficient to power around 6 million UK homes. The project is already supporting or creating more than
2,000 jobs
in the UK during construction and operations. The new operations base in Port of Tyne opened in March 2023 and will support
400 long-term job opportunities
. D2N2 low carbon growth fund, Derbyshire and Nottinghamshire
In 2022 D2N2 LEP committed
£6.5m
to support 7 projects ranging from enabling hydrogen-fuelled buses and refuse lorries, and new approaches to anaerobic digestion, to decarbonising food and drink manufacturing. EDF and HMG, Suffolk
The government has announced its
£700m
investment in Sizewell C - the first direct investment in a nuclear project for 35 years - becoming a co-shareholder in the project with EDF. Subject to final approvals, at peak construction the project is expected to support up to
10,000 jobs nationwide
and provide reliable, low-carbon, power to the equivalent of 6 million homes for over 50 years. Offshore wind
– We currently have the world’s largest operational offshore wind farm project, Hornsea 2, and the second, third and fourth largest operational offshore wind farm projects in the world. Our innovative policy instruments like the
CfD
scheme make the UK a world leader in offshore wind. Hydrogen
– The UK’s natural assets and technical expertise means we can be an early mover in both electrolytic ‘green’ hydrogen and
CCUS
-enabled ‘blue’ hydrogen production. There are over 200 companies working on hydrogen and fuel cell technologies in the UK, and we consistently feature in the top 10 countries globally for hydrogen technology patent rates. We are announcing a shortlist of projects for due diligence and confirming further details on electrolytic hydrogen allocation rounds. Green Finance
– Behind every new net zero investment, sits a team of financial, legal, data and accountancy experts, presenting a huge opportunity for the UK financial sector and professional services. The UK’s financial sector is already leads in green project financing and investment analytics. We set out how we will capture this opportunity in the 2023 Green Finance Strategy. Research and Tech sector
– The UK is a leading science superpower. We are widely recognised as global leaders in cutting edge areas like the most promising fusion energy technologies, and boast a world-class research base, with 3 of the top 10 universities globally. This means we are one of the best places to conceive, develop and deliver green technologies, putting us in a strong position to capitalise on the opportunities of a net zero economy. There are significant opportunities for UK industry the whole way through the supply chain. We want UK companies to continue playing a key role in green supply chains, from nuclear to
CCUS
and electric vehicles. For example, nuclear power plant Hinkley Point C has spent over £4.1 billion with suppliers in the Southwest to date and EDF anticipate that 64% of the construction value of the project will be spent with UK firms, with over 22,000 people nationwide currently working on the project. We will continue to anchor and support the development of those supply chains critical to delivering our net zero and energy security ambitions, while promoting the rule-based international system. Following publication of the Critical Minerals Strategy in July 2022 and the Critical Minerals Refresh in March 2023, we will go further with a semiconductor strategy to be published as soon as possible. We are also supporting UK industry to increase their exports. The global transition to net zero creates a major market opportunity with exports within low carbon and renewable energy industries growing significantly faster than exports from the broader economy.
In 2021, it is estimated exports from these sectors increased by 67% from 2020, compared to total exports which increased by 6%. We are supporting UK firms to export through UK Export Finance (
UKEF
). In 2021-2022 alone, the economic impact of the new loans, insurance and guarantees provided by
UKEF
across the whole economy was up to £4.3 billion of UK Gross Value Added (
GVA
) and an estimated up to 72,000 UK jobs – 40,000 directly employed by exporters and a further 32,000 jobs supported indirectly through the UK supply chain. We are increasing UK Export Finance’s maximum exposure limit from £50 billion to £60 billion. This provides additional capacity for
UKEF
to support exporters, including in green industries, to win contracts, fulfil orders and get paid. The transition to net zero also opens up opportunities to create well-paid and high- skilled jobs, support levelling up and reinvigorate our industrial heartlands. It is estimated that since November 2020, over 80,000 green jobs are currently being supported or in the pipeline across the UK economy as a result of new government policies and spending. North East and North West England, Yorkshire and the Humber, the Midlands, Scotland, Wales and Northern Ireland will each have unique benefits from the transition. The
ONS
estimate a 16% increase in direct employment in low carbon businesses across the economy from 2020 to 2021. Separately, new analysis of green jobs advertisements by the Department for Energy Security and Net Zero suggests that within some parts of the green economy, jobs advertised offer higher salaries compared to the UK average. Figure 4
: Advertised salary index by net zero sector using online job advert data, UK, 2014 to 2022. Average salary index by sector (6-monthly rolling average)
The government is working closely with industry and the financial sector to understand any barriers to investment they are facing, and communicate the support, incentives and opportunities available to investors. Government has published the 2023 ‘Green Finance Strategy’, setting out how government will utilise all the levers available to mobilise the private investment needed to deliver net zero as well as how the UK will deliver on its ambition to become the world’s first Net Zero-aligned Finance Centre, and how government will help cement the UK’s status as a world-leading green finance centre. The measures in the 2023 ‘Green Finance Strategy’ set out a pathway to deliver on this commitment along with reforms to the UK pensions and insurance sector that will leverage the UK’s deep capital markets to invest in the net zero transition and green industries in the UK. For example, through Solvency UK, we will provide incentives for insurers to increase investment in long-term productive assets, including innovative green assets and renewable energy infrastructure. The 2023 ‘Green Finance Strategy’ sets out how policies in this plan will work alongside interventions by the UK’s public finance institutions, including
UKIB
, to address financing barriers and accelerate the deployment of net zero technologies. Government is establishing a new partnership to work with key leaders across business and finance to support the delivery of our net zero target, forming a shared view of the actions needed across government and industry to secure the substantial economic opportunities for the UK from net zero through a new Net Zero Business & Investment Group. Addressing significant appetite from the business and finance communities, the group will provide a structured cross-cutting forum to help accelerate decarbonisation in key business sectors and strategically address the barriers business sectors face in reducing their emissions. To achieve our ambitions, we are setting out in these plans a range of different levers at our disposal which play to the unique strengths of the UK. From tax to regulation through planning reform, targeted spending and international collaboration, our policy is tailored to secure private investment. A strong and supportive business environment
: the government is committed to making the UK the best place in the world to start and grow a business and we are ensuring the UK’s tax system is one of the most competitive of the world’s major economies. At Spring Budget 2023, we announced reforms to capital allowances which give the UK the joint most generous capital allowance regime in the OECD. We introduced full expensing for 3 years to support business investment, with a commitment to make the reform permanent when the fiscal conditions allow; and increased tax reliefs for R&D intensive Small and Medium Enterprises (
SMEs
). Together, these ensure the UK business tax system is one of the most competitive of the world’s major economies. Long-term policy certainty and agile and smart regulation to drive investment
: we are setting a clear policy framework on energy security and net zero, so businesses can plan and invest with confidence. Smart and agile regulation, including the Zero Emission Vehicles mandate, the consultation on the Sustainable Aviation Fuels mandate as well as in areas such as building efficiency and heat pumps, will help drive demand for new products and services and accelerate innovation and investment. Sir Patrick Vallance’s Pro-Innovation Regulation of Technologies Review on green industries demonstrates we can move quickly to ensure regulation supports innovation and investment. Government will break down the barriers to deployment, to allow projects and investment to happen more quickly. Revenue models, financing mechanisms and market frameworks
: in emerging sectors we are establishing clear market frameworks (including through the Energy Bill), so the private sector can invest with confidence. This includes revenue models that give investors more certainty about the returns they will make: from CfDs and business models for hydrogen, through to the Nuclear Regulated Asset Base (
RAB
) model and models for
CCUS
. To complement this, our green finance policy framework seeks to ensure sufficient private capital is available to finance our net zero objectives.
Targeted public investment
: Public spending has a role to play where industry and households cannot invest, for instance making our schools and hospitals greener through the Public Sector Decarbonisation Scheme (
PSDS
). Further, in areas where investors face greater risk due to the novelty or scale of a project, government can co- invest alongside the private sector to ensure good projects happen. Government does this directly, for example through the Advanced Fuels Fund for Sustainable Aviation Fuels, or through our major public finance institutions, including the £22 billion
UKIB
. We have set out the role of these institutions in detail in our 2023 Green Finance Strategy. We also continue to provide significant public investment in research and innovation, with £4.2 billion in net zero research and innovation over the period from 2022-25. Figure 5
: The UK’s attractive business and investment environment
1st
New investment projects,
FDI
value by jobs created in Europe. 1st
in G20 as a globally connected economy. 6th
largest economy. 1st
ranked best global green finance centre. 1st
in Europe for value of start-up & scale-up ecosystem. Open, liberal economy
Stable regulatory regime with independent legal status
Globally competitive and transparent tax regime
Generous R&D and patent tax relief
The UK-EU Trade and Cooperation Agreement allows zero tariff market access with the EU
Flexible labour market
World class professional services sector supporting businesses with insurance and finance
The ‘Net Zero Strategy’ set out an indicative ‘delivery pathway’ of emissions reductions to meet our climate targets up to Carbon Budget 6 (2033-37) and stay on track for net zero by 2050. This draws on insights from modelled 2050 net zero scenarios, exploring the range of potential energy and technology solutions, and is designed to drive progress while preserving options and allowing room for change, recognising the level of uncertainty in long-term plans of this kind. It is based on our understanding today of the potential for each sector to decarbonise, considering the balance between sectors that is optimal for the entire economy in terms of delivery and cost. Broken down by sector, our pathway outlines the progress we expect across the economy. Sectors have the potential to make progress at different rates, depending on the availability and deployment of technological solutions, development of supply chains, financing, and infrastructure and a variety of upside and downside risks. For example, the costs of solar, offshore-wind and batteries have consistently fallen faster than expected. Similarly, consumer behaviour and trends are unpredictable and can catalyse realisation of carbon savings sooner than expected. For instance, recent sales of battery electric vehicles have been exceeding expectations. These indicative sector pathways, presented as ranges for residual emissions to reflect the inherent uncertainty, help to drive change and to plan how we can remain on track for the unique economic and institutional environment of the UK to provide long-term certainty and direction for mobilising investment to meet our targets. We welcome the
CCC
’s view and new evidence from the Independent Review of Net Zero that this pathway represents a clear and credible range for emissions reduction in each sector of the economy. The figure below shows emissions reductions based on central assumptions, but these should not be viewed as predictions or targets: the precise emissions savings ultimately contributed by each sector are likely to change. The Technical Annex provides further detail on these uncertainties. Figure 6
: Indicative delivery pathway to 2037 by sector, from the Net Zero Strategy
Nearly 18 months on from the Net Zero Strategy, we have made strong progress. The
CCC
’s 2022 Progress Report to Parliament and the ‘Independent Review of Net Zero’ have highlighted areas where we have made particularly strong progress over the past year – and substantial achievements have been made in a number of areas across our delivery pathway. Our proposals and policies, detailed in our Carbon Budget Delivery Plan, are a dynamic long-term plan for a transition that will take place over the next 15 years, setting us on course to reach net zero by 2050. We recognise the importance of the government’s own set-up in ensuring successful delivery of net zero
. Ensuring that departments are working together to deliver coordinated action consistent with our long-term climate aims has been a priority. Recent progress includes:
Publishing the net zero and energy security outcome delivery plan (
ODP
) to provide a clear, joined-up plan for delivery across our domestic and international climate agenda. Establishing the Domestic and Economic Affairs (Energy, Climate and Net Zero) Cabinet Committee to drive coordinated action across departments and ensure net zero is at the heart of government decision-making. Working with regulators to strengthen their functions to support the net zero transition. This might be through regulation itself, using lighter touch approaches such as Strategy and Policy Statements, or embedding net zero as an internal benchmarking tool. Embedding a systems-driven approach to complex policy problems, with a dedicated net zero systems team engaging across government to upskill civil servants in systems approaches. Managing interdependencies using systems tools to identify and track risks across the net zero portfolio and understand their wider effects. Partnering with local government through our cross-departmental Local Net Zero Forum to address key net zero policy and delivery issues facing local government. This plan is published alongside ‘Powering Up Britain – Energy Security’. These plans set out our ambitious policies which will ensure we can deliver energy security and increase the UK’s international economic competitiveness, while delivering on net zero. There are 2 sides of this: Powering Up Britain – Energy Security is focused on changing decades of reliance on imported fossil fuels, by reducing demand and boosting home grown energy, giving energy resilience the priority it deserves. Powering Up Britain – the Net Zero Growth Plan focuses on our long-term decarbonisation trajectory and how it can improve the UK’s competitiveness, deliver an industrial renaissance and level up the whole of the United Kingdom. These are complementary and should be read together.
While comprehensive, they will continue to evolve and be flexible to adapt to changing circumstances. Together, these plans provide the long-term certainty, revenue models and frameworks and targeted investment that will accelerate delivery of our objectives. The subsequent chapters of this plan outline our progress over the past year in greater detail and summarise our next steps to delivering. The chapters are grouped into sectors and enablers, both reflecting the categories identified in the Net Zero Strategy:
Sectors
: each responsible for a defined range of carbon savings between now and 2050. Sectors cover:
Power
Fuel supply and hydrogen
Industry
Heat and buildings
Transport
Natural resources, waste and F-gases
Greenhouse gas removals (
GGRs
)
Enablers
: each support the transition across the economy covering:
Innovation
Green investment
Net Zero workforce and skills
Embedding Net Zero in government
Local Net Zero
Empowering the public and business to make green choices
International leadership and collaboration
Incorporating recommendations proposed by the
CCC
and the Independent Review of Net Zero will turbocharge delivery. Many of the policy announcements have been informed by the
CCC
analysis of government’s progress, contained in their 2022 Progress Report to Parliament. A full response to the
CCC
recommendations in their 2022 Progress Report to Parliament is covered in a separate annex. Moreover, we can also confirm that we are partly or fully acting upon 23 recommendations from the Independent Review of Net Zero report’s 25 recommendations for 2025. This includes expediting the setup of Great British Nuclear, announcing a new taskforce to deliver on our ambitions for solar power, and setting out long-term commitments to
CCUS
. The government thanks the
Rt Hon
Chris Skidmore
MP
for his contribution to the agenda through his report. The full response to the recommendations set out in the Independent Review of Net Zero is covered in a separate annex. With the announcements, proposals and policies contained within this plan, we will enable carbon budgets to be met. The Carbon Budget Delivery Plan sets out a package of proposals and policies that enable us to meet our next 3 carbon budgets, up to Carbon Budget 6 in 2037, in compliance with section 14 of the Climate Change Act (2008). Carbon Budget 5 was set on the 80% by 2050 trajectory, before the UK legislated for net zero by 2050. Carbon Budget 6 onwards is set on a net zero by 2050 trajectory, as is the UK’s
NDC
announced in December 2020. This commits the UK to reduce all greenhouse gas emissions by at least 68% by 2030 on 1990 levels. As well as meeting our carbon budgets, the policies set out here will progress us towards the UK
NDC
target. The UK remains fully committed to its 2030
NDC
target, which the
CCC
has advised is consistent with the Paris Agreement temperature goal. The UK’s target is estimated to require the fastest rate of reduction in greenhouse gases between 1990 and 2030 of all major economies. We will keep our policy package under review and iterate it as circumstances develop. Finally, updated projections and technical updates to the pathway are included in the
. A secure, reliable, cost-effective, decarbonised power sector is critical for a modern industrial economy. In the Net Zero Strategy, government committed to have a fully low- carbon power sector by 2035, subject to security of supply, to underpin our net zero ambitions. Both the
CCC
and Independent Review of Net Zero recognise the key role that low carbon electricity plays in delivering a low carbon economy consistent with net zero. They also noted the essential role a resilient and energy secure power system plays in the growing and functioning of the UK’s economy and society. To deliver on these goals we need to mobilise significant private investment into low carbon technologies and their associated supply chains, across generation, networks, storage and flexibility. We have published Powering Up Britain – Energy Security, which sets out the government’s plans to enhance our country’s energy security, diversifying through a range of sources; including wind, solar, nuclear and hydrogen. Energy security necessarily entails the smooth transition to low carbon energy in line with Net Zero, even as we acknowledge the vital role natural gas will play for years to come. Decarbonising the power sector whilst meeting a potential 60% increase in electricity demand, by the middle of next decade, has the potential to bring forward £275 – £375 billion of investment from both the private and public sectors. Investment in the electricity network will support the expected increase in peak demand, bringing forward £50 - £150 billion of investment by 2037. Reinforcing the onshore electricity network could support 20,000-80,000 jobs by 2037, in addition to providing further employment in the supply chain. In addition, measures to increase storage and demand side flexibility could support up to 7,000 jobs across the supply chain by 2030. Our proposals and policies for growing the offshore wind sector in line with our ambition for up to
50GW
could support up to 90,000 direct and indirect jobs. For nuclear, we aim to take 1 nuclear project to Final Investment Decision this parliament and 2 in the next parliament, including Small Modular Reactors (
SMRs
). Each large- scale nuclear power plant could support up to around 10,000 jobs at peak construction, in addition to providing further employment in the supply chain. The
CCC
and ‘Independent Review of Net Zero’ set out a series of recommendations for the power sector such as enabling and accelerating the deployment of low carbon technologies, networks, planning and building supply chain, skills, and training. In some cases, these recommendations are already aligned to government’s actions. For instance, we are taking forward most of the renewable electricity related recommendations from both the Independent Review of Net Zero and
CCC
Annual Progress Report, to help accelerate renewable deployment.
On solar, this includes establishing a new government/industry solar taskforce, developing a solar delivery roadmap, and assessing low-cost finance from retail lenders for homes and small business premises. We are also working to build UK training and certification capability for onshore wind and solar, exploring measures to incentivise on-site generation at manufacturing facilities and working to publish the ‘Biomass Strategy’ in 2023. The government has accepted the main recommendation of the Independent Review of Net Zero. We have established Great British Nuclear and will be producing a roadmap later in 2023. Further details can be found in Powering Up Britain – Energy Security. We are also working with the Office for Nuclear Regulation (
ONR
) and Department for Work and Pensions to evolve business and finance arrangements to better support
ONR
investment in future capability and resources. We agree with the ‘Independent Review of Net Zero’s’ recommendation on the Review of the Electricity Market Arrangements (
REMA
) and have set out our plans for the programme in ‘Powering Up Britain - Energy Security’. We ran our first consultation from July to October 2022 and published the summary of responses in March 2023. We aim to publish a second
REMA
consultation in Autumn 2023 and will take decisions on shorter-term reforms more quickly where it is viable to do so throughout the
REMA
programme. We accept the Independent Review of Net Zero recommendation, that government should commit to outlining a clear approach to gas vs. electricity ‘rebalancing’ by the end of 2023/4 and should make significant progress affecting relative prices by the end of 2024. Rebalancing will generate the clear short-term price signal necessary to shift both households and businesses to lower-carbon, more energy efficient technologies like heat pumps. This is vital to meet government’s existing decarbonisation commitments, including our goal of 600,000 heat pumps installed per year by 2028. In 2021, power emissions were around 54
MtCO2e
making up around 12% of total UK net
GHG
emissions (including international aviation and shipping). Natural gas combustion currently makes up the largest share of these emissions. Power emissions have decreased by 6% since 2019 and 73% since 1990. This decrease has resulted mainly from changes in the mix of fuels being used for electricity generation, including the decline of coal and growth of renewables; together with greater efficiency resulting from improvements in technology. In line with the sectoral breakdown of the indicative pathway set out in the ‘Net Zero Strategy’, compared to 2021 emissions levels,
GHG
emissions could need to fall by 42% to 48% on average over 2023-27, by 69% to 74% by 2030 and 79% to 84% on average over 2033-37. Please see the ‘
’ for details of our proposals and policies for meeting the carbon budgets. Accelerated the Contracts for Difference scheme to drive increased deployment by moving to annual auctions and secured
11GW
of new renewable capacity through Allocation Round 4, which was the largest auction to date. We are launching the Floating Offshore Wind Manufacturing Investment Scheme. The scheme will provide up to £160 million to kick start investment in port infrastructure projects needed to deliver our floating offshore wind ambitions. This will give investors the confidence to back this emerging sector, which will make a vital contribution to the UK’s energy security and net zero. Supported the rollout of rooftop projects by removing Value Added Tax (
VAT
) on solar panels installed on residential accommodations until 2027. We launched the Contracts for Difference (
CfD
) Allocation Round 5 in March 2023, which is the first round to run on an annual basis. This round has the potential to support a range of technologies, including offshore wind, onshore wind, solar, tidal, geothermal, and floating offshore wind. Taken important steps to cut the time taken to build renewable electricity plants through progressing the range of measures set out in the British Energy Security Strategy, including planning measures such as a strong need statement for offshore wind and associated infrastructure in the Renewable National Policy Statement which we are publishing for consultation, a fast track process under the Nationally Significant Infrastructure Projects Action Plan (
NSIP
), and cost recovery powers to enable more capacity into key bodies involved in the planning process. Built on the UK’s position as a world-leader in offshore wind by appointing an Offshore Wind Industry Champion, Tim Pick, to spearhead acceleration work and jointly chair the Offshore Wind Acceleration Taskforce (
OWAT
). Announced the launch of Great British Nuclear (
GBN
). We will begin negotiations with Net Zero Teesside Power which, subject to successful negotiations, could be the UK’s first ever power
CCUS
project. Passed the legislation for the Dispatchable Power Agreement (
DPA
), which will provide the basis for negotiations with power
CCUS
projects. Launched a call for evidence on how our future policy framework can support the continued deployment of power
CCUS
projects beyond Track-1. Published a consultation on business models for power bioenergy with carbon capture and storage (Power
BECCS
) and concluded the power
BECCS
project submission assessment process, we will issue a response to the consultation imminently. Appointed Nick Winser as Networks commissioner to advise how to further accelerate transmission network deployment, on top of ongoing actions including a package to halve delivery times, based on a significant programme of reform. Jointly with
Ofgem
, published the Electricity Networks Strategic Framework in August 2022 to set out a shared vision for the transformation of the electricity network required to manage the anticipated increase in electricity demand as we decarbonise. Worked closely with
Ofgem
, network companies and connection stakeholders to speed up connections for new generation and demand, with an action plan to accelerate connections to be published in the summer. Holistic Network Design was published by National Grid Electricity System Operator (
ESO
), setting out for the first time a strategic, coordinated plan for the electricity network needed to support up to
50GW
of offshore wind by 2030.
We have made changes to
Ofgem
regulation to allow network infrastructure to be built ahead of need. This includes an accelerated regulatory approval process for around £20 billion of transmission projects identified in the Holistic Network Design, which sets out the network infrastructure needed to deliver the government’s ambition for up to
50GW
connected offshore wind by 2030. Jointly with
Ofgem
, published a consultation response on our decision to establish the Future System Operator (
FSO
), which will undertake strategic network planning from a whole systems perspective. Launched the £100 million Offshore Coordination Support Scheme to support well-advanced offshore wind and interconnection projects to coordinate their transmission infrastructure. We are launching a consultation on a Strategy and Policy Statement for Energy Policy, and a consultation on community benefits for network infrastructure. Launched a consultation on changes to the energy National Policy Statements, to reflect the strategic importance of and need for network infrastructure and a strategic, co-ordinated approach. Responded to a consultation confirming the outline of a new policy framework for energy smart appliances and demand side response services that will enable the transition to a smart and secure electricity system. Driven rollout of over 30 million smart and advanced meters in homes and businesses across Great Britain, with 55% of all meters now smart or advanced. National Grid
ESO
launched the new Demand Flexibility Service, as an additional tool for them to manage our electricity system this winter. Announced up to £65 million through the Flexibility Innovation Programme to support innovative solutions to enable large-scale widespread electricity system flexibility, alongside up to £68 million through the Longer Duration Energy Storage programme to accelerate technology commercialisation. Published the Electric Vehicle (
EV
) Smart Charging Action Plan in January 2023 to maximise the benefits of energy flexibility from EVs, and to make sure the system is ready to respond in time for the upturn in energy demand. Together with
Ofgem
and Innovate UK, we have responded to the recommendations of the Energy Digitalisation Taskforce setting out our progress and next steps on delivering digitalisation within the energy sector. We continue to progress work with
Ofgem
, the
ESO
, developers and our European partners to realise our ambition of at least 18 GW of interconnector capacity by 2030 and to bring forward pilot Multi-Purpose Interconnectors (
MPIs
). The UK Infrastructure Bank (
UKIB
) has announced that, following an expressions of interest process, it will appoint managers for equity funds covering both short and long duration electricity storage. UKIB
will invest on a matched basis, crowding-in wider sources of finance. Going forward,
UKIB
expect to make direct investments in the electricity storage sector, which was identified as an investment opportunity in their Strategic Plan. We continue to drive forward our vision to power the UK through affordable, home-grown, clean energy. We are working to deliver our aim to fully decarbonise the electricity system by 2035, subject to security of supply. Details of the actions government is taking to enhance our country’s energy security and deliver a smooth transition to a low carbon system in line with net zero are set out in Powering Up Britain – Energy Security. Some of the key actions we are listed below:
We will launch a competitive process to select the best Small Modular Reactor technologies, with first phase commencing in April 2023
We intend to consult in 2023 on the need and potential design options for market intervention to support hydrogen to power
We will publish an action plan this year in response to Electricity Networks Commissioner Nick Winser’s recommendations on halving the development time for transmission network projects
We will establish a solar government/industry taskforce and we will publish a solar roadmap setting out a clear step by step deployment trajectory to achieve
70GW
of solar by 2035
Planning
The planning system is central to delivering our ambitious programme of net zero infrastructure development and building out the clean generation and grid capacity that will power our economy. An effective planning system is needed to support both large scale nationally significant infrastructure like offshore wind, nuclear power and carbon capture, and support local decisions on renewable and low carbon energy. That is why in order to support our net zero and energy security goals, the government is committed to ensuring faster, fairer, and more effective planning regimes, including through changes to the National Planning Policy Framework - generally for local plan-making and decisions - the energy National Policy Statements - for nationally significant decisions - and Electricity Act planning. The government has already demonstrated its commitment to reform, by publishing an action plan in February 2023 to improve the Nationally Significant Infrastructure Project planning process, including regulatory and guidance changes to streamline the process, support digital transformation and address capacity shortfalls that can slow the process down. We are now:
Implementing these reforms as quickly as possible, with powers in Bills currently before Parliament which allow for full cost recovery from developers, allow for shorter statutory deadlines to be set to introduce a fast-track route, and provide for a more strategic and outcomes-based approach to environmental requirements;
Publishing 5 revised energy
NPS
covering renewables, oil and gas pipelines, electricity networks and gas generation, and an overarching Energy Statement for consultation. This includes a new requirement for offshore wind to be considered as “critical national infrastructure”. Delivering an Offshore Wind Environmental Improvement Package. Consulting on community benefits for network infrastructure. Examining evidence on distribution-level consenting to speed up the connections process for the low-voltage network.
Developing upcoming proposals on:
addressing pressing local planning bottlenecks energy efficiency in historic buildings
consulting on changes to the existing permitted development rights which allow rooftop solar and stand-alone ground mounted solar in the grounds of domestic and non-domestic buildings
consulting on a new permitted development right for solar canopies on non-domestic car parks, such as supermarkets
the proposed approach to siting new nuclear projects, and developing a new nuclear National Policy Statement for nuclear electricity generating infrastructure beyond 2025
This significant programme of work will speed up the processing of new energy infrastructure and support our clean growth ambitions. However, given the scale and speed of low carbon infrastructure development needed, we expect that more planning reform will be required. We are looking closely at what other countries have done to speed up infrastructure deployment, including recent developments in Europe. This is a global challenge, where managing the balance between local and environmental protection, securing energy supplies in an unstable world, and urgently tackling climate change are an issue for governments across the world. Low carbon hydrogen is a critical component of our strategy to deliver energy security, drive economic growth and support net zero. The
CCC
and ‘Independent Review of Net Zero’ emphasise the key role that low carbon hydrogen can play in delivering a net zero economy as a versatile replacement for high-carbon fuels used today. It has the potential to help to bring down emissions in vital UK industrial sectors and provide flexible energy for power, heat, and transport. To reach the scale and cost reductions required to help deliver net zero, we are supporting multiple production routes, including
CCUS
-enabled and electrolytic hydrogen. As the
CCC
notes, natural gas will be needed to support hydrogen production for the net zero transition. The ‘British Energy Security Strategy (
BESS
)’ doubled our ambition: to deliver up to 10GW of low carbon hydrogen production capacity by 2030, subject to affordability and value for money. We anticipate that electrolytic production will deliver at least half of this ambition drawing on the scale up of UK offshore wind, other renewables and new nuclear. Excess renewable electricity can be used to produce hydrogen, which can also be stored over time and used to power the grid when needed. This ambition places us in a leading group of countries and would bring significant economic benefits, with potential to unlock up to £11 billion of private investment across production, transport, and storage, supporting 12,000 jobs by 2030. This would support economic growth and levelling up across the country and enable cost savings across the UK electricity system. The UK has already built world leading capabilities - for example in electrolyser and fuel cell manufacture. The case for investing in UK hydrogen is clear. We are consistently in the top 10 countries globally for hydrogen technology patent rates, have a global reputation for advanced energy infrastructure and expertise, and possess highly developed gas infrastructure that can be redeployed. We are delivering policies to support deployment of new low carbon hydrogen production, reduce upfront infrastructure costs, and provide greater clarity and certainty around future demand and revenue streams, through our £240 million Net Zero Hydrogen Fund (
NZHF
) and our Hydrogen Production and Transport and Storage Business Models. Building on this progress, we will take forward the ‘Independent Review of Net Zero’ recommendation to develop a hydrogen production delivery roadmap to show how hydrogen production can be scaled up over the coming decade. We have also progressed the development of
CCUS
-enabled hydrogen. Phase-1 of the
CCUS
Cluster Sequencing process has now concluded and HyNet and the East Coast Cluster were announced as Track-1 clusters prioritised for deployment in the mid-2020s. HyNet will support decarbonisation in the North West and North Wales, while the East Coast Cluster will deliver infrastructure to decarbonise industry and drive economic growth in Humber and Teesside. Within these Track-1 clusters, 2 hydrogen projects have been announced to take forward to negotiations. Hydrogen transport and storage (
T&S
) infrastructure could be key to fully realise future hydrogen demand alongside growing production capacity across the UK. We committed in the British Energy Security Strategy to design hydrogen transport and storage business models by 2025, and consulted on the design of these business models in 2022. With respect to recommendations from the
CCC
and the Independent Review of Net Zero to deliver hydrogen
T&S
business models as soon as possible while supporting ‘no regrets’ projects, and plans for distribution and storage outside our industrial clusters, we aim to respond to our consultation on hydrogen
T&S
infrastructure in Q2 2023, with any further details on strategic planning to align with the production. To bring forward hydrogen
T&S
business models, we are aiming to introduce legislative measures when parliamentary time allows, which will be crucial to designing these new business models by 2025. Our consultation response will provide detail on institutional arrangements for hydrogen system planning, noting the Independent Review of Net Zero recommendation that the Future System Operator take a hydrogen system planning role. In July 2022, our ‘Hydrogen Sector Development Action Plan’ set out government and industry actions to maximise the hydrogen economy’s benefits, including asking industry to lead a process to voluntarily set UK supply chain ambition. We will work with industry over the course of 2023 to develop supply chain strategies for both Hydrogen and
CCUS
, and evaluate what additional intervention, if any, might be required. As we transition to net zero, fossil fuels will retain a crucial role in the energy system, until there are credible clean energy alternatives that can replicate their role. As recognised by the
CCC
, natural gas will play a role for years to come, particularly in the hardest to decarbonise sectors. The upstream oil and gas sector continues to make good progress in decarbonising in line with our North Sea Transition Deal (
NSTD
) and midstream targets.
Last year we published the ‘Climate Compatibility Checkpoint’, which ensures that the compatibility of new licensing with the UK’s climate objectives has been considered before a decision to endorse a new licensing round is made. The
NSTA
then launched the UK’s 33rd oil and gas licensing round in October 2022. Government and industry remain committed to the
NSTD
target to reduce
GHG
emissions from production by 50% by 2030. The Independent Review of Net Zero and the Climate Change Committee made several recommendations for oil and gas production. With respect to greater data availability and transparency, the
NSTA
recently published asset level domestic production emissions dashboards and will update gas footprint analysis comparing imports and domestic production this year. We are committed to ensuring that the Climate Compatibility Checkpoint continues to be an effective tool to shape future policy and will consider further the proposal to develop an offshore industries’ integrated strategy. Government is prioritising the delivery of ambitious targets for oil and gas supply decarbonisation, including the electrification of oil and gas facilities and ending routine flaring and venting by 2030. The
NSTA
already supports industry to build abatement into their facilities and is applying its regulatory powers to require new platforms to include low carbon power, prioritising electrification where technically feasible. We will not accelerate the end to routine flaring from 2030 to 2025 as the 2030 target is already challenging due to the basin’s maturity, noting that retrofitting facilities is expensive and technically challenging. The sector committed to accelerate compliance with the World Bank’s ‘Zero Routine Flaring by 2030’ initiative ahead of 2030, and its Methane Action Plan committed to an ambitious 50% reduction in methane emissions by 2030. The government is working with regulators and industry to continue to drive down flaring and venting gas ahead of the 2030 target. In 2021, fuel supply emissions were around 20
MtCO2e
making up around 4% of total UK net
GHG
emissions (including international aviation and shipping). Upstream oil and gas currently make up the largest share of these emissions. Fuel supply emissions have decreased by 18% since 2019 and 66% since 1990. Since 1990, the largest reductions have been from coal mining and gas leakage. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels,
GHG
emissions could rise by 8% or fall by 2% on average over 2023-27, fall by 22% to 33% by 2030 and 43% to 52% on average over 2033-37. Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. Doubled our ambition from
5GW
to up to 10GW low carbon hydrogen production capacity by 2030, subject to affordability and value for money, with at least half from electrolytic hydrogen. Launched the £240 million
NZHF
in April 2022 and the first electrolytic hydrogen allocation round in July 2022, and published Heads of Terms for the Hydrogen Production Business Model in December 2022. Published a shortlist of 20 projects to invite to the next stage of due diligence for the first electrolytic hydrogen allocation round alongside this document. We have also announced that 2 hydrogen projects have been taken forward to negotiations under Track-1 Phase-2 of the
CCUS
Cluster Sequencing Process. Awarded contracts for 23 feasibility studies and 5 demonstration projects under the £60 million Low Carbon Hydrogen Supply 2 competition. Published a consultation on a Hydrogen Certification Scheme, as part of our commitment from the British Energy Security Strategy to set up a scheme by 2025, building on the Low Carbon Hydrogen Standard, which was published in April 2022 and helps ensure government supports truly low carbon projects only. We have published a consultation on high level design options for hydrogen
T&S
business models, along with an independent consultancy study reviewing hydrogen
T&S
infrastructure requirements up to 2035. We continue to support strategically important investments by early movers in industry, including through the announcement of an extension to the Industrial Energy Transformation Fund. Subject to business case approval, the government plans to allocate a further £185 million to help industrial sites to adopt decarbonisation technologies. We are encouraging other early use cases whilst bringing forward applications with the greatest strategic potential to support deep decarbonisation of the UK economy as well through further competition rounds of the Net Zero Innovation Portfolio and transport trials, consulting on Decarbonisation Readiness Requirements for new build and substantially refurbishing combustion power plants, trials in hydrogen for heating and consulting on boilers being hydrogen-ready from 2026 (see Buildings chapter). We appointed Jane Toogood as UK Hydrogen Champion to help galvanise industry and investors to accelerate the development of the UK hydrogen economy. The Hydrogen Champion has met extensively with stakeholders across industry to assess opportunities and identify barriers to achieving this, making several recommendations in an independent report published on 22 March 2023. Our ‘North Sea Transition Deal One Year On’ report announced the Government and Regulators Electrification Group (
GREG
) to explore barriers to electrification, and an industry Task and Finish Group. In Autumn 2022, the
GREG
moved to resolve specific barriers to electrification, engaging widely to prioritise issues. We continue to work closely with projects and regulators, including
NSTA
and
Ofgem
. We fulfilled the Net Zero Strategy commitment to launch the Climate Compatibility Checkpoint. We introduced an 80% investment allowance under the Energy Profits Levy, incentivising industry to invest in upstream decarbonisation. Crown Estate Scotland and the Scottish Government launched the Innovation and Targeted Oil and Gas (
INTOG
) sectoral marine plan and seabed leasing round for offshore wind, aiming to power oil and gas assets in Scottish Waters. The outcome of the
INTOG
round was announced on 24 March, confirming 13 projects. Several North Sea electrification projects are in development, including large ‘hub’ solutions which provide power connections to onshore electricity grids and link up to nearby offshore wind - these are critical to wider electrification delivery and the emerging floating offshore wind sector.
The Health and Safety Executive (
HSE
) -led Iron Mains Risk Reduction Programme (
IMRRP
) addresses gas distribution network leaks by replacing iron mains with plastic pipes within 30 metres of buildings through to 2032. By 2032, this will deliver a 66% reduction in CO2e
GHG
emissions since 2014, with c.5% of iron mains remaining. For hydrogen
, we will:
enter due diligence with 20 projects in the first electrolytic hydrogen allocation round (
HAR1
), through which we intend to award contracts in Q4 2023 totalling up to 250MW of capacity, subject to affordability and value for money
aim to launch a second electrolytic hydrogen allocation round (
HAR2
) in Q4 2023 and aim to award contracts to up to 750MW of capacity in early 2025, subject to affordability and value for money, to deliver up to
1GW
of electrolytic low carbon hydrogen production capacity in construction or operation by 2025
aim to engage with industry on the draft full form Low Carbon Hydrogen Agreement (
LCHA
) in Q2 2023 with the intention of publishing the final
LCHA
for initial projects from Q3 2023
aim to publish a response to our consultation on the design of business models to support hydrogen
T&S
infrastructure by the end of Q2 2023, with any further details on strategic planning to align with the production roadmap. To bring forward hydrogen
T&S
business models, we are aiming to introduce legislative measures when parliamentary time allows, which will be crucial to designing these new business models by 2025
aim to publish a delivery roadmap this year to show how hydrogen production can be scaled up over the coming decade
publish the first revisions of the UK Low Carbon Hydrogen Standard this year
For oil and gas
, we will see:
Exclusivity Arrangements awarded by Crown Estate Scotland to
INTOG
projects
further moves from industry towards our target of ending routine flaring & venting by 2030
future industry investment decisions to deliver the first electrification projects
‘Powering Up Britain – Energy Security’, published alongside this plan, sets out more information on government’s approach to securing cleaner energy. Carbon Capture, Usage, and Storage
Carbon Capture, Usage and Storage (
CCUS
) is an emerging sector that is of central importance to decarbonising the UK’s economy. It will enable the decarbonisation of hard to abate industrial sectors and enable low-carbon hydrogen production and flexible low-carbon electricity generation to complement other forms of low carbon power, along with engineered greenhouse gas removals. CCUS
forms part of the most cost-effective route to net zero, and represents a significant economic opportunity, with the potential to support up to 50,000 jobs by 2030 and deliver £4.3 billion in
GVA
by 2050 through exports. The UK is the place to invest in
CCUS
– it is in the top 5 countries globally for
CCUS
readiness and has one of the largest potential
CO2
storage capacities in Europe. We are committed to deploying
CCUS
in 2 industrial clusters by the mid-2020s and 4 clusters by 2030, with the aim of capturing and storing 20-30Mt
CO2
per year by 2030. By 2030, these clusters aim to enable
CCUS
for 6Mtpa of
CO2
from industrial sectors, at least 5Mtpa of
CO2
from engineered greenhouse gas removals, the gas
CCUS
capacity required to keep us on a pathway towards our power sector decarbonisation ambitions and
CCUS
support for the delivery of up to half of the 10GW ambition of low carbon hydrogen production. CCUS
may need to reach storage capacity to store a total of at least ~50 Mtpa
CO2
by the mid-2030s. Significant progress has been made in creating this new sector, and our policies and incentives aim to reduce upfront infrastructure costs and de-risk early investment in a competitive and growing industry. We have:
Developed business models across the value chain which provide the minimum required initial revenue support to attract private investment, ensuring an appropriate method to wind down government support when industry can self-fund
CCUS
and hydrogen projects. Set out measures in the Energy Bill, that will establish an economic regulatory framework for
CO2
networks. Selected HyNet (Northwest England and North Wales) and the East Coast Cluster (Teesside and Humber) as the first 2 clusters. Alongside this document, we are announcing the Track-1 negotiations project list of 8 capture projects for these clusters across the hydrogen, power, industry, and waste sectors that have been successful in proceeding to negotiations in the next stage of the programme. Of these, there are 3 Industrial Carbon Capture, 2 Energy from Waste, one power-
CCUS
and 2 Hydrogen projects. Announced an intent to increase the size of the 2 initial clusters by expanding transport and storage capacity and additional capture projects. Launched Track-2 of the
CCUS
cluster sequencing process to establish 2 further
CCUS
clusters. Launched the UK energy supply chain taskforce to maximise opportunities, enhanced UK Export Finance’s support for attracting investment in
CCUS
and identified existing infrastructure that could support
CCUS
; industry is working through the
CCUS
Council to publish a Supply Chain Strategy in summer 2023. The
NSTA
ran the UK’s first ever carbon storage licensing round with 13 potential areas available: 26 bids under evaluation with a view to awarding licences in April 2023. We could need as many as 100 stores to meet our net zero targets. The above actions provide a clear roadmap to meeting our 2030 commitments. To meet our Carbon Budget 6 commitments, taking into account recommendations from the ‘
CCC
’s 2022 Progress Report to Parliament’ and the ‘Independent Review of Net Zero’, we will also:
Work with industry to progress development of non-pipeline transport in a timeframe consistent with our Track-2 objectives, supporting decarbonisation of sites away from
CO2
stores or industrial clusters suggested in the ‘Independent Review of Net Zero’. Ensure additional clusters identified for 2030 or expansion of the first 2 clusters can demonstrate options for the delivery of non-pipeline transport projects from 2030.
Set out a vision for the UK
CCUS
sector to raise confidence and improve visibility for investors as suggested in the ‘Independent Review of Net Zero’. The UK Infrastructure Bank (
UKIB
) has also identified
CCUS
as an investment opportunity in its first strategic plan. The Bank is engaging the market and projects, focusing on how it can accelerate delivery of the UK’s first
CCUS
clusters. Projects are encouraged to speak to
UKIB
about their financing needs. Subject to proposals meeting its investment principles, the bank stands ready to invest. The building blocks for the creation of a new
CCUS
sector supporting our net zero ambition are in place and the delivery of the first 4 clusters is underway. This, together with the additional areas outlined above, will enable industry and government to deliver on our net zero and
CCUS
objectives. UK industries combine high-end technology and highly-skilled workers with the ingenuity to make products that are traded all over the world. Through the Industrial Decarbonisation Strategy, the UK was the first major economy to set out how we can have a thriving industrial sector aligned to net zero, which also supports jobs, growth, and investment. There is a role for government in helping to increase the rate of adoption of low carbon technologies, particularly when these technologies are not yet fully cost-competitive or price-competitive compared to established practices. Progress in industrial resource efficiency and energy efficiency (
REEE
) is key to reaching net zero. REEE
measures could contribute up to 12
MtCO2e
of annual savings by 2050 (excluding potential additional savings from the Iron and Steel sector). The Energy Efficiency Taskforce will play a vital role in bringing government and business together to deliver ambitious
REEE
savings. It will advise and work with ministers on the delivery of the government’s ambition to reduce, by 15%, the UK’s final energy consumption from buildings and industry by 2030, compared to 2021 levels. This applies to domestic and commercial buildings and industrial processes, with a particular focus on the role of the private sector and stimulating investment. We will replace 50TWh of fossil fuels per year by 2035 to support industrial fuel switching. Electrification has the potential to reduce annual industrial greenhouse gas emissions by between 7 and 19
MtCO2e
, contributing between 15% and 40% of the necessary carbon abatement in industry by 2050. The level of electrification uptake will depend on a secure supply of electricity, grid access, technology innovation, and the relative cost of electricity compared to other fuels. We recognise that there are barriers to fuel switching to electricity, including the relative cost of electricity compared to gas, and we plan to launch a call for evidence in 2023 to seek views on overcoming these challenges. Low carbon hydrogen could play a role in decarbonising industrial manufacturing. Hydrogen can be used both for indirect heating applications, such as to fuel industrial boilers or combined heat and power (
CHPs
) plants, and for direct heating processes, such as in a furnace or kiln. Hydrogen, along with other options, can also help decarbonise non-road mobile machinery, another significant source of
GHG
emissions. By 2050 industry could use between 40-110 TWh of hydrogen as a fuel each year, abating between 4 – 21
MtCO2e
per annum, depending on hydrogen availability. Our UK Low Carbon Hydrogen Standard and the Hydrogen Production Business Model are intended to incentivise the uptake of hydrogen across UK industry (see
for more on our strategy). CCUS
will play a vital role in transforming industrial sectors such as refining, cement, and chemicals. It can also support the transformation of our industrial regions into low carbon manufacturing clusters, creating high value jobs to help level up the economy. We have committed to deploy
CCUS
in at least 2 industrial clusters in the mid-2020s, and in 4 clusters by 2030. This will enable
CCUS
deployment and support our ambition to capture and store 6
MtCO2
per annum of industrial emissions by 2030 and 9
MtCO2
per annum by 2035. We announced £20 billion of investment in the early development of
CCUS
in March 2023, and have developed business models to de-risk and incentivise private investment, and we have now announced the Track-1 project negotiation list, including industrial capture projects. We also anticipated that further savings of 1
MtCO2
per annum after 2030 could be delivered. The best mechanism for delivering these additional savings, including the role of industrial carbon capture, remains under review. We are determined that our efforts to decarbonise industry and reduce emissions are not undermined by carbon leakage. The consultation Addressing Carbon Leakage Risk to Support Decarbonisation, published alongside this plan, is a significant step forward in setting a new framework to mitigate this risk and considers a range of domestic policy options to protect against carbon leakage, including both a carbon border adjustment mechanism (
CBAM
) and mandatory product standards. Decarbonising our industrial sector has the potential to unlock £19 billion in public and private investment across the UK in line with our 2037 delivery pathway. This could support up to 4000 jobs directly in industry for the manufacture and installation of on-site energy efficiency measures and up to 50,000 jobs across industry, power and the transport and storage network for the deployment of CCS. In 2021, industry emissions were around 76
MtCO2e
making up around 17% of total UK net
GHG
emissions (including international aviation and shipping). The largest emissions sources include manufacturing and construction (for example, iron and steel, chemical, and cement), oil refineries and industrial non-road mobile machinery. Industry emissions have decreased by 3% since 2019 and 52% since 1990. Since 1990, the largest reductions were from manufacturing and construction (for example, iron and steel) and adipic acid production.
In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels,
GHG
emissions could fall by 15% to 25% on average over 2023-27, 41% to 52% by 2030 and 62% to 75% on average over 2033-37. Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. Phase 2 of the Cluster Sequencing process launched in November 2021. Projects to proceed to the due diligence stage of the Phase 2 process have been announced. Publication package on
ICC
business models was released in December 2022. The Chancellor announced £20 billion of investment in the early development of
CCUS
in March 2023. We have now announced the Track-1 project negotiation list, including industrial capture projects. Completed 6 application rounds of the £289 million Industrial Energy Transformation Fund (
IETF
). Successful applications can be found online and came from a diverse range of sectors, locations, and company sizes. Published the government response to our consultation on strengthening the Energy Saving Opportunity Scheme (
ESOS
) and introduced clauses in the Energy Bill to provide enabling powers to strengthen
ESOS
. Responded to the Environmental Audit Committee’s report on Building to Net Zero, outlining our intention to consult this year on our approach to the measurement and reduction of embodied carbon in new buildings. Collaborated with the
UKRI
-funded National Interdisciplinary Circular Economy Research (
NICER
) programme to strengthen our evidence base on resource efficiency initiatives. Progressed work on how consumer labelling can inform consumers of durability, repairability and recyclability, and will incorporate these findings into future work. Supporting energy and trade intensive industries through the Energy Bills Discount Scheme
Consulting on proposals to ‘rebalance’ the costs placed on energy bills away from electricity to incentivise electrification across the economy. Extending the Energy Intensive Industries (
EII
) Compensation Scheme for a further 3 years and subsequently announced the British Industry Supercharger. Continued to support the engineering and technical design elements of decarbonisation projects across industrial clusters through the £210 million Industrial Decarbonisation Challenge, delivered through UK Research and Innovation (
UKRI
). Consulted with industry on implementing a net zero consistent cap for the UK
ETS
, reviewing Free Allocation policy and expanding the use of emissions trading across the economy. Government has published an initial response covering proposals implemented by 2023. Responded to our Industrial Carbon Capture (
ICC
) business model consultation and published the latest contractual drafting underpinning the
ICC
and Waste
ICC
business models. Introduced a spending power in the Energy Bill to provide financial assistance for
CCUS
, low carbon hydrogen production and hydrogen transportation and storage. This is intended to facilitate payments under the
ICC
business models, funded through the £1 billion CCS Infrastructure Fund (CIF) and Industrial Decarbonisation and Hydrogen Revenue Support (
IDHRS
) scheme. We are working with the devolved administrations on those parts of the Bill that are within devolved competence. Announced £5 million of grants through the Local Industrial Decarbonisation Plans competition. Grants will support industry outside the main industrial clusters (in “local clusters”) to develop strategic decarbonisation plans focused on shared infrastructure and integrated solutions. This UK-wide competition is intended to launch in summer 2023. Committed to consult on bolstering environmental regulation of industry to ensure it integrates regulation of
GHG
and other emissions. Published a consultation on Addressing carbon leakage risk to support decarbonisation. Explores a range of domestic policy options to mitigate the risk of carbon leakage and ensure UK industry has the optimal policy environment to decarbonise. Accepted the recommendation for a cross-government strategy to decarbonise non-road mobile machinery (NRMM). We are running research projects and will launch a call for evidence to develop our evidence base on options to decarbonise NRMM. Consulting on the policy design of measures to drive reductions in demand, in line with the
CCC
’s recommendation. We are consulting on policies to address carbon leakage, including a UK
CBAM
and/or mandatory low-carbon product standards, alongside our review of policy on free allocations under the UK Emissions Trading Scheme. Set out our ambitions for hydrogen (in the ‘
’ of this report). Our upcoming call for evidence on industrial electrification will address recommendations regarding the barriers to this decarbonisation technology. To drive our progress in decarbonising industry, we will:
Launch a call for evidence on Industrial Electrification in 2023. We also accept the recommendation that government should commit to outlining a clear approach to gas vs. electricity ‘rebalancing’ by the end of 2023/4 and should make significant progress affecting relative prices by the end of 2024. Open the £5 million Local Industrial Decarbonisation Plans competition for bids in Summer 2023. Extend the current Climate Change Agreements Scheme by 2 years, providing Climate Change Levy discounts in return for meeting energy efficiency or carbon reductions targets. Publish the ‘Biomass Strategy’ in 2023. The ‘Biomass Strategy’ will review the amount of sustainable biomass available to the UK and how this resource could be best utilised across the economy to help achieve the government’s net zero and wider environmental commitments while also supporting energy security. Launch a digital energy advice service for small businesses this year to give impartial, trusted advice on improving non-domestic energy efficiency, reducing their energy use and bills. We will also be piloting a new audit and grant scheme this year enabling small businesses to move from insight to implementation of energy efficiency measures. The government has consulted on proposals for the private rented sector and will publish the government response in due course. We will also consider how we can further support greater energy efficiency in owner-occupied commercial buildings. Publish a consultation to review the current Batteries Regulations in the second half of 2023. This will consider measures to promote the recovery, reuse, or recycling of all battery chemistry types. Begin work on an NRMM strategy in 2023, as recommended by the
CCC
.
We intend to launch a Call for Evidence on NRMM decarbonisation options in Autumn 2023. Publish a roadmap for increasing the use of timber in construction by summer 2023. Consider options to further formalise productive cross-government policy making and joined-up strategy to support resource-efficient circular economy business models in industry. This work will build on existing industry partnerships, cross-government research, and the work of the newly created Energy Efficiency Taskforce. Begin negotiations with 3 industrial carbon capture projects as part of Phase-2 of Track-1 of the
CCUS
Cluster Sequencing Process. UK Emissions Trading Scheme
The Independent Review of Net Zero recognises that the UK has been a global leader in emissions trading for more than twenty years. Since 2021, the UK Emissions Trading Scheme (UK
ETS
) has placed the power of the market at the heart of the UK’s net zero strategy. The Review sets out an enhanced role for the UK
ETS
as a foundation for a thriving, decarbonised economy through 2050 and beyond. It shows how, with a long-term commitment to an expanded market, we can unlock investment in UK infrastructure; catalyse innovation in the UK’s world-leading science and technology; and support UK businesses with the most cost-effective and flexible means to deliver net zero. We will explore expanding the scheme to more sectors of the economy, including high emitting sectors. We will shortly publish a government response to our consultation on initial expansion of the UK
ETS
’s scope to cover energy from waste/waste incineration and domestic maritime emissions. We intend to legislate to continue the UK
ETS
beyond 2030 until at least 2050. It will remain aligned with our net zero target, giving the private sector the certainty they need to invest in decarbonisation. We will explore the potential role of emissions trading markets in gas/electricity price rebalancing as we consider options for rebalancing policy costs away from electricity and onto fossil energy use when the current high gas prices fall. Using findings from the call for evidence on the role of robust monitoring, reporting and verification (
MRV
) of greenhouse gas emissions on farms in last year’s UK
ETS
consultation and additional evidence from ongoing research projects, we will develop a harmonised approach for measuring carbon emissions from farms, which could help unlock new routes to decarbonisation and financial opportunities. We do not propose expanding the UK
ETS
to agriculture at this time. Throughout the development of the UK
ETS
, we will undertake full consultation on our proposals. We are committed to ensuring that carbon leakage risks are mitigated at all stages of the UK’s net zero transition. We are currently reviewing our approach to free allocation of
ETS
allowances, looking at ways to better target free allocations for those most at risk of carbon leakage to ensure they are fairly distributed. We are also considering other potential mitigation approaches – as set out in today’s consultation Addressing carbon leakage risk to support decarbonisation. It has never been more critical to ensure secure, affordable heating for households, and accelerate the UK’s transition to net zero. Decarbonising our building stock will bolster UK energy security by minimising our exposure to volatile fossil fuel prices. It will drive investment into low-carbon technologies such as heat pumps, heat networks, and potentially hydrogen, while reducing bills for households and businesses. We have made significant progress since the ‘Net Zero Strategy’. We are investing over £6.6 billion this Parliament towards improving energy efficiency and low-carbon heating, with targeted regulation and new market-based mechanisms helping to reduce costs for consumers and businesses, attract greater private investment and strengthen supply chain resilience. We are delivering several ‘Help to Heat’ schemes, such as the Social Housing Decarbonisation Scheme, to support the installation of insulation and heat pumps, with targeted support for low-income households and the least energy efficient homes. We are also increasing public awareness of low- and no-cost actions through the ‘It all adds up’ campaign. We have published, following consultation, our plans for a new Energy Company Obligation scheme – the Great British Insulation Scheme. This landmark scheme will support over 300,000 households to improve their energy efficiency through measures such as loft and cavity wall insulation, keeping homes warmer and more comfortable while saving people money on their bills. However, we can still go further. That is why we have already committed an additional £6 billion between 2025 and 2028, demonstrating our long-term commitment to driving energy efficiency and clean heat in our building stock. We have launched the Energy Efficiency taskforce to help deliver our ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030, relative to 2021 levels. The taskforce will focus on stimulating private investment and increasing green finance options, galvanising supply chains, and increasing public and business engagement with energy efficiency. This will include building public understanding, awareness of support, and uptake of clean heat technologies such as heat pumps. These actions will also unlock bill savings, as a typical household heating their home to a comfortable temperature can be expected to save over £1,000 per year by improving to EPC band C from the worst energy efficiency bands. As well as supporting households we are putting in place measures to reduce demand from large businesses and improve the efficiency of industrial processes. The Independent Review of Net Zero highlights substantial progress so far, with recommendations focused on how to accelerate progress to meet the scale of the challenge. The Review recommended that we provide greater certainty on increasing heat pump installations. The government is firmly committed to making the UK one of the largest markets in the world for heat pumps, and we can confirm that, as recommended by the Review, the Boiler Upgrade Scheme will be extended until 2028.
We are putting in place a combination of regulatory and public spending measures to make heat pumps as cheap to buy and run as fossil fuel boilers, to achieve at least 600,000 heat pump installations a year by 2028. We have consulted on phasing out new and replacement fossil fuel heating systems for off gas grid properties, and will respond to these consultations. The government has an ambition to phase out all new and replacement natural gas boilers by 2035 at the latest, and will further consider the ‘Independent Review of Net Zero’ recommendation in relation to this. We accept the Independent Review of Net Zero recommendation that government should commit to outlining a clear approach to gas vs. electricity ‘rebalancing’ by the end of 2023/4 and should make significant progress affecting relative prices by the end of 2024. In 2021, buildings emissions were around 88
MtCO2e
making up around 20% of total UK net
GHG
emissions (including international aviation and shipping). Residential combustion currently makes up the largest share of these emissions (78%), the vast majority of which is from heating. Buildings emissions have increased by 5% since 2019 and decreased by 19% since 1990. Annual buildings emissions are particularly volatile as impacted by external temperatures. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels,
GHG
emissions could fall by 7% to 17% on average over 2023-27, 25% to 37% by 2030 and 47% to 61% on average over 2033-37. Please see the Carbon Budget Delivery Plan annex for details of our proposals and policies for meeting the carbon budgets. Launched a new Energy Efficiency Taskforce, to accelerate energy demand reduction and drive energy efficiency improvements to bring down bills for households and businesses. Investing approximately £3 billion this Parliament in domestic energy efficiency upgrades through our decarbonisation schemes, delivering improvements to 230,000 – 290,000 homes, and saving customers between £400 - £700 per annum on their energy bills (based on £2500 price cap). We have also committed £1 billion per annum until 2026, supporting low-income households with energy efficiency measures through the Energy Company Obligation (
ECO
4). Integrated the Simple Energy Advice website into an enhanced government website with tailored advice and consumer options for spend-to-save improvements for people’s homes. Introduced an uplift to energy efficiency standards for new homes in June 2022, which must now deliver around 30% fewer
GHG
emissions compared to previous standards. The uplift is a stepping-stone to the revised Future Homes Standard, which we will consult on in 2023, ahead of legislating in 2024 and full implementation in 2025. Published a consultation to ensure The Energy Performance of Buildings (England and Wales) Regulations 2012 are fit for purpose and reflect our net zero ambitions. These include changes to make sure Energy Performance Certifications (
EPCs
) are reliable and trusted, such as considering new civil penalties when certificates are not provided. Following the 2020 Social Housing White Paper, the 2021 Heat and Buildings Strategy committed government to consider setting a new regulatory standard of EPC Band C for the social rented sector. We have committed to begin the consultation process on a minimum energy efficiency standard for the social rental sector, within 6 months of the Social Housing Regulation Bill receiving Royal Assent. Made over £1 billion available through Public Sector Decarbonisation Scheme Phases 1 and 2 to support heat decarbonisation and energy efficiency in the public sector. Phase 3 is delivering a further £1.4 billion between 2022-2025 to support a 75% reduction in public sector buildings
GHG
emissions by 2037. Launched a £450 million Boiler Upgrade Scheme (BUS), with over 15,000 voucher applications so far. BUS has enabled energy suppliers and mortgage lenders to offer low-finance options, and installers intend to ramp up deployment. Launched a £30 million Heat Pump Investment Accelerator competition in March 2023, to expand heat pump manufacturing. We have consulted on phasing out new and replacement fossil fuel heating systems for off gas grid properties, and will respond to these consultations in due course. Implementing the Clean Heat Market Mechanism in 2024, a market-based incentive for manufacturers to increase installation of low-carbon heating systems relative to the sale of fossil fuel boilers. This is through the Energy Bill. Cut rate of
VAT
on the installation of heat pumps and insulation to 0% for 5 years in March 2022, to help boost clean heat uptake. Continued to grow and decarbonise the UK heat network market through the Green Heat Network Fund and the Heat Network Efficiency Scheme. We can now confirm that capital support will be extended to 2028 to facilitate the continued growth of low carbon heat networks, including £220 million for the Heat Network Transformation Programme over 2025/6 and 2026/7. Supporting industry to deliver a neighbourhood hydrogen heating trial by 2024 and a village scale trial of hydrogen heating by 2025 (location to be announced in 2023) to take decisions in 2026 on the role of hydrogen in decarbonising heating. We are also supporting industry in the development of a hydrogen town plan. In addition, we have consulted on mandating hydrogen-ready boilers and broader heating system efficiencies. Launch the Great British Insulation Scheme. Based on proposals announced last year as
ECO
+, this will deliver £1 billion additional investment by March 2026 in energy efficiency upgrades, such as loft and cavity wall insulation. It will extend help to a wider group of households in the least efficient homes in the lower Council tax bands as well as boosting help for those on the lowest incomes. We plan to lay legislation by the summer to take it forward. Work with the Energy Efficiency Task Force, which will publish its action plan later this year. Extend the Boiler Upgrade Scheme to 2028 and enhance its current marketing campaign, to increase consumer awareness and further encourage take-up.
Publish a summary of responses to the consultation on improving the energy performance of privately rented homes, respond to the consultation on improving home energy performance through lenders. We plan to consult by the end of this year on how to improve the energy efficiency of owner-occupied homes. The government has consulted on proposals for the private rented sector and will publish the government response in due course. We will also consider how we can further support greater energy efficiency in owner-occupied commercial buildings. Publish a full technical consultation for Future Homes Standard and Future Building Standard in 2023. Introduce a regulatory framework for heat networks and begin the implementation of heat network zoning by 2025. Transport is the largest emitting sector and decarbonising it is a key priority. The 2021 Transport Decarbonisation Plan and the Net Zero Strategy put the sector on an ambitious path to net zero by 2050, and we are making good progress against the
CCC
and Independent Review of Net Zero recommendations. Our plans will deliver wider benefits across the UK - bolstering energy security, unleashing economic growth, and supporting a healthier population and environment. We have provided strong market signals and incentives to drive supply chain development, and this is already unlocking significant private investment. For example, our commitment to zero emission vehicles has led to hundreds of millions of pounds of private investment in charging infrastructure. We are a world leader in the production and use of low carbon fuels, with independent analysis conducted for Sustainable Aviation forecasting the potential for 65,000 jobs to be created by a UK sustainable aviation fuel (
SAF
) industry by 2050, and £1.9 billion of direct
GVA
benefit per annum. To accelerate sector growth, we have an ambitious plan to support innovation and deployment of low carbon technologies, reducing costs to households and businesses. The rapid adoption of battery electric cars has exceeded the
CCC
’s trajectory,
with industry statistics showing that nearly 17% of new cars sold in 2022 were battery electric, up from 12% in 2021. We are leading the way internationally with our commitment to deliver the
ZEV
mandate from 2024, making good on one of the Independent Review’s 25 key actions for 2025. This is supported by our Electric Vehicle (
EV
) Infrastructure Strategy action plan, with major government investment alongside the private sector through our Local
EV
Infrastructure and Rapid Charging Funds. We welcome the
CCC
’s recognition of wider progress in reducing emissions from surface transport. This includes consulting on ending the sale of new non-zero emission L-category vehicles and buses, coaches, and minibuses, and announcing phase out dates for the sale of new, non-zero emission heavy goods vehicles (
HGVs
). Our Zero Emission Road Freight Demonstrator programme will deploy hundreds of zero emission
HGVs
in multiple technologies on UK roads. Alongside other measures, this will support delivery of the Independent Review of Net Zero’s recommendation to accelerate decarbonisation of the wider freight sector. We welcome the Independent Review of Net Zero’s recognition of the important role for low carbon fuels (
LCFs
) in decarbonising sectors such as aviation and maritime, and will deliver on its recommendation to publish a Low Carbon Fuels Strategy this year to provide certainty for industry and investors over the role
LCFs
will play across modes out to 2050. We continue to make progress delivering on our ambitions for a thriving domestic sustainable aviation fuel (
SAF
) market, supported by a comprehensive policy package that includes a further consultation on our
SAF
mandate, responding to the government-commissioned independent evaluation of developing a sustainable long-term UK
SAF
industry, and launching a second application window for the £165 million Advanced Fuels Fund. In 2021, domestic transport emissions were around 109
MtCO2e
making up around 25% of total UK net
GHG
emissions (including international aviation and shipping). Road transport constitutes the majority of these emissions. Domestic transport emissions have decreased by 11% since 2019 and 15% since 1990, though 2021 emissions were impacted by COVID-19 and resultant restrictions on movement. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels,
GHG
emissions could fall by 2% to 8% on average over 2023-27 27% to 39% by 2030 and 61% to 73% on average over 2033-37. Please see the Carbon Budget Delivery Plan annex for details of our proposals and policies for meeting the carbon budgets. International aviation and shipping were significantly impacted by COVID-19 and resultant restrictions on movement. In 2021, international aviation and shipping emissions were around 20
MtCO2e
making up around 4% of total UK net
GHG
emissions (including international aviation and shipping). In 2019, international aviation and shipping emissions were around 44
MtCO2e
making up around 9% of total UK net
GHG
emissions (including international aviation and shipping). In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2019 emissions levels due to severely depressed demand in 2021,
GHG
emissions could fall by 11% or rise by 5% on average over 2033-37. Please see the Carbon Budget Delivery Plan for details of our proposals and policies for meeting the carbon budgets. We published our response to the Green Paper on a new regulatory framework for vehicle
CO2
emissions, and a technical consultation on
ZEV
mandate design in April 2022. We have now launched our final consultation on the
ZEV
mandate regulations, to apply from 2024, ensuring delivery of our commitment to phase out the sale of new non-zero emission cars and vans. We consulted on dates to phase out new non-zero emission buses and L-category vehicles. At
COP26
we announced phase out dates for the sale of new non-zero emission
HGVs
: 2035 for
HGVs
of 26 tonnes and under and 2040 for
HGVs
over 26 tonnes. We completed the first year of the Zero Emission Road Freight Trial programme, including feasibility studies and deployment of twenty battery electric rigid trucks.
We are expanding this as part of the Zero Emission Road Freight Demonstrator programme, to demonstrate HGV technologies at scale on UK roads. We supported increased availability of public charging devices, more than tripling in 4 years from 10,300 devices in January 2019 to over 37,600, including more than 7,500 rapid devices, in February 2023. Alongside disability charity Motability, co-sponsoring the British Standards Institute (
BSI
) in providing world-first specifications on designing and installing accessible public
EV
chargepoints. We are continuing to incentivise the purchase of battery electric vehicle company cars by confirming preferential benefit in kind rates out until April 2028. In February 2023 we announced £200 million for new walking and cycling schemes and projects to enable safer and more inclusive active travel. In July 2022 we published the second Cycling and Walking Investment Strategy (
CWIS2
), which included an objective to deliver a world-class cycling and walking network in England by 2040. We published the Jet Zero Strategy in July 2022, which introduces a world first in-sector emissions reduction trajectory that sees UK aviation emissions peak in 2019. We have set a 2040 net zero target for domestic aviation and in February 2023 published a call for evidence to seek views on further action required to achieve our target for airport operations in England to be zero emission by 2040. We have committed to having at least 5 UK Sustainable Aviation Fuel (
SAF
) plants under construction by 2025, supported by the £165 million Advanced Fuels Fund, and to introduce a
SAF
mandate targeting at least 10%
SAF
in the UK aviation fuel mix by 2030. We are launching a second consultation on the mandate’s design as well as a second window of the Advanced Fuels Fund. We commissioned an independent review to help understand the conditions needed to create a sustainable long-term UK
SAF
industry in October 2022, and will imminently respond to its findings, and will work with industry on options to increase revenue certainty for UK
SAF
plants and options to stabilise the UK market for feedstocks. We have led in
ICAO
negotiations on adopting a 2050 net zero target and maintaining the integrity of the Carbon Offsetting Reduction Scheme for International Aviation. We have committed to working closely with academia and industry to better understand the science and potential mitigations non-
CO2
impacts from aviation. We published the Course to Zero consultation in July 2022, seeking views and evidence on the optimal pathway to net zero
GHG
emissions for domestic maritime by 2050. We launched the Operation Zero implementation plan, to deliver zero-emission operations and maintenance vessels in the North Sea offshore wind sector by 2025 and announced the £206 million
UK SHORE
research and development programme. We are championing a 2050 zero emissions target for international shipping through a leading role in IMO negotiations and launched the Clydebank Declaration at
COP26
, now with 24 state signatories, committing to support zero emission shipping corridors. As part of the Green Shipping Challenge we have announced agreements on developing green shipping corridors with the U.S., Norway and the Netherlands. Implement the
ZEV
mandate in 2024 and bolster charging infrastructure roll-out across the country to accelerate uptake of zero emission vehicles. Set an end date for the sale of new, non-zero emission buses and an expectation for when the entire fleet should be zero emission, whilst ensuring bus services, including those serving rural areas, are not adversely affected. Launch the Rapid Charging Fund to support the upgrade of electricity capacity on the strategic road network, enabling the roll-out of ultra- rapid electric vehicle chargepoints. Progress Future of Freight plan actions to decarbonise the wider freight sector, in line with the Independent Review of Net Zero’s recommendation and deliver Zero Emission Road Freight Demonstrations for hydrogen fuel cell and battery electric technologies, with vehicles and infrastructure being in place by March 2025. Consult on the future regulatory framework to deliver our commitments to phase out the sale of new non-zero emission
HGVs
and support uptake in the interim period. Develop the rail decarbonisation programme with the Great British Railways Transition Team, ahead of Great British Railways becoming formally established. Update the Clean Maritime Plan, with indicative domestic decarbonisation targets, delivering
UK SHORE
R&D investment programme initiatives - including trials of battery electric and alternative fuelled vessels and shoreside infrastructure by March 2025 - and considering a potential phase out date for the sale of new non-zero emission domestic vessels. Play a leading role on delivering international progress on decarbonising aviation and shipping through the
ICAO
and IMO. Publish our sector-wide Low Carbon Fuels Strategy in 2023, providing a clear vision for investment, and legislating to include recycled carbon and nuclear derived fuels in renewables transport fuel schemes, enhancing fuel security and environmental benefits. Continue work on potential measures to help address market barriers to the use of fuels with higher biocontent in compatible heavy-duty vehicles. Aim to complete the review of the National Networks National Policy Statement during 2023, taking account of the government’s legal net zero target. Maximising co-benefits for climate and nature is vital to supporting net zero alongside other priority outcomes, including biodiversity, water quality, climate adaptation and economic growth. The Independent Review of Net Zero demonstrated that decarbonising land use sectors and sustainably managing natural resources and broader ecosystems can create sizeable economic opportunities. Delivering on these has the potential to leverage growing demand for investment opportunities in natural capital, supporting the market frameworks needed in this emerging area. We have made progress on key Net Zero Strategy commitments, publishing updates on how environmental land management (
ELM
) schemes will pay farmers to provide a range of public goods, including actions to reduce
GHG
emissions.54 We have also set a legally binding target for tree coverage in England. Our ambitious agriculture measures build on historical progress in reducing emissions.
For example, the dairy sector increased milk production by 11% between 2000-2020, with 21% fewer cows and 12% less
GHG
emissions. We will build on progress in reducing emissions from agriculture and will set out how farmers will be supported to understand their emission sources through carbon audits by 2024 and take further actions to decarbonise their businesses, including through
ELM
schemes. We will shortly publish a government response to our call for evidence exploring the role of robust monitoring, reporting, and verification of
GHG
emissions on farms. Utilising these findings and additional evidence from ongoing research projects, we will develop a harmonised approach for measuring carbon emissions from farms, helping unlock new financial opportunities through carbon markets. We also anticipate entry of high efficacy methane suppressing products to the UK market from 2025 and will explore the role of industry and government to maximise uptake of such products for suitable cattle farm systems at pace, through a phased approach. This will include the ambition to mandate the introduction of products with proven safety and efficacy in compound feeds for cattle as soon as practically possible in England. We have also made considerable progress reducing emissions from waste, as we drive forward action to deliver the collection and packaging reforms from the Net Zero Strategy. The Climate Change Committee has recognised the effectiveness of the Landfill Tax in diverting waste from landfill and consequently reducing emissions. We will shortly issue a call for evidence to support the near elimination of biodegradable waste being sent to landfill by 2028. We will publish an addendum to the Resources and Waste Strategy in the summer, which will focus on net zero. We welcome the recommendations made by the Review and
CCC
’s 2022 Progress Report to Parliament, including as we prepare to publish our Land Use Framework for England later this year. Taking a systems approach, the Land Use Framework will help set out how we can deliver multifunctional landscapes that are resilient to our changing climate whilst meeting our needs for net zero, food production and environmental recovery. For example, the agricultural sector plays an important role in supporting on-shore renewable energy generation, aiding delivery of the British Energy Security Strategy, whilst maintaining domestic food production security. We agree with the Independent Review of Net Zero’s recommendation that we ensure a pipeline on investable nature-based solutions projects. We have established the Natural Environment Investment Readiness Fund with the Environment Agency to develop a pipeline of 86 projects across England to monetise the benefits of nature and develop enabling tools or standards. Our 2023 Green Finance Strategy sets out how we will meet HMG’s goal of mobilising at least £500 million per year of private finance into nature’s recovery by 2027, and more than £1 billion per year by 2030. In 2021, agriculture and other land use emissions were around 49
MtCO2e
making up around 11% of total UK net
GHG
emissions (including international aviation and shipping). Livestock (particularly cattle) currently make up the largest share of these emissions. Agriculture and other land use emissions have decreased by 2% since 2019 and 25% since 1990. The largest factor in this long-term fall has been an increase in the sink provided by forest land, with an increasing
CO2
uptake by trees as they reach maturity, in line with the historical planting pattern. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels,
GHG
emissions could fall by 1% to 12% on average over 2023-27, 11% to 24% by 2030 and 19% to 37% on average over 2033-37. Please see the Carbon Budget Delivery Plan for details of our proposals and policies for meeting the carbon budgets. In 2021, waste and F-gas emissions were around 30
MtCO2e
making up around 7% of total UK net
GHG
emissions (including international aviation and shipping). The largest emissions sources include landfill and air conditioning and refrigeration. Waste and F-gas emissions have decreased by 11% since 2019 and 66% since 1990. The reduction since 1990 is primarily due to reductions in emissions from landfill and halocarbon production. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels,
GHG
emissions could fall by 23% to 31% on average over 2023-27 43% to 51% by 2030 and 56% to 65% on average over 2033-37. Please see the Carbon Budget Delivery Plan for details of our proposals and policies for meeting the carbon budgets. We published our Environmental Improvement Plan (EIP), updating on our progress on delivering the 25 Year Environment Plan and setting out our future ambitions for land use to support net zero alongside nature, biodiversity and climate adaptation goals. Published our recent Environmental Land Management Update, which sets out how we will support farmers and land managers to sustainably produce food, while delivering benefits for climate and nature. We are accelerating the roll-out of the Sustainable Farming Incentive (
SFI
) scheme in 2023 and confirmed the full range of future payable actions across the
SFI
and the Countryside Stewardship scheme. We also announced the opening of round 2 of the Landscape Recovery scheme which will focus on net zero, protected sites and habitat creation. We have also established a cross administration UK Blue Carbon Evidence Partnership to produce a roadmap to potential inclusion of coastal wetlands in the UK
GHG
. Announced 6 new
SFI
standards. Actions under these standards will help towards decarbonising the agriculture sector. In the EIP 2023 we committed to consulting this year on extending environmental permitting to the beef and dairy sectors. Opened the £270 million Farming Innovation Programme (
FIP
). In partnership with UK Research & Innovation (
UKRI
), we have already committed £68 million up to the end of 2022 and will provide further grants of £51 million in 2023 to facilitate the development and adoption of emerging farming technologies that will help reduce
GHG
emissions.
Launched the £5.6 million Paludiculture Exploration Fund (2022-2025) to support the uptake of paludiculture, which offers an opportunity to continue profitable agriculture while managing land in a way that supports net zero. Announced our intention to ban the use of peat in horticulture, with limited exemptions, in 2024. Started development of the Natural England Peatland Restoration Plan which will provide a trajectory for peatland restoration up to 2050 and will be published in 2024. Announced a £124 million boost for the Nature for Climate Fund (NCF), ensuring a total spend of approximately £678 million on woodland creation and woodland management by 2025. Announced the inclusion of a hedgerow standard in the
SFI
, due to be rolled out later this year. Launched the Forestry Commission Development Woodland Officer apprenticeship with the University of Cumbria and the Institute of Chartered Foresters. Published the government response to consultations on launching a Deposit Return Scheme for drinks containers in England, Wales and Northern Ireland and Extended Producer Responsibility for packaging. Developed plans to improve resource efficiency. See
for more detail. Consulted on improving food waste reporting for large food businesses. Set a legally binding target through the Environment Act to reduce residual waste (excluding major mineral wastes) kg per capita by 50% by 2042 from 2019 levels. Published our F-gas assessment report on the effectiveness of the F-gas regulation
Natural Resources:
Continue to roll out our
ELM
schemes, with all 3 operating in full by 2024-5. Publish a Land Use Framework for England this year. Publish a summary of responses to our call for evidence on methane supressing feed products. Develop a mandatory methodology for voluntary food ecolabelling,
Publish a Biomass Strategy in 2023. The Biomass Strategy will review the amount of sustainable biomass available to the UK and how this resource could be best utilised across the economy to help achieve the government’s net zero and wider environmental commitments while also supporting energy security. This includes providing early thinking on domestic biomass production, including short rotation forestry and perennial energy crops. Publish a roadmap for increasing the use of timber in construction by summer 2023. Publish our response to the Lowland Agricultural Peat Task Force report and continue to work with partners to develop the Peatland Restoration Plan for publication in 2024, ahead of the NCF ending in 2025 and transitioning to the future farm schemes as the main peat delivery vehicle. Launch a £6.6 million lowland peat research and development programme and explore options to increase ambition in lowland peatlands, developing infrastructure and collaboration projects to transform our lowland peat water landscapes. Respond to the call for evidence on the UK Emissions Trading Scheme (
ETS
) potential role as a long-term market for nature-based and engineered greenhouse gas removals. Waste, wastewater and F-gases:
Deliver our collection and packaging reforms from the Resources and Waste Strategy. This includes: publishing our response to our consultation on consistency in household and business recycling in England, introducing a Deposit Return Scheme for drinks containers from October 2025, and implementing packaging Extended Producer Responsibility from 2024. Develop a plan to achieve the near elimination of biodegradable municipal waste going to landfill from 2028 following a call for evidence. Respond to our call for evidence on the initial expansion of the UK Emissions Trading Scheme to cover waste incineration and energy from waste. Publish our response to the consultation on a revised Waste Prevention Programme for England alongside the new programme ‘Maximising Resources, Minimising Waste’. Publish our response to the consultation on improving food waste reporting for large food businesses. Support Water UK’s Net Zero Route Map to deliver a net zero water supply by 2030. Publish 2 rapid evidence assessments setting out options to improve our estimates of
GHG
emissions from wastewater treatment. Consult on proposals to amend our existing F-gas legislation, with the aim of further reducing F-gas use and emissions. Removing carbon dioxide from the atmosphere is essential to meet net zero. We intend to capitalise on the economic benefits from this emerging sector, by scaling-up engineered Greenhouse Gas Removals (
GGRs
) to deliver new export opportunities and high-quality green jobs across the UK, supporting energy security and levelling-up. To deliver this we need to mobilise significant private investment, supporting innovation and providing investors with long-term clarity and certainty on future revenue streams. Our priority is to reduce greenhouse gas (
GHG
) emissions from human activities and to only use
GGRs
to mitigate remaining
GHG
emissions that are unavoidable. The
CCC
agrees that nature-based and engineered removals will be needed to mitigate the impact of residual
GHG
emissions in hard-to-abate sectors, to meet net zero.57
The ‘Net Zero Strategy’ established our ambition to develop markets and incentives for engineered GGR technologies to enable deployment of at least 5
MtCO2e
pa of engineered GGR removals by 2030, potentially scaling to 75-81
MtCO2e
pa by 2050. We welcome the recommendations from the
CCC
and Independent Review of Net Zero for GGR sector policy. These included publishing timings and details of the
GGRs
business model proposal, detailing plans for monitoring, reporting and verification (
MRV
) and undertaking legislative changes to ensure engineered removals count towards our carbon budgets. We are already acting on these and the commitments made in the NZS to support the scale-up of engineered
GGRs
. A robust monitoring, reporting and verification (
MRV
) framework will be crucial to preserve the integrity of any market for negative
GHG
emissions and instil public and investor confidence that removals are genuine and verifiable. The Independent Review of Net Zero emphasised that government must clearly outline the standards the business models require. We have consulted on the immediate priorities for
MRV
, including a review of the existing landscape of standards and initiatives that could underpin business model support for initial GGR projects and proposed principles for determining the legitimacy of a negative emission.
We agree with the
CCC
that access to
CO2
transport and storage infrastructure will be critical for engineered GGR technologies that rely on long-term geological storage, such as direct air carbon capture and storage (
DACCS
) and bio-energy carbon capture and storage (
BECCS
). Our work on
CCUS
clusters is set out in the
CCUS
section of this document, and in
. As part of this, we are exploring how early GGR projects could be connected to the transport and storage network. Subject to criteria under development, the government is minded to enable engineered greenhouse gas removals (
GGRs
) to apply to Track-1 expansion and Track-2. We also agree with the
CCC
that understanding and ensuring the sustainability of
GGRs
is crucial and will differ across the different types of engineered GGR methods. To address this, we have commissioned research on resource intensity for
DACCS
. Relevant for biomass
GGRs
, we are committed to publishing the Biomass Strategy in 2023. This will review the amount of sustainable biomass available to the UK and how this resource could be best utilised across the economy to help achieve the government’s net zero and wider environmental commitments while also supporting energy security. This will outline the role that
BECCS
can play in reducing carbon emissions across the economy and set out how the technology could be deployed. Direct Air Capture (DAC) powered by nuclear power plant
One example of a project being funded is a consortium led by Sizewell C, who are developing an innovative heat-powered DAC demonstrator plant designed to capture low carbon waste heat from a nuclear power plant. This technology could offer increased efficiency and less reliance on electricity, therefore reducing the cost of removing carbon dioxide from the atmosphere. A scaled-up DAC plant linked to Sizewell C could utilise around 400 MW of heat from the nuclear power plant to capture 1.5 million tonnes of
CO2
per year. As set out in the Net Zero Strategy, we set an ambition to deploy at least 5
MtCO2e
p.a. of engineered removals by 2030, potentially rising to 23
MtCO2e
p.a. by 2035. In July 2022 we published our consultation on engineered GGR business models that could support on a technology-neutral basis technologies such as
DACCS
, seawater
CO2
removals, and certain
BECCS
applications. This included seeking views on the immediate priorities for monitoring reporting and verification (
MRV
). In August 2022 we published our power
BECCS
consultation and project submission process, today we have published the project selection outcome and will publish the consultation response imminently
In December 2022, we published a position on GGR credits for the Industrial Carbon Capture (
ICC
) Business Model and Waste
ICC
Business Model
We have set up a GGR Business Model Expert Group to enable government to continue engagement with a broad range of stakeholders across the GGR landscape, drawing on this expertise to inform development of the business model. We have acted on our commitment to seek an amendment to the Climate Change Act (
CCA
) to enable engineered removals to contribute to UK carbon budgets, by including a clause in the Energy Bill that seeks to broaden the definition of “removals” of greenhouse gases beyond nature-based
GGRs
to include engineered
GGRs
. The Energy Bill is currently progressing through Parliament. Subject to criteria under development, the government is minded to enable engineered
GGRs
to apply to Track-1 expansion and Track-2. The power
BECCS
project selection process sought to identify projects which could deploy to Track-1 timescales. Two projects passed the deliverability assessment for the power
BECCS
project submission process, Drax Power Ltd and Lynemouth Power Ltd. They have not been selected for deployment in Track-1, but the Department for Energy Security and Net Zero will engage further with these projects following the assessment outcome. Track-1 is not the extent of our ambition, and the department remains committed to achieving 5Mtpa of engineered greenhouse gas removals by 2030. Phase 1 of the £6 million Net Zero Innovation Portfolio DAC and other
GGRs
Programme delivered 22 feasibility studies across DAC, Enhanced Weathering, Biochar and
BECCS
technologies. In the coming year we will:
Publish government responses and next steps following a review of the GGR business model and power
BECCS
business model consultation responses. For the GGR consultation response, this includes having reflected on input from our GGR Business Model Expert Group meetings. Monitor the progress of the DAC and GGR Innovation Programme which will be in the process of building pilot/demonstration projects to be fully operational by March 2025. Publish the Biomass Strategy in 2023, which will outline the role that
BECCS
can play in reducing carbon emissions across the economy and set out how the technology could be deployed. Delivering net zero will require a step change in the rate of new technologies being developed, deployed to market and adopted by businesses and consumers. The global market opportunity for UK companies from net zero could reach a cumulative £1 trillion to 2030 and supporting innovation could help unlock up to 300,000 jobs and new commercial opportunities in both exports and domestic industries across all parts of the UK. Since the Net Zero Strategy, government have confirmed a portfolio of net zero research and innovation (
R&I
) investment of approximately £4.2 billion over the period from 2022-25. This reflects delivery of net zero research and innovation programmes being a top priority. The Net Zero Research and Innovation Delivery Plan, published alongside this Net Zero Growth Plan, outlines this government’s support and aligns with the priorities set out in the Net Zero Research and Innovation Framework. We welcome the
CCC
and Independent Review of Net Zero’s recommendations on the need to disseminate knowledge and insight from
R&I
programmes and accelerate the rapid and safe introduction of emerging net zero technologies.
The government plans to prioritise several key recommendations from the
CCC
and Independent Review of Net Zero and will continue to deliver our significant research and innovation portfolio. We will:
develop a net zero technology roadmap and update the Energy Innovation Needs Assessments
deliver the recommendations around the role of regulators and regulation through the Patrick Vallance-led review of how the UK can better regulate emerging technologies to ensure growth
deliver recommendations on disseminating knowledge and reviewing greater R&D for net zero through existing and planned activity, such as the recently launched consultation on R&D tax relief reform
In the last 18 months, we have made good progress against the commitments set out in the innovation chapter of the Net Zero Strategy. This includes:
At the 2022 Autumn Statement, the government recommitted to a £20 billion per annum public R&D budget by 2024/2025. This included an additional £1.6 billion for the UK’s 9 Catapults for 2023-2028. This will allow Catapults to continue supporting innovation and de-risking the transition from research to commercial delivery; accelerating innovation clusters; and stimulating additional private sector investment in R&D. The Net Zero Research and Innovation Framework, published alongside the Net Zero Strategy in October 2021, set out the key research and innovation challenges for the next 5-10 years and a roadmap to 2050. We’ve since published a follow-up Net Zero Research and Innovation Delivery Plan alongside this plan to outline the government’s net zero R&D programmes for the current Spending Review period 2022-25 and how these are aligned to the priorities in the Framework. The Net Zero Strategy committed at least £75 million on research into natural resources, waste and F-gases. The Department for Environment, Food and Rural Affairs continue to push forward key programmes in these sectors and are in the concluding stages of finalising a partnership with
UKRI
and the Devolved Administrations called Building a Great Future – Transforming Land Use for Net Zero, Nature and People. As a leading member of Mission Innovation, we have cemented Mission Innovation as the leading forum for international clean energy innovation and global collaboration. The UK leads the Mission Innovation Secretariat and helps shape the overall strategy of the initiative through our role on the Steering Committee. The UK now co-leads the Green Powered Future Mission and the Clean Hydrogen Mission, as well as the Heating and Cooling Innovation Community. The UK also participates in 4 other Missions. Addressing the
CCC
’s recommendation, we will continue to encourage dissemination of the outputs of funded innovation programmes. This includes through publishing programme updates such as the forthcoming NZIP Progress Report and sharing best practice through the cross-government Net Zero Innovation Board. Addressing the Independent Review of Net Zero recommendations, we will take forward several new commitments including the development of a net zero technology roadmap and an update of the Energy Innovation Needs Assessments. Case Study: Lapwing Reverse Coal Project: Novel engineering of a natural solution will enable the removal of
CO2
from the atmosphere to lock it back in the ground
The Lapwing Estate sits on lowland peat which has been historically drained and farmed for food production. This has degraded the soil and led to
GHG
emissions as the peat oxidises (lowland peat is responsible for 3% of UK
GHG
emissions). Reverse Coal was awarded nearly £3 million through the NZIP. To capture carbon dioxide and abate existing emissions, they will rewet the peat and establish fast growing willow crops which will be chipped and dried and then fed into a high temperature pyrolysis plant. This plant converts the willow (biomass) into a solid form of carbon akin to coal, called ‘biochar’. The biochar is buried underground for long term stable carbon storage with the heat and power directed into controlled environment agriculture for more sustainable and secure food production. This first-of-its-kind project is exploring an innovative new way to sustainably intensify production of high quality, healthy food, whilst at the same time supporting the government’s target for net zero by 2050. Fusion has potential to be the ultimate clean power solution, delivering low-carbon, safe, continuous and sustainable energy without the issue of very long-lived, high-level radioactive waste. The UK is a recognised global leader in this technology, with the world record for fusion energy production being broken at the Joint European Torus facility in Oxfordshire, and unique capabilities in the technologies like robotics and fuel handling needed to develop fusion commercially. We have an opportunity to capitalise on our position to create a new fusion energy technology sector in the UK, creating jobs, economic growth and export potential even before fusion energy is on the grid. In 2021, the UK Fusion Strategy set out ambitious objectives to demonstrate the commercial viability of fusion by building a prototype fusion power plant capable of providing energy to the UK grid by 2040, and to build a world-leading fusion industry with high-export potential. The UK government has already committed £222 million for the first 5 years of
UKAEA
’s Spherical Tokamak for Energy Production (
STEP
) programme. STEP
aims to design, develop, and build the prototype fusion power plant. This will not only demonstrate a path to the commercial viability of fusion energy, but will help create a skilled fusion supply chain and provide learning and experience for the UK fusion sector as a whole. The government has also provided £42 million for the Fusion Industry Programme. This initiative will galvanise commercial fusion innovation through a challenge fund, designed to support UK businesses to solve common technical issues facing fusion, as well as encourage R&D investment into this growing industry. This supports the Fusion Cluster, a newly created community of public organisations and businesses working together at the Culham Centre for Fusion Energy to share knowledge and drive fusion energy from theory to reality. Members have access to cutting edge technical facilities, start-up business support and experienced peers.
The government has already identified and announced a site for the
STEP
power plant, which will be bult in West Burton, transforming the site of an existing coal power plant into a green energy cluster. It has set up the company that will deliver this power station and begun developing the commercial relationships need to build it. The UK is the only country in the world to develop and legislate for a proportionate regulatory regime for fusion that encourages innovation whilst putting safety at the heart of our fusion sector. Taken together, the government’s clear strategy and investment in fusion energy R&D, regulation and development of the sector has already made the UK the best place in the world to do fusion innovation. Fusion companies from around the world are interested in collaborating with the UK and several companies have made announcements about plans to build new facilities or experiments in the UK because of the unique programme started by the UK. The global transition to net zero will see trillions of pounds reallocated and invested in new projects, products and services. The UK’s world-renowned finance sector can be at the forefront of this global green future. Unlocking the potential of green finance is integral to the delivery of the Net Zero Growth Plan. It is also vital to delivering on the vision set out in the Chancellor’s 2022 Autumn Statement, and 2023 Spring Budget, for both financial services and green industries to be key growth sectors for the UK. Alongside this plan, government has published the 2023 Green Finance Strategy. This sets out how we will deliver on our ambition to become the world’s first net zero-aligned financial centre, how we will utilise all levers available to mobilise the private investment into energy security and net zero, and how we will support industry to capture the opportunity of being a world-leading green finance centre. As we are clear that there is no pathway to net zero without protecting and restoring nature, the strategy explicitly incorporates nature and climate adaptation into our green finance policy framework. The UK’s
COP26
Presidency in 2021 generated historical momentum in the numbers of businesses, cities, regions and investors seeking to align with climate and environmental goals, with over 90% of global
GDP
now covered by national net zero targets. In the financial services sector this was exemplified through the commitment of the Glasgow Financial Alliance for Net Zero, which unites over 550 members across the financial sector committed to align with a net zero future, spanning 50 countries and representing 40% of global private financial assets. This is a long-term opportunity for UK financial services. It is estimated that global sustainable finance markets are expected to grow to $34 trillion in assets under management by 2026, outpacing growth in the asset and wealth management industry as a whole. Managing this capital is a significant opportunity for UK financial and professional services, but the sector must be supported to secure significant market share. From innovative climate tech solutions seeking venture capital to grow towards their vision, to banks lending to major renewables projects and asset managers allocating capital to support the companies of the future – behind every step of our transition will be our world-leading financial services sector. The 2023 Green Finance Strategy sets out the actions government will take next to develop our green finance policy framework and respond to recommendations made by both the
CCC
and Independent Review of Net Zero. Policy focuses on greening the financial system, through the provision of the right information, data and tools for real economy and financial services companies to manage risks and seek opportunities; and on financing our green objectives through more efficient and effective mobilisation of private capital. We are providing further detail on the UK’s commitment and framework for becoming the world’s first net zero-aligned financial centre. We are ensuring market participants have the information and data they need, for instance by: committing to consult on the extension of transition planning disclosure requirements to the largest private companies, complementing existing requirements in place by the FCA, committing to issue a call for evidence on Scope 3 emissions reporting, and continuing to support the work of the International Sustainability Standards Board and setting up of a framework to address their suitability for adoption in the UK as soon as final standards are published. We will support industry as it develops the new market frameworks, tools and expertise required to expand green finance activity with an update on the delivery of a UK Green Taxonomy and launching a Transition Finance Market Review on how to make the UK become the best place in the world for raising transition capital. To support companies and financial institutions to invest in critical net zero sectors and technologies, we set out how the UK Infrastructure Bank, with £22 billion in capital to deploy for net zero and regional and local objectives, British Business Bank, UK Research and Innovation, and the UK’s export credit agency, UK Export Finance, support green technologies through to commercialisation. We also commit to consult on the specific steps and interventions needed to support the growth of high integrity voluntary carbon markets and protect against greenwashing. We are publishing a Nature Markets Framework setting out our approach to accelerating high-integrity markets to enable farmers and land managers to attract investment in natural capital, as well as our plans to develop a comprehensive suite of nature investment standards. The UK Infrastructure Bank is now operational and, as of 27th March 2023, has announced 12 deals, investing approximately £1.2 billion and unlocking over £5 billion of private capital. Projects that contribute towards meeting net zero include:
Committing £162.5 million as a cornerstone investor in Next Power UK ESG fund, the UK’s largest subsidy-free solar fund. Investing £150 million, alongside £1 billion from other investors, in the UK portion of finance for the 1. 4GW
NeuConnect interconnector project.
Since their launch in 2021, the UK’s green gilt programme has raised more than £26 billion from gilts issued by the UK Debt Management Office, and retail Green Savings Bonds sold via NS&I. To highlight and communicate more widely the net zero opportunities and incentives for investment in the UK, we published 4 investor roadmaps - covering the UK’s automotive, hydrogen,
CCUS
, and offshore wind sectors. Last year we hosted the Green Trade and Investment Expo. This event brought together 200 British business leaders and global investors, showcasing investment and export opportunities presented by the UK’s net zero transition. In 2022 the UK became the first G20 country to require the largest businesses and financial institutions to disclose their climate-related risks and opportunities under the framework set by the Taskforce on Climate-related Financial Disclosure. Through our G7 presidency, we facilitated other jurisdictions to take the same steps. Additionally, we have committed to building on this through the delivery of Sustainability Disclosure Requirements. Furthermore, the UK launched the Transition Plan Taskforce, a group of industry experts tasked with developing guidance for gold standard transition plans. By the end of 2023, government will:
consult on transition planning disclosure requirements for the UK’s largest companies
consult on the UK Green Taxonomy
prepare a framework to assess the International Sustainability Standards Board (
ISSB
) disclosure standards, subject to their finalisation
consult on specific steps and interventions needed to support the growth of high integrity voluntary markets and protect against greenwashing
receive recommendations from the Transition Finance Market Review
The government’s net zero and environmental goals depend on the UK having the right workforce with the right skills and capacity in the right locations across the UK. In the next 30 years, the net zero transition will drive opportunities for job creation, with existing occupations set to evolve as the UK’s economy decarbonises. It will be important to manage this shift, with parts of the country requiring the greatest transition often among low-productivity areas of the UK. We agree with the
CCC
and the Independent Review of Net Zero that government should take a proactive approach to identifying and working with industry to tackle net zero specific workforce challenges and skills gaps. As the UK transitions to net zero, one in 5 UK workers will experience shifting demand for skills implying a substantial need to upskill and reskill our current workforce. Alongside that, we need to bring new workers and talent along with us on the transition to net zero. Delivering a net zero workforce is a joint government, industry and education sector endeavour which is why the government set up the Green Jobs Delivery Group. The Delivery Group builds on existing work by the government to prepare the existing workforce for the green economy and boost the pipeline of skilled workers. Government continues to ensure the skills system is delivering for net zero. This includes the implementation of the Department for Education’s Sustainability and Climate Change Strategy, which will equip children, young people, and adult learners with the knowledge and skills to contribute to the green economy. As just one example in March 2023, the Department for Energy Security and Net Zero announced an additional £5 million to support low carbon heating training, expected to support around 10,000 training opportunities, which is starting in April 2023 and continuing until March 2025.This is in addition to the £15 million committed to skills in the energy efficiency and low carbon heating sectors since 2020 through the Home Decarbonisation Skills Training Fund, supporting over 16,000 training opportunities for people working in the energy efficiency, retrofit and low carbon heating sectors in England. A key role for government is to provide industry with certainty and clarity, so that the private sector is better able to address skills challenges through recruitment and training. The government’s commitment to its legally binding carbon budgets and sector specific plans sends an important signal to businesses. We recognise that businesses require greater policy certainty to invest in their workforces and training. While acknowledging the work done so far, the
CCC
and Independent Review of Net Zero made recommendations on publishing an Action Plan or Roadmap for Net Zero Skills, driving forward delivery of the recommendations of the Green Jobs Delivery Group. We agree on the need to go further and so are committing to publishing a joint government-industry Net Zero and Nature Workforce Action Plan in the first half of 2024, representing the culmination of several sectoral assessments in the coming 12 months. We are beginning with a set of head start actions from the pilot Power and Networks Working Group now, followed by a suite of comprehensive actions for this sector by Summer 2023, which can be used as a template for the other sectoral assessments (more detail set out at the end of this chapter). We will publish an update with this suite of comprehensive actions, alongside biannual progress updates from the Delivery Group’s co-Chairs on its work, later this year. We agree with the Independent Review of Net Zero on the need to develop robust green jobs figures to monitor the transition. We will continue to work closely with the Department for Levelling Up, Housing and Communities and its Spatial Data Unit to ensure this work supports efforts to reduce geographic disparities and level up the UK (see box below for more information). Another key method to deliver on employers’ net zero workforce needs are apprenticeships, where government has been driving progress. Over 100 standards are currently approved for delivery in areas including sustainability business specialist, smart meter installer, ecologist, metal recycling technical manager, and forest craftsperson. There are also more in development including low carbon heating technician and battery manufacturing technician. These standards have been developed by employers and the Institute for Apprenticeships and Technical Education (
IfATE
), to ensure that they continue to meet the needs of employers within the sector.
In addition,
IfATE
asks all trailblazer groups to apply their Sustainability Framework when developing or revising apprenticeships so that sustainability is considered in a way that is meaningful to each occupation. The Apprenticeship Levy is a key part of the government’s reforms to the apprenticeship system and we are committed to making apprenticeships work for businesses. For example, we are helping
SMEs
to hire apprentices and keeping Standards up to date to support changing workforce demands, like the domestic electrician apprenticeship which was recently updated. The government is committed to improving the apprenticeship system and continues to engage with stakeholders on their ideas. Short, intensive Skills Bootcamps also enable learning in sectors and jobs that support the transition to net zero. Government established the Green Jobs Delivery Group in May 2022, as the central government-industry forum on green jobs and skills, with ministerial membership from
BEIS
(now the Department for Energy Security and Net Zero),
Defra
,
DfE
, and
DWP
, as well as membership from industry leaders, academia, the skills sector, unions, and local representatives. Following initial investigations into current workforce challenges, 4 task and finish groups have been established:
The Power and Networks Group
is tackling near-term workforce challenges facing the power sector. The pilot industry-government working group has already started to conduct a workforce assessment in 2022 which will feed into the overarching Net Zero and Nature Workforce Action Plan in 2024. Emerging actions are set out in the initials steps below and further updates will be provided by Summer 2023. The Nature Skills Group
is developing a set of actions to create a pipeline of required nature-based jobs and skills across the economy. The Local Capacity Group
brings together place leaders, the business community, skills providers and government to explore the key local challenges and opportunities to delivering net zero though a local lens. The Resources and Waste Group
is gathering information on the skills needed to deliver the Resources and Waste Strategy and the move to a more circular economy. The Institute for Apprenticeships and Technical Education (
IfATE
) is improving its occupational maps and will be adding a new ‘green occupation’ filter so that employers and learners can see which apprenticeships and technical qualifications support a green career. For example, a Low Carbon Heating Technician apprenticeship is in development, offering a direct route into the small-scale renewables industry. The Green Apprenticeships and Technical Education Advisory Panel (
GATEAP
) has advised
IfATE
and the employers it works with on strengthening green content within existing standards and introducing new standards where necessary. There are already 100 standards which support green skills. Occupational standards containing green skills include Maintenance and Operations Engineering Technician, offering a Wind Turbine Technician occupational specialism; and a Plumbing and Domestic Heating Technician, including an Environmental Technologies option. New higher technical qualifications (
HTQs
) will align with the transition to net zero. This includes
HTQs
in Digital, Construction, Engineering and Manufacturing, and Agriculture, Environmental and Animal Care. These are all sectors that will require level 4 and 5 skills for the green transition. The government is working with industry to establish sector-specific initiatives. For example, a new Forestry Training Fund launched in February 2023 and a research project is being commissioned on workforce growth needed in the peat restoration sector. The government is also supporting the establishment of a new professional body for the farming industry, the Institute for Agriculture and Horticulture (
TIAH
), to support the agricultural transition. The government will work with partners to ensure that net zero and green careers are considered in all relevant current and proposed careers campaigns across government and industry. This includes the Green Careers Hub and Net Zero Ambassadors, as well as supporting awareness raising of net zero and green careers by disseminating information to careers leaders and careers advisers in schools, colleges and in the community. In England,
DfE
and industry are working together to train the existing workforce for the net zero transition through programmes including Skills Bootcamps, Free Courses for Jobs,
HTQs
and apprenticeships. These programmes are helping to upskill more workers so that they can, for example, support greater energy efficiency in domestic and commercial buildings, and work with green technologies that contribute to the lowering of carbon emissions. Industry have committed to work with
DfE
to propose new Skills Bootcamps in FY 2023-24 aimed at addressing immediate workforce skills needs in key low carbon sectors. They will work at pace to identify common skills demands that could be addressed by Skills Bootcamps. By the end of 2023, we will have at least 35 different bootcamp courses across England supporting greener construction, transport, and green energy and industry sectors. Employers (including those with a role to play in delivering the net zero transition) are encouraged to use the ‘find training and employment schemes for your business’ website for more information on the full range of government programmes available to help them hire employees, offer work experience, or upskill existing staff (including those which offer financial incentives). From April 2022, the government widened the eligibility criteria of Free Courses for Jobs. Any adult in England who is earning under the National Living Wage or is unemployed has free access to these qualifications. Options includes green skills such as the built environment, conservation, and forestry. DWP
is continuing to support people into green jobs through jobcentre interventions and a range of different programmes. This includes Sector-based Work Academy Programmes and the Restart Scheme, as well as by referring people to wider skills provision. DWP
is increasing knowledge of green jobs across jobcentres and launched a new green jobs toolkit in April 2022, with information on sectors including forestry, wind, recycling and waste, water and building retrofit. DWP
’s National Employer and Partnership Team (
NEPT
) established a green jobs team in December 2021 to ensure green jobs opportunities are accessible to jobseekers.
Green jobs and skills data
It is estimated that since November 2020, over 80,000 green jobs are currently supported, or in the pipeline across the UK economy as a result of new government policies and spending. Our ambitions could support up to 480,000 jobs in 2030. The government is working with the Office for National Statistics (
ONS
) to improve data on the green economy. The
ONS
estimate a 16% increase in direct employment in low carbon businesses across the economy from 2020 to 2021 - reaching nearly 250,000. However, this is only part of the picture, and the
ONS
has undertaken work to develop a broader definition of green jobs: “Employment in an activity that contributes to protecting or restoring the environment, including those that mitigate or adapt to climate change”. This definition has been developed following extensive engagement with stakeholders. ONS
will develop a framework underneath this definition and publish associated experimental statistics for green jobs throughout 2023. It will continue to improve its existing estimates, publish related research articles, and engage with users. Progress also continues with monitoring jobs in the green economy using experimental government analysis of online advertisements. For 4 net zero sectors - heat and buildings, electric vehicles, wind, and new and advanced nuclear power - the key trends identified in online job advertisements were examined, showing:
Their share of UK online job advertisements has increased in recent years (in Technical Annex)
They are spread throughout the UK while individual sectors appear more concentrated in a few, varying geographic areas (Figure below)
They have higher advertised average salaries compared to the UK average salary for online job advertisements (Figure 4 in introduction)
Additionally, the Unit for Future Skills (
UFS
) is building a jobs and skills data ecosystem, which will help identify skills mismatches at an individual, sectoral, and economy-wide level. From 2023 the government will improve data collected from net zero and environmental schemes on supporting green jobs data, including building a granular understanding of the geographic distribution of green jobs and their economic impact on places, and making as much of this information as possible available publicly. From Spring this year, the Department for Energy Security and Net Zero will publish the Delivery Group’s biannual updates from the co-chairs. In 2024, the Delivery Group will publish a Net Zero and Nature Workforce Action Plan. We also continue to join up across the devolved administrations, who have already made excellent progress, with the Welsh Government having launched their Net Zero Skills Plan in March 2023, and the Scottish Government and Skills Development Scotland having launched their Climate Emergency Skills Action Plan 2020-2025 in 2020. Pilot government-industry action on the power and networks sector workforce
The Green Jobs Delivery Group is taking action and, as priority, established a pilot power and networks sectors government-industry working group, due to these sectors’ importance to delivering on net zero and energy security. Challenges these sectors face, include issues with the STEM skills pipeline; competition for skills with other sectors; lack of diversity and inclusion in the sector; and an aging workforce. In response, industry has asked for more agile upskilling and reskilling training. This early work of the power and networks working group has both helped to establish a process, that we will encourage other sector groups to follow, and agreed head start actions which government and industry will make early progress on. The group will publish a comprehensive suite of actions within the Green Job’s Delivery Group co-chair’s update by Summer 2023. Principles of intent:
Process (that we will encourage other sector groups to follow)
By summer 2023, industry (led by EDF, with support from Energy and Utilities Skills partnership (
EUSP
) and the Engineering Construction Industry Training Board (
ECITB
)) will conduct and collate research on workforce demand and skills gaps within the power and networks sectors, specifically related to net zero. This will cover the skills and workforce picture in England, as well as that of the devolved administrations where relevant. By summer 2023, industry (led by
EUSP
) will then refine the group’s initial assessment of workforce barriers. This will cover skills and workforce in England, and of the devolved administrations where relevant. By summer 2023, industry (led by
ECITB
, with support from
EUSP
) will next map and identify gaps in routes to competence, including through apprenticeships, qualifications, and industry schemes. This will draw upon the work of the
DfE
and Institute for Apprenticeships and Technical Education (
IfATE
). This will cover skills and workforce in England, and of the devolved administrations where relevant. In autumn 2023, government and industry will work together to identify how best to overcome barriers which threaten the sectors’ ability to get people into key occupations in sufficient numbers. For example,
DfE
will identify opportunities to flex skills programmes in line with the challenges identified via 1 and 2 above. These actions, along with information on how progress towards them will be monitored, will then be included as part of the Net Zero and Nature Workforce Action Plan in 2024. ‘Head start’ actions on power and networks:
Building upon this, by autumn 2023, industry (led by National Grid and supported by
EUSP
), and government will work together to support modular and agile training routes into key occupations within the power and networks sectors. Industry, led by
EUSP
, will identify where investment in modular or short courses could be increased by developing new Skills Bootcamps. DfE
will respond by supporting the roll out of new Bootcamps, through the Dynamic Purchasing System (DPS) or by responding to the local grant holder. By autumn 2023, industry (through
EUSP
) will work with the
IfATE
via the Energy and Utility Employer Advisory Panel (
EAP
) to explore how apprenticeships and modular technical qualifications can best support skills development in sectors.
By winter 2023, Industry, led by
EUSP
, will pilot an approach to maximising the employer training estate, delivering training to an industry standard, aimed at meeting industry rather than individual employer needs. This would involve, for example, industry collaborating on using one another’s training estate to maximise the talent pipeline, and providing training on behalf of other employers where capacity allows. This requires industry to explore agreeing and setting output standards. By spring 2024,
DfE
will provide communications to industry, to support employers and training providers to engage with recently launched flexi, portable, and accelerated apprenticeships, to boost apprenticeship numbers by maximising use of the variety of progression routes. Industry, led by
EUSP
, will use its ‘workforce assessment’ to inform regulators of projected workforce demand as part of efforts to ensure sufficient provision for workforce resilience. Industry, led by
EUSP
, will explore (jointly led with
ECITB
) potential skills passporting arrangements for the power and networks sectors. By autumn 2023, industry, led by
EUSP
, will identify opportunities for growth and routes to competence presented by apprenticeships. There are no plans to review the Apprenticeship Levy at present, but we will continue to develop and support a suite of improvements to the apprenticeships system for employers. In 2023, industry (led by IEMA/CIEEM) and
IfATE
will explore how apprenticeships and other non-degree level routes to environmental management and regulation could be improved or created. The group has discussed wider workforce issues, including attracting people into net zero roles, and addressing diversity and inclusion issues. As a first step, the group is collating and analysing a range of data and evidence available to identify potential actions. Government will work with partners to ensure that net zero and green careers are considered in all relevant current and proposed careers campaigns across government and industry. This includes the Green Careers Hub, as well as supporting awareness raising of net zero and green careers by disseminating information to careers leaders and careers advisers in schools, colleges and in the community. In summer 2023, industry and government will add to this initial list, forming a more comprehensive set of actions covering the steps being taken to address both skills and wider workforce challenges. This will then be reflected in the Net Zero and Nature Workforce Action Plan in 2024, alongside actions for other key sectors and the detail of how progress will be monitored. The government has made significant progress in embedding net zero in its processes and decision making. In February, the Prime Minister created the Department for Energy Security and Net Zero, whose focus alongside energy security, is driving overall delivery of net zero and maximising the economic opportunity the transition presents. Additionally, the creation of the Domestic and Economic Affairs (Energy, Climate and Net Zero) Cabinet committee, ensures a coordinated approach to delivering net zero across government. This Cabinet-level governance is supported by Departmental governance, as well as other groups such as the Net Zero Business and Investment Group, the Green Jobs Delivery Group, and the Jet Zero Council and the Local Net Zero Forum. We have embedded net zero considerations into our key financial decision-making frameworks including publishing further detail on the environmental impacts of Spending Review 2021 and the methodology for assessing these. We have also laid the final environmental principles policy statement before Parliament. The policy statement sets out how policymakers should interpret and proportionately apply 5 environmental principles to support environmental protection and sustainable development. Ministers of the Crown will be required to have due regard to the statement when making policy from 1 November 2023.These are 2 key milestones we committed to in the Net Zero Strategy. All the while we have adopted a whole systems approach, helping us to deal with the inherent complexity of the challenges faced. We continue to embed systems tools and practices to support cross-sector decision making, account for dependencies, and maximise the benefits of net zero. In the next 18 months we are committed to strengthening governance even further. We will continue to embed net zero into decision-making frameworks and share more information on how we are set-up to deliver net zero within government, directly addressing the themes of enhancing coordination and transparency identified through the
CCC
’s 2022 Progress Report to Parliament progress report and Independent Review of Net Zero. We note the
CCC
’s and Independent Review of Net Zero’s recommendations on increased focus on government coordination and consistency and expanding our suite of public reporting. We have made strong progress in this area to date and:
In response to recommendations on expanding public reporting and improving transparency of internal government processes, as part of the government’s 2023 response to the
CCC
’s 2022 Progress Report to Parliament we will:
share further detail on the tools and processes used to inform internal decisions and policy-making, including publishing a map of the governance landscape
publish the findings of a review that assesses how often we publish data on UK emissions
We will work with the UK Regulators Network (
UKRN
) to build from their existing cross-regulator Climate Change Network and test the best way to bring-in regulators from beyond the
UKRN
’s core membership. Committing to confirming proposals for the form and governance of this forum by Summer 2023. We will consider the case for new delivery agencies where they are the right model - using Great British Nuclear, among others, as case studies for the efficacy of these modes of delivery. Improving the quality and coverage of data in decision- making, and ensuring climate and environmental impacts are considered in all fiscal decisions, remains a priority. HM
Treasury will continue to work with departments to build climate impact assessment capability to ensure that spending decisions and measures at future fiscal events can be made using improved data.
HM
Treasury received a recommendation to work with the
OBR
and
CCC
to set out a process for how
HM
Treasury considers the climate impacts of fiscal events, and we will engage the
OBR
and
CCC
on this. We promised to report annually against 24 commitments we made in the Net Zero Strategy. An account of these commitments is provided by 40 quantitative metrics, which are set out in the
. Established the Domestic and Economic Affairs (Energy, Climate and Net Zero) Cabinet Committee, picking up on the successes of the Climate Action Committees and ensuring net zero continues to have a Cabinet-level forum dedicated to it. Set-up a Climate Non-Executive Board Members Liaison Forum, which draws on the knowledge and expertise of non-executive board members from across Whitehall to provide strategic insight and support to the implementation of the Net Zero Strategy and British Energy Security Strategy. Introduced a new Net Zero Business and Investment Group, which convenes business and finance leaders to accelerate emissions reduction across key sectors and maximise the economic opportunity of net zero. Created a Local Net Zero Forum which brings together national and local government to provide a single and coordinated engagement route into government on strategic local net zero policy and delivery issues. Required suppliers bidding on qualifying central government contracts to commit to achieving net zero and to detail their emissions via a Carbon Reduction Plan. Between September 2021 and the start of February 2023, the measure was applied to 129 procurements, which are valued at c.£187.5 billion over their contractual term. Published the Construction Playbook and associated Net Zero Carbon and Sustainability Annex, which include stronger guidance and additional resources on how government construction projects should undertake whole life carbon assessments, and seek to reduce both embodied and operational carbon emissions. Developed a new training offer available to all civil servants, expanded training for Fast Streamers, and are developing a climate and environment specialism to be embedded in the Civil Service policy profession standards. Funded carbon literacy courses for the public sector more widely with courses now available for organisations such as the NHS, local government, and universities. At Spending Review 2021 (SR21)
HM
Treasury required departments to assess the climate impacts of major spending bids. Decisions made at SR21 were informed by these assessments and proposals were considered and assessed according to these impact assessments and within the context of the broader suite of policies set out in the Net Zero Strategy. HM
Treasury also required departments to provide qualitative commentary against the delivery of the 25 Year Environment Plan. Since SR21,
HM
Treasury has continued to work with departments to improve the quality and coverage of their emissions impact data. In December 2022,
HM
Treasury published further detail on the methodology for assessing environmental impacts at SR21. HM
Treasury and
HMRC
also carefully considered the climate change and environmental implications of relevant tax measures. The government incorporated a climate assessment in all relevant Tax Information and Impact Notes (TIINs) for measures at Budget 2021 and has continued to do so. We published the
in October 2021, setting out the actions departments and their agencies will take to reduce their impacts on the environment. Sponsored by the Department for Energy Security and Net Zero, the Modern Energy Partners programme will publish a suite of public sector decarbonisation guidance on the
ESC
website in spring 2023. This will help to address the capacity and capability barriers that public sector organisations face when they seek to decarbonise their built estates. The next application window to the Public Sector Decarbonisation Scheme, Phase 3c, is expected to open to applications in Autumn 2023. We are developing plans for future phases of the Low Carbon Skills Fund and will make further announcements in due course. Ministers will be required to have due regard to the environmental principles policy statement when it legally comes into force on 1 November 2023. HMRC
will explore options to further strengthen the analytical approach to monitoring, evaluating, and quantifying the environmental impacts of tax measures, including their wider impacts. We have made excellent progress in this area to date and will continue to work collaboratively with local actors to progress still further:
we will strengthen the partnership with local government through ongoing engagement in the Local Net Zero Forum
as announced in the Budget, all new Investment Zones will be required to demonstrate how they will support the UK’s net zero target
In the last 18 months, we have delivered against the key commitments we made in the Local Climate Action chapter of the Net Zero Strategy. As announced in the Budget, new Investment Zones will drive local economic growth. Green business sectors are one of the 5 priority sectors for the Investment Zones, and all Investment Zones are also required to demonstrate their contribution to national Net Zero and environmental targets. Government-funded research through 3Ci and Innovate UK is helping to identify opportunities for local areas and local government to work with the private sector to finance the net zero transition. Proposals to develop work on blended finance are set out in the accompanying publication, the 2023 Green Finance Strategy. We are supporting Freeports in England, Wales and Scotland to produce net zero plans. We will continue to invest £5 million/year in the Local Net Zero Hubs Programme and progress our ongoing projects, such as Net Zero Go, to support delivery at the local level. We will continue to support the
UKIB
to build its local advisory function and to work closely with the Local Net Zero Hubs. We will support work to promote net zero investment in Freeports. Green business sectors are one of the 5 priority sectors for the government’s Investment Zone programme announced in the Budget and all Investment Zones will be required to demonstrate how they support the government’s net zero and environmental targets.
We recognise that supporting the public and businesses with green choices must address multiple barriers, such as, cost, convenience, awareness, and that everyone - government, industry, businesses, and civil society - must work together to achieve net zero to gain the economic benefits and ensure the environment is in a state for future generations. As the
CCC
acknowledged in their report, we have already included in the Net Zero Strategy a clear set of principles for how we will engage and empower the public to make green choices. Across net zero sectors, we are introducing measures which support these 6 principles. Principle 1 - Minimise the ‘ask’ from the public by ‘sending clear regulatory signals.’
Principle 2 – Make the green choice the easiest. Principle 3 – Make the green choice affordable. Principle 4 – Empower people and businesses to make their own choice. Principle 5 – Motivate & build public acceptability for major changes. Principle 6 – Present a clear vision of how we will get to net zero and what the role of people and business will be. The public will play a key role in the transition and therefore we will set out further detail on how government will increase public engagement on net zero. This includes detailing how the government will (i) support public awareness of our actions through our digital platforms, (ii) develop a roadmap setting out plans and proposals under net zero and (iii) construct a guiding framework, in conjunction with partners and trusted messengers, to amplify net zero messaging. Government is establishing a new partnership to work with business and finance leaders to support the delivery of our net zero target - a new Net Zero Business and Investment Group. The group will look to develop a shared view of market barriers across different sectors to deliver net zero and the respective roles across government, industry and the finance sector in addressing these. In July 2022, the government launched an online advice tool that provides high-level trusted, impartial and tailored advice to consumers on how to improve home energy performance and information on retrofit recommendations. In March 2023, we also launched an accompanying phoneline service that provides a digital assist service for the tool. In 2022, we ran a digital discovery to explore whether there is a user need for new content on net zero on GOV.UK or a new resource to link together different sources of information and support on net zero in a comprehensive platform. We will run an alpha phase later this year. In the year to
COP26
, the former Net Zero Business Champion, Andrew Griffith
MP
, engaged large businesses and led Together for Our Planet, a campaign targeting small and micro businesses across the UK. The UK remains a global leader in the global Race to Zero, with almost 4,000 small and medium-sized enterprises (
SMEs
) and two-thirds of the FTSE100 companies signed up to date. While labels already exist for energy-using products and homes (in the form of Energy Performance Certificates), we are exploring the use of eco-labels for a wider a range of goods and services. We are exploring the use of product labelling to show the durability, repairability and recyclability of products, as well as their environmental footprint. We have announced our intention to require recyclability labelling on packaging and will introduce this as part of new regulations on packaging and packaging waste. The Department for Energy Security and Net Zero and
Defra
have bolstered its behavioural research capabilities by launching an Energy & Climate Behavioural Science Framework, a call-off contract that allows us to rapidly procure behavioural research. DfT
has launched a similar contract for transport. We have regularly funded public dialogues on a range of net zero issues and will continue to do so, using the findings to inform policy development. For example, in the past year, the Department for Energy Security and Net Zero has commissioned a public dialogue on biomass and bioenergy with carbon capture and storage to feed into the delivery of the Biomass Strategy in 2023. We will set out further detail on how government will increase public engagement on net zero. Government will launch a series of local demonstrator projects, which will test various approaches to delivering in-person advice, with a particular focus on harder-to-treat properties and digitally excluded consumer groups. We will also be reviewing further advice and measures that the ‘It all Adds Up’ campaign can include. We will continue to pursue the role of ecolabelling across sectors to help consumers make more informed purchasing decisions. We will create a mandatory methodology for eco-labelling which the food and drink industry must follow when providing voluntary information to consumers regarding their food’s emission and sustainability claims. The UK has been – and will remain - at the centre of global efforts to tackle climate change and transition to a global net zero economy. Collectively, we must reach our target in a way that protects energy security, supports green growth and innovation, and maximises benefits for businesses and consumers. Successfully addressing the challenges of climate change requires an unprecedented level of international action, collaboration, and coordination. The UK is driving international collaboration and focusing our actions on areas that will have the biggest impact. We are building strategic alliances to accelerate the global net zero transition, championing ambition and driving forward real-world action to keep 1.5 alive, and mobilising finance at scale – whilst maximising opportunities for the UK. Current global challenges such as Putin’s invasion of Ukraine, food and energy security, the rising cost of living and the recovery from the Covid pandemic underscore the urgent need to accelerate climate action. Further action on climate mitigation, adaptation and nature can bolster national and global resilience to current and future shocks and enhance economic stability. The UK will continue to be a world leader in the drive to net zero. Between 1990 and 2021 we’ve cut emissions by 48% while growing our economy by 65%.
In 2020 there were over 400,000 green jobs in low carbon businesses and their supply chains across the country. However, while countries have increased their emission reduction targets, the science is clear that emissions need to be halved by 2030 to keep 1.5C within reach and reach net zero by 2050. country - including the UK - will face, it also drives down the cost of transition faster by increasing demand for low carbon technologies. As the Independent Review of Net Zero made clear, the UK has comparative advantage and stands to benefit from the huge economic opportunities this brings. The ‘2030 Strategic Framework for International Climate and Nature Action’ will define the UK government’s vision and role in tackling global climate change and biodiversity loss in this critical decade. Taking an integrated approach to climate and nature, the Framework will build on our
COP26
Presidency, the outcomes of
COP27
and the Convention on Biological Diversity (
CBD
),
COP15
. The UK International Climate Finance Strategy underpins this, outlining how the UK is delivering on our commitment to provide £11.6 billion of international climate finance between 2021/22 and 2025/26, supporting developing countries to take climate action, and delivering on our international priorities and commitments. We welcome the recommendations of both the Climate Change Committee (
CCC
) and the ‘Independent Review of Net Zero’ and full responses can be found in the annexes. As recommended by the
CCC
and in response to the Glasgow Climate Pact, we revisited our 2030 Nationally Determined Contribution and strengthened it with information on delivery of our target to reduce all greenhouse gas emissions by at least 68% by 2030 on 1990 levels, including plans to expand the territorial scope of the
NDC
to include the UK’s Crown Dependencies and Overseas territories. Keeping 1.5 degrees alive: Over 90% of the world’s
GDP
, up from 30% when the UK took on the COP Presidency, is now covered by net zero commitments. More than 170 countries have now put forward new 2030 climate plans, known as nationally determined contributions, amounting to around 6 Gts in emissions reductions. Accelerating unprecedented low-carbon transitions of industries such as transport and energy, with commitments covering power, coal, methane, fossil fuel financing, forests and land, transport and sectors, including the first ever agreement to coal phase down in a UN climate decision. Finalising the Paris Rulebook after 6 years of negotiations, which sets out the instructions and products needed to fully implement the Paris Agreement on climate change. These guidelines build confidence and transparency as countries deliver on their commitments to meet the goals of the Paris Agreement. During
COP27
our focus was building on the Glasgow Climate Pact. We welcome the landmark progress made on loss and damage and the agreement to establish a fund to support those most vulnerable to the effects of climate change. We also saw progress on key work programmes launched in Glasgow. This includes the work programme for urgently scaling up mitigation ambition and implementation in this critical decade (known as the mitigation work programme) and the Glasgow - Sharm El-Sheikh work programme on the Global Goal on Adaptation (GlaSS). Our results to date demonstrate the transformative impact that UK
ICF
can have. Between 2011 and 2022, our programmes:
supported 95 million people to better adapt to the effects of climate change
improved access to clean energy for 58 million people
reduced or avoided 68 million tonnes of greenhouse gases
installed 3.3 gigawatts of clean energy capacity
avoided deforestation across 410 thousand hectares
mobilised £5.7 billion of public and £5.2 billion of private finance for climate change purposes
supported the sustainable management of 910 thousand hectares of land. Continuing to drive global ambition and implementation of net zero commitments is vital to the future of our planet and more must be done. The UK will continue to champion international climate action, noting the urgency required in this critical decade to 2030. The UK will:
Publish the 2030 Strategic Framework for International Climate and Nature Action which will set out the priorities for UK action through to 2030. Publish the UK’s International Climate Finance Strategy. It outlines how the UK’s high-profile commitment to spend £11.6 billion on
ICF
in 2021/22-2025/26 is being spent and is delivering results as part of the promised contributions to the
UNFCCC
commitment to mobilise US$100billion climate finance a year for developing countries. The strategy also shows how we are delivering on the
ICF
sub-targets which we have announced publicly, on nature, adaptation, and innovation. HM
Treasury, (2006), ‘Stern Review: The Economics of Climate Change’
McKinsey, ‘
’
University of Oxford net zero tracker, ‘
’
International Energy Agency (IEA) (2021), ‘
’
Department for Energy Security and Net Zero (2015), ‘
’
Department for Energy Security and Net Zero (2022), ‘
’
DESNZ
analysis of Bloomberg New Energy Finance data estimated £27 billion was invested in 2021 and £23 billion in 2022. ‘
’
EY (2021),
’
Bentham, M., Mallows, T., Lowndes, J. and Green, A. (2014), ‘
’
European Automobile Manufacturers’ Association (acea), (2023), ‘
’
Times Higher Education (2023), ‘
’
EDF, (2022), ‘
’
Internal
DESNZ
research, Dataset:
and
DESNZ
analysis (2023)
BEIS
(2020), ‘
’
Department for Energy Security and Net Zero (2023), ‘
’
European Automobile Manufacturers’ Association (acea), (2023), ‘
’
CCC
(2020),
’
BEIS
(2021), ‘
’,
Internal
BEIS
(2021), ‘
’,
BEIS
(2022), ‘
’
BEIS
(2022), ‘
’
DESNZ
analysis of the ‘
’
Please see the ‘Carbon Budget Delivery Plan’ for details of our policies and proposals for meeting the carbon budgets. The ‘Meeting carbon budgets’ section of the ‘Carbon Budget Delivery Plan’ makes clear how we have reached the conclusion that Carbon Budgets will be met.
Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met. HMT
(2021), ‘
’
BEIS
(2022), ‘
’
BEIS
(2023), ‘
’
BEIS
(2021), ‘
’
National Grid
ESO
, ‘
’
BEIS
(2022), ‘
’
BEIS
(2023),
July and December 2022 ‘Hydrogen Strategy update to the market’
NSTA
(2022),
Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. The ‘Meeting carbon budgets’ section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met. This figure has been updated since the NZS publication. DESNZ
analysis (2023), ‘
’. For further details see Sector Modelling in Technical Annex. DESNZ
analysis (2023), ‘
’
DESNZ
analysis (2023), ‘
’. For further details see Sector Modelling in
. Please see the ‘Carbon Budget Delivery Plan’ for details of our policies and proposals for meeting the carbon budgets. The ‘Meeting carbon budgets’ section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met. DLUCH (2022), ‘
’
BEIS
(2021), ‘
’
DESNZ
internal analysis
Heat Networks Industry Council
BEIS
(2021), ‘
’. Includes IA&S in total emissions. Consistent with CB6/NZS analysis. Source:
BEIS
, Energy Consumption in the UK 2021, table U2
Please see the ‘Carbon Budget Delivery Plan’ for details of our policies and proposals for meeting the carbon budgets. The ‘Meeting carbon budgets’ section of the ‘Carbon Budget Delivery Plan’ makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met. Sustainable Aviation forecasts based on independent analysis conducted by
ICF
consulting firm. Analysis assumes UK
SAF
production costs match or are lower than wider global
SAF
production costs. CCC
(2022), ‘
’,
SMMT
, ‘
’. December saw battery electric vehicles (
BEVs
) claim their largest ever monthly market share, of 32.9%, while for 2022 as a whole they comprised 16.6% of registrations, surpassing diesel for the first time to become the second most popular powertrain after petrol. Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. The ‘Meeting carbon budgets’ section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met. BEIS
(2021), ‘
’
Please see the ‘Carbon Budget Delivery Plan’ for details of our policies and proposals for meeting the carbon budgets. The ‘Meeting carbon budgets’ section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met. Internal
DESNZ
analysis based on ‘
’. Note this data is based on 80% emission reduction target by 2050, not the current net zero (100% reduction) target, hence likely to be an underestimate. BEIS
(2021), ‘
’
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