The IDS and the Net Zero Review set out the potential options available to address this, including regulatory standards and Carbon Border Adjustment Mechanisms (CBAMs), as well as the ongoing review of our current carbon leakage mitigation policy of free allowances under the UK ETS. Government will continue to explore options to mitigate carbon leakage, with emphasis on an international, multilateral effort to tackle carbon leakage at source through global action on industrial decarbonisation and climate regulation, with continued monitoring of related global policy developments. Net zero transition and economic opportunities 10. To stay on track for net zero, industrial emissions will need to fall significantly, with residual emissions being compensated for by Greenhouse Gas Removal methods. All industrial sectors will need to act to meet this challenge and to ensure they are resilient to climate changes that are already inevitable. To do this, we need to transform how industry uses energy and makes products and rethink the type of industrial products consumers buy. 11. Based on our whole system modelling, by 2050, emissions associated with industry could need to drop by 87-96% compared to 2019, down to 3-10 MtCO2e. In the interim, to meet our NDC and Carbon Budget 6 targets, we expect emissions could fall by 43-53% by 2030 and 63-76% by 2035, compared to 2019 levels. These figures are based on an indicative industry pathway contributing to the whole-economy net zero and interim targets Net Zero Build Back Greener

2050204520402035203020252020201520102005200019951990 12. The IDS sets out the policy foundations to deliver net zero for industry, including immediate actions in the 2020s. The initial reduction target of around two thirds (67%) of industrial emissions by 2035 was informed by sector-specific modelling developed in conjunction with the CCC. Our new ambition of 63-76% is consistent with, and builds on, the pathways we set out in the IDS, but with, amongst other things, increased levels of fuel switching and iron and steel decarbonising in 13. Our Carbon Budget 6 delivery pathway aims to give long-term clarity to industry, going further than the IDS in several • Going further and faster on fuel utilisation and storage (CCUS). These are critical for our overall pathway, requiring both infrastructure decisions and revenue support, via the IDHRS scheme. Modelling suggests fuel switching to low carbon alternatives could reach 50 Twh per year by 2035, along with an increase in capturing and storing industrial emissions, from 3 MtCO2 per year to 6 MtCO2 by 2030, and 9 MtCO2 per year by 2035. Chapter 3 – Reducing Emissions across the Economy

• Working towards more resource and energy efficiency savings. We anticipate the need for regulatory, fiscal, and wider measures targeted at industrial products and supply chains to achieve 11 MtCO2e worth of savings by 2035, including up to 3 MtCO2e of potential abatement in the iron and steel sector, as estimated by the • Realising the benefits of demand- side measures and carbon pricing. An increasing carbon price will help to incentivise action on decarbonisation by industry, whilst demand side measures, such as product labelling, regulatory standards, and changes to public and private procurement approaches, can play a key role in helping the development of the market, and mitigating the risk of 14. To achieve the level of emissions reductions in the industry sector indicated by our delivery pathway to 2037, we will need additional public and private investment of at least £14 billion and significant operating expenditure from the expected increase in CCUS, hydrogen use and other fuel switching technology. Energy and resource efficiency will also play a key role in offsetting some of 15. Due to challenges faced by industry, such as the level of capital investment required to commercially scale essential low carbon technologies, it will be important to drive the decarbonisation of industry at a pace that allows technology to develop and companies, large and small, to adapt their working practices, and retrain their workforces. 16. Many industrial sectors also have low profit margins, so their ability to invest in some decarbonisation technologies is limited and has been exacerbated by the pandemic. Short-to-medium term capital funding and revenue support will therefore be required to overcome these investment hurdles, reduce the risk of carbon leakage, and stimulate long 17. Decarbonising the industry sector will regenerate communities and open up new employment opportunities right around the UK. Based on current estimates, policies and proposals to reduce emissions in the industry sector could support up to 54,000 jobs in could support up to 50,000 jobs in 203035, split across industry, power, and the transport and storage network.36 In addition, the manufacture and installation of on-site energy efficiency and fuel switching measures to achieve a net zero pathway for industry could support up to 4,000 jobs in 2030. 18. We have the opportunity to future-proof industrial sectors and take advantage of future low carbon markets. This will include creating resilient supply chains that ensure we exploit our strengths and have diverse supply sources for critical goods, as well as supporting those areas that could be vulnerable to global shocks. The UK is already a world leader in new clean technology, as seen in our growing hydrogen and CCUS sectors, and we can develop new markets for low carbon goods and support further innovation. As highlighted in the IDS, wider environmental and air quality impacts will be kept under consideration, in line with evolving regulatory standards. Net Zero Build Back Greener

19. CCUS will be critical to achieving net zero, alongside low carbon alternatives such as low carbon hydrogen and electricity. These technologies offer a renewed era for our industrial heartlands. Connecting locally, for instance positioning hydrogen train trials near blue hydrogen clusters means we can start to bring higher skilled, higher paid jobs and expertise to cluster in these area.
The engineers, fabricators, and geologists currently working in industrial clusters and the oil and gas sector will be able to make use of local skills programmes such as Skills Bootcamps or Free Courses for Jobs to support new emerging industries in renewables, CCUS, and low carbon hydrogen to help build SuperPlaces. As the demand pulls through these lower carbon technologies, the costs fall. And these industrial clusters, our potential ‘SuperPlaces’, will foster and lead internationally on the development and roll out Fuel switching and carbon capture 20. Fuel switching to hydrogen is likely to be technically feasible for most industrial processes and our modelling indicates it is the least-cost option to decarbonise harder to electrify sites, processes, and sectors. 21. The IDS sets out that a low regret level of deep decarbonisation infrastructure should be installed in industrial clusters this decade. This will give industry the confidence to invest in switching to low carbon fuels, such as hydrogen. Industrial users located in clusters are therefore expected to provide the most significant new demand for hydrogen by 2030, with the greatest potential from chemicals and iron and steel sectors. A significant proportion of this demand could arise from a small number of sites acting as ‘pathfinders’, proving the viability of hydrogen at a commercial scale and fostering the initial market for low carbon hydrogen. 22. The UK Hydrogen Strategy indicated that in 2030 consumption of low carbon hydrogen as an industry fuel could range from around 10 TWh per year if supply is limited to clusters, and up to around 20 TWh per year if pipelines are connected to some dispersed sites. While supply is likely to come mostly from large scale cluster-based CCUS-enabled hydrogen production sites, there could also be industrial demand for low carbon hydrogen from electrolysis, which can be produced at a smaller scale on a more localised level. To stay on track for our Carbon Budget 6 delivery pathway, hydrogen demand from industry may need to increase up to 50 TWh by 2035. This increase would be driven by a growing number of sites having access to low carbon hydrogen, further technology development to enable an expanding range of processes to switch to hydrogen, and a shift in the associated costs, such as the price of carbon, to make hydrogen an increasingly competitive 23. The UK Hydrogen Strategy also set out the actions we are taking to support industry to realise the potential of this new technology. It is critical that we demonstrate fuel switching to low carbon hydrogen on industrial sites during the 2020s so we will provide further support for research and innovation through the Net Zero Innovation Portfolio and initiatives led by the Industrial Decarbonisation Research and Innovation Centre (IDRIC). Chapter 3 – Reducing Emissions across the Economy

24. Demand-side measures and carbon pricing could help to drive demand for hydrogen and will be supported by grant funding, such as the £55 million Industrial Fuel Switching Competition under our Net Zero Innovation Portfolio and the Phase 2 of the IETF, to support on-site fuel switches. Regulatory measures can also support industry to switch to low carbon hydrogen, with the Hydrogen Strategy announcing calls for evidence on hydrogen-ready industrial equipment and decarbonising existing high carbon hydrogen production. Alongside this, hydrogen production measures in the fuel supply chapter of this strategy will bring forward low carbon hydrogen supply for use across the economy and help make hydrogen a price competitive decarbonisation option to encourage end users to switch. 25. Carbon Capture, Usage & Storage (CCUS) will be an exciting new industry to capture the carbon we continue to emit and revitalise the birthplaces of the first Industrial Revolution. The Prime Minister’s Ten Point Plan established a commitment to deploy CCUS in a minimum of two industrial clusters by the mid-2020s, and four by 2030 at the latest. Our aim is to use CCUS technology to capture and store 20-30MtCO2 per year by 2030, forming the foundations for future investment and potential export opportunities. Developed alongside hydrogen, we can create these transformative ‘SuperPlaces’ in areas such as the Humber, North East, North West and southern England, as well as in 26. Developed alongside hydrogen, CCUS will be part of creating transformative “SuperPlaces” in areas such The Humber and North East, North West, and Southern England as well as in Scotland and Wales. Our £1 billion CCS Infrastructure Fund will provide industry with the certainty required to deploy CCUS at pace and at scale and will form part of a package of government support, which will also include the Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme and the £240 million Net Zero Hydrogen Fund supporting both CCS-enabled ‘blue’ and electrolytic ‘green’ hydrogen. 27. Following the completion of Phase 1 of the Cluster Sequencing process, the Hynet and East Coast Clusters have been confirmed as track 1 clusters for the mid-2020s and will be taken forward into Track-1 negotiations. If the clusters represent value for money for the consumer and the taxpayer then subject to final decisions of Ministers, they will receive support under the government’s CCUS Programme. We are also announcing the Scottish Cluster as a reserve cluster if a back-up is needed; we will continue to engage with this cluster as well as the track 1 clusters, throughout the next stage of the process. This puts these places - Teesside, the Humber, Merseyside, North Wales and the North East of Scotland - among the potential early SuperPlaces which will be transformed over 28. We remain committed to helping all industrial clusters to decarbonise as we work to reach net zero emissions by 2050, and we are clear that CCUS will continue to play a key role in this process. Consequently, the government continues to be committed to Track-2 contributing capacity of 10Mt per year to help achieve our 2030 ambition.
Deploying CCUS will be a significant undertaking, these are new major infrastructure projects for a new sector of the economy and carry with them significant risks to deliver by the mid-2020s. Net Zero Build Back Greener

Government will need to play a role in providing long-term certainty to these projects to manage these risks and bring forward the 29. CCUS will be critical to achieving net zero, alongside low carbon alternatives such as low carbon hydrogen and electricity. These technologies offer a renewed era for our industrial heartlands. Connecting locally, for instance positioning hydrogen train trials near blue hydrogen clusters means we start to bring higher skilled, higher paid jobs and expertise to cluster in these areas. The engineers, fabricators and geologists currently working in industrial clusters and the oil and gas sector will be able to make use of skills programmes such as Skills Bootcamps and Free Courses for Jobs to support new emerging industries in renewables, CCUS and low carbon hydrogen to help build SuperPlaces. As the demand pulls through these lower carbon technologies, the costs fall. And these industrial clusters, our potential SuperPlaces, foster and lead internationally on the development and roll out of these 30. Industrial CCUS is fundamental to decarbonising of industries such as chemicals, oil refining, and cement. This is because options for decarbonising industry are limited and fuel switching is sometimes only a partial solution. CCUS is not currently investable for most industrial sectors as deployment costs are higher than the current carbon price can support, and businesses are unable to pass these through to consumers. Additionally, businesses may face challenges raising capital finance to invest in CCUS until it has been more widely deployed in the UK. Therefore, an investable business model is needed, alongside clear commitments to provide 31. The IDS set out the ambition to capture 3 MtCO2 per year by 2030. Our delivery pathway for Carbon Budget 6 requires an increased ambition of 6 MtCO2 per year by 2030 and 9 MtCO2 per year by 2035. We envisage these emissions to be captured from industries in clusters as well as from more dispersed sites, where non-pipeline transport solutions such as the shipping of CO2 may be required. Revenue support for industrial carbon capture and hydrogen production 32. CCUS and hydrogen deployment will play a central role in our green industrial revolution and ensuring that the UK’s businesses are competitive in a net zero future. We have been working with industry to develop business models for industrial carbon capture and hydrogen production to give investors the long-term revenue certainty they require. We are now setting up the Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme to fund these business models and enable the first commercial scale deployment of low carbon hydrogen and industrial carbon capture. This will unlock by 2030 up to £6bn private sector capital, create thousands of jobs in key levelling up regions, grow the UK supply chain and achieve cost reductions, and deliver carbon savings to allow us to stay on track for 33. The IDHRS scheme will initially commit to providing up to £100 million to support initial electrolytic hydrogen projects, as set out in the Fuel Supply chapter. We will also be announcing a funding envelope in 2022 that will enable us to award the first contacts to industrial carbon capture facilities and CCUS-enabled hydrogen production projects from 2023 through the Cluster Sequencing process, to deliver up to 3 MtCO2/yr of industrial carbon capture and up to 1GW of CCUS-enabled hydrogen by the mid-2020s. Chapter 3 – Reducing Emissions across the Economy

34. Subject to costs falling, we are also committing to further allocation rounds for all types of eligible low carbon hydrogen production and industrial carbon capture from 2025. We will announce further allocation rounds in due course which will enable us to meet our 2030 deployment ambitions of 6MtCO2/year of industrial carbon capture, 5 GW hydrogen production capacity, and four CCUS clusters, while continuing to grow the UK supply chain and achieve cost reductions. Once established, this framework could also be used in the future for other critical 35. From 2025 at the latest, all revenue support for hydrogen production will be levy funded, subject to consultation and legislation being in place. Further details on this will be set out in 2022 through the Government’s response to the ongoing Hydrogen Business Model consultation. This will include parallel work to ensure fairness and affordability, such as exemptions for energy intensive industries 36. Electrification has the potential to abate between 5 MtCO2e and 12 MtCO2e of industry emissions per year by 2050. Electrification will play a more significant role (12 MtCO2e) if hydrogen is unavailable in dispersed sites. This equates to an increase demand of electricity by 15-44 TWh. Additional electricity demand is consistent under our delivery pathway for Carbon Budget 6, albeit the demand comes at a faster pace due to the possible adoption of electrification in the iron and steel sector. 37. Electrification technologies for low temperature processes are technologically mature and could be applied to less energy intensive sites today. However, industry faces barriers to adoption such as high electricity costs. We have seen the impact of overreliance on gas pushing up prices for hardworking people but our plan to expand our domestic renewables will push down electricity wholesale prices. Applications for higher temperature processes are currently limited due to the low maturity of technologies. We are currently assessing these barriers and will set out initial steps that we will take to support the uptake of electrification by the end of 2021. Some initial grant funding support will be available via Phase 2 of the IETF from Autumn 2021. We are also working with Ofgem, network operators, and stakeholders on the approach to delivering low carbon electricity networks with the capacity to meet increased demand from industry. 38. Initial support for sustainable use of biomass fuel switching and BECCS is available via Phase 2 of IETF.
As set out in the IDS, current evidence strongly suggests that given limited sustainable biomass supply, we may need to prioritise the use of biomass where it can be combined with carbon capture and storage (BECCS), resulting in negative emissions. The Biomass Strategy, due to be published in 2022 will review the amount of sustainable biomass available to the UK, how this could be best used across the economy, and establish a role for BECCS in reducing carbon emissions across the economy. 39. NRMM covers a wide variety of machinery across the economy (e.g. diggers, combine harvesters, generators, cranes), with total emissions of around 12 MtCO2e per year. Industrial NRMM accounts for around 6 MtCO2e,37 coming from construction, mining, and manufacturing, with the remaining emissions largely attributed to agriculture (see Natural Resources chapter), and some to buildings and transport. New technologies have begun to penetrate markets for some NRMM uses, for example electrification technologies, particularly for small, light duty equipment. Government intervention is Net Zero Build Back Greener

likely to be necessary to ensure low carbon technologies continue to be developed and ensure uptake at the level needed to reach 40. The first stage in government support will involve innovation funding to prepare key low carbon technologies for commercialisation. The £40 million Red Diesel Replacement competition will provide grant funding to develop and demonstrate low carbon alternatives to red diesel for the construction and mining and quarrying sectors, to help 41. Further cross government work is required to develop policies to support the deployment of technological solutions and required infrastructure in specific sectors, including agriculture, transport and buildings. Relevant government departments will work together to 42. UK steel plays a critical role in the economy as a foundation industry supporting local economic growth and our levelling-up agenda. Steel employs around 32,500 people and supports up to a further 40,000 jobs through its supply chains, providing high value employment in economically deprived areas.38 The IDS contains commitments to work with the newly constituted Steel Council to consider the implications of the recommendation of the Climate Change Committee to ‘set targets for ore-based steelmaking to reach near-zero emissions by 2035’. Hydrogen-based steelmaking, CCUS and electrification are some of the technological approaches being considered as 43. The Steel Council offers the forum for government, industry, and trade unions to work in partnership on the shared objective of creating an achievable, long- term plan to support the sector’s transition to a competitive, sustainable, and low 44. Steel accounts for 14% of industry emissions,39 with 95% of this coming from two blast furnace sites, Scunthorpe, and Port Talbot.40 Decarbonising these sites and the wider steel sector through switching to Electric Arc Furnace applying industrial carbon capture technology to existing blast furnaces or in the future using hydrogen-based DRI. 45. The UK recognises the importance of coordinating international activity on steel sector decarbonisation, to reduce the costs and risks of unilateral action. This includes working with international partners to collaborate on measures to mitigate carbon leakage, increase the effectiveness of R&D spending, and create larger, international markets for low emission steel products. The UK is taking a leading role in driving forward this activity, championing a number of key initiatives in this area at COP26, and beyond. This includes the Clean Energy Ministerial’s Industrial Deep Decarbonisation Initiative, which the UK co-leads with India. This focuses on aligning approaches to data measurement, standards and procurement, to ensure there is a coordinated approach to market creation across borders. We are also supporting the Net Zero Industry Mission, under Mission Innovation, which aims to foster deeper collaboration on industry decarbonisation. Resource efficiency and energy 46. The Climate Change Committee estimate that REEE measures could contribute 11 MtCO2e of annual emissions reductions by 2035.41 Various policies exist to incentivise and regulate action on REEE, but we need to ensure the right frameworks are in place to end clear investment signals and drive Chapter 3 – Reducing Emissions across the Economy

47. Resource efficiency and material substitution measures could save 9 MtCO2e per annum in industry within the UK by 2050.42 Resource efficiency measures reduce emissions from industrial processes by keeping products and materials in circulation for longer by way of reuse, repair, remanufacture and recycling as well as reducing material usage. These activities enable the retention of value, and in some cases the creation of new value for both the producer and customer, at a much-reduced 48. The approach in driving the transition to a more resource efficient economy is set out for England in the Government’s 2018 Resources and Waste Strategy, to be supplemented by a new Waste Prevention Programme, which outlines how we will maximise the value of our resources and minimise waste to increase the circularity of our economy. We will formalise joint working arrangements across government departments to promote collaboration on resource efficiency approaches, ensuring we are using all the policy tools available in working towards shared emissions and environmental targets. 49. The Climate Change Committee (CCC) balanced pathway estimates that 3 MtCO2e of potential savings per year could be driven by consumer-side measures by 2035. Government aims to support this shift in the 2020s through policy measures that inform consumers of the embodied carbon of industrial goods and empower them to make choices that support more efficient use of resources. Measures across different sectors will be explored, but opportunities have been identified in the construction, automotive and 50. Government aims to support action in the construction sector by improving reporting on embodied carbon in buildings and infrastructure with a view to exploring a maximum level for new builds in the future. We recognise there is potential to reduce embodied carbon by way of material substitution where appropriate, such as in timber usage (see Natural Resources, Waste and F-gases chapter) and resource efficiency approaches, amongst others. We have also supported the Green Construction Board to produce a Routemap to Zero Avoidable Waste, published in July 2021. 51.
Government is identifying opportunities to reduce the substantial embodied carbon footprint of the automotive sector, beyond the reduction and then elimination of emissions at 52. We are building on the successful introduction this year of the first wave of right to repair measures for certain appliances and equipment. Alongside the review of Waste from Electrical and Electronic Equipment (WEEE), we will explore the use of labels that inform consumers of durability, repairability and recyclability. Other options under consideration include enhancing and extending producer responsibility schemes to incentivise sharing 53. To realise the wider emissions saving potential of resource efficiency measures will require establishing frameworks which minimise virgin resource use and maximise recycled, reused, or remanufactured content. We will continue to assess all, fiscal and non-fiscal, policy options to meet these 54. Knowledge can be a barrier preventing the value in waste resources from being realised, including the sharing of secondary resources across different industrial processes. We will support companies to identify these Industrial Symbiosis opportunities through facilitation of a cross sector network to boost take-up of circular economy initiatives. We will Net Zero Build Back Greener

support inter-disciplinary approaches and strengthen the evidence base on resource efficiency initiatives by collaborating with the UKRI funded National Interdisciplinary Circular Economy Research (NICER) programme, and through the development of data systems to connect energy, waste, and water flows from 55. Energy efficiency measures in industry range from simple, bill-saving measures to complex retrofits of industrial equipment with long payback periods and replacement cycles. We intend to explore regulatory measures to drive greater, earlier uptake of energy efficiency measures in line with Carbon Budget targets, supported by a wider package of policies to enable a smooth industry transition. We intend to consult on the development of a package 56. The heterogeneity of manufacturing industry means that processes are very varied, so codifying them for regulation across the whole sector may be challenging. We are currently exploring potential new regulatory options to address this challenge. This includes consideration of whether Energy Management Systems can provide a tailored, technology-neutral approach, and we would seek to minimise burdens imposed by regulation, possibly by using digital tools. 57. Energy intensive industry (EII) firms are already covered by energy efficiency regulations and many have adopted efficiency measures. We are examining how existing schemes can be enhanced (e.g. reforming Climate Change Agreements) and/ or expanded (e.g. to non-EIIs and SMEs). For non-EIIs and SMEs, we are reviewing existing policies to ensure financial support is accessible and minimum standards are clear. 58. For smaller businesses, behaviours (awareness, prioritisation, maintenance) are often a further barrier to improving energy efficiency and we are considering new policies to respond to these barriers. Building on behavioural insights approaches in other areas of government policy, we are keen to explore how local networks – such as growth hubs, Local Enterprise Partnerships (LEPs), the local net zero hubs, and chambers of commerce – can be used to drive energy- efficient behaviours amongst businesses. We will consider which levers could work best to support, interconnect and scale-up 59. Funding for complex industrial retrofits with high payback periods will remain available via the IETF Phase 2 from Autumn 2021. These would be further supported by any future extension to the IETF, reflecting the government’s manifesto commitment to increase funding to £500 million to 2028. Work will be undertaken to ensure sustainable financing measures are available long-term. 60. The IDS sets out our ambition to create demand for low carbon products, growing the associated market and supporting industry to share the costs of decarbonisation 61. The IDS committed to exploring a range of policy options that can support this ambition including improved transparency of embodied emissions data, product labelling, regulatory standards, and agreeing public and private procurement approaches. The government has committed to developing detailed policy proposals in this area, beginning with a call for evidence on demand-side policy by Spring 2022. The call for evidence will investigate how we can define low carbon products and the emissions reporting that will be required to support those definitions. It will also explore the design of demand-side policy levers, with a view to the potential introduction of voluntary standards and labelling as early as 2025, and regulatory standards being introduced in the Chapter 3 – Reducing Emissions across the Economy

62. Across these approaches, the IDS recognises the significant benefits which can be achieved through international cooperation, and the UK is leading the new Clean Energy Ministerial Industrial Deep Decarbonisation Initiative (IDDI), which aims to develop shared approaches to embodied emissions reporting and definitions for green steel and cement to drive public and private procurement. 63. Dispersed sites43 account for approximately half of the UK’s industrial emissions44, and therefore form a major part of industry’s pathway to net zero. These sites are highly diverse in terms of location, sectors, and industrial processes, ranging from energy-intensive processes such as clinker production in cement to less energy-intensive processes like pasteurisation in food and drink 64. The IDS indicated that emissions reductions in the early 2020s would focus on energy efficiency. Deeper decarbonisation potential is expected to be reached in the 2030s onwards, when uptake of low carbon technologies in dispersed sites is expected 65. Whilst the broad trajectory on decarbonising dispersed sites remains valid, the more ambitious Carbon Budget 6 targets mean we will explore opportunities for faster decarbonisation in dispersed sites in the 2020s. Going further on dispersed sites in the 2020s could help industry avoid technological lock-in through offering decarbonisation opportunities to align with investment cycles; and spread the benefits of green technologies beyond the clusters, supporting the 66. To achieve this, we intend to advance work in the following main • Accelerated decarbonisation across dispersed We will investigate the potential for securing earlier emissions savings from segments of emissions where the technological pathway is more straightforward, or where economies of scale can be developed.
This could include areas such as heat pumps for low temperature processes, and electrification • Preparing sites for key infrastructure decisions in the For most sites, more clarity on optimal decarbonisation options depends on key infrastructure decisions, such as the future of hydrogen in the gas grid by 2026. We will work with stakeholders to ensure that these sites understand their decarbonisation options once these decisions have been made. This would include funding for Mini-Cluster Industrial Decarbonisation Plans in the early 2020s, to develop shared infrastructure and intergrated decarbonisation solutions in local areas. This would be supplemented by continued funding via Phase 2 of the IETF for site-level studies and Net Zero Build Back Greener

Chapter 3 – Reducing Emissions across the Economy Working together across the UK Examples of policy action by the Scottish Government, Welsh Government, and Northern Ireland Executive A collaboration between researchers at Swansea University and cement producer Hanson UK has seen the installation of a new demonstration unit at the company’s Regen Ground Granulated Blast Furnace Slag (GGBS) plant in Port Talbot. The demonstration unit replaces some of the natural gas in the Regen process with green hydrogen. The carbon footprint of Regen GGBS is about one tenth of Portland cement and it is used as a replacement for up to 80% of the cement in concrete. The project is part of the £9.2 million Reducing Industrial Carbon Emissions (RICE) project which has been part-funded by the European Regional Development Fund through the Welsh The Scottish Government has announced a major fund to decarbonise industry and manufacturing opening opportunities to develop negative emissions technologies (NETs). The Scottish Industrial Energy Transformation Fund commits £34 million for projects at industrial sites for energy efficiency or deeper decarbonisation, including on feasibility and conceptual studies into the role of NETs.This is supported by a £180 million Emerging Energy Technologies fund to support Hydrogen, CCS and NETs projects. The Scottish Government has also launched the Grangemouth Future Industry Board in recognition of the continued commitment to Scotland’s largest industrial manufacturing cluster, now and in our net zero future. Supporting a just transition to net zero is at the heart of the Board’s work, designing the collaborative approach to planning for the transition of this core manufacturing region and harnessing the significant assets, technical and engineering,, skills, and significant opportunities presented by

Invest Northern Ireland delivers a suite of support, including specialist advice and investment capital to enable Northern Irish businesses to become more efficient and resilient through green efficiencies. • Technical Available to all businesses with an annual energy and resource spend above £30,000, this support includes fully funded technical audits, feasibility studies and advice to help businesses identify cost and • Resource Matching through Industrial fully funded support that offers opportunities to convert redundant materials of one business into a resource for another business, utilising a circular economy approach to add value and to reduce costs and carbon for all parties. • Resource Efficiency Capital Available to eligible businesses, grants of up to £50,000 to help with the purchase of new resource efficient technologies that reduce the consumption of water, raw materials and waste produced leading to • COVID-19 Energy Efficiency Capital Available to eligible businesses to build resilience through green efficiency, grants of up to £80,000 are available for the installation of energy efficiency equipment that offers cost and carbon savings through the reduction of energy Net Zero Build Back Greener

Decarbonising the way we heat and power our buildings • Levelling up through supporting 175,000 green skilled jobs by 2030 and 240,000 by 2035 – resulting in £6 billion additional GVA by 2030 and with a focus on the areas • Making the transition to low carbon buildings affordable and achievable for all • Aiming to phase out the installation of new and replacement natural gas boilers by 2035 in line with the natural replacement cycle, and once costs of low carbon alternatives have come down, including any hydrogen-ready boilers in areas not converting to hydrogen, to ensure that all heating systems used in 2050 are • Making heat pumps as cheap to buy and run as a gas boiler by growing the heat pump market to support 600,000 installations per year by 2028 and expanding UK manufacturing – with the ambition of working with industry to reduce costs by at least 25-50% by 2025 and to parity with gas boilers by 2030 at the latest. • Supporting households in making this transition with a new £450 million Boiler Upgrade Scheme providing £5,000 capital grants and a new market-based incentive for heating system manufacturers, whilst investing £60 million in heat pump innovation – making them beautiful, smaller, easier to install. • Consulting on phasing out the dirtiest and most expensive fossil fuels first - new oil, coal and liquefied petroleum gas heating - and replace with low carbon alternatives in non-domestic buildings from 2024 and homes from 2026, following natural appliance replacement cycles. • Committing to action on addressing distortions in fuel prices to ensure that low carbon technologies are no more expensive to run than fossil fuel boilers. • Helping households and businesses reduce their energy bills while making buildings healthier and more comfortable benefiting from warmer, comfier, more valuable • Upgrading fuel poor homes to EPC Band C by 2030 where reasonably practicable and providing additional funding to the Home Upgrade Grant and the Social Housing Decarbonisation Fund – investing £1.75 billion. Chapter 3 – Reducing Emissions across the Economy

• Consulting on phasing in higher minimum performance standards to ensure all homes meet EPC Band C by 2035, where cost-effective, practical and • Setting long-term regulatory standards to upgrade Privately Rented Homes to EPC C by 2028 and considering setting a long-term regulatory standard for Social Housing, subject to consultation. • Reducing the energy consumption in commercial and industrial buildings in England and Wales by 2030, using measures including regulations and a performance-based measurement scheme.
• Investing a further £1.425 billion in the Public Sector Decarbonisation Scheme, with the aim of reducing direct emissions from public sector buildings by • Setting a minimum energy efficiency standard of EPC Band B by 2030 for privately rented commercial buildings in England and Wales. • Establishing large scale trials of hydrogen for heating to take decisions in 2026 on the role of hydrogen in decarbonising heating, and consult on the case for enabling or requiring hydrogen-ready boilers and broader heating system efficiencies. • Continuing to grow and decarbonise the UK Heat Network market through the £338 million Heat Network Transformation Programme of which at least £270m will go towards the Green Heat Network Fund, introducing sector regulation and new heat • Launching a new world-class policy framework for energy-related products to ensure products use less energy, reducing emissions and household bills. 1. The UK has around 30 million buildings46 and includes some of the oldest building stock in Europe.47 In total, buildings are responsible for around 17% of our national emissions.48 Currently, 1.7 million fossil fuel heating systems are installed per year (gas, oil, and coal).49 The vast majority of emissions from buildings result from heating. Including indirect emissions (e.g. from electricity generation) emissions from heating buildings make up around 78% of all buildings emissions and about 21% of all UK emissions.50 Overall, between 1990 and 2019, net UK greenhouse gas emissions from heat and buildings decreased by 17%. 2. The package of measures presented here, and in our Heat and Buildings Strategy (HBS) and associated consultations, delivers on commitments made in the Ten Point Plan for a Green Industrial Revolution and the Energy White Paper. In the Ten Point Plan, we committed to deliver greener buildings. Since then, we have announced £60 million to support decarbonisation of Social Housing and have allocated over £1 billion from the Public Sector Decarbonisation Scheme, in doing so, supporting up to 30,000 jobs. Net Zero Build Back Greener

3. The UK already has a strong track record improving energy performance, with 40% of our homes now above Energy Performance (EPC) Band C, up from just 9% in 2008. There are approximately 28 million households in the UK,51 and 86% of homes in England use natural gas boilers.52 Across the UK, 9% of the energy consumed to heat homes is provided by other fossil fuels, such as oil and coal, generally in homes that do not have access to the gas grid.53 In 2019, approximately 15 million (60%) of homes in England had a lower energy performance, with ratings of EPC band D and below.54 The largest proportion of homes in England are owner-occupied (64% in 2019), with a much smaller proportion being socially rented (17% in 2019), or privately rented (19% in 2019).55 Owner-occupied homes are now the worst performing tenure, with the greatest proportion of homes below EPC band D.56 Improving the energy performance of all homes and taking a ‘fabric first’ approach, by improving the energy efficiency will be key to ensuring the transition to low carbon heating is cost effective.57 4. Non-domestic There are approximately 1.7 million non-domestic (commercial, industrial and public) properties in England and Wales.58 Non-domestic buildings account for around a quarter of UK building emissions.59 Commercial and industrial buildings over 1,000 m2 are responsible for over half of the energy used by commercial and industrial buildings (excluding process heat) but account for only 5% of the stock.60 Public sector buildings account for about 9% of building emissions.61 Net zero transition and economic opportunities 5. By 2050, buildings will need to be almost completely decarbonised, by making use of a combination of technologies to minimise their carbon emissions and maximise their energy performance. The scale of this challenge is significant, but we will take an approach that goes with the grain of consumer behaviour and maximises consumer choice, to ensure a smooth and gradual transition for households and businesses. Much like the move to electric vehicles, the move to low carbon options such as electric heat pumps will be a gradual transition from niche product to mainstream consumer option. To ensure that we all benefit from cleaner, warmer and comfier buildings, will need to improve the energy efficiency of our buildings and products, end the use of fossil fuel heating systems and switch to low carbon sources, and integrate the use of smart technologies that give more control to 6. The decarbonisation trajectory of the sector presents significant potential for investment and export opportunities for goods and services. Deployment of energy efficiency measures and low carbon heating in domestic and non-domestic buildings, in line with the ambitions and outcomes in the Heat and Buildings Strategy, will drive up to £6 billion gross value added (GVA) per year by 2030.62 7. This will be investment not just in the buildings themselves, but in the infrastructure that supplies them. Government support will stimulate this investment and will need to be focussed on growing key markets for low carbon heat and supporting vulnerable and low-income households, the social housing sector, and the public sector. Chapter 3 – Reducing Emissions across the Economy

8. Decarbonising the heat and buildings sector will regenerate communities and open up new employment opportunities right around the UK. Based on current estimates, policies and proposals to reduce emissions from buildings could support up to 100,000 jobs by the middle of the 2020s and up to 175,000 in 2030. Jobs will be supported across a range of areas – from manufacturing to services, and from installation to research 9. Decarbonising buildings will deliver a range • Levelling up. Decarbonisation will support clean, local growth in every region of the UK, while investing in equality of living standards and job creation. Reducing heat and buildings emissions will require installing energy efficiency measures and new heating systems, which rely on local • Reducing energy bills and business operating costs. Inefficient homes are more expensive to run.
The Energy Efficiency Infrastructure Group estimate that upgrading all UK homes to EPC band C could provide annual energy cost • Tackling fuel poverty. In 2014, the Government introduced a statutory fuel poverty target for England, to improve as many fuel-poor homes as is reasonably practicable to a minimum EPC rating of band C by the end of 2030. Tangible, targeted support for more deprived areas can be achieved through action to upgrade poor-performing buildings, leading to warmer, healthier homes and lower energy bills. We recently published an updated fuel poverty strategy for England.64 • Improving health. COVID-19 has highlighted the importance of good ventilation in buildings. Improving the energy performance of our buildings, whilst ensuring good ventilation, will ensure they are efficient and healthy environments. This can help avoid many physical illnesses, including heart and lung conditions65. Reducing the number of fossil fuel boilers will also significantly reduce the various pollutants emitted, including nitrous oxides, which negatively impact human health. Improved thermal comfort also leads to better health and wellbeing as well as reducing the likelihood of • Increasing property value. Studies indicate that more energy efficient properties typically have a higher value than less efficient ones. Evidence from a study commissioned by BEIS indicated that properties with an EPC C rating were worth around 5% more than those currently at EPC D rating, after controlling for other factors such as property size and 10. Our approach to this transition must be affordable and achievable for all and, following successes in power and electric vehicles, we will utilise long-term signals alongside early investments to bring down costs and improve • Investing in innovation. Continuing to work with industry to refine processes and technologies to deliver value-for-money and value for the UK economy – with an emphasis on making technology cheaper, easier to install and designed to appeal to consumers. We are investing in technology now, in trialling hydrogen ahead of strategic decisions on the role of hydrogen for heating in 2026; and £60 million in heat pump innovation – making them beautiful, smaller and easier to install. Net Zero Build Back Greener

• Prioritising no or low regrets actions. Reducing bills through a fabric-first approach to improving building thermal efficiency through, for example, insulation, draught-proofing and increasing the energy performance and capability of products • Growing supply chains and bringing down Making heat pumps as cheap to buy and run as a gas boiler by growing the heat pump market to support 600,000 installations per year by 2028 and expanding UK manufacturing – reducing costs by at least 25-50% by 2025 and to parity with gas boilers by 2030. To help achieve this we are announcing a new £450 million Boiler Upgrade Scheme – offering households £5,000 grants when they install an air source heat pump. • Continuing to support those most in need. Supporting the vulnerable through the transition to low carbon buildings and meeting our statutory fuel poverty target. We will continue to ensure financial support is available for those who need it most. We are investing a further £1.75 billion in funding for our Home Upgrade Grant and Social Housing Decarbonisation Fund schemes, which provide support for low-income households in installing energy efficiency and low carbon heating. • Balancing certainty and flexibility. Providing stability for investment through clear long-term signals that work with the grain of the market and minimise impact on consumers. For example, aiming to phase out the installation of new and replacement natural gas boilers by 2035, in line with the natural replacement cycle and only once costs of low carbon alternatives • Ensuring buildings are resilient to the impacts of climate change. Implementing measures to ensure homes and buildings are well ventilated and protected against • Taking a whole-sector and whole- system approach. Considering the heating system in the context of what is most appropriate for the whole building to minimise costs, as well as accounting for local suitability, environmental impacts, and 11. The benefits of more efficient, low carbon buildings for consumers are smarter, better performing buildings, reduced energy bills and healthier, more comfortable environments. Households and businesses will need to play their part in decarbonising their buildings, but we need to ensure that the costs of doing so fall fairly across society. 12. Based on our whole-system modelling, by 2050, emissions associated with heat and buildings could need to drop by 98-100% compared to 2019, down to 0-2 space between digit and unit MtCO2e. In the interim, to meet our NDC and CB6 targets, we expect emissions could fall by 25-37% by 2030 and 47-62% by 2035, compared to 2019 levels. These figures are based on an indicative heat and buildings pathway contributing to the whole-economy net zero and interim targets Chapter 3 – Reducing Emissions across the Economy

2050204520402035203020252020201520102005200019951990 13. We have developed three high-level illustrative scenarios to reflect different technology mixes that would allow us to decarbonise heating of buildings, contributing towards meeting our Carbon Budget 6 target. We are committed to taking strategic decisions on the role of hydrogen for heating in 2026, following trials, which will further inform out pathway to 2050. Realising these scenarios would be consistent with our trajectory to net zero in 2050. These a high hydrogen scenario, a high electrification scenario and a dual energy system scenario. 14.
In all scenarios the following will • Improving the energy performance of buildings to keep buildings warm and comfortable, keep bills down, minimise the impacts of transition on the energy system, and make switching to low carbon • Phase out of heating appliances that are only capable of burning fossil fuels, consistent with our ambition to phase out the installation of new and replacement natural gas boilers by 2035, and phase out the installation of high-carbon fossil fuel boilers in properties not connected to the gas grid by 2026 (and 2024 for non- Net Zero Build Back Greener

• Heat these will be the best low carbon heating option for some types of buildings, for example, if they are new buildings or off the gas grid. We have set a target of 600,000 heat pump installations per year by 2028, from roughly 35,000 currently. We expect this to be the minimum number of heat pumps that need to be deployed each year after 2028 across any scenario, and all scenarios other than high hydrogen will require much higher deployment. Of the 600,000 heat pumps per year, we expect about 200,000 to be in new build properties. • Heat they use hot water in pipes to deliver heating (and in some cases cold water for cooling) to many consumers from a centralised heat source. Heat networks could supply up to 20% of UK heat demand by 2050, up from 3% of UK heat 15. To achieve the level of emissions reductions in the heat and buildings sector indicated by our delivery pathway to 2037, we will need additional public and private investment of approximately £200 billion. 16. In this scenario, we assume there is no significant use of hydrogen for heating in buildings. This may be because hydrogen is not proven to be feasible, cost-effective, or preferable as a solution for low carbon heating, or because its deployment has been significantly delayed. In this scenario, we would need to continue the rapid growth of the heat pump market beyond 600,000 per year in 2028 to up to 1.9 million per year from 2035, resulting in roughly 13 million homes using low carbon heating systems by 2035 – around 11 million with heat pumps and around 2 million using heat networks. 17. To ensure we drive this level of heat pump deployment, further policy would be required to phase out installation of new fossil fuel heating faster. We could grow the heat pump market and transition consumers in stages, while continuing to follow natural replacement cycles to work with the grain of consumer behaviour. For homes, we could focus initially on key segments of the domestic building stock, for example based on tenure, property 18. The increased deployment of heat pumps will be accompanied by investment in the infrastructure we need to meet increased electricity demand, including the generation of low carbon electricity and additional 19. In this scenario, hydrogen has proven feasible and preferable as a solution for heating most UK buildings, and decisions taken in 2026 set the UK on a path to converting most of the national gas grid to hydrogen. We would expect to begin the transition by converting a pilot hydrogen town by the end of the decade and then accelerate rollout. The conversion would likely start by building out from existing hydrogen production and use in industrial clusters, and roll-out would involve switchover on an area-by-area 20. Due to the infrastructure and supply chain requirements of a hydrogen conversion we estimate that in this scenario, we would convert around 4 million homes to using low carbon hydrogen by 2035. New heating system installations should be low carbon or hydrogen-ready, meaning ready for a planned future conversion, from 2035. We estimate that by 2035 roughly 13 million homes will have low carbon heating, comprising around 7 million with heat pumps, 4 million using hydrogen, and around 2 million homes using Chapter 3 – Reducing Emissions across the Economy

21. In this scenario, both hydrogen and electrification prove feasible and preferable as heating solutions to large numbers of consumers. This could arise in several • All or most of the gas grid is converted to low carbon hydrogen, but the costs and benefits of switching to hydrogen versus installing a heat pump are viewed differently by different consumers. This could result in a high switchover to both hydrogen and heat pumps on the gas grid. • There is partial but still extensive conversion of the gas grid to hydrogen, based on differing geographical or built environment factors. This would require careful consideration of which parts of the grid would be converted and where responsibility for decisions about the costs and benefits of converting different areas • There is widespread consumer demand for hybrid systems that utilise a mix of 22. It is too early to determine the policy framework that might support this mixed transition. Any scenario in which hydrogen is an available option for consumers will require public policy decisions to enable cost-effective and co-ordinated investment in infrastructure and supply chains, and ensure consumer choice and other public interests are protected. If the case for converting the network to hydrogen differs strongly from area to area, more of the preparation may need to take place at a regional or local level. Net Zero Build Back Greener

Chapter 3 – Reducing Emissions across the Economy Future scenarios - what factors Over the 2020s, we will need to start taking more decisive steps about which technologies and infrastructure should be rolled out, where and when, and accordingly, where we need to target investment, skills, and other enabling actions. We aim to make decisions about the role of hydrogen in heating by 2026, and commit to reviewing existing institutional arrangements, as stated in our Heat and Buildings Strategy, helping ensure that we have an appropriate framework in place to facilitate decision making at all levels.
The cost of installing a heat pump is currently significantly more expensive than gas boilers and installation often requires additional ancillary works, such as upgrading radiators. This can result in total installed costs of around £10,000 for the average home. However, the cost of installing heat pumps should fall significantly as the market scales up, and the Heat and Buildings Strategy has set ambitions on reducing the installed cost of heat pumps over this decade. We are also providing subsidy for first through the Boiler Upgrade Scheme, which will provide grants of £5,000 towards the cost of installing an air source heat pump and £6,000 for Ground Source Heat Pumps. We will look to help the market drive down the upfront costs, which leading market participants believe can make heat pumps as cheap to buy and run as a gas boiler by 2030. This ambition reflects the opportunity for innovation and economies of scale across the value chain and has been seen in other technologies such as solar PV, wind and electric vehicles. Conversely, it is likely hydrogen appliances will cost approximately the same as natural gas Heat pumps are significantly (2.5 – 3x) more efficient than gas boilers and may get even more efficient, therefore requiring much less energy to run. Currently, on average heating a home with a heat pump costs more than with a gas boiler. This is, in part, due to policy and social costs charged on electricity bills. However, by addressing existing distortions between electricity and gas prices, we will ensure heat pumps will be no more expensive It is too early to properly estimate the running costs of hydrogen heating. The cost of producing hydrogen is currently higher than fossil fuels. Though the future production costs of hydrogen will not be the same as the ultimate cost to consumers, using hydrogen for heating could cost more than natural gas heating. There remains uncertainty on other issues that will impact on hydrogen costs, such as, new and innovative means of production, the cost to store it, new and innovative business models, and the cost of any changes to the gas grid that may

Heat pumps, unlike most traditional fossil fuel boilers, tend to work by providing an ambient temperature, rather than short blasts through very hot radiators. Evaluation and research have shown that the majority of consumers are happy with the performance of their systems, and smart controls help consumers with this change. Installing heat pumps at the same time as carrying out building energy efficiency and heating system improvements allows for a single intervention and could prove more efficient for many households or businesses. Hydrogen boilers will likely work in a similar way to gas boilers. Some adaptive measures might be needed to enable hydrogen, but requirements for this and associated costs are still uncertain and could vary significantly between different types of buildings. When switching over to hydrogen, the initial grid conversion process is likely to require streets or areas to be converted at the same time. It is expected that an engineer will need to have access to homes to do the changeover in a particular timeframe, and building residents are unlikely to have control over when Net Zero Build Back Greener

23. Much like the move to electric vehicles, the move to heat pumps will be a gradual transition from niche product to mainstream consumer option. Our core commitment is that we will aim to phase out the installation of new and replacement natural gas boilers in homes and buildings by 2035 at the latest, once costs have come down. This would be in line with the natural replacement cycle, and include hydrogen ready boilers in any areas not converting to hydrogen, to ensure all heating systems used in 2050 are compatible 24. Accelerating heat pump deployment. We will grow the UK heat pump market to support 600,000 installations per year by 2028. As part of this, and working with industry to do so, we will aim for cost parity between heat pumps and gas boilers by 2030 with significant cost reductions of at least 25-50% by 2025. To achieve this, we will introduce a range of new policies to support heat pump deployment, including a new £450 million Boiler Upgrade Scheme over 2022/23 to 2024/25 with grants of £5,000 for an air source heat pump. In addition, we will consult on phasing out the installation of new oil, coal, and LPG heating, and replace with low carbon alternatives such as heat pumps in off gas grid non-domestic buildings from 2024 and homes from 2026, and we will launch a new market-based incentive for heating system manufacturers, similar to that for CO2 in cars. Subject to strategic decisions on the pathways and market conditions, we would look to grow the heat pump market beyond 600,000 per year in 2028 and potentially up to 1.7 million a year by 2035, and we will consult on our proposed approach to doing this. 25. We are investing £60 million in a ‘Heat Pump Ready’ Programme which will support the development of innovative solutions to improve deployment, tools and technologies across the heat pump sector. These new opportunities will build on our previous Energy Innovation Programme activities, such as the Electrification of Heat Demonstration Project. 26. Heat networks. Under the £338 million Heat Network Transformation Programme, we will launch the £270 million Green Heat Network Fund to grow the market for low carbon heat networks. We will also pass new legislation to regulate the sector for consumers, give heat networks the statutory powers they need to build, and regulate the carbon emissions of projects from the early 2030s. We will also deliver new heat networks zones in England by 2025 where heat networks are the default solution for decarbonising heating.
Finally, we will work with industry to increase the capacity and capability of the UK supply chain to support the sector to reach its growth potential and look to improve performance of legacy networks through the Heat Network Chapter 3 – Reducing Emissions across the Economy

27. Hydrogen heating. We will work in partnership with industry and other key stakeholders to thoroughly assess the feasibility, safety, consumer experience and other costs and benefits, of hydrogen as an option for heating our homes and workplaces. We will support industry to develop and deliver large scale trials of hydrogen for heating, including a neighbourhood trial by 2023 and a village scale trial by 2025, and develop proposals for a possible ‘hydrogen town’ before the end of the decade. We will develop the evidence base and frameworks necessary to take strategic decisions on the role of hydrogen in decarbonising heat in 2026. In the shorter-term, we will work with the Health and Safety Executive and industry partners to enable up to 20% hydrogen blending in suitable areas of the GB gas networks subject to the success of testing and trials, and value 28. Hydrogen-ready boilers and boiler standards. We are aiming to consult shortly on the case for enabling or requiring new gas boilers to be readily convertible to use hydrogen (‘hydrogen-ready’) by 2026. We will also use this consultation to test proposals on the future of broader boiler and heating system efficiency and explore the best ways to reduce carbon emissions from our gas heating 29. Biomethane in the gas grid. We will deliver a new Green Gas Support Scheme (GGSS) to support the injection of biomethane from anaerobic digestion (expected to deliver 2.8TWh of renewable heat per year in 2030/31), and we will explore the development of commercial-scale gasification and the replacement of the GGSS with a long-term 30. Our core commitment is to reduce bills, whilst improving comfort, health and home value, through ensuring as many homes as possible to achieve EPC Band C by 2035 at the latest, where cost-effective, practical, 31. New Buildings. We will introduce regulations from 2025 through the Future Homes Standard to ensure all new homes in England are ready for net zero by having a high standard of energy efficiency and low carbon heating installed as standard. This should mean that all new homes will be fitted with a low carbon heat source such as a heat pump or connected to a low carbon heat network. To reinforce this, we will consult on whether it is appropriate to end new gas grid connections, or whether to remove the duty to connect from the Gas Distribution Networks. As an interim measure to the Future Homes Standard, we plan to introduce an uplift in standards, effective from June 2022, for England that would result in a 31% reduction in carbon emissions from new homes compared to current standards. We will also respond to our consultation for the Future Buildings Standard for new non-domestic 32. Domestic private rented sector. We will build on our 2020 consultation on strengthening the Minimum Energy Efficiency Standards to EPC band C by 2028 to set long term minimum regulatory standards consistent with our net zero commitment for private rental sector. We are aiming to publish a response to this consultation by the end of the year We have provided significant additional support to local authorities to ensure compliance and enforcement of these regulations, building on earlier compliance and enforcement pilots. This includes providing £4.3m to 57 local authorities to support activity in these areas. We plan to scale up activity further in the coming years. We have also set out proposals to strengthen the compliance and enforcement framework under our recent EPC Band C consultation. This includes the introduction of a compliance and exemption database to support local authority enforcement of the Net Zero Build Back Greener

33. Owner occupied homes. We are also exploring opportunities to improve the energy performance of owner-occupier homes. We have conducted a series of stakeholder workshops on the case for action, with over 50 representatives from the housing sector, landlord representatives, retrofit supply chain, NGOs, and consumer organisations. We plan to consult on options to upgrade homes in the owner occupier sector. We will work with owner-occupiers to help them improve the liveability of their homes. The provision of green finance will be an important step in making this easier and more accessible. 34. Social housing. We will provide £800 million additional funding to the Social Housing Decarbonisation Fund (SHDF) over 2022/23 to 2024/25, which will deliver energy performance improvements to social housing. We will also consider setting a long-term regulatory standard to improve social housing to EPC Band C and consider levers required to decarbonise the stock in line with net zero. We will consult the sector before setting any 35. Low Income/Fuel Poor Consumers. We will ensure as many fuel-poor homes as reasonably practicable achieve a minimum energy efficiency rating of C by the end of 2030. To help achieve this, we will provide £950 million additional funding over 2022/23 to 2024/25 for off-gas-grid properties through the Home Upgrade Grant (HUG) to provide ongoing support for low-income households living off the mains gas grid with energy efficiency and low carbon heating upgrades. We will also expand and extend the Energy Company Obligation Scheme and the Warm Homes Discount Scheme until 2026. 36. Net zero backstop for homes. We will consider on an ultimate backstop date to ensure that all homes meet a net zero minimum energy performance standard before 2050, where cost effective, practical, and 37. Public Sector. We have committed to halve direct emissions from public sector buildings by 2032, against 2017 levels, and we aim to further reduce emissions from public sector buildings by 75% by 2037.
To help achieve this, we will provide £1.425 billion additional funding for the Public Sector Decarbonisation Scheme (PSDS) over 2022/23 to 2024/25, and through our Greening Government Commitments (GGCs) which sets targets to reduce emissions from central government departments and arms- length bodies. We have also initiated the Public Sector Low Carbon Skills Fund which provides complementary funding alongside the PSDS to enable public sector organisations to acquire expert skills in order to unlock 38. Non-domestic buildings. The Energy White Paper set a minimum energy efficiency standard of EPC Band B by 2030 for privately rented commercial buildings in England and Wales. Later this year we plan to consult on regulating the non-domestic owner-occupied building stock, and we are considering whether this should align with the private rented sector minimum energy efficiency standards. We will also respond to the 2021 consultation on introducing a performance-based policy framework in large commercial and industrial buildings and pilot 39. We will look to consult stakeholders on the Small Business Energy Efficiency Scheme (SBEES) later this year. The scheme will aim to remove barriers for SMEs in accessing energy efficiency measures, drive forward better buildings performance and aid SMEs in meeting regulatory standards. Finally, we have consulted on strengthening the Energy Savings Opportunity Scheme (ESOS), which is a mandatory energy assessment scheme for large businesses’ energy use and opportunities to improve energy efficiency. Chapter 3 – Reducing Emissions across the Economy

• Energy-related products. We have published a policy framework setting out illustrative proposals for raising minimum energy performance standards and improving consumer information for a range of high potential products, including but not limited to space heating, cooking, taps and showers and lighting. We plan to consult on more concrete proposals between 2022 and 2023 ahead of implementing measures from 2025. 40. There are a range of barriers to home energy performance improvements, which we will also need to address to help people • Advice & information. Our existing Simple Energy Advice service has received over 1.5m users to date. We will enhance our digitally led service, and are considering options to support tailored retrofit advice in local areas. The aim is to create a Government-led home energy advice journey, supported by tailored local advice. This includes moving our Simple Energy Advice service to GOV.UK, which will improve user experience, and supporting local advice provision. This will help households to improve the energy performance of their homes, and move • Green finance. Catalysing the market for Green Finance is a priority. We are working with mortgage lenders to support homeowners to improve the energy performance of their properties and will publish our response to our lenders consultation in due course. Government is also exploring the case for a further green home finance innovation programme, focussed on supporting lenders to develop green finance products targeted at consumer types who will be impacted by future regulation, and which the market is unlikely to develop on its own in the short term. BEIS has invited the UK Infrastructure Bank (UKIB) to help steer this work, and we will work further with the UKIB to explore whether they can play a wider role in scaling up green 41. Rebalancing energy Clean, cheap electricity is an everyday essential. We have seen the impact of overreliance on gas pushing up prices for hardworking people but our plan to expand our domestic renewables will push down electricity wholesale prices. However, current pricing of electricity and gas does not incentivise consumers to make green choices, such as switching from gas boilers to electric heat pumps. We want to reduce electricity costs so we will also look at options to shift or rebalance energy levies (such as RO and FiTs) and obligations (such as ECO) away from electricity bills over this decade. This will include looking at options to expand carbon pricing and remove costs from electricity bills while ensuring that we continue to limit any impact on bills overall. We know that in the long run, green products are more efficient and cheaper, and we are putting fairness and affordability at the heart of our approach. We will launch a Fairness and Affordability Call for Evidence on these options for energy levies and obligations to help rebalance electricity and gas prices and to support green choices, with a view to taking decisions in 2022. Net Zero Build Back Greener

42. Developing a workforce pipeline with the skills to meet the requirements of net • The increase in deployment of low carbon heating systems over the coming decade will require a significant escalation in the number of trained, high-quality installers. With this in mind, we have launched the independent Green Jobs Taskforce with key industry bodies to advise on how we can have the skilled workforce to deliver net zero and support people in high carbon sectors with the transition. • We will encourage current gas engineers, electricians, and those with transferrable skills in complementary sectors, to retrain and specialise in smarter, greener, and cleaner technologies. There are over 140,000 plumbers and heating and ventilation engineers in the UK. Approximately 90% of builders stated they would be willing to retrain to meet the demand for new roles and skills’ changes in the future.69 Attracting new entrants to the sector also provides a great opportunity to diversify the workforce. We will work with industry to support training and new routes of entry to help boost heat pump installer numbers and other areas of skills shortage to support the decarbonisation of homes. We will also work with industry and the low carbon projects supported through the Green Heat Network Fund to increase opportunities to gain skills in the heat networks sector. • We will also continue to work with Ofgem, distribution network operators, and other local actors on the approach to planning the network in Great Britain and delivering smart, secure, cost-effective solutions. This will include considering the potential for storage and hybrid technologies in combination with flexible tariffs.
Chapter 3 – Reducing Emissions across the Economy

Working together across the UK Examples of policy action by the Scottish Government, Welsh Government and Northern Ireland Executive UK Government is working across all levels of government and with Devolved Administrations to ensure consistent action to reduce emissions across the heat and buildings sector, and The Optimised Retrofit Programme is testing a new approach to decarbonising homes, based on the recommendations of the Jofeh Report.70 The programme is delivering fabric improvements, heating technology and intelligent use of energy supplies to more than 1,500 homes across Wales. Significant Welsh Government investment is supporting social landlords to decarbonise 230,000 social homes over the next decade, and the learning from the programme will be used to help decarbonise Wales’s 1.2 million private-rented The Scottish Government published its Heat in Buildings Strategy on 7 October 2021. This sets out a vision and actions for the decarbonisation of heat in homes and buildings in line with Scotland’s statutory climate targets. The Scottish Government will allocate at least £1.8 billion over the next five years to support the accelerated deployment of heat and energy efficiency measures in homes and buildings. This investment will help to cut emissions, create jobs, strengthen supply chains, and tackle fuel poverty. The Scottish Government offers cashback grants to all homeowners as part of the Home Energy Scotland (HES) Loan Scheme, up to £6,000 for energy efficiency improvements and up to £7,500 for new renewable heating. It is also bringing forward the requirement for all homes to be upgraded to meet at least EPC C standards or equivalent by 2033 with the majority meeting this standard by 2030. Subject to devolved competence, the Scottish Government has committed to phasing out the need to install new or replacement fossil fuel boilers, in off gas areas from 2025 and in on gas areas from 2030, subject to technological developments and decisions by the UK Government in reserved areas. It is currently developing regulations which will require new buildings receiving a warrant from 2024 to use zero emissions heating Net Zero Build Back Greener

A phased programme is planned to uplift Northern Ireland’s building regulations, taking developments in other administrations into account, to provide ultra-high energy efficient building fabric and services with low carbon heating standards for new buildings as soon as is practicable and no later than 2026/27. Consideration may be given to earlier uptake of requirements for low carbon heating solutions from 2022/23, if deemed feasible following consultation with industry. There are several schemes currently available to support energy efficiency improvements and the installation of lower carbon heating, including the Boiler Replacement Scheme, Affordable Warmth, and the Northern Ireland Sustainable Energy Programme (NISEP). A new Northern Ireland Energy Strategy is expected to be published by the end of 2021, which will provide further information on proposals to phase out coal and solid fuels, along with fossil fuel home heating oil. The Energy Strategy will also provide further information on proposals to decarbonise the natural gas network, including through future injection of biomethane and potential hydrogen blending. Further detail will also be provided on the transition to low carbon heating options, such as heat pumps, and future proposed support schemes, including energy efficiency and low carbon heating pilot schemes, which are intended to be launched Chapter 3 – Reducing Emissions across the Economy

Setting the pace for greener, better transport • End the sale of new petrol and diesel cars and vans from 2030; from 2035, all new cars and vans must be zero emission at the tailpipe. • Introduce a zero emission vehicle mandate setting targets for a percentage of manufacturers’ new car and van sales to be zero emission each year from 2024. • Take forward our pledge to end the sale of all new, non-zero emission road vehicles by 2040, from motorcycles to buses and HGVs, subject to consultation. • Ensure the UK’s charging infrastructure network is reliable, accessible, and meets the demands of all motorists. Later this year, we will publish an EV infrastructure strategy, setting out our vision for infrastructure rollout, and roles for the public and private sectors in achieving it. • Building on the £1.9 billion from Spending Review 2020, the Government has committed an additional £620 million to support the transition to electric vehicles. The funding will support the rollout of charging infrastructure, with a particular focus on local on-street residential charging, and targeted plug-in vehicle grants. • Build a globally competitive zero emission vehicle supply chain and ensure our automotive sector is at the forefront of the transition to net zero. • Lead by example with 25% of the government car fleet ultra low emission by December 2022 and all the government car and van fleet zero emission by 2027. • Take action to increase average road vehicle occupancy by 2030 and reduce the barriers to data sharing across the transport sector. • Maximise carbon savings from the use of low carbon fuels, including by increasing the main Renewable Transport Fuel Obligation (RTFO) target. • Increase the share of journeys taken by public transport, cycling and walking. • Support decarbonisation by investing more than £12 billion in local transport systems over the current Parliament. • Invest £2 billion in cycling and walking, building first hundreds, then thousands of miles of segregated cycle lane and more low-traffic neighbourhoods with the aim that half of all journeys in towns and cities will be cycled or walked by 2030. As announced in the Transport Decarbonisation Plan, we will create at least one zero Net Zero Build Back Greener

• Invest £3 billion in the National Bus Strategy, creating integrated networks, more frequent services, and bus lanes to speed journeys, and support delivery of 4,000 new zero emission buses and the infrastructure needed to support them. • Electrify more railway lines as part of plans to deliver a net zero rail network by 2050, with the ambition to remove all diesel-only trains by 2040.
• Plot a course to net zero for the UK domestic maritime sector, phase out the sale of new non-zero emission domestic shipping vessels and accelerate the development of zero emission technology and infrastructure in the UK. We will engage with industry to explore establishing a UK Shipping Office for Reducing Emissions (UK- SHORE) to transform the UK into a global leader in the design and manufacturing of • Become a leader in zero-emission flight, kick-starting commercialisation of UK sustainable aviation fuels (SAF), and developing a UK SAF mandate, to enable the delivery of 10% SAF by 2030, and we will be supporting UK industry with a £180m funding to support the development of SAF plants. 1. Domestic transport has the largest share of UK greenhouse gas emissions of any sector across the economy, at 23% in 2019. The majority (55%) of these emissions are from passenger cars, contributing 68 MtCO2e. This is followed by heavy goods vehicles and light goods vehicles contributing 19 MtCO2e (16%) and 19 MtCO2e (16%) respectively. The remaining emissions in domestic shipping, road transport, rail, and domestic aviation contribute a combined further 2. We must deliver a step change in the breadth and scale of our ambitions and, to this end, in July 2021 we published our world leading Transport Decarbonisation Plan. This covered all areas of transport and set out an ambitious but deliverable pathway to reaching net zero and delivering against carbon budgets along the way. The pathway we have set out is not about stopping people from doing things. Rather, it’s about doing the same things differently. We want to be a world leader in green technologies, and encourage more 3. Removing tailpipe emissions from road transport is a clear priority and we must continue the progress we have made to date. We have expanded our commitments in this area and will set ambitious but achievable phase out dates for every type of road vehicle. Alongside the Transport Decarbonisation Plan, we published the 2035 Delivery Plan outlining the key timelines, milestones, and progress towards the Ten Point Plan commitment to accelerate the shift to zero emission vehicles. 4. There are now over 600,000 plug-in electric vehicles in the UK. In September 2021, more than one in five new cars sold had a plug. Additionally, more than 300 walking and cycling schemes have been delivered since 2020. For public transport, our National Bus Strategy for England, published in March, sets out a vision of a transformed bus industry and a green bus revolution. Rail is already the greenest form of motorised transport, with almost 38% of the network electrified and significantly more to come as set out in the Great British Railways White Paper in May. Chapter 3 – Reducing Emissions across the Economy

Net zero transition and economic opportunities 5. Every place in the UK will have its own net zero emission transport network before 2050, serving the unique needs of its communities. Sustainability will be at the heart of levelling up. People everywhere will feel the benefits – villages, towns, cities, and countryside will be cleaner, greener, healthier, and more prosperous and pleasant environments in which to live, work and enjoy. 6. Based on our whole system modelling, by 2050, total transport emissions, including international aviation and shipping, could need to drop by 76-86% compared to 2019, down to 23-40MtCO2e. In the interim, to meet our NDC and CB6 targets,72 we expect they could fall by 22-33% by 2030 and 46-59% by 2035, compared to 2019 levels. These figures are based on an indicative transport sector pathway contributing to the whole-economy net zero and interim targets. Our potential pathway also indicates residual emissions from domestic transport could need to fall by around 34-45% by 2030 and 65-76% by We anticipate that international aviation and shipping emissions could need to fall by up to 12% by 2035, relative to 2019 levels (see 2050204520402035203020252020201520102005200019951990 Net Zero Build Back Greener

2050204520402035203020252020201520102005200019951990 7. Much of the change needed to deliver net zero for the transport sector is already underway and makes sense even without the global imperative of climate change. Decarbonisation will deliver fundamentally better transport, for everyone, every day. It will make it faster and more efficient, as well as cleaner, and provide benefits including increased reliability and better connectivity. This is also a huge industrial opportunity, a once in a generation chance to increase economic growth and future prosperity – using electricity, low carbon hydrogen, sustainable low carbon fuels and pedal power – to invest in new jobs across our country. 8. Our Transport Decarbonisation Plan sets out this ‘green print’ in detail. • The technology transformation started in cars and vans will spread to all road transport, from motorcycles to buses, coaches and HGVs. Over time, the use of zero emission vehicles will become even cleaner, as the use of renewable energy in the UK’s electricity mix continues to increase. An extensive network of charging and refuelling infrastructure for all vehicles will enable the transition and meet Chapter 3 – Reducing Emissions across the Economy

• Low carbon fuels will continue to play a crucial role in maximising carbon savings from road vehicles during the transition, whilst increasingly being required in other transport modes such as aviation and maritime. This includes low carbon hydrogen, which is likely to be fundamental to achieving net zero in heavy transport applications and represents a major • We cannot simply rely on the electrification of road transport, or believe that zero emission cars and lorries will solve all our problems. As we build back better from the pandemic, it will be essential to avoid a car-led recovery. Alongside road vehicle decarbonisation, we must increase the share of trips taken by public transport, cycling and walking. We want to make these modes the natural first choice for all who can take them.
As more journeys are cycled or walked, and taken by public transport, the carbon, air quality, noise and congestion benefits will be complemented by significant improvements in public • We will support and encourage modal shift of freight from road to more sustainable alternatives, such as rail, cargo bikes and inland waterways. We will transform last mile deliveries, with zero emission HGVs and decarbonised deliveries made possible through the adoption of new delivery models, supported by accurate data and digital innovations which drive greater • The rail network will be net zero emissions by 2050 through a sustained, long-term programme of investment in rail electrification, supported by deployment of battery and hydrogen-powered trains. • UK aviation and shipping will achieve net zero emissions by 2050. Ahead of that, our domestic lead will act as a showcase to the world and bolster our call to action internationally, where cooperation and collaboration through the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO), will continue to be vital to decarbonise • The Government has set CB6 to formally include the UK’s share of international aviation and shipping emissions, as recommended by the CCC, which allows these emissions to be accounted for • We will address aviation emissions through new technology such as electric and hydrogen aircraft, the commercialisation of sustainable aviation fuels, increasing operational efficiencies, developing and implementing market-based measures and GHG removal methods, while influencing consumers to make more sustainable • The UK will play an important role in developing zero emission maritime technology, such as alternative fuel powered vessels using ammonia or methanol produced from low carbon hydrogen, or highly efficient batteries, particularly where we can build on domestic expertise to capture early • As we have stated in the Ten Point Plan and the Transport Decarbonisation Plan, we need to ensure that the taxation of motoring keeps pace with the change to electric vehicles to ensure that we can continue to fund the first-class public services and infrastructure that people and families across the UK expect. Net Zero Build Back Greener

The transition to zero emission cars and vans is leading the way in our effort to decarbonise transport. The car and van sector is easier to decarbonise compared to other sections of the economy, through the combination of a proven low carbon technology that has significant advantages over the existing high carbon technology it replaces, reducing costs and growing consumer demand. Strong progress is already being made towards our 2030/2035 phase out • Demand is Industry figures show over 650,000 new plug-in cars registered in the UK since 2010, and over 1 in 7 cars sold so far in 2021 • Range is increasing as costs are There are 20 EV models that come with a range of over 200 miles compared to the early Nissan Leaf models that delivered 60 miles, and battery prices are little more than a tenth of what they • The charging infrastructure market is There are now over 25,000 public chargepoints in the UK, which includes over 4,700 rapid devices according to industry sources. This is one of the largest networks of rapid 9. Across every form of transport, decarbonisation and growth will go hand in hand. The UK will play a leading role in this modern-day industrial revolution, consolidating our position as a world leader in green technology, science, and research. The imperative to decarbonise brings with it a host of other benefits, including new business models, new modes, increasing levels of autonomy, far better integration, and a blurring of the distinction between traditional forms of transport, as well as public and private travel coming together to offer greater choice and flexibility. We will use research and development to build on the expertise of business and academia, maximising opportunities for growth, exports and hundreds of thousands of new 10. To achieve the level of emissions reductions in the transport sector indicated by our delivery pathway to 2037, we will need additional public and private investment of 11. Decarbonising the transport sector will regenerate communities and open up new employment opportunities right around the UK. Based on current estimates, policies and proposals to reduce emissions in the sector could support up to 22,000 jobs in 2024 and up to 74,000 jobs in 2030. Development of road transport sector technologies as the economy transitions to net zero could support Chapter 3 – Reducing Emissions across the Economy

12. We need a skilled workforce capable of developing, implementing and operating mobility solutions in a way that maximises the huge potential benefits they offer. The government launched the Green Jobs Taskforce, to advise the government, industry and the skills sector on the action required to deliver the jobs and skills required for the net zero transition. Our approach on green jobs and skills is set out in the Green Jobs, Skills and Industries chapter of the Net 13. Decarbonising transport will also help • It will improve health by removing a source of air pollution. There will still be particulate emissions associated with road, rail, tyre, and brake wear, and we are working to tackle those too, but the toxic by-products of burning hydrocarbon fuels will be eliminated from the roadside and rail; • Physical inactivity costs the NHS up to £1 billion per annum, with further indirect costs of £8.2 billion – active travel can • Over half the UK population is exposed to daytime noise levels above recommended limits. Zero emission vehicles – extremely quiet at low, urban speeds – will help address this. This will support levelling-up and help reinvent high streets as enjoyable places to live, work, visit and spend 14. As the Transport Decarbonisation Plan and this Strategy are implemented, we will continue to consider the views of stakeholders from across the UK. We will engage closely with Devolved Administrations, respecting areas of devolved competency, as we work towards our shared goal of achieving net zero.
We will also continue to collaborate with local authorities and other regional bodies to identify 15. Depending on progress in the sector, at some points additional targeted action maybe be required, such as steps to reduce use of the most polluting cars and tackle urban congestion, to enable these targets to be met. We will regularly review progress against our targets – publishing the next transport decarbonisation plan within five years – and continue to adapt and take further action if needed to decarbonise transport. 16. Cycling and walking can help us tackle some of the most challenging issues we face as a society, not just climate change, but improving air quality, health and wellbeing, addressing inequalities, and tackling congestion and noise pollution on our roads. Increased levels of active travel can improve 17. We will deliver the Prime Minister’s bold vision for cycling and walking, investing £2 billion over five years with the vision that half of all journeys in towns and cities will be cycled or walked by 2030. We will also deliver thousands of miles of safe, continuous, direct routes for cycling in towns and cities, physically separated from pedestrians and volume motor traffic along with more low traffic neighbourhoods and school streets. Net Zero Build Back Greener

18. We will deliver a world class cycling and walking network in England by 2040. This will include comprehensive cycling and walking networks in all large towns and cities, with measures to enable cycling and walking, such as cycle training for all children and adults that want it. We will enable behaviour change through targeted personal incentives, such as GP prescribing of active travel, existing tax reliefs, and rewards programmes. 19. We will deliver the National Bus Strategy’s vision of a transformed bus industry and a green bus revolution. We will make buses more frequent, more reliable, more comprehensive, easier to understand and use, better co-ordinated and cheaper – to dramatically increase passenger numbers and reduce congestion and carbon emissions. 20. We will support delivery of 4,000 new zero emission buses, either battery electric or hydrogen, and the infrastructure needed to support them. This will be the single largest investment ever made in zero emission buses, representing the replacement of nearly 12% of England’s local operator bus fleet. 21. We will deliver the first All-Electric Bus City. This will demonstrate what can be achieved when there is a real commitment to move all buses in a place to electric zero emission. Coventry has now been announced as the UK’s first all-electric bus city, with £50 million to fund up to 300 electric buses and 22. We are consulting on a phase out date for the sale of new non-zero emission buses and coaches. We have already begun consulting on an appropriate date to end the sale of new non-zero emission buses and on the appropriate supporting policy and regulatory framework. We will also consult on a phase out date for the sale or purchase of new non- 23. We will deliver a net zero rail network by 2050, with sustained carbon reductions in rail along the way. Our ambition is to remove all diesel-only trains (passenger and freight) from the network by 2040. We will deploy new low-carbon technologies on the network such as hydrogen and battery trains, where they make operational and economic sense. We will incentivise the early take up of low carbon traction by the rail freight industry. 24. We will build extra capacity on our rail network to meet growing passenger and freight demand and support significant shifts from road and air to rail. This includes new high-speed lines, reopening lines closed under the Beeching cuts and significant improvement to regional city public transport networks with the aim of making them as good as London’s. 25. We are working with industry to modernise fares ticketing and retail and encourage a shift to rail and cleaner and greener transport journeys. Great British Railways set out a transformation in how people will pay for their journeys, to encourage a shift to rail and cleaner, greener journeys. Greater provision of walking and cycling routes to and from stations, and supporting infrastructure, will be introduced to support healthier greener journeys. Great British Railways will encourage more rail freight by providing the right conditions for industry growth, with better coordination, modern contracts, and new safeguards. Chapter 3 – Reducing Emissions across the Economy

26. We will end the sale of new petrol and diesel cars and vans by 2030. From 2035 all new cars and vans must be fully zero emission at the tailpipe. Between 2030 and 2035, new cars and vans will only be able to be sold if they offer significant zero emission capability. 27. To provide certainty to consumers, energy providers, the chargepoint industry, vehicle manufacturers and supply chains during this transition, we will introduce a zero emission vehicle mandate setting targets requiring a percentage of manufacturers’ new car and van sales to be zero emission each 28. We will continue to regulate the tailpipe CO2 emissions of new non-zero emission cars and vans to limit their emissions until 100% of new sales are zero emission. This framework could subsequently be applied to all forms of new road vehicles sold in the UK. 29. Between 2030 and 2035, new cars and vans will only be able to be sold if they offer significant zero emission capability and we will provide further detail on the outcome of our recent consultation on this shortly. We will then publish a further consultation in early 2022 • The design of the ZEV mandate (including uptake trajectories) and CO2 emissions regulation (as a backstop to ensure standards in the remainder of the fleet are • How and when targets will be set 30. We are building a globally competitive UK zero emission vehicle supply chain to ensure our automotive sector is at the forefront of the transition to net zero.
Since 2020, the government has been actively supporting the transformation of the automotive supply chain to electrification through the Automotive Transformation Fund (ATF). We are allocating a further £350 million of our up to £1 billion ATF commitment to support the electrification of UK vehicles and their supply chains. We will also continue to invest in R&D through the Advanced Propulsion Centre (APC) competition to ensure the UK remains at the forefront of the development and industrialisation of zero emission vehicle 31. We will consult this year on a phase out date of 2035, or earlier if a faster transition appears feasible, for the sale of new non-zero emission powered two and three wheelers (and other L category vehicles). 32. We will lead by example with 25% of the government car fleet ultra low emission by December 2022 and all the government car and van fleet zero emission by 2027. 33. We will ensure the UK’s charging infrastructure network meets the demands of its users. We have already announced £1.3 billion of investment to accelerate the rollout of charging infrastructure on motorways, on streets, in homes and workplaces. The Government has committed an additional £620 million of funding to support the transition to electric vehicles. Further details will be published in due course. Later this year, we will publish an EV infrastructure strategy, setting out our vision for infrastructure rollout, and roles for the public and private sectors in Net Zero Build Back Greener

Amir is self-employed and uses a van for work. His work involves a lot of journeys locally, totalling around 250-300 miles per week. He usually plugs into charge every few evenings, with his vehicle fully charged by the morning. He has a chargepoint installed on his driveway so he can charge on his domestic energy tariff. The chargepoint is smart, which means it shifts charging to off-peak times, which saves Amir money. He has also signed up to a vehicle-to-grid scheme with his electricity supplier. By keeping his van plugged in during the week when he doesn’t need to use it, he’s able to sell energy back to the grid when 34. We will plot a course to net zero for the UK domestic maritime sector, with indicative targets from 2030 and net zero as early as is feasible. We will establish, after public consultation in 2022, an ambitious ‘Course to Zero’. Following consultation, we will establish ambitious indicative targets and embed this course in our Clean Maritime Plan. 35. We will consult on a potential phase-out date for the sale of new non-zero emission domestic vessels. Following the conclusion of the current Clean Maritime Demonstration Competition and the Course to Zero consultation, we will consult in mid-2022 on the potential for accelerated decarbonisation through carefully designed, well signposted measures to phase out the sale of new, non- zero emission domestic vessels. 36. We are assessing how economic instruments could be used to accelerate the decarbonisation of the domestic maritime sector. Building on Maritime 2050, the Clean Maritime Plan and our published research, we will further investigate the use of economic instruments to drive decarbonisation. 37. We will extend the Renewable Transport Fuel Obligation to the maritime sector. Following consultation earlier this year, we will make renewable fuels of non-biological origin used in shipping eligible for incentives 38. This year we will be consulting on the appropriate steps to support and, if needed, mandate the uptake of shore power in the UK. We will consult in winter 2021 on how government can support wider deployment of shore power, including potential regulatory interventions, for both vessels and ports. 39. We are accelerating the development of zero emission technology and infrastructure in the UK. We have launched the £20 million Clean Maritime Demonstration Competition (CMDC) to fund feasibility studies and technology trials. We will engage with industry to explore establishing a UK Shipping Office for Reducing Emissions (UK-SHORE) in cooperation with UKRI and Innovative UK. UK-SHORE aims to transform the UK into a global leader in the design and manufacturing Chapter 3 – Reducing Emissions across the Economy

40. Earlier this year we consulted on our Jet Zero Strategy, which will set out the steps we will take to reach net zero aviation emissions by 2050. We have also consulted on a target for UK domestic aviation to reach net 41. We are supporting the development of new and zero carbon UK aircraft technology through the Aerospace Technology Institute (ATI) programme and fund zero emission flight infrastructure R&D at UK airports. As part of the Jet Zero ambition, the Aerospace Technology Institute (ATI) provides R&D funding, matched by industry, to support the design and development of new aerospace technologies, with particular focus on zero carbon technologies, that are most likely to grow the UK’s share in the global market. We are also investing £3 million in 2021/22 through the Zero Emission Flight Infrastructure competition to accelerate R&D into infrastructure requirements at airports and airfields to handle new forms of zero 42. We will accelerate the commercialisation of UK sustainable aviation fuels (SAF). Our ambition is to enable delivery of 10% SAF by 2030 and we will be supporting UK industry with a £180 million funding to support the development of SAF plants. This builds on our recently launched £15 million Green Fuels, Green Skies competition. We will also establish a SAF clearing house, the first of its kind announced in Europe, to enable the UK 43. We are currently reviewing the responses to the SAF mandate consultation. Ahead of a second consultation in 2022, we will continue to engage with industry to ensure our policy can support the delivery of any future 44. We recently consulted on phase out dates for the sale of all new non-zero emission HGVs - that is, on ending the sale of new non- zero emission HGVs by 2035, for vehicles 26 tonnes and under, and 2040, for vehicles over 26 tonnes, with the government’s response due to be published in due course. 45.
We will support and encourage modal shift of freight from road to more sustainable alternatives, such as rail, cargo bike and inland waterways. This will be supported by a package of policies • Investing in the capacity and capability of the rail network for freight, including infill • The Mode Shift Revenue Support and Waterborne Freight Grant Schemes; • Introducing a rail freight growth target; and • ‘Last mile’ measures to support more sustainable freight in urban areas. Net Zero Build Back Greener

46. We will support transport decarbonisation by investing more than £12 billion in local transport systems over the current Parliament. We will deliver this through existing funding streams where decarbonisation sits alongside other core government objectives. 47. We are driving decarbonisation and transport improvements at a local level by making quantifiable carbon reductions a fundamental part of local transport planning and funding. Local Transport Plans (LTPs) – statutory requirements that set out holistic place-based strategies for improving transport networks and proposed projects for investment – will need to set out how local areas will deliver ambitious carbon reductions in line with carbon budgets and net zero. 48. We will embed transport decarbonisation principles in spatial planning and across transport policy making. Last year, the government set out proposals for a new and improved planning system, central to our most important national challenges, including combating climate change and supporting sustainable growth. The National Model Design Code, published in July this year, guides local planning authorities on measures they can include within their own design codes to create environmentally responsive and sustainable places. The National Model Design Code provides tools and guidance for local planning authorities to help ensure developments respond to the impacts of climate change, are energy efficient, embed circular economy principles and reduce 49. As announced in July 2021, and subject to parliamentary approval, the RTFO main obligation will increase from 9.6% in 2021 to 14.6% in 2032. This is estimated to achieve additional carbon savings of up to 20.8 MtCO2e over this period. The ‘development fuels’ sub-target, which incentivises specific fuels of strategic importance, is already set to increase from 0.5% in 2021 to 2.8% by 2032, and by 2023 we will review whether there is scope to be more ambitious. We also committed to additional measures to promote the uptake of low carbon fuels in the freight, maritime and aviation sectors and we will work with stakeholders to develop a longer-term low carbon fuel strategy for the deployment of low carbon fuels across different transport 50. We expanded the RTFO to incentivise the use of renewable hydrogen in maritime and rail in 2018. As set out clearly in the recent Hydrogen Strategy and Transport Decarbonisation Plan, hydrogen is likely to play a significant role in transport applications, particularly where energy density requirements or refuelling times make it the most suitable low carbon energy source. Our dedicated hydrogen R&D funding and support is focussed on heavier applications, such as rail, maritime, aviation and heavy road freight, where hydrogen offers in-use advantages and the largest global market potential. The government remains technology neutral and acknowledges that there will be other transport applications where hydrogen may be well suited, including the potential for hydrogen to be utilised within combustion engines, where it can be shown to produce zero harmful emissions at the tailpipe. Chapter 3 – Reducing Emissions across the Economy

51. We are investing £3 million in 2021 to establish the UK’s first multi-modal hydrogen transport hub in Tees Valley. The funding is kick-starting activity across the region, supporting collaborative R&D pilot projects and pop-up trials that demonstrate hydrogen technology solutions across transport modes and forge new industry and academic Future transport – more choice, 52. We will take action to increase average road vehicle occupancy by 2030. Increasing car occupancy from 1.55 to 1.7 could save nearly 3 Mt of carbon a year by 2030. We are building our evidence base to understand the barriers and potential policies to increase the uptake of shared mobility and will work with industry and local authorities to understand where further action can be taken. 53. We will reduce the barriers to data sharing across the transport sector. Better data can provide new policy and operational insights, drive new products and services and ‘nudge’ people towards lower emission journeys. We recently published a new annual statistical release, drawing together various data sources on transport’s environmental impact. Data consumers can use these data, without restrictions on use or disclosure, for journey planning applications, products and services enabling users to plan green Net Zero Build Back Greener

Chapter 3 – Reducing Emissions across the Economy Working together across the UK Examples of policy action by the Scottish Government, Welsh Government and Northern Ireland Executive UK Government is working across all levels of government and with Devolved Administrations to ensure consistent action to reduce emissions across the transport sector, The Welsh Government’s vision is that by 2025 all users of electric cars and vans are confident that they can access electric vehicle charging infrastructure when and where they need it.73 Its Electric Vehicle Charging Strategy identified a need for 30,000-55,000 fast chargers and up to 4,000 rapid chargers by 2030. The forthcoming EV Charging Action Plan will include further details on the specific support for the roll out of a comprehensive network. The transport measures in the updated 2018 Climate Change Plan contain action across all modes. The Scottish Government will phase out the need for new petrol and diesel cars and vans by 2030, and will work with public bodies to lead the way to do this by 2025.
It will also work with the freight industry to remove the need for new petrol and diesel heavy vehicles by 2035, supported by its work with Scottish Enterprise to establish a Zero Emission Heavy Duty Vehicle programme to remove the majority of fossil fuel buses in The commitment set out in the Climate Change Plan to reduce car kilometres by 20% by 2030 demonstrates the level of ambition in meeting Scotland’s statutory targets. To encourage modal shift to public transport the Scottish Government is investing over £500 million in bus priority infrastructure and extending nationwide free bus travel to all young people resident in Scotland under 22 years old from 31 January 2022. On active travel, the Scottish Government will support transformational active travel projects with over £500 million of investment over 5 years and has committed to ensuring that at least £320 million or 10% of all the transport capital budget is spent on supporting walking, cycling On public transport, Scotland’s rail services will be decarbonised by 2035, and the Scottish Government is working with its Bus Decarbonisation Taskforce to create a pathway to zero emission buses. This is supported by its long-term investment of over £500 million in bus priority infrastructure. In Northern Ireland, £74 million has been invested in the purchase of zero and low emission vehicles (hydrogen and electric) and associated infrastructure in the public transport sector. A £20 million Blue/Green infrastructure investment fund was launched in 2020/21 and has continued in 2021/22, which has supported a range of initiatives including active travel schemes across Northern Ireland. An Executive Energy Strategy is currently being developed which will include measures focusing on informing transport choices and behaviours, and establishing a sustainable transport hierarchy that will support changes in how we travel, reduce the distances travelled in private vehicles, and decarbonise transport. Net Zero Build Back Greener

Harnessing nature for net zero • 75% of farmers in England will be engaged in low carbon practices by 2030, rising to 85% by 2035. Government is introducing farming schemes, including the new environmental land management schemes, which will provide a powerful vehicle for achieving net zero, and goals of the 25 Year Environment Plan. • Increase investment in industry-led research and development into solutions to help deliver net zero in agriculture and horticulture, including through the Farming • Treble woodland creation rates by the end of this Parliament, reflecting England’s contribution to meeting the UK’s overall target of increasing planting rates to 30,000 hectares per year by the end of this Parliament and maintain new planting at least at this level from 2025 onwards. We will explore a long-term statutory tree target in England within the public consultation on Environment Bill targets. • We will boost the existing £640 million Nature for Climate Fund with a further £124 million of new money, ensuring total spend of more than £750 million by 2025 on peat restoration, woodland creation and management. This will enable more opportunities for farmers and landowners to support net zero through land • Restore at least 35,000 hectares of peatlands in Englad by 2025, through the Nature for Climate Fund. Restore approximately 280,000 hectares of peat in England by 2050, including via funding from the new environmental land • Mobilise private investment into tree planting, including through the Woodland Carbon Code, with the support of government’s Woodland Carbon Guarantee, and into peat restoration through implementing a package of reforms to the • We will work with key stakeholders to develop a policy roadmap to increase the use of timber in construction in England, and will create a cross-government and industry working group tasked with identifying key actions to safely increase timber use and reduce embodied carbon. Chapter 3 – Reducing Emissions across the Economy

• To support our commitment to explore options for the near elimination of biodegradable municipal waste to landfill from 2028, we are bringing forward £295 million of capital funding which will allow local authorities in England to prepare to implement free separate food waste collections for all households from 2025. • Complete a review of the F-gas Regulation and assess whether we can go further than the current requirements and international commitments, including by looking at what additional reductions in F-gas use can be made to help the UK meet net • Through the Environment Bill we will legislate for Local Nature Recovery Strategies – a new system of spatial strategies that will map proposals for improving or creating habitat for nature and wider environmental benefits, helping to deliver net zero • Biodiversity co-benefits and other environmental objectives are maximised alongside 1. This chapter covers natural resources including agriculture, forestry, and other land use (AFOLU), (inclusive of peatlands and soils), as well as resources, waste, wastewater, and fluorinated gases (F-gases). In 2019, net UK greenhouse gas (GHG) emissions from these sectors, referred to as NRWF (natural resources, waste, and F-gases), reflected 103 MtCO2e or 20% of the UK total, having decreased by 45% between 1990 and 2019.74 2. In the Ten Point Plan, we committed to protecting our natural environment. Since then we have launched the floods investment programme to better protect 336,000 properties from flooding. We also awarded 90 projects grants under round 2 of the £80 million Green Recovery Challenge Fund (GRCF). In total, the GRCF is set to plant Agriculture, forestry, and other land 3. AFOLU were responsible for 63 MtCO2e (12%) of UK net GHG emissions in 2019, having risen slightly in the last 2 years but 4. Emissions from agriculture, mainly stemming from livestock, agricultural soils, and farm machinery, added up to 55 MtCO2e (11%) of UK emissions in 2019. Although rising by 1% from 2018 to 2019, agricultural emissions have fallen by 13% since 1990. The Agriculture Transition Plan (2020) sets out how we will move away from the EU’s Common Agricultural Policy to use public money to reward farmers and land managers for delivering environmentally sustainable 5.
Forestry and woodlands currently act as carbon sinks and, in 2019, captured about 4% of our emissions.76 Since 2010, 123,000 hectares of new woodland has been planted across the UK, an area equivalent to Bedfordshire. The England Tree Action Plan (2021) committed to increasing tree planting rates from 13,410 hectares across the UK in 2020/21, to 30,000 hectares each year by the end of this Parliament. The plan is supported by £500 million of the Nature for Climate Fund. In 2020-21 we funded new partnerships with Northumberland County Council, Trees 4 Cornwall, and England’s network of ten Community Forests. Two new Net Zero Build Back Greener

community forests were launched, Plymouth and South Devon in June 2021 and North- 6. Although peatlands are the UK’s largest terrestrial carbon store, in a degraded condition they represent a net source of emissions. In 2019, peatlands emitted 4% of UK net GHG emissions, having become degraded due to drainage for agricultural use, overgrazing and burning. We have rewetted around 100,000 hectares of peatland across the UK and set out further plans for peatland restoration and responsible management in the England Peat Action Plan (May 2021). 7. Waste management emissions consist of waste disposed to landfill sites, waste incineration without energy recovery, and the treatment of wastewater. In 2019, waste management accounted for 25 MtCO2e (5%) of UK emissions, a significant decrease of 71% since 1990, largely driven by a reduction in biodegradable waste to landfill. The Resources and Waste Strategy (RWS), (2018) set out how we will transition to a more circular economy, and included key reforms to enable us to manage our waste more efficiently, reduce the amount of waste we create as a society, and ensure we use 8. F-gases (GHGs which can be used in systems such as heat pumps and air conditioning units) accounted for 15 MtCO2e (3%) of UK emissions in 2019, with 93% of these coming from hydrofluorocarbons (HFCs). F-gas emissions have fallen by 10% since 1990.78 In 2017, the UK was one of the first countries to commit to cutting HFC consumption by 85% by 2036, ratifying the Kigali Amendment to the UN Montreal Protocol.79 We have cut HFC consumption even faster than that, reducing levels placed on the market by 55% since 2015, through Net zero transition and economic opportunities 9. A systemic transformation across the UK economy, including NRWF sectors, is required to achieve net zero by 2050. While we will significantly reduce emissions across the NRWF sectors, some residual emissions from agriculture, waste, and F-gases will remain. These will need to be compensated for by both nature-based and engineered greenhouse gas removals (GGRs) as a last resort. On our journey to net zero, we will maximise opportunities to adapt to climate change and the extreme weather it brings, and to maximise the co-benefits for other 10. By 2050, emissions associated with the NRWF sectors could need to drop by 67-75% compared to 2019, down to 26-34 MtCO2e. In the interim, to meet our NDC and Carbon Budget 6 targets, they are expected to fall by 30-40% by 2030 and 39-51% by 2035, compared to 2019 levels. These figures are based on the indicative NWRF sectoral pathway to help us reach net zero and interim targets. Our potential pathway also indicates residual emissions in AFOLU sectors could need to fall by 17-30% by 2030 and 24-40% by 2035, relative to 2019 levels; waste and F-gas emissions could need to fall by 50-57% by 2030 and by 62-69% by 2035, relative to Chapter 3 – Reducing Emissions across the Economy

11. We are working closely with Devolved Administrations to deliver this ambition. This includes frequent engagement at Ministerial and official levels through existing and new forums, and allows us to think practically about how we deliver across the UK. We will also consider the interdependencies between land use sectors and other goals. 2050204520402035203020252020201520102005200019951990 Net Zero Build Back Greener

2050204520402035203020252020201520102005200019951990 Agriculture, forestry, and other land 12. By 2050, we will have a resilient and prosperous countryside, where farmers and land managers are supported to reduce emissions and deliver a range of environmental outcomes. 75% of farmers in England will be engaged in low carbon practices by 2030, rising to 85% by 2035. Emissions mitigation in agriculture is complex and diverse, with no silver bullets. It is difficult to establish a single metric to track progress, but government monitors engagement with low carbon farming practices through our Farm Practice Survey. We will continue to improve this metric in future years to address what we consider to be key limitations in the current approach. 13. We will support farmers to adopt low carbon farming practices, and increase the carbon stored on their farms, helping to improve business productivity and profitability gains. Schemes that support environmental land management will help drive this change and will also help compensate for residual emissions that are harder to reduce, such as from livestock. The Farming Investment Fund will offer funding for equipment, technology, and infrastructure that improves farm productivity and benefits the environment. We are also providing funding to help farmers produce healthier animals, reduce GHG emissions and enhance welfare through the Animal Health and Welfare Pathway. Additionally, Defra will develop a Farming for Net Zero resource, providing advice to farmers on good practice techniques to understand, manage and abate GHG emissions. Chapter 3 – Reducing Emissions across the Economy

14. We also recognise the importance of other policy levers with potential climate benefits, for example Environmental Permitting for dairy and intensive beef herds which is planned under the Clean Air Strategy. There is also an important role for emerging markets in nature-based solutions. For example, the Woodland Carbon Code, which incorporates robust standards and accreditation processes.
We will seek to establish a robust market framework, with arrangements to ensure additionality, transparency, and traceability of carbon credits, so that regulators and the public can be confident that carbon savings are verified and also guaranteed against future issues such as forest fires or disease. Additionally, we continue to consider the impact that climate change will have on the suitability of our land for different uses, such as the impact of hotter, drier summers and warmer, wetter winters on agriculture, habitat creation and restoration, and forestry. 15. Biomass will also be an important component of our pathway to net zero. It is likely that the UK will be producing more domestic perennial energy crops (such as miscanthus and short rotation coppice) and short rotation forestry than today, but the exact role is yet to be determined. The Biomass Strategy, due in 2022, will look to address this. The sustainability, and wider environmental impact of growing and using biomass, including on air quality, will be key factors in establishing its role. Resources and waste, and F-gases 16. By 2050, we will have met the 25 Year Environment Plan (25YEP) commitments to eliminate all avoidable waste, including plastic, and to double resource productivity.81 A circular economy will be part of everyday reusing, repairing, and remanufacturing goods will be standard practice. Goods will be designed to last for longer and be more efficient. At end of life, the vast majority of products will be sent for recycling, with food, garden, and dry materials collected separately and used as lower carbon inputs for new products. Producer responsibility schemes will be embedded across the economy. Any non-recyclable residual waste will be treated to enable the processing of waste into valuable outputs, such as energy. Where possible, these processes would include carbon capture and storage. (See the Power chapter for more on energy from waste.) Only where no such treatment is possible may landfill be permitted. 17. By 2050, current F-gas use will have been predominantly replaced by alternative gases or technologies. HFC importers, equipment manufacturers and servicing technicians will have taken steps to reduce their use in favour of alternatives, not only in line with the current phasedown, but also with further measures implemented following the F-gas Regulation review and future international changes. Net Zero Build Back Greener

18. Protecting, restoring, and sustainably managing other natural resources such as soils or blue carbon habitats like saltmarsh and seagrass, can provide benefits for biodiversity and climate adaptation, as well as for carbon sequestration. We do not currently have the required data to include these habitats in the UK GHG Inventory or to accurately quantify their potential contribution to net zero but are doing further work to close Reducing emissions while balancing other climate and While reducing emissions, we must also adapt to the inevitable changes in our climate, ensuring that policies supporting net zero are resilient to current and future climate risks, and preventing locking in future vulnerabilities or maladaptation. The second National Adaptation Programme sets out how we are addressing, and will address, climate risks between 2018 and 2023 and further detail on adaptation is included in the Climate Science Delivering net zero creates opportunities to benefit other environmental objectives too. For example, climate change and biodiversity loss are closely related, and policies to tackle climate change can help to improve biodiversity. Likewise, net zero policies can support further environmental goals, such as water quality, natural beauty, and the delivery of the 25YEP . For example, we will ensure afforestation across England and that the right species of tree is planted in the right place, benefitting flood management, soil health and biodiversity, while also sequestering carbon. In some cases, however, we know it will be important to manage potential for example, ammonia emissions from digestate, a by-product from the process of anaerobic digestion, can negatively impact human health and cause biodiversity loss. We are working to mitigate ammonia emissions through the Green Gas Support Scheme, which will require participants to take additional steps to mitigate ammonia emissions, and by researching technologies that can help reduce the negative environmental impacts of digestate. The relationship between net zero and wider environmental objectives, including air quality, is set out in more detail in the Chapter 3 – Reducing Emissions across the Economy

The UK has a limited amount of land and delivering net zero will require changes to the way this land is used, for example, for afforestation, biomass production, and peat restoration. Opportunities for land to be used for multiple purposes, such as agroforestry will help to make sure land use for decarbonisation purposes is balanced with other demands, such as housing development and food production. These changes are likely to have varying effects on wider environmental outcomes and may completely alter the character of some landscapes and rural livelihoods (see section below). Land use change must be designed in a systemic, geographically targeted way with appropriate local governance and delivery structures which consider the complex range of interacting social, economic, and demographic factors. To support this, government is developing a Net Zero Systems Tool which aims to allow key decision makers to gain new insights and understanding, by highlighting dependencies and trade-offs within the land use system, as well as by demonstrating the knock-on effects of proposed policies. In addition, through the Environment Bill, the Government is introducing Local Nature Recovery Strategies (LNRS), a spatial planning tool for nature, allowing local government and communities to identify priorities and opportunities for nature recovery and nature-based solutions across England. The Bill includes a specific duty on all public authorities to “have regard” to relevant LNRSs and the spatial information they provide will support the development of local plans and other land use change incentives. Delivery of priorities and opportunities identified in LNRS will be supported by a range of delivery mechanisms including our environmental land management schemes, and in particular, the Local Nature Recovery scheme.
By 2028, Defra’s current plans are for total spend to be evenly split between farm-level, locally tailored, and landscape-scale investment within ELM 19. Reducing emissions will create growth and employment opportunities across NRWF sectors, and it is important that these opportunities are evenly felt and realised by all. Achieving net zero will require innovation from businesses and landowners, investment from government and the private sector, and changes in our choices as consumers. We want to create domestic and international demand for our low carbon, high welfare and world-renowned produce, whilst supporting international markets for sustainably 20. To achieve the level of emissions reductions in the NRWF sector indicated by our delivery pathway to 2037, we will need additional public and private investment of approximately £30 billion. Given the importance of R&D to deliver our pathway, we are committing to spend £75 million on net zero related R&D across the NRWF sectors 21. Decarbonising the NRWF sectors will regenerate communities and open up new employment opportunities right around the UK. For example, an increase in afforestation across England could support up to 1,900 jobs in 2024 and up to 2,000 jobs in 2030. By investing in rural infrastructure and skills development we will seek to ensure rural communities and rural businesses, including the most disadvantaged, benefit from net zero. There will be significant opportunities for upskilling, reskilling, and starting new career paths, alongside expanding current sectors. For example, nature-based solutions create entry-level opportunities for people just starting out, as well as requiring specialist skills such as hydrology, ecology and forest management. By delivering long-term policy certainty, we will unlock the private investment necessary to deliver these green jobs. Net Zero Build Back Greener

22. Innovation will also be vital to delivering net zero and maximising benefits for the UK. In agriculture, farmers will be able to adopt new emission saving technologies, produce lower carbon foods and steward the land in new ways, such as through vertical farming. This will allow them to diversify income streams and produce high quality, low carbon produce for domestic and international markets, boosting the rural economy. Investment in agricultural innovation, through schemes like the Farming Innovation Programme, will drive development of new precision technologies, explore the potential of robotics and artificial intelligence, and take advantage of developments in breeding technologies, including the potential of gene editing. This can also make our agricultural sector more resilient to the impacts of climate change and safeguard our food security. We also know other technological solutions, such as those to reduce emissions from non-road mobile machinery in the agricultural sector require further development. Cross government work is required to develop non-road mobile machinery policies to support the deployment of technological solutions and required infrastructure in specific sectors, including industry, transport, and buildings. Relevant government departments will work together to ensure a coherent approach (see the Industry chapter). A significant market share for innovations such as alternative proteins will take time to materialise, but will align with consumer dietary trends, and the UK already has a lively and growing domestic market that could grow to become another great British food export that competes internationally. These and other novel methods of food production could create significant opportunities to further promote high quality 23. Innovation is key to other NRWF sectors too. Industry is responding to the HFC phasedown by switching to alternative gases and technologies in areas such as refrigeration, air conditioning, and heat pumps, and will continue to innovate in this area. The UK Research and Innovation’s National Interdisciplinary Circular Economy Research programme is looking at how to transition to a more circular economy. Producers will need to move to more sustainable product design, and consumers, with support from the public and private sectors, will need to shift to more sustainable product choices and towards reusing, repairing, remanufacturing, and Agriculture, forestry, and other land 24. We have begun the Agricultural Transition Period and have moved away from the CAP . We are reducing and then stopping untargeted Direct Payments in England and moving to a system where public money rewards farmers and land managers for environmentally sustainable actions, including reducing emissions and expanding the carbon sequestration potential of our land. We will introduce three environmental land management the Sustainable Farming Incentive (SFI), Local Nature Recovery (LNR) and Landscape Recovery (LR). The SFI will be open to all farmers and will incentivise low carbon practices, for example, soil and nutrient management. LNR will fund actions that support local nature recovery and deliver local environmental priorities. The LR scheme will fund long-term land use change projects such as large-scale tree planting, and peatland restoration projects. Net zero will be a key priority across the delivery of our environmental land management schemes. Chapter 3 – Reducing Emissions across the Economy

25. Take up of these schemes will be voluntary and will require a shift in the practices of landowners and farmers. We are working to ensure the schemes encourage participation, including through appropriate payment rates, in line with the Payment Principles.82 Participants will still be able to benefit from private sector funding, for delivering additional benefits. Advice and guidance will also be provided to support participants to adopt new practices. Tests and trials for the schemes began in 2020. The scheme will be rolled out in full by 2024.83 Government has committed to maintain current levels of spending on the sector in England, based on 2019 levels, until 2024/5, amounting to an average of £2.4 billion a year. 26. We are also supporting the acceleration of private investment in nature through initiatives such as the Natural Environment Investment Readiness Fund. These will test new models and build pipelines of investable nature projects by providing technical assistance and capacity building support to create opportunities for private investment. Projects will capture the value of the carbon and other benefits provided by natural assets such as woodlands, peatlands wetlands and river catchments.
They will create multi- functional landscapes that deliver diverse benefits, providing a return on investment and improving our understanding of how to attract 27. We will boost the existing £640 million Nature for Climate Fund with a further £124 million of new money, ensuring total spend of more than £750 million by 2025 on peat restoration, woodland creation and management. This will enable more opportunities for farmers and landowners to support net zero through land use change. 28. Government will support a range of measures to decarbonise the agriculture sector specifically, including by providing further funding to support farmers to take up low carbon practices and technologies. We will introduce a targeted set of financial incentives to improve animal health and welfare and reduce emissions from animals, including action to identify and eliminate bovine viral diarrhoea, with pilots starting in late 2022 or early 2023. The Farming Investment Fund will provide further grants to farmers, enabling them to invest in equipment, technology and infrastructure that will improve their profitability and benefit the environment. The scheme will be launched in 2021. From 2022, Government will also provide grants for new slurry stores, equipment, and other interventions. The primary goal will be delivering reductions in nitrate and ammonia pollutants from slurry, a key cause of pollution on farms, but the grants will also reduce methane emissions and protect and 29. We will increase investment in industry-led research and development into productivity challenges, delivering net zero and testing new technologies and methods. The Farming Innovation Programme will open for applications in October 2021 with further competitions planned for 2022 and beyond. These will bring together interested farmers, scientists, and researchers to tackle productivity and environmental challenges. We will invest in supporting knowledge exchange so more farmers and growers have access to the latest findings from cutting-edge research that they can apply on their farms. Net Zero Build Back Greener

30. We will encourage and support increased agroforestry (trees and agriculture coexisting on the same land) through our environmental land management schemes from the early 2020s, enabling agricultural land to sequester emissions while delivering other environmental benefits, such as air quality and biodiversity, and providing alternative income streams for 31. Government is working, and will continue to work, in partnership with the sector to develop a new outcome-focused approach to regulation and enforcement which supports net zero. For example, ruminant livestock are the leading cause of farm emissions, but feed additives with methane inhibiting properties have the potential to reduce emissions, especially from housed cattle. Whilst this is an emerging technology, government is actively investigating the promising role these products may have in delivering emissions savings in the mid-term, including by assessing whether regulation could ensure maximised take up of 32. We will also consider how best to reduce and better target the use of manufactured fertiliser, including exploring the potential of regulation in this area. In addition, we are considering whether we need new legislative powers to improve soil management and nutrient management. We will consider the recommendations of the Nutrient Management Expert Group, due to report in spring 2022, on the optimal policy approaches to minimise emissions from fertiliser use. 33. The Government’s upcoming Food Strategy will support the delivery of net zero, nature recovery, and biodiversity commitments and will help to create a food system that incentivises farmers to produce high quality, high welfare food in the most sustainable way. Government is exploring options to reduce carbon emissions from food production, support innovation in the food sector, incentivise land use change to sequester more carbon, and preserve natural resources. 34. Government is also committed to exploring the monitoring, reporting, and verification of emissions in the agriculture sector. This will enable us to understand where the greatest decarbonisation opportunities could be across the sector, considering all options. We will continue to review potential carbon pricing strategies for land use sectors, including the potential role for voluntary or compliance carbon markets to support cost effective decarbonisation for the sector. 35. The England Peat Action Plan (EPAP) sets out the government’s long-term vision for managing, protecting, and restoring peatlands so that they provide a wide range of benefits to wildlife, people and the planet. 36. Tackling the drivers of peatland degradation is essential. The EPAP commits to ending the horticultural use of peat in the amateur sector by the end of this parliament and a consultation will be launched on potential legislative measures (e.g. a sales ban) in 2021. Legislation to end managed burning on protected blanket bog that is 40 cm deep or more, unless covered by a license, has already been laid, protecting 40% of England’s blanket bog, and government is committed to reviewing the economic and environmental case for extending protections. Chapter 3 – Reducing Emissions across the Economy

37. At least 35,000 ha of peatlands in England will be restored, by 2025, via the Nature for Climate Fund. From 2024, public funding for peatland restoration will be available in England through the new environmental land management schemes. To further support peatland restoration, government is implementing a range of policies that will mobilise private investment. The Natural Environment Investment Readiness Fund has been launched and a package of reforms to the Peatland Code, including expanding it to cover more peatland types, will be implemented in 2022. We will aim to restore approximately 280,000 ha of peatland in 38. Degraded lowland peat is responsible for 86% of England’s peatland emissions. Full restoration may not always be desirable, due to the lowlands’ agricultural value and interactions with landscape scale water level management regimes. Where it is not possible to restore peatlands, we will support new responsible management measures for lowland peatlands.The Lowland Agriculture Peat Taskforce will provide recommendations in summer 2022 on how to improve the condition of lowland farmed peatlands, both to reduce emissions and support continued profitable agriculture. From 2024, our Local Nature Recovery scheme will provide a key funding stream for wetter modes of farming, including paludiculture.
To prevent delay, our Farming Innovation Programme will be open to supporting applications for R&D in paludiculture from the 20 October 2021, with more competitions to follow in 2022 39. We will treble woodland creation rates by the end of this Parliament, reflecting England’s contribution to meeting the UK’s overall target of increasing planting rates to 30,000 hectares per year by the end of this Parliament, and maintain new planting at least at this level from 2025 onwards. We will explore a long-term statutory tree target in England within the public consultation on Environment Bill targets. We intent to spend over £500 million of the Nature for Climate Fund on funding woodland creation and management in England until 2025, beyond which the new environmental land management schemes will provide the main source of public funding. Whilst this rate of planting will lead to a relatively small emission savings in the short-medium term, it will play an increasingly important role as time goes on, while also providing other 40. Private finance for tree planting and management is being generated via the Woodland Carbon Code with the support of government’s Woodland Carbon Guarantee. Government has also launched a new England Woodland Creation Offer to fund woodland creation in England and will establish new Woodland Creation Partnerships in key areas, bringing together government, NGOs, and the private sector to develop bespoke offers to 41. The government will review guidance on the tax treatment of trees and woodlands, to provide greater clarity to landowners on how new and existing trees on their land affect tax liabilities. Further, government will regulate to improve protections for existing woodlands and increase the number of woodlands under active management, improving resilience to 42. Felled trees store carbon within them and timber has the lowest embodied carbon of any mainstream building materials. Guided by market analysis, fire safety and structural considerations, key opportunities for the safe growth of timber use will be in low-rise buildings using traditional and certain modern methods of construction, and in a wide range of commercial and non-residential settings. We will promote the safe use of timber in construction through several measures, Net Zero Build Back Greener

• Providing financial support to develop innovative timber products through the • Working with key construction stakeholders, including the Green Construction Board, Construction Leadership Council, Home Builders Federation, and Federation of Master Builders to develop a policy roadmap on • Driving an increase in the use of certain modern methods of construction, some forms of which can encourage use of sustainable materials such as timber; • Working with Homes England and delivery partners to explore ways to increase timber use in the delivery of housing programmes; • Increasing public demand for sustainably sourced timber through procurement • Encouraging research into barriers to uptake of timber, including looking at timber strength grades and the fire resistance of engineered timber structures. 43. Government will publish a Biomass Strategy in 2022 which we will set out the results of a review of the amount of sustainable biomass available to the UK (including domestically grown perennial energy crops and short-rotation forestry), and how this resource could be best utilised across the economy to help achieve net zero. The strategy will set out the role which Bioenergy with Carbon Capture & Storage (BECCS) can play in reducing carbon emissions and how the technology could be deployed. It will also consider where and how we can improve our existing biomass sustainability standards (already some of the world’s most stringent) and examine the relationship between biomass, including how it is used, and our wider environmental targets, 44. The Government’s Resources and Waste Strategy (RWS) set out the overall ambition and direction of travel for the waste sector. It made a commitment to increase municipal recycling rates to 65% and to ensure that no more than 10% of municipal waste is landfilled by 2035. Biodegradable waste sent to landfill today, however, slowly breaks down anaerobically, emitting methane for many years afterwards. Faster action will mean greater emissions savings. We will therefore explore policies to work towards the near elimination of biodegradable municipal waste to landfill by 2028. To support this commitment, we are bringing forward £295 million of capital funding which will allow local authorities in England to prepare to implement free separate food waste collections for all 45. To work towards these goals, we are delivering the reforms announced in the RWS. Consistent collections of household and business waste will be introduced via the Environment Bill. The powers will allow us to require local authorities to separately collect a core set of materials for recycling, including paper and card, glass, metal, plastic, food waste and household garden waste. This will divert significant volumes of biodegradable waste from landfill and provide a high volume of emissions savings. A deposit return scheme for drinks containers and extended producer responsibility for packaging, placing the net costs of disposing of packaging on producers, will also be introduced. These two measures will increase the volume of materials being recycled and decrease our consumption of virgin materials, thereby reducing the amount of waste sent to landfill and reducing Chapter 3 – Reducing Emissions across the Economy

46. Complementing these measures, the introduction of the plastic packaging tax from April 2022 will encourage greater use of recycled plastic in plastic packaging, instead of new (virgin) plastic. The tax will be charged at £200 per tonne and be paid by manufacturers and importers of plastic packaging that contains less than 30% recycled plastic. It is estimated that this will lead to an increase in the use of recycled plastic by 40% in 2022-23, equal to carbon savings of nearly 200,000 tonnes of CO2 emissions. The government will also review aspects of the Landfill Tax in England and Northern Ireland in due course, as announced in Spring 2021. This will ensure the tax continues to support the government’s ambitious environmental objectives. 47. Government is committed to moving to a more circular economy.
This means keeping built assets, products, and materials in use for longer, including through repair and reuse, and making greater use of secondary materials, thus reducing waste arising. Recycling and material substitution, especially of carbon intensive materials such as steel, aluminium, and cement, are also an important part of our approach. The draft Waste Prevention Programme for England (WPP) (recently consulted on) sets out the overall approach to improving resource efficiency across key sectors and announced government’s intention to consult on introducing extended producer responsibility in other areas, including textiles. The Industrial Decarbonisation Strategy, meanwhile, outlines our high-level ambition for resource efficiency measures across industry. At least one legislative target in the area of resource efficiency and waste reduction will be set under the Environment Bill. For further information on our plans for resource efficient manufacturing see the Industry chapter. 48. Government is also committed to eliminating food waste to landfill and delivering the UN Sustainable Development Goal 12.3 to halve food waste by 2030. The Environment Bill will require all local authorities in England to separately collect household food waste, preventing it from being sent to landfill. This will create carbon savings and support the shift to a circular economy, as food waste is instead turned into biogas and digestate (a soil improver) through anaerobic digestion. In addition, government will continue to work with Waste and Resources Action Programme (WRAP) and industry, and to support the Courtauld 2030 voluntary agreement with food and drink businesses, the Food Waste Reduction Roadmap, and the Target Measure Act approach, as well as campaigns in the public and private sector to reduce food waste, including the annual Food Waste 49. Wastewater emissions will decrease due to improved treatment processes and expected data improvements. Water company research and investment into reducing process emissions from wastewater treatment plants will result in reductions in municipal process emissions via alternative treatment processes such as anaerobic treatment, membrane activated biofilm reactors, alternative ammonia removal processes and nature-based solutions. Improvements in the way companies, and government, report on industrial emissions, and the way they are calculated, are also likely to result in reductions Net Zero Build Back Greener

50. Government will continue to impose the requirements of the F-gas Regulation, which covers England, Wales and Scotland. The regulation requires a range of measures to reduce emissions, including controls on gas placed on the market, product bans, leak checks and mandatory certification for handlers of F-gases. These actions will help us to meet the Kigali Amendment target of reducing HFC consumption by 85% by 2036, as well as the F-gas Regulation’s target of a 51. A review of the F-gas Regulation has commenced and is due to complete no later than 2022. This will be used to assess whether we can go further than the current requirements and international commitments, including by looking at what additional reductions in F-gas use can be made to help Chapter 3 – Reducing Emissions across the Economy

Working together across the UK Examples of policy action by the Scottish Government, Welsh Government and Northern Ireland Executive UK Government is working across all levels of government and with Devolved Administrations to ensure consistent action to reduce emissions across the Natural Resources, Waste and F-Gases sectors, and In November 2020, the Welsh Government published its National Peatland Action Programme to target peatland bodies most in need of restoration, with the aim of delivering 600-800 ha of restoration per year.84 It will also safeguard those in good and recovering condition. Activity will be delivered by Natural Resources Wales and partners across a range of land uses on both private and public land. When the Senedd first sat in 1999, Wales recycled less than 5% of its municipal waste. In 2020, Wales highest ever recycling rate of over 65% put it third in the world, with 403,000 tonnes of CO2 avoided in 2019/20. This success is due to a truly collective effort by local authorities, communities and households, while the Welsh Government has set targets and funded infrastructure. Food waste is collected from every household and recycling centres are evolving into modern eco-parks where businesses and enterprises capture the value in materials and keep The Scottish Government has set ambitious targets to restore 250,000 ha of peatland by 2030 and for 18,000 ha of new woodlands to be created annually by 2024/25, with woodland cover increased from around 19% to 21% of the total area of Scotland by 2032. Scottish Forestry and Forestry and Land Scotland will work with investors, carbon buyers, landowners, and market intermediaries to increase private investment in new woodlands to increase the woodland carbon market by at least 50% by 2025. I n its recent Programme for Government, the Scottish Government allocated an additional £150 million for forestry and woodland Scottish Forestry will use £100 million of this to support new tree planting; and Forestry and Land Scotland will use £30 million to expand Scotland’s national forests and land, and £20 million to invest in modernising nursery facilities to increase tree A new Scottish Agriculture Bill will be brought forward in 2023 to replace the EU Common Agricultural Policy. Co-development and co-design with rural partners will be central to the development of future support structures and delivery. The Agriculture Reform Implementation Oversight Board (ARIOB) will be asked to incorporate recommendations from farmer-led groups, into the work implementing policy reform. These groups were established to develop proposals to cut emissions across agriculture, support sustainable and high quality food production, and design a new support system. A preliminary package of funded measures will be agreed COP26, and the ARIOB will also consider responses to the public consultation launched in August on the same themes. Net Zero Build Back Greener

The Forests for our Future Programme aims to plant 18 million trees by 2030 to create 9,000 ha of new woodland.
The programme will improve the resilience of Northern Ireland’s forests and woodlands and increase their contribution to a sustainable, healthy environment; increase the contribution of forests and woodlands to Northern Ireland’s sustainable and inclusive economic growth; and increase the use of Northern Ireland’s forest resources to enable more people to improve their health, wellbeing, and Legislative provisions to help to limit emissions from F-gases (which have a high greenhouse warming potential) and ozone depleting substances have also been brought into operation in Northern Ireland. Chapter 3 – Reducing Emissions across the Economy

Balancing residual emissions to achieve net zero • Set the ambition of deploying at least 5 MtCO2/year of engineered removals by 2030, in line with CCC85 and National Infrastructure Commission assessments.86 • Deliver £100 million innovation funding for Direct Air Carbon Capture and Storage • Develop markets and incentives for investment in greenhouse gas removal methods, by consulting on our preferred business models to incentivise early • Working in partnership with the devolved administrations, we will aim to launch a call for evidence in the coming months exploring the role of the UK ETS as a potential long-term market for GGRs, as part of our upcoming consultation on the UK ETS. • Explore options for regulatory oversight to provide robust monitoring, reporting and verification (MRV) of GGRs, following the recommendations of the BEIS-led MRV Task & Finish Group involving experts from industry and academia. • Seek an amendment to the Climate Change Act to enable engineered removals to contribute to UK carbon budgets. 1. The primary method of achieving net zero is to take ambitious decarbonisation measures across society. However, we must also acknowledge that sectors such as industry, agriculture and aviation will be difficult to decarbonise completely by 2050. Greenhouse gas removals (GGR) are therefore essential to compensate for the residual emissions arising from the most difficult activities to reduce or eliminate from within polluting sectors. This approach is supported by the Climate Change Committee,87 the Energy Systems Catapult,88 the National Infrastructure Commission and the National Grid ESO (the GB electricity Net Zero Build Back Greener

2. GGR is the name given to a group of methods that actively remove greenhouse gases, predominantly CO2, from the atmosphere, also commonly referred to as Carbon Dioxide Removal (CDR) methods and Negative Emission Technologies (NETs). The range of GGR approaches fall broadly into two • Nature-based such as afforestation, and soil carbon • Engineering-based such as Direct Air Carbon Capture and Storage (DACCS), Bioenergy with Carbon Capture and Storage (BECCS), wood in construction, biochar, and enhanced 3. Following the sector classification adopted by the CCC and in this Strategy, this chapter focuses on engineered removals. Nature-based solutions, such as afforestation, are discussed in the Natural Resources, Waste 4. The 2017 Clean Growth Strategy was the first time the UK government formally addressed the need to deploy GGR methods. • Committed up to £100 million funding to research and develop nascent GGR; • Published a call for evidence on GGR in • Commissioned 4 studies to further our evidence base on the potential for GGR deployment in the UK and understanding of possible policy incentives. Chapter 3 – Reducing Emissions across the Economy

Net Zero Build Back Greener

5. In December 2020, BEIS and HM Treasury jointly launched a Call for Evidence on GGRs, which invited views on the role of GGRs in reaching net zero and potential mechanisms which government could consider to enable their deployment. A Summary of Responses to the Call for Evidence has been published Net zero transition and opportunities for the sector 6. We are clear that the purpose of greenhouse gas removals is to balance the residual emissions from sectors that are unlikely to achieve full decarbonisation by 2050, whilst not substituting for ambitious mitigation to achieve net zero. GGRs must not be pursued as a substitute for decisive action across the economy to reduce emissions, often referred to as mitigation deterrence.91 7. There is also a need to ensure that GGRs result in a permanent net reduction in atmospheric carbon. This is a complex task which, at least in the near-term, may require case-by-case scrutiny of the carbon intensity of GGR supply chains and long-term indirect emissions of GGR projects. Developing a robust approach to the Monitoring, Reporting and Verification (MRV) of negative emissions is essential to the deployment of GGRs at scale. Future markets in which negative emissions are traded, whether voluntary or otherwise, will require careful regulation to ensure that capital is being invested into permanent, verifiable 8. Evidence around scale-up potential of engineered removal solutions in the UK is rapidly evolving, alongside innovation in the sector. This evidence92,93 suggests that the next decade will be critical and several GGR solutions, such as Direct Air Capture, will have to be developed or scaled-up significantly during the late 2020s and early 2030s to contribute effectively to later carbon budgets and our net zero target, as well as to build our evidence and experience in the sector. Chapter 3 – Reducing Emissions across the Economy

2050204520402035203020252020201520102005200019951990 9. Both nature-based and engineered removal methods will be necessary. For engineered removals, a portfolio approach, supporting innovation, demonstration, and commercialisation of a wide range of removal solutions in the 2020s, is needed to ensure GGRs can contribute effectively to meet our NDC and CB6 targets. The government’s current suite of innovation programmes for DACCS and other GGRs will help ensure we continually target efficiency improvements, cost reductions and novel GGR technologies to inform our approach 10. Based on the current evidence base and projects in the pipeline, our analysis indicates that engineered removals would be expected to deploy from 0 MtCO2 today to at least 5 MtCO2 by 2030 and to around 23 MtCO2 by 2035, with higher and lower deployment possible depending on sector-specific and Net Zero Build Back Greener

11. By 2030 we envisage significant deployment of mature BECCS technologies and commercial scale deployment of DACCS.
BECCS technologies will include retrofit applications in the power and industry sectors. BECCS applications in the power sector could be deployed by the late 2020s, and potentially achieve ambitious contributions to our NDC target by 2030. Engineered removals are likely to be located within or near industrial clusters, benefitting from access to CO2 transport and storage infrastructure, essential to support delivery of net-negative emissions. 12. By the early 2030s the portfolio of GGRs deployed at scale will expand as technologies mature and demand from end-use sectors increases. Beyond the contribution of power BECCS to the electricity grid, production of hydrogen, biogas/biomethane fuels with BECCS could also support the decarbonisation of transport, industry and potentially power and heat in buildings. Industry may also benefit from BECCS applications in sectors such as cement. When applicable in these areas, BECCS can represent a cleaner form of energy production than fossil fuel counterparts, whilst also bringing the additional benefit of negative emissions. The early 2030s could also see progress in deployment of DACCS technologies, thanks to efforts in demonstration and piloting during the 2020s through the support of our Direct Air Capture and other GGRs innovation competition. 13. By 2050, deployment of engineered removals at large scale, between 75 and 81 MtCO2 per year, will be needed to help compensate residual emissions. This is expected to be equivalent to around 45-80% of total emissions captured across the UK economy and will see predominantly the scale up of DACCS and BECCS with gasification Chapter 3 – Reducing Emissions across the Economy

Greenhouse gas removals in the context There will be several complex interdependencies between GGR methods and the wider net zero system. Progress towards decarbonisation in other sectors will affect the extent to which GGR deployment will be required to hit our emissions targets. Conversely, GGRs have resource requirements that will impact other sectors. For example, deployment of engineered GGRs in the early years will likely be constrained by the availability of CO2 transport and storage injection capacity and any development of GGR business models will need to consider interactions with Industrial Carbon Capture and hydrogen business models, along with wider carbon pricing policy. We have committed to consider how the UK Emissions Trading Scheme could be expanded in future to provide a long-term support Biomass availability and supply Biomass policy is highly interdependent with GGR deployment. Sustainable biomass is a unique renewable organic material, and the future availability of sustainable biomass directly influences the scale GGRs such as BECCS and biochar can deploy to. Constraints on demand for perennial energy crops and solid recovered fuels, related mostly to technological and financial challenges, will need to be overcome via research and innovation to see significant increase in the take up of these biomass feedstocks. The upcoming Biomass Strategy (due to publish in 2022) will review the amount of sustainable biomass available to the UK and set out a framework for how this resource can be best utilised across the economy to help achieve our net zero target. The upcoming biomass policy statement gives an early indication of this framework, setting out the principles and policy aims for biomass up to 2050. The Strategy will also assess the UK’s current sustainability standards, to see where and how we can improve them even further. Any future BECCS project would be required to meet stringent sustainability requirements for the production and use of biomass, as will be set out in the Biomass Strategy. Net Zero Build Back Greener

Land use change will be required to accommodate GGRs, either directly through nature based GGRs such as afforestation or indirectly from increased production of woody biomass, such as perennial energy crops or short rotation forestry, to use for BECCS or other opportunities in the wider bioeconomy. What is best grown, where, in what quantity, and for what purpose, determines the feasibility of a GGR through land-use change. Feasibility therefore must consider, amongst alternative land use, feasible technological options for production, the net impact on GHG emissions, interactions with competing land demands for other strategic government objectives such as food security, nature conservation and housing, as well as social implications such as integration of GGRs into existing farm practice and environmental Further research is required into best practice for establishing GGRs in a productive and biodiverse landscape, and what levers may be required to establish such measures on land that is largely privately owned. Research projects through the UKRI SPF on GGRs and NERC GGR Research Programme will start to address these evidence gaps. GGR deployment will require alignment with HMGs schemes to reward environmental land management for Sustainable Farming Incentive (SFI), Local Nature Recovery (LNR) and Landscape Recovery Schemes. We will also need to consider interactions with private sector demands, such as through the domestic voluntary carbon market. Uncertain impacts from climate change such as impacts to national stocks of high-grade farmland also demands consideration of what is both feasible now and on the way to 2050. Differences in spatial and temporal scales between removal technologies, such longer pay- back times for afforestation as opposed to short rotation forestry, create opportunities to maximise carbon removals to 2050 through a mix of land based GGRs. Managing environmental risks and benefits There are significant opportunities for maximising environmental co-benefits through nature based GGRs. For example, integrating perennial energy crops (e.g., short rotation coppice (SRC)) into existing farm systems can increase the abundance and diversity of flora and fauna at a field scale, though these benefits depend on factors such as historic cropping patterns and spatial distribution. At a landscape scale, afforestation can deliver co-benefits through natural flood management and urban cooling. However, benefits depend on sustainable forest management and choosing the right location and species of tree in Chapter 3 – Reducing Emissions across the Economy

We must ensure that GGR technologies do not create new environmental risks. For instance, feedstock production for BECCS, biochar and wood in construction have potentially significant land requirements which if mismanaged could pose risks to biodiversity.
The deployment of BECCS could also potentially impact local air quality and we must ensure that regulation and abatement on emissions other than CO2 develop to reflect this. It is also necessary to ensure resilience to the impact future climate change might have on the feasibility to deliver GGRs and wider environment objectives. CO2 Transport and Storage networks By the early 2030s, CO2 transport and storage infrastructure availability could potentially constrain GGR deployment, as the significant overall expansion of CCUS projects creates competition for access to the network. 14. The UK is well placed to take a leading role in GGR policy development and deployment. We have world-leading academic and industry expertise in relevant sectors, as well as a rapidly developing carbon capture usage and storage (CCUS) sector and access to large volumes of quality geological CO2 storage. Enabling GGR deployment will not only help us hit net zero but can support the UK’s ability to export skills and expertise to other nations with comparable ambitions for 15. To achieve the level of negative emissions indicated by our central delivery pathway to 2037 and keep us on track to deliver net zero, we will need additional public and private investment of around £20 billion. Scaling up the GGR sector will also regenerate communities and open up new employment opportunities right around the UK. 16. It will be crucial to ensure that future GGR policy maximises the economic and regional development opportunities of developing the low carbon economy in our industrial heartlands. Economic benefits include creating new, highly skilled jobs in our industrial heartlands and safeguarding those existing in adjacent sectors with the potential to be adversely affected by the transition to net zero, Net Zero Build Back Greener

17. Government has a clear role to play in responsibly deploying GGRs, and is committing to an ambition of deploying at least 5 MtCO2/year of engineered removals by 2030. To achieve this, we are taking ambitious steps to enable commercial demonstration and deployment of engineered GGRs such as Direct Air Capture. We are addressing their financial and regulatory barriers, whilst also working to build the evidence base and address continued uncertainty around how GGRs can most effectively and sustainably be deployed and verified. Our role will change over time, as GGRs become more established, and the sector matures. Addressing financial barriers and 18. One of the fundamental barriers to GGR deployment is the lack of an established market or customer demand for engineered removals. GGR technologies are associated with high capital and operational costs, making private investment unattractive in the absence of a stable revenue stream for the provision of negative emissions. 19. The government’s vision is to establish a liquid market for carbon removals, in which polluters have a strong policy or financial incentive to invest in GGRs to compensate for their remaining emissions. The UK Emissions Trading Scheme (ETS) is a possible market-based solution for stimulating investment by GGRs – moving us towards a single, integrated compliance market for carbon, with negative emissions supporting liquidity as the ETS allowance cap 20. GGR credits could function within an ETS market through, for instance, allowing polluting sectors to meet their obligations through the procurement of negative emissions alongside conventional abatement options. In the Energy White Paper, the government committed to exploring how the UK ETS could incentivise the deployment of GGR technologies. We aim to work with our Devolved Administration colleagues to launch a call for evidence in the coming months on the role the UK ETS could have as a potential long-term market for engineered or nature-based GGRs. This may explore possible eligibility criteria for participation in the UK ETS, different types of GGR market design, and timings for when GGRs could be added to the market. 21. We recognise that a market for GGRs will take time to establish and a phased approach is likely to be necessary. In the short-term, there may be a role for government in providing bespoke support for initial projects to de-risk investment decisions and provide revenue certainty for technology developers. Yet we also recognise the potential for early support instruments to integrate with market- based approaches, such as combining contract mechanisms with inclusion of GGRs Chapter 3 – Reducing Emissions across the Economy

22. To advance our ambition to stimulate the GGRs sector, we will consult on business models for engineered GGRs in Spring 2022. This will set out details of our preferred mechanisms to incentivise early investment and enable commercial demonstration of a range of GGR technologies from the mid- to-late 2020s. The consultation will consider how GGR incentives interact with policies and business models currently under development for CCUS, hydrogen production, sustainable aviation fuels and other relevant sectors, along with wider carbon pricing policy. It will also consider how near-term policy incentives can most effectively leverage private investment and enable a transition towards a market-led framework as the sector matures. 23. Our proposals will be informed by a study currently being conducted for BEIS by Element Energy, as well as a recent study on commercial frameworks for first-of-a-kind Power BECCS projects which is published 24. Whilst seeking to capitalise on the economic benefits of GGR development in the UK, we are also mindful of potential disruption to existing markets and the effects on consumers and businesses. The cost of support for GGRs is likely to be shared between the public and private sector. We will seek to develop an appropriate balance of risk allocation over the short, medium, and long term. Potential policy frameworks to enable developing GGR solutions will require careful consideration to guard against unintended effects. We will ensure that support for GGRs does not distort the development and commercialisation of decarbonisation technologies in other sectors. 25. The majority of GGR techniques are at a pre-commercial stage and require innovation and demonstration support to be ready for commercial deployment.
To address this GGR technologies were included as one of ten innovation priority areas announced in the Ten Point Plan for a green industrial revolution.94 Together with UKRI, we are investing £100 million in the research, development, and demonstration of greenhouse gas removals across multiple programmes. This includes the DAC and other GGR innovation competition which will support the construction of pilot plants for a range of promising technologies to help them achieve commercial realisation.95 The programme’s pilot projects could remove between 100 and 1,000 tonnes of CO2e per year in 2025 and have the potential to scale up to millions of tonnes by the 2030s. 26. Through the government’s Strategic Priorities Fund, UK Research and Innovation (UKRI) will invest £31.5 million in five land based GGR demonstrator projects and a central hub. The hub will lead on coordination across the programme, as well as conducting cross-cutting research on the environmental, economic, social, ethical and governance implications of GGR approaches. 27. The Biomass Feedstocks Innovation Programme aims to increase the production of sustainable domestic biomass by funding innovative ideas that barriers production. The sustainable, increased supply of biomass for bioenergy conversion is a critical factor for the Net Zero Build Back Greener

28. We are also publishing the outputs of two BEIS commissioned research projects designed to further our understanding and evidence base on GGR methods and their deployment. An updated assessment of greenhouse gas removal methods and their potential deployment in the UK provides a comprehensive and up-to-date assessment of lifecycle costs, TRL and deployment 29. Once atmospheric carbon has been captured, the length of time it remains captured becomes crucial in verifying the effectiveness of a GGR process. This applies to both nature based and engineered solutions and is often referred to as the ‘permanence’ or ‘durability’ of GGRs. Establishing robust Monitoring, Reporting and Verification (MRV) protocols is highly complex, particularly for 30. In 2021, we established a GGR MRV Task and Finish Group, comprised of experts across government, industry, academia, and regulatory services. The role of the group was to provide advice and guidance on the development of a MRV policy approach for GGRs. A recommendation made by the group is the need for an independent audit function to be responsible for a monitoring, reporting and verification regime. This would ensure that the amount and permanence of removals are quantified, robustly and transparently, which will be essential to developing and supporting 31. Alongside this document we have published a report summarising the work of the group, including proposed principles to guide our MRV approach, initial suggestions for how MRV protocols could operate, and the future work required to advance the development of an MRV policy for negative emissions. The government will carefully consider the Group’s advice as we take forward future work in this area. 32. Accounting for emissions associated with international supply chains presents a challenge for GGR carbon accounting, and we will engage with our international counterparts to ensure best practice is achieved. Accounting for possible re-emissions, e.g., of CO2 captured internationally but stored in the UK may be a particular challenge. We commit to collaborating with international partners to ensure alignment on any future 33. Currently the Climate Change Act 2008 only recognises removals from Land Use, Land Use Change and Forestry (LULUCF) as counting towards our carbon budgets, a definition which does not allow engineered removals and some nature-based solutions to contribute. We propose to bring forward legislative amendments to address this. 34. An MRV regime will be required to ensure that the amount and permanence of removals are quantified, robustly and transparently, with tolerable uncertainty. We will explore options for establishing a regulatory function to provide this oversight, taking into consideration the advice of the MRV Task and Finish Group. Chapter 3 – Reducing Emissions across the Economy

Working together across the UK Example of policy action by Scottish Government UK Government is working across all levels of government and with Devolved Administrations to ensure consistent action on Greenhouse Gas Removals, and Storegga and Carbon Engineering have announced a partnership to develop commercial Direct Air Capture (DAC) projects in the UK, potentially contributing to the removal of millions of tonnes of CO2 each year. One location being considered for their first proposed plant will sequester up to 1 mtpa, connected via pipeline to the Acorn Carbon Capture and Storage project at St Fergus. The proposed DAC facility would deliver permanent CO2 removal by capturing CO2 from the air then safely and permanently storing it deep below the seabed in an offshore geological storage site. The offshore Acorn CO2 storage site is aiming to be operational by the mid-2020s and the first DAC project could be operational within two The Scottish Government’s Climate Change Plan committed to a detailed feasibility study of opportunities for developing negative emission technologies (NETs) in Scotland. This will identify specific sites and applications of NETs, including developing work to support policy on Direct Air Capture and its role in our future energy system. The launch of a £180 million Emerging Energy Technologies Fund to support Hydrogen, CCS, and NETs projects has also been announced. Net Zero Build Back Greener

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Harnessing UK strengths in R&D to reach net zero • Increase government investment in R&D to £22 billion; increase total R&D investment to 2.4% of GDP by 2027. • Publish the UK’s first Net Zero Research & Innovation Framework to set out the key research and innovation challenges for the next 5-10 years; and a future update to demonstrate how the government is delivering against these. • Deliver a Government programme of innovation to enable decarbonisation – funding of at least £1.5bn during next spending review period expanding a portfolio of cross government net zero innovation to fund BEIS-led programmes on power, buildings and industry; DfT-led programmes across transport; and DEFRA led programmes on natural resources, waste and F-gases, to target priorities aligned with the Net Zero Research & Innovation Framework.
This spending includes new programmes set out in this Strategy such as £60m Heat Pump Ready programme. • Take a leadership role in Mission Innovation 2.0, a global initiative working to accelerate clean energy innovation.1 Net Zero Build Back Greener

1. Innovation is central to our approach to delivering net zero. It will require a step change in the rate of new technologies and processes being developed and deployed into the market and being adopted by businesses and consumers. Continued investment in cutting-edge research, development, and demonstration, will be integral to achieving this transformation and to the UK leading the world in areas of existing and potential competitive advantage. This investment will also support businesses to grow and solutions to be delivered at scale. Research, development, and innovation are needed to allow government, industry and business to make decisions about what new technologies and systems are promising. To respond, government must enable the efficient scaling of technologies, systems, and business models to pull them through to commercialisation for 2050 - and beyond. 2. Our goal is for the UK to be a global leader in the technologies, processes, services, and business models needed to decarbonise our economies, protect our environment, and adapt to a changing climate. We will support our world class innovators, entrepreneurs, and financial institutions to develop and deploy the key technologies of the future. This will need to take place alongside other cross-cutting policies, regulatory changes, 3. By supporting innovation, we could unlock the potential for 300,000 jobs in exports and domestic industry through new commercial opportunities across low carbon sectors. 4. In the Prime Minister’s Ten Point Plan for a Green Industrial Revolution,2 we restated our commitment to raise total private and public R&D investment to 2.4% of GDP by 2027 – enabling the next phase of green innovation to help bring down the cost of the net zero transition, nurture the development of better products and business models, and understand consumer choices. We have started delivering on this with funding announced for programmes across the portfolio including renewables, energy storage and flexibility, and hydrogen.3 This is contributing to levelling up across all regions of the UK whilst helping us to achieve our Chapter 4 – Supporting the Transition across the Economy

5. Innovation can significantly reduce costs of the technologies, processes, and systems needed to reach net zero. This goes beyond just developing technologies. It also means exploring new business models, approaches to financing, the regulatory environment and how consumers respond. Taking a whole systems approach to innovation will be integral to maintaining and developing the UK’s global leadership in areas where we have, or can develop, an international comparative advantage or unique capability. We must harness the UK’s international reputation to attract inward investment and anchor existing and emerging supply chains in the UK. International collaboration will also be critical to ensure that clean technologies become cheaper and more readily available. 6. Innovation is a process which occurs within an ecosystem of interacting actors, technologies, and institutions. This requires technologies, systems or processes to progress through multiple phases of development – from basic research, through to commercialisation and diffusion. However, innovation does not flow neatly in one direction from one phase to the next; it is unpredictable and serendipitous, involving constant cycles of learning, testing, refining, and discovery. At each phase of the innovation process there are different market failures and barriers, requiring distinct interventions. In the early stages, there are often minimal incentives for private actors to invest in innovation and direct funding policies can help ‘push’ technologies towards demonstration and early commercialisation. In the later stages, the importance of attracting private finance grows. Market incentive policies support the development of markets and leverage private finance to ‘pull’ technologies towards 7. The Prime Minister’s Ten Point Plan for a Green Industrial Revolution, our Plan for Growth and our new Innovation Strategy bring together ambitious policies and significant public investment to achieve net zero, whilst seeking to mobilise substantial private investment. These commitments will position the UK to take advantage of export opportunities in global markets presented by these low carbon technologies and services. Net Zero Build Back Greener

Case Glass Futures with Encirc pilot project Through government’s 2016-21 Energy Innovation Programme, BEIS funded Encirc (a glass container manufacturer) and Glass Futures (an industry research and technology organisation) to lead a trial project based in Derrylin, Northern Ireland to help determine the most effective approach to using low carbon fuels in manufacturing in the glass sector. This revolutionary project has proven that new bottles can be made from 100% recycled glass by using energy only from burning low carbon biofuels. It is thought that this world-first initiative will set a global standard and make way for an industry-wide reduction in carbon emissions in the glass sector. When made from waste organic materials, biofuels are a renewable and much more sustainable fuel source than those traditionally used by the glass sector and can reduce the carbon footprint of each bottle by up to 90%. By using up to 100% recycled glass to create new bottles, the trial has further minimised the lifetime impact of these new products. Supporting innovation for net zero 8. Achieving net zero will require profound changes to the UK economy. It will mean increasing our low carbon electricity supply, making the transition to low carbon buildings, decarbonising transport, building a hydrogen economy, decarbonising industry, rolling-out carbon capture and storage, transforming the way land and marine spaces are used, improving agricultural management, adopting better waste management, and deploying technologies to remove greenhouse gases from the atmosphere. This should include innovation to mitigate any environmental impacts from new technologies on our 9. In each of these sectors, known technologies, business models, services and approaches will need to be demonstrated and then deployed at scale, while novel technologies need R&D support now to determine whether they can be affordable and viable options in the longer-term.
Underpinning this will be research to understand consumer acceptability and behaviour, and to create economic incentives will also be required for 10. We’re publishing the Net Zero Research & Innovation Framework which sets out the critical net zero research and innovation challenges across the UK that require development over the next 5-10 years, and presents timelines of short, medium, and longer-term priorities. The framework will help to align current and future government funding around agreed priorities and to crowd-in effort and investment from the private sector and research communities by providing a clear Chapter 4 – Supporting the Transition across the Economy

11. Government investment in research drives progress on our goals, from the physics underpinning battery technology to the mathematics underlying climate modelling. In November 2020, we committed to increasing investment in core UK Research and Innovation (UKRI) and National Academy funded research by more than £1 billion by the April 2024 (the 2023/24 Financial Year). UKRI investment in research, innovation, and skills creates the conditions for the UK to address the complex and interrelated challenges of 12. Beyond early-stage research, investment in new technologies is essential for bringing them closer to commercialisation. We will expand our cross government portfolio of net zero innovation support, delivering at least £1.5 billion during the next spending review period. This will accelerate the commercialisation of low carbon technologies, systems, and business models 13. The Transport Decarbonisation Plan committed to implementing a range of innovation programmes to support the decarbonisation of transport, with successful projects for zero emission road freight trials and hydrogen transport pilots recently announced. Building on the success of our £20 million zero emission road freight trials, we will expand these to trial three zero emission HGVs technologies at scale on UK roads to determine their operational benefits, as well as their infrastructure needs. The accompanying Jet our strategy for net zero aviation proposes a suite of policies to reduce aviation emissions, including accelerating the development of sustainable aviation fuels and supporting the development of zero emission flight. The Agricultural Transition Plan set out the commitment to boost innovation and help farmers and growers increase productivity, sustainability, and resilience to a changing climate. Given the importance of R&D to deliver emissions savings across the natural resources, waste and F-gases sectors, we are also committing to spend £75 million on net zero related R&D in these sectors over the 14. We will prioritise innovations where there is a strong case for UK Government investment, while leveraging additional funding from industry. It will also support the UK in maintaining its leadership in the development of technologies such as nuclear reactors and fusion energy,4 which are expected to complement renewable sources in the future. With high levels of innovation alongside ambitious policy support in technologies, the UK’s low carbon sectors with the largest potential could unlock £60 billion of 15. The Industrial Strategy Challenge Fund (ISCF),6 delivered by UKRI and its partners, drives UK growth and productivity by directing innovation across sectors and disciplines behind government’s strategic priorities. ISCF has to date allocated £824 million to eight challenges aligned to the 2017 Industrial Strategy Clean Growth Grand Challenge. Examples include the Transforming Food Production Challenge; the Faraday Battery Challenge; the Driving the Electric 16. The government’s Innovation Strategy sets out our plans for a refreshed Innovation Missions programme to build on UK leadership in mission-driven innovation and bring government together with industry, civil society, and academia to respond directly to major challenges confronting the UK. As referenced in the International chapter, Missions can play an important role in stimulating and leveraging innovation for tackling complex problems while simultaneously promoting growth and improved business outcomes and restoring the UK’s place as a science superpower. Net Zero Build Back Greener

17. It is a strategic focus of our National Space Strategy to utilise space technology in the fight against climate change. Satellites provide an extraordinary insight into our climate and environment and enable us to understand and monitor how climate change is impacting the Earth. We will strive to remain at the forefront of Earth Observation (EO) technology and know-how. This supports our ambition to be a global science and technology superpower and to lead the world in tackling climate change and 18. It is essential that we track cross- government activity and ensure that innovation funding is strategically aligned to deliver the government’s net zero ambition. This will be supported by the Net Zero Innovation Board (NZIB), chaired by the UK Government’s Chief 19. Alongside our policies that specifically support our net zero objectives, there will be continued significant public investment in R&D to support all sectors. This includes the creation of a new institution – the Advanced Research and Invention Agency (ARIA) – to fund high-risk, high-reward research. ARIA’s leadership will have full scope to determine the areas in which it will invest. Case Hy4Heat Programme and Hydrogen Fuelled Appliances The Hy4Heat programme was launched by BEIS in 2017 to explore the use of hydrogen gas for heating by seeking to demonstrate technical feasibility and safety. It aims to define quality and technical standards, and to develop domestic and commercial hydrogen appliances. The programme, with up to £25 million funded by BEIS, is supporting the innovation journey of a range of domestic hydrogen appliances and meters including world-first hydrogen- ready boilers, cookers, and fires. These hydrogen appliances and meters are being installed at a hydrogen home facility, developed in partnership with Northern Gas Networks (NGN) and Cadent. This will enable industry and members of the public to see how these appliances work in a home setting. These properties will be the first UK houses to demonstrate the use of hydrogen appliances in a real-world setting. Chapter 4 – Supporting the Transition across the Economy

Policy and regulatory frameworks 20. As set out in the Ten Point Plan and Energy White Paper, we will continue to develop a policy environment and regulatory framework which incentivises further deployment of new technologies, services, and business models. The UK’s Electricity Market Reform is an example of how government can drive significant cost reductions in low carbon technology.