New technologies have begun to penetrate markets for some NRMM uses, for example electrification technologies, particularly for small, light duty equipment. Government intervention is likely to be necessary to ensure low carbon technologies continue to be developed and ensure uptake at the level needed to reach carbon The first stage in government support will involve innovation funding to prepare key low carbon technologies for commercialisation. The £40 million Red Diesel Replacement 56 57 National Atmospheric Emissions Inventory (2021), ‘Greenhouse Gas emissions reports’, uk/reports/reports?section_id=3

Chapter 3 Policies and Measures 173 competition under our Net Zero Innovation Portfolio will provide grant funding to develop and demonstrate low carbon alternatives to red diesel for the construction and mining and quarrying sectors, to help these sectors to decarbonise. Phase 1 aims to develop component technologies relating to infrastructure, fuels and equipment over 11 months while Phase 2 aims to demonstrate the fully integrated system on construction, and mining and quarrying 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 ensure a 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.58 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 part of this process. 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 carbon future. Steel accounts for 14% of industry emissions,59 with 95% of this coming from two blast furnace sites, Scunthorpe, and Port Talbot.60 Options for decarbonising these sites and the wider steel sector include switching to Electric Arc Furnace applying industrial carbon capture technology to existing blast furnaces or in the future using hydrogen-based DRI. 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 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. 58 Employment figures sourced from ONS (2018), ‘Industry (2, 3 and 5 – digit SIC) – Business Register and employmentandemployeetypes/datasets/industry235digitsicbusinessregisterandemploymentsurveybrestable2 Indirect jobs estimates based on ONS (2019), ‘Type I UK employment multipliers and effects, reference year 2015’, adhocs/009746typeiukemploymentmultipliersandeffectsreferenceyear2015 59 National Atmospheric Emissions Inventory (2021), ‘Greenhouse Gas emissions reports’, uk/reports/reports?section_id=3 60 BEIS analysis (2021), ‘Net Zero Industry Pathway (N-ZIP) model’, uploads/2020/12/N-ZIP-Model.xlsb

174 8th National Communication 3.10.3.3 Resource efficiency and energy efficiency (REEE) The Climate Change Committee estimate that REEE measures could contribute 11 MtCO2e of annual emissions reductions by 2035.61 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 rapid action. Resource efficiency and material substitution measures could save up to 9 MtCO2e per annum in industry within the UK by 2050.62 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 environmental impact. 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. Analysis underpinning the NZS 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 electronics sectors. 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.
Government is identifying opportunities to reduce the substantial embodied carbon footprint of the automotive sector, beyond the reduction and then elimination of emissions 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 and renting. 61 The figures were derived by the CCC based on research from 2018 (Scott, et al., 2018). This research acknowledges that there are a range of possible scenarios that differ greatly in resource efficiency savings. The CCC’s balanced pathway assume savings consistent with the high scenario. Empirical evidence on the likelihood of these scenarios is limited. The balanced pathway also includes estimated savings from industrial buildings, which are covered in the Heat and Buildings chapter. 62 CCC (2020), ‘Sixth Carbon Budget’,

Chapter 3 Policies and Measures 175 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 nonfiscal, policy options 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, boosting the take-up of circular economy initiatives. We will 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 industrial sites. 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 of measures. 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. New policies include establishing a dedicated energy advice offering for smaller businesses to provide trusted advice on improving industrial energy efficiency and decarbonisation, as outlined in The UK Government’s British Energy Security Strategy (2022). Additionally, the Department for Business, Energy and Industrial Strategy has sponsored 100,000 free copies of the energy management standard BS ISO 50005 to support SMEs with a means to develop a practical, low-cost approach to 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 these networks. Furthermore, the heterogeneity of the 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 and we would seek to minimise burdens imposed by regulation, possibly by using digital tools. 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. Funding for complex industrial retrofits with high payback periods remain available via the IETF Phase 2. 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

176 8th National Communication 3.10.3.4 D emand-side measures 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 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 late 2020s. 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 Dispersed sites63 account for approximately half of the UK’s industrial emissions, and therefore form a major part of industry’s pathway to net zero. These sites are highly diverse in 64terms 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 manufacturing. 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 to be rapid.
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 levelling up agenda. To achieve this, we intend to advance work in the following main Accelerated decarbonisation acr oss 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 of off-gas grid sites. 63 Defined by the IDS as sites outside a 25km radius from the 6 main industrial clusters (Grangemouth, Teesside, Humberside, Merseyside, South Wales and Southampton) 64 National Atmospheric Emissions Inventory, ‘Emissions from NAEI large point sources’,

Chapter 3 Policies and Measures 177 • Pr eparing 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 integrated decarbonisation solutions in local areas. This would be supplemented by continued funding via Phase 2 of the IETF for site-level studies There has been a considerable decline in Scotland’s industrial emissions since 1990, falling by almost 50% between 1990 and 2019. At present, around 30% of total Scottish greenhouse gas emissions are generated by a diverse range of industrial sub-sectors, predominantly manufacturing, as well as mining and construction. The Scottish Industrial 66 provides grant funding to energy intensive industries to reduce energy costs and emissions through increased energy efficiency. Other key policies include a Scottish Industrial Energy Transformation Fund, a Low Carbon Manufacturing Challenge Fund, work on the Grangemouth Future Industry Board aimed at growing economic activity in the area while transitioning to NetZero, and a Green Jobs Fund. Our industrial sector faces decarbonisation challenges, which require long-term targeted and symbiotic action to ensure their international competitiveness, including fuel switching, carbon capture and storage or other new technology solutions and raw material substitution with waste streams from other industries requiring less energy to process. The 2020s will be the period where substantial resource efficiency improvements are made and we develop and scale up new options for industrial decarbonisation such as carbon capture and storage, low-carbon hydrogen and engineered emissions removals. This period will also enable us to understand the costs, supply chain implications and where costs fall. Flexibility will be required as appropriate decarbonisation pathways for regions and industrial The scaling up of new options for industrial decarbonisation will then have a transformative impact on emissions from the end of the current decade and through the 2030s. In the period of 2021-25, we will review a number of our key interventions with business such as Business Wales to ensure climate change aspirations are embedded at the heart of our operations. We will build on many of our strong academic initiatives and clusters to achieve a cohesive approach within regions and between our academic and business sectors to ensure that we maximise the opportunities for our communities. The policies and proposals for this sector have been set out under the broad mitigation areas of resource efficiency, fuel switching, carbon capture utilisation and storage (CCUS) and commercial buildings. Below are the key policies for Wales, more detail can be found 65 Locations outside of the 6 main clusters where co-location of industrial units could yield integrated solutions 66

178 8th National Communication Drive decarbonisation through the manufacturing sector In 2021, Welsh Government published a new Manufacturing Action Plan. Through the plan it will futureproof manufacturing in Wales, make use of new technologies and importantly, drive down emissions. Supporting manufacturers to export is an important part of the Manufacturing Action Plan, and the Export Action Plan sets out how it will be achieved. Export Clusters will help businesses transition from a reliance on sales to fossil fuel Increased resource efficiency in industry and business through regulation and funding Welsh Government will secure greater recycling in businesses through the introduction of the new Business Recycling Regulations in 2023 and the introduction of extended producer responsibility for packaging in 2024 (which will also secure an increase in the recycling of business-to-business packaging). Business Wales – using our financial and advice services to encourage business emission Business Wales supports new entrepreneurs, micro-businesses and SMEs to embed sustainable development practices in the fabric of their venture. A full review of the future Business Wales service has been undertaken and building on the current provision and dedicated support on sustainability the future provision from 2023 onwards will have a key focus on support businesses to reduce carbon emissions and promoting sustainable Welsh Government will seek to prioritise the decarbonisation all to action, where Welsh Government are looking for applications that enable more of the business base to become 3.10.6 Northern Ireland Executive The 10x Economic Vision highlights five priority clusters relating to areas where the emergence of significant capability and capacity with the potential to drive the economy forward has been seen. A number of local businesses within these specialisms, both Small and Medium Enterprises (SMEs) and large companies, have already demonstrated an appetite for collaborative working and have come together with academic partners and other key stakeholders to develop new products, services and ways of working. These technologies and clusters will evolve and change, and policy must keep pace with these changes. Whilst these clusters may change over time, commitment to ‘tightening an economic strategy from broad sectors to strong or emerging specialisations’ will remain.
Those clusters particularly relevant to the path to net zero The application of innovation and enabling technologies to build competitive advantage and transition to net zero across the primary and secondary processing sectors, including genomics, traceability of food, advanced packaging, plant and animal health specialisms, and the application of Artificial Intelligence to new agricultural methods. 3.10.6.2 Advanced Manufacturing and Engineering Advanced manufacturing is the use of innovative or cutting edge technologies and methodologies for improved competitiveness in the manufacturing sectors. It embraces

Chapter 3 Policies and Measures 179 companies in Aerospace and Defence, Automotive, Construction, Materials Handling, Electronics, Energy, Water and Consumer Products. 3.10.6.3 Windows of Opportunity The transformation to new ways of living that reduce waste and carbon footprint cuts across these priority clusters. There are both significant economic opportunities and adjustments across the priority clusters and the economy more broadly to be gained through efforts to address climate change. Various industries such as energy, transport and construction will see changes in technology which will have substantial implications for the mix of skills required. The UK Government’s ‘10 Point Plan for a Green Industrial Revolution’ sets out a commitment for up to 250,000 new jobs to be created across the UK by 2030 as part of efforts to move towards net-zero. Northern Ireland aims to obtain a significant share of this growth in jobs and take advantage of other opportunities which arise from the transition to a greener, more sustainable economy. The UK has around 30 million buildings67 and includes some of the oldest building stock in Europe.68 Currently, 1.7 million fossil fuel heating systems are installed per year (gas, oil, and coal).69 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. The package of measures presented here, and in our Heat and Buildings Strategy (HBS)70 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. 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 UK71, and 86% of homes in England use natural gas boilers.72 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 peoplepopulationandcommunity/populationandmigration/populationprojections/datasets/ householdprojectionsforengland ; BEIS (2020) ‘Non-domestic National Energy Efficiency Data-Framework’ based on 2018 data, 68 Buildings Research Establishment (2020), ‘The Housing Stock of the United Kingdom’, com/bretrust/The-Housing-Stock-of-the-United-Kingdom_Report_BRE-Trust.pdf 69 Building Services Research and Information Association (BSRIA) (2020), Domestic boilers market analysis – United Kingdom, 2020, 70 71 ONS (2020), ‘Households projections for England’, 72 MHCLG (2020), ‘English Housing Survey 2019 to 2020’,

180 8th National Communication gas grid73. In 2019, approximately 15 million (60%) of homes in England had a lower energy performance, with ratings of EPC band D and below74. 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)75. Owner-occupied homes are now the worst performing tenure, with the greatest proportion of homes below EPC band D76. 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 Non-domestic There are approximately 1.7 million non-domestic (commercial, industrial and public) properties in England and Wales78. Non-domestic buildings account for around a quarter of UK building emissions79. 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 stock80. Public sector buildings account for about 9% of building emissions.81 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 with net zero. 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 2021, we consulted on phasing out the installation of new oil, coal, and LPG heating, and 73 BEIS (2020), ‘Energy Consumption in the UK 2020’, 74 MHCLG (2020), ‘English Housing Survey 2019 to 2020’, 75 MHCLG (2020), ‘English Housing Survey 2019 to 2020’, housing-survey-2019-to-2020-headline-report 76 MHCLG (2020), ‘English Housing Survey 2019 to 2020’, 77 ‘Fabric first’ means installing measures that upgrade the building fabric (e.g. walls/lofts) before making changes to the heating system.
78 BEIS (2020), ‘Non-domestic National Energy Efficiency Data-Framework’, statistics/non-domestic-national-energy-efficiency-data-framework-nd-need-2020 national 1990 to 2018’, 80 BEIS (2016), ‘Building Energy Efficiency Survey‘, 81 BEIS (2020), ‘Final 2018 UK greenhouse gas emissions national 1990 to 2018’, uk/government/statistics/final-uk-greenhouse-gas-emissions-national-statistics-1990-to-2018

Chapter 3 Policies and Measures 181 replace with low carbon alternatives such as heat pumps in off gas grid non-domestic buildings from 2024 and homes from 2026. 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. 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. 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 Efficiency Scheme. 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 explore whether 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 for money assessment. 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 systems over the next decade. 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 biomethane 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, and affordable. New Buildings. We plan to introduce the Future Homes Standard, which will ensure that from 2025 all new homes in England are ready for net zero by having a high standard of energy

182 8th National Communication efficiency and low carbon heating installed as standard82. Similarly, we will introduce the Future Buildings Standard which will ensure that from 2025, new non-domestic buildings use low carbon heat and have the best fabric standards possible. 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 and Buildings Standards, in December 2021 we introduced an uplift in standards. Once the new standards come into effect, in June 2022, new homes will be expected to deliver around 30% less CO2 emissions compared to the previous standards and new non-domestic buildings will be expected to produce 27% less CO2 emissions. 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. To date, BEIS has made available a total of £6.4 million for compliance and enforcement of the PRS regulations. This includes providing £4.3m last financial year to 59 local authorities to support activity in these areas. We have also allocated a further £2m this financial year to be given to around 20 additional local authorities. 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 exemptions database to support local authority enforcement of these regulations. 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. 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 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 have also expanded and extended the Energy Company Obligation Scheme and the Warm Home Discount Scheme until 2026. 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 affordable. 82 The Net Zero Strategy, p.146,

Chapter 3 Policies and Measures 183 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 decarbonisation projects. 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 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. 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. There are a range of barriers to home energy performance improvements, which we will also need to address to help people Advice and 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 towards net zero. 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 will also launch a new Green Home Finance Accelerator (GHFA) 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. The GHFA will build on the lessons learnt from the recent Green Home Finance Innovation Programme which had a specific focus on green mortgage innovation. We are also working with the UK Infrastructure Bank to explore whether they can play a role in supporting lenders to scale up green home finance offers for

184 8th National Communication homeowners. Additionally, we will explore opportunities to simplify and improve the GD Green Deal framework to support the funding of energy efficiency measures. Rebalancing energy the costs placed on energy bills away from electricity to incentivise electrification across the economy and accelerate consumers and industry’s shift away from volatile global commodity markets over the decade. This will also ensure heat pumps are comparatively cheap to run over time. We will publish our proposals on how to do so in 2022, considering overall system impacts and limiting the impact on bills, particularly for Developing a workforce pipeline with the skills to meet the requirements of net zero 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.83 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. Supporting the British Energy Security Strategy The Energy Security Strategy builds on the commitments set out in the Prime Minister’s 10 Point Plan, the Energy White Paper, the Heat and Buildings Strategy and the Net Zero-rating VAT for the next five years on the installation of insulation and low-carbon heating, saving between up to £1000-£2000 on the cost of an air source heat pump. Expanding heat pump We will run a Heat Pump Investment Accelerator Competition worth up to £30m in 2022 to make British heat pumps, which reduce Setting clear energy performance standards varying by building type to be phased in 83 CITB (2021), ‘Building Skills for Net Zero’

Chapter 3 Policies and Measures 185 Catalysing a world-leading competitive low-cost green finance market to help property owners improve their properties stock • Doubling innovation funding for the development and piloting of new green finance oducts for consumers from £10m to £20m orking with the UK Infrastructure Bank to develop proposals in response to the strategic steer restating the urgent need to improve the energy efficiency oducing a scheme under which lenders will work to improve the energy performance of the properties against which they lend Improving consumer By summer we will launch a comprehensive Energy Advice Service on GOV.UK which will help consumers navigate what can be unknown territory to improve the energy performance of their homes. We will launch additional support for homeowners through telephone support and specific local area advice for energy consumers. Establishing a dedicated energy advice offering for smaller businesses to provide trusted advice on improving industrial energy efficiency. Empowering consumers to choose energy-efficient products We are bringing in new minimum standards and labelling requirements for a range of energy-using products and will formally consult on draft regulations at the end of 2022, early 2023. Reviewing planning barriers that households can face when installing energy efficiency measures such as improved glazing, including in conservation areas and listed buildings. This will be completed by the end of 2022 and ensure protection of local amenity and heritage, whilst making it easier to improve energy efficiency. Ensuring all new homes are designed so that smart meters can be fitted from the outset, in advance of the Future Homes and Buildings Standards by 2024. The Boiler Upgrade Scheme (BUS) The Boiler Upgrade Scheme will support the continued deployment of low carbon heat following the closure of the Domestic Renewable Heat Incentive (RHI). The scheme will provide capital grants for the installation of low carbon heat technologies in domestic and small non-domestic properties. The grant model will help customers overcome the high upfront cost of low carbon technologies when replacing existing fossil fuel systems. The BUS will provide grants of £5000 towards the installation and capital costs of air source heat pumps and biomass boilers, and grants of £6,000 for ground source heat pumps. Private Rented Sector Regulations As of April 2020, privately rented homes in England and Wales are required to meet the minimum standard of Energy Performance Certificate (EPC) Band E before they can be let, unless a valid exemption applies. Local authorities are the enforcement bodies for these regulations. Government committed in the Clean Growth Strategy to improve as many private rental homes as possible to EPC band C by 2030 where practical, affordable and cost effective, we consulted on this commitment in the winter of 2020/2021. We carefully analysed the responses received and we will publish a Government Response in due course. In the Net Zero Strategy, we stated that we plan to consult on options to upgrade homes in the owner occupier sector. More widely, we committed to consult on phasing in higher

186 8th National Communication minimum performance standards to ensure all homes meet EPC Band C by 2035, where cost-effective, practical and affordable. The Home Upgrade Grant provides grants to low-income households to upgrade the energy performance of the worst quality, off gas grid homes in England by installing multiple energy efficiency measures and low carbon heating. In the summer of 2021, the Government announced the launch of the Sustainable Warmth competition. This pot of money is worth over £500 million and comprises both the Local Authority Delivery scheme and the Home Upgrade Grant, applications for which closed on 4 August 2021. This funding will deliver energy efficiency upgrades to low-income households both on and off the gas grid. Homes with an EPC rating of D and below are eligible. Local Authority Delivery Scheme The Local Authority Delivery Scheme (LAD) is focussed on low-income households in homes that most need energy efficiency upgrades. The scheme is prioritising homes with low Energy Performance Certificate (EPC) ratings of D, E, F and G and targeted at households with a combined household annual low-income of no more than £30,000 who are most at risk Phase 1 allocated £200m in grants to over 136 Local Authorities for delivery by March 2022, with a managed closure to September 2022. It is forecasted that up to 20,000 homes Phase 2, allocated £300m to the five Local Net Zero Hubs, who work with their regional Local Authorities to continue to deliver energy efficiency upgrades to up to 30,000 homes. LAD Phase 2 is currently in delivery and BEIS will continue to work with the Net Zero HUBs to ensure that as many homes benefit from the scheme as possible. Phase 3, funding was allocated to successful LAs under the third phase of LAD (£287m) in December 2021 to January 2022, with delivery commencing from early 2022 Green Homes Grant Voucher Scheme Homeowners (both freehold and leasehold owner occupiers), and landlords could apply for vouchers of up to £5,000 towards the cost of installing energy efficient and low-carbon heating improvements in their homes.
Some homeowners on income-based or disability benefits were eligible for vouchers covering the full cost of improvements, up to a value of £10,000. The scheme opened on 30 September 2020 and closed to new applications on 31 March 2021, with scheme closure date set at 30 November 2021. Through the scheme the government contributed over £233 million towards the installation of over 49,000 energy efficiency and low carbon heating home improvement measures Public Sector Decarbonisation Scheme The Public Sector Decarbonisation Scheme provides grants for public sector bodies to fund heat decarbonisation and energy efficiency measures. The scheme supports the aim of reducing emissions from public sector buildings by 75% (compared to 2017) by 2037, as set out in the Heat and Buildings Strategy in October 2021. We have already made available over £1 billion through Phases 1 and 2 of the Public Sector Decarbonisation Scheme over 2020/21 and 2021/22, and a further £1.425 billion will be invested in the scheme over the financial years 2022/23 to 2024/25. Chapter 3 Policies and Measures 187 The 2021 Sustainable Warmth strategy announced a continuation of ECO from 2022 – 2026 and an expansion in the value of the scheme from £640mn/annum to £1bn/annum. In Summer 2021, government consulted on the 4-year £4bn successor scheme (ECO4) and published the consultation response in April 2022. The scheme focuses support by installing energy efficiency measures in low income and vulnerable and fuel poor households across Great Britain, living in energy inefficient homes. A minimum level of energy efficiency upgrade is required, for deeper improvements to homes. The Green Deal, launched in 2013, enables consumers to take out loans to pay for energy efficiency improvements on their properties, with repayments made through their energy bill. Repayments are made on a Pay-As-You-Save after the improvement has been made, the consumer begins to save energy, their energy bills are less than they would have been without the improvements, and these savings are used to repay the loan. In July 2015, Government announced there would be no further public investment in the scheme, but the scheme remains in place to support existing Green Deal Plans. Government will explore opportunities to simplify and improve the Green Deal framework to support the funding of Social Housing Decarbonisation Fund Demonstrator The Social Housing Decarbonisation Fund will upgrade a significant amount of the social housing stock currently below EPC C up to that standard, delivering warm, energy-efficient homes, reducing carbon emissions and fuel bills, tackling fuel poverty, and supporting green jobs. The 2020 Summer Economic Update announced the SHDF Demonstrator project, launched in 2020, which has awarded £61m of funding to social landlords across England and Scotland to test innovative approaches to retrofitting at scale, seeing around 2000 social homes improved to at least EPC band C and supporting around 1,200 local jobs. Social Housing Decarbonisation Fund Wave 1 The Social Housing Decarbonisation Fund will upgrade a significant amount of the social housing stock currently below EPC C up to that standard, delivering warm, energy-efficient homes, reducing carbon emissions and fuel bills, tackling fuel poverty, and supporting green jobs. The Government launched Wave 1 of the SHDF in August 2021. It will provide around £179m funding in financial year 21/22, delivering up to March 2023. The Non-domestic RHI scheme was open to commercial, industrial, public sector, not for profit and community generators of renewable heat since November 2011 and closed to new applicants on 31 March 2021. The Domestic RHI opened in April 2014 and was available to homeowners, private and social landlords, people who build their own homes, and assignment of rights investors who successfully registered with Ofgem. Following a 12 month extension which was announced in March 2020, the Domestic RHI closed to new applicants on 31 March 2022. This extension provided further support for the deployment of renewable heating technologies in domestic properties, ahead of the launch of the Boiler Upgrade Scheme. The extension also provided ongoing support for the supply chain during the Coronavirus (Covid-19) pandemic. By mid-2021 the RHI had accredited 21,655 non- domestic installation and 95,256 domestic installations. The total renewable heat generated

188 8th National Communication and paid for by accredited installation stands at 75,156 GWh. The RHI is expected to save approximately 137 MtCO2e of greenhouse gas emissions over the course of its lifetime.84 EPC Disclosure and Targets for Lenders We have consulted on the role that mortgage lenders can play in helping homeowners to improve the energy performance of their homes. The consultation proposed that lenders disclose information related to the energy performance of their portfolios and sign up to meet an improvement target. The target could be achieved by lenders offering low cost green finance products to customers (e.g. green mortgages, further advances), offering incentives (e.g. cashbacks), and providing information and advice to customers on the Green Home Finance Innovation Fund (GHFIF) Funded through the BEIS Energy Innovation Programme, the £1.8m GHFIF competition launched in September 2019 and completed in March 2022. GHFIF was designed to promote the establishment of green lending products for homeowners by supporting lenders to overcome the barrier to innovation posed by high initial development costs in an untapped green finance market. Three organisations were awarded grant funding to support the initial development and piloting of green mortgage products that incentivised energy efficiency retrofit in homes. The funded projects were led by two retail lenders and one fintech company. Two of the resulting ‘green lending’ products are now continuing in a Green Home Finance Accelerator (GHFA) The purpose of the GHFA programme is to drive innovation in the green lending market and support the establishment of a diverse range of green finance products and services which incentivise domestic energy efficiency and low carbon heating retrofit for both owner occupiers and private landlords.
The NZIP-GHFA programme will make up to £20m of grant funding available to support UK lenders to design, develop and pilot a range of innovative finance propositions (not simply green mortgages) enabling homeowners to decarbonise their homes and improve thermal comfort. Energy-related Products Policy Energy Labelling and Ecodesign aim to encourage uptake of the most energy efficient products and phase out the least energy efficient products from the market. Since 2019, we have introduced an energy label for commercial refrigeration and updated ecodesign requirements for welding equipment, electric motors and variable speed drives, washing machines, dishwashers, refrigeration, commercial refrigeration, lighting products and electronic displays. In 2021, the energy labels for lighting products, electronic displays, washing machines, refrigeration and dishwashers were also rescaled to aid consumer understanding and reflect technological progress. Circular economy requirements for a range of products were also introduced, contributing to a reduction in material waste. These regulations combined are estimated to save 4.5 MtCO2e by 2050 and provide consumers with savings on their energy bills. government/uploads/system/uploads/attachment_data/file/680624/ukia_20180029_en.pdf

Chapter 3 Policies and Measures 189 The Scottish Government published its Heat in Buildings Strategy in October 202185. The Strategy sets out a vision for the future of heat in buildings, and the actions Scotland is taking in the buildings sector to deliver its climate change commitments, maximise economic opportunities, and ensure a just transition to net zero emissions, including helping Policies in the Heat in Buildings Strategy build on those in the updated Climate Change Plan, setting out a highly ambitious vision for over 1 million homes in Scotland to convert to zero emissions heating by 2030 and the equivalent of 50,000 non-domestic buildings. Action to ensure this includes providing funding to make the uptake of zero emissions heating easier – for example through the Heat Networks fund and regulation, including the New Build Heat requiring new buildings from 2025 onwards to use zero direct emissions heating. A commitment has also been made to introduce regulations to increase uptake of zero emissions heating systems including minimum energy efficiency standards (equivalent to EPC C) in private-rented homes by 2028, and in owner occupied homes by 2033. To reduce emissions, housing needs to set challenging build and retrofit standards, and help people live in ways that are good for them now and for future generations. We have set enhanced standards for new build social homes to avoid locking in significant amounts of carbon, but we now need to ensure that all new homes are either low or zero carbon to run, or at a minimum future proofed for ease of later retrofit. Decarbonising our 1.4m existing homes is even more complex, we have some of the oldest housing stock in Europe and cannot repeat the mistakes of the past. The Innovative Housing Programme (IHP) has invested £155m into building 2,000 innovative, affordable and market homes across Wales. The programme is now being mainstreamed into core housing capital programmes. We will learn from the IHP programme to inform new build policy and practice. In this carbon budget period we will set challenging requirements Affordable homes built using Welsh Government grant funding will be expected to exceed standards set in Building Regulations, leading the way and driving market change. We acknowledge that retrofitting existing homes is a complex and iterative process, and homes are likely to need to go through several stages of retrofit work to reduce their carbon incrementally, embracing innovation and experimentation over time. Learning from our Optimised Retrofit Programme (ORP) will inform retrofit. ORP will act as proof of concept for approaches to both fabric and technology retrofit and establish a firm evidence base on which to develop our longer term retrofit strategy. Our principled approach is to target households with the worst thermal and energy efficiency ratings. Investment of £1.8bn in the Welsh Housing Quality Standard (WHQS) has already significantly improved the quality of social homes across Wales, including raising their energy efficiency rating to a minimum of EPC D. 93% of our 225,000 existing social homes now Our focus between 2021 and 2025 will be on optimising the thermal and energy efficiency of other existing Welsh homes. In deploying our optimised retrofit model, we will maximise air 85

190 8th National Communication tightness, eliminate thermal bridging, optimise insulation, solar gain and natural ventilation so reducing heat loss and making homes ‘fabric ready’. Individual homes are being assessed with building passports setting out their journey to zero carbon and retrofitted in a bespoke way to lower carbon emissions. We will incrementally extend our optimised retrofit approach beyond social homes, to the private rented sector and eventually owner-occupied homes. We will take a staged approach using the social housing sector and investment in it to lead the way for both new build and retrofit programmes. We will not push households into fuel poverty but rather lift households out of fuel poverty focusing on changing fabric and behaviours to save people money as well as saving the planet. Our policy commitments will be supported by financial investment in social housing capital grants to build 20,000 new, low carbon social homes over this term of Government, to drive up standards in existing social housing stock and to test and learn approaches to retrofit. Our approach to funding retrofit will be based on partnership and shared responsibility. We will prioritise use of public funds on the most vulnerable and those least able to contribute, developing ways to support those The policies and proposals for this sector have been set out under three broad mitigation areas of energy setting demanding standards for new build, and existing properties; low carbon heat; and behavioural shift and demand reduction.
Below are the key policies for Wales, more detail can be found in the Net Zero Wales Plan and in The Optimised Retrofit Programme (ORP) elsh Government’s ongoing development of retrofit policy and • Welsh Housing Quality Standard (WHQS) – Improving energy efficiency for elsh Government will continue to invest £108m per annum as a minimum, to support social landlords in meeting the new WHQS standard. Drawing on evidence from ORP the new WHQS 2022 standard will focus on Fabric First principles and seek to bring all social housing as close as feasible to EPC A or equivalent Part L of the Building Regulations provides guidance on the conservation of fuel and . It is Welsh Governments primary tool for raising minimum standards for new build housing and conversions. • Social Homes will lead by example being built to standards in elsh Government have made a commitment in its Programme for Government (PfG) and it will build 20,000 low carbon, social homes during this government term. • Developing Innovative construction techniques and increasing the use of While Part L sets the standard for what needs to be achieved in the construction of elsh Government have also invested £155m in the Innovative Housing Programme (IHP) over the last four years to work out how to best meet

Chapter 3 Policies and Measures 191 • Incentivising energy efficiency of homes through our Help to Buy – Wales chased using a Help to Buy Wales (HtBW) loan are market homes; they are not specifically developed for the scheme. This means builders will need to ensure all market homes meet new standards. Piloting Smart Flexible and Digitalised Systems to [maximise use of assets] elsh Government’s Smart Living (SL) initiative provides early support to develop place-based and innovative solutions to supply flexible, digital development Develop behaviour change interventions alongside our wider programmes elsh Government will continue to invest in specific behaviour change research relating to low carbon living. • Supporting the owner-occupied sector to improve energy efficiency and arm Homes Programme is the Welsh Governments key delivery mechanism in this area. Since 2011, Welsh Government has invested over £394m, benefitting more than 67,000 homes. It will continue to fund the current programme, before taking the new programme forward from 2023. The Department of Finance is planning a phased programme of uplifts to NI’s building regulations 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. As an interim step to move towards net zero for 2050, a phase 1 uplift to new build standards took effect from 30 June 2022. A phase 2 discussion exercise will gather evidence, including whether an early introduction of requirements based on low carbon heating might be feasible in a phase 3 uplift in 2023. Full implementation of ‘net zero ready’ is anticipated by 2026/27. These phases will take into account developments in other administrations to address standards for work to existing buildings and in related areas, such as ventilation, overheating and, potentially in collaboration with the Department for Infrastructure (DfI), electric vehicle charge-point provisions. There is a need to remain alert to emerging developments in areas such as embodied carbon, fuel price assumptions and grid impacts. nergy Efficiency and Decarbonisation of Heating The Department for Communities (DfC) and the NI Housing Executive (NIHE) are working collaboratively to achieve the aim of mitigating the effects of climate change, reduce fuel poverty and improve health through a variety of projects, initiatives and strategies. There is a need for improved energy efficiency, decarbonisation of heating and transformational behaviour change through education and empowerment so that householders understand how to take full advantage of new sustainable technologies and solutions. There are a number of current initiatives ongoing as The Energy Efficiency in Social Housing project is a multi-million-pound investment programme to improve the energy performance of almost 1,900 homes. This has been made possible by funding of c. €23 million secured from the European Regional Development Fund

192 8th National Communication (ERDF) through its Investment for Growth and Jobs Programme for Northern Ireland 2014- 2020. A further €22 million of funding is being invested by NIHE. This six-year €45 million programme is expected to be completed by September 2023. The schemes no fines properties, improving thermal efficiency in aluminium bungalows through the provision of new external wall cladding, new double glazing and improved insulation measures. The Rural-Led Energy Transition (RULET) Pilot is a joint initiative between the NIHE and Ulster University, within SPIRE 2 – an EU funded project aimed at reducing or eliminating the risk of low-income households being left behind in the energy transition. RULET has evolved from the learning points of the HANDIHEAT 86 pilot project in County Fermanagh. RULET’s focus is on how domestic electrical heating systems, combined with energy storage, can be delivered and operated at scale. Another consideration is the potential to create significant system value by managing high levels of wind penetration into the electric network. Northern Ireland has world-leading levels of wind energy; however, when wind generation exceeds electricity demand, the output from wind turbines is dispatched down – ‘tuned off’. In 2020, 15% of available wind energy with a retail value of over £80m, was dispatched down. This has potential to benefit low The RULET project commenced on site in winter 2021 and monitoring will continue over the Through a 300 Unit Low Carbon Programme, NIHE will deliver a thermal improvement oved energy efficiency measures, oved householder education to effect behaviour change, The aim is to commence this programme in winter 2022/23, complete installations by winter 2023/24 and monitor until late 2024. The objective is to compile a comprehensive suite of data and key learning points to help inform a revised Decarbonised Heating Policy for the Landlord and the private grants sector.
It is expected that this change will begin to make a positive contribution toward a net zero future from the mid-2020s. NIHE’s New Build Pilot is exploring the viability of Modern Methods of Construction as a means of helping to increase the supply of social housing in Northern Ireland. In this research pilot, NIHE is undertaking the construction of a small development of new social housing units in Belfast. This scheme will provide 6 semi-detached dwellings (2 bed, 3 person) and will incorporate the following Modern Methods of Construction (MMC) • Ultra-low energy building techniques • Mechanical ventilation and heat recovery system with integral heat pump. 86 The HANDIHEAT Project, which is now in its final year, continues to contribute to improvements in energy efficiency by demonstrating the effectiveness of renewable energy solutions in isolated rural communities across northern Europe, acting as Lead Partner. Chapter 3 Policies and Measures 193 The aim is to explore if a building can produce net zero greenhouse gas emissions in use, known as ‘zero carbon in use’. Embodied energy can also be reduced by using low-carbon building materials and construction methods. The standards explored in this pilot far exceed current building regulations. The hope is that building to high energy standards now will futureproof new builds and avoid the need for expensive retrofit to achieve Net Zero. 3.11.5.4 Fuel Poverty and Housing Supply in NI The Department for Communities’ Affordable Warmth Scheme targets low income households in the owner occupied and private rented sectors most at risk of fuel poverty and provides a range of heating and insulation measures to improve the energy efficiency of a property. Changes to the eligibility criteria for the Scheme were implemented from 1 July 2021 to increase the income threshold from £20,000 to £23,000 and remove disability benefits from the calculation of income. The Affordable Warmth Scheme is finding and helping households which need more intensive help and is spending on average almost £5,100 per household on energy efficiency improvements. The Scheme aims to assist about 3,200 low income households each year. DfC’s Fuel Poverty Strategy, ‘Warmer Healthier Homes’ will be updated to align with the Executive’s Energy Strategy which was published in December 2021, the emerging Green Growth, Environmental and Housing Supply strategies and the very recent Climate Change legislation. This will ensure that there is a just transition to net zero, in line with climate change obligations, that current inequalities are addressed, and further inequalities are not created. Currently increasing global high energy prices present difficulties for aligning fuel poverty, energy and climate change strategies with an associated potential impact on efforts to reduce carbon and switch from fossil fuels to renewable heat sources. A draft Housing Supply Strategy has been produced following an extensive public consultation process. It is anticipated that the Strategy will be brought forward for consideration by the NI Executive in due course. Work has commenced in parallel on the action planning process that will support the Strategy. In Northern Ireland a Private Tenancies Bill, which currently received Royal Assent in May 2002, contains an enabling power for the Department for Communities to bring forward regulations which will set a minimum EPC rating which a privately rented property must Domestic transport has the largest share of UK greenhouse gas emissions of any sector across the economy, at 24% in 2020. 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. Removing exhaust emissions from road transport is a clear priority and we must continue the progress we have made to date. We have committed to set ambitious but achievable phase out dates for every type of road vehicle and are making progress designing and delivering our new net zero emission vehicle mandate for new cars and vans. This will set targets for a percentage of manufacturer’s new car and van sales to be zero emission each year from 2024. Alongside the Transport Decarbonisation Plan, we published the 2035 Delivery Plan outlining the key timelines, milestones, and progress towards our commitment to accelerate

194 8th National Communication the shift to zero emission vehicles. In March 2022, we published our Electric Vehicles Infrastructure Strategy87 to set out our vision for the rollout of charging infrastructure. Over 750,000 plug-in electric vehicles have been sold in the UK since 2010. From 1 January to 30 April 2022, 14.4% of all new cars sold in the UK were battery electric. 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 2021, 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 2021. ol and diesel cars and vans from 2030; from 2035, all new cars and vans must be zero emission at the exhaust. oduce 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. ake 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. e the UK’s charging infrastructure network is reliable, accessible, and meets the demands of all motorists. We have published an Electric Vehicle Infrastructure Strategy, setting out our vision for infrastructure rollout, and roles for the public and private sectors in achieving it. Building on £1.9 billion previous funding, we have committed an additional £620 million to support the transition to electric vehicles. The funding will support ollout of charging infrastructure, with a particular focus on local on-street residential charging, and targeted plug-in vehicle grants.
• Build a globally competitive zer o 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 gover nment car and van fleet zero emission by 2027. ake action to increase average road vehicle occupancy by 2030 and reduce the barriers to data sharing across the transport sector. om the use of low carbon fuels, including by increasing the main Renewable Transport Fuel Obligation (RTFO) target. ease the share of journeys taken by public transport, cycling and walking. • Support decarbonisation by investing more than £12 billion in local transport • Invest £2 billion in cycling and walking, building first hundreds, then thousands of egated 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 87

Chapter 3 Policies and Measures 195 • 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. e 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. o 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 recently launched the UK Shipping Office for Reducing Emissions (UK-SHORE) to transform the UK into a global leader in the design and manufacturing of clean maritime technology. o-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. We will continue to work closely with Devolved Administrations, local authorities and other regional bodies, as we work towards our shared goal of achieving net zero. 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. 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 everyday life for us all. We will invest £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 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. 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. We have begun to 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%

196 8th National Communication of England’s local operator bus fleet. This included £71m in 2021 to support 335 new zero emission buses in 5 areas and £198.3m in 2022 to provide 943 buses. 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 charging infrastructure. 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-zero 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. 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 and significant improvement to regional city public transport networks with the aim of making them as good as London’s. We are working with industry to modernise fares ticketing and retail and encourage a shift to rail and cleaner and greener transport journeys.
The Great British Railways White Paper 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. The Great British Railways White Paper will also encourage more rail freight by providing the right conditions for industry growth, with better coordination, modern contracts, Cars, vans, motorcycles, and scooters 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 exhaust. Between 2030 and 2035, new cars and vans will only be able to be sold if they offer significant zero emission capability. 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 year from 2024. In April 2022 we published a consultation on proposed policy design features for the mandate including the level of ZEV uptake. We will continue to regulate the exhaust 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. How and when targets will be set and enforced 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

Chapter 3 Policies and Measures 197 to electrification through the Automotive Transformation Fund (ATF). We are allocating a further £350 million of this 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 technologies. We will soon consult 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 We aim for 25% of the government car fleet to be ultra low emission by December 2022 and all the government car and van fleet zero emission by 2027. We will ensure the UK’s charging infrastructure network meets the demands of its users. We previously announced £1.3 billion of investment to accelerate the rollout of charging infrastructure on motorways, on streets, in homes and workplaces. The Government has recently committed an additional £620 million of funding to support the transition to electric vehicles. In 2022, we published an EV infrastructure strategy, setting out our vision for infrastructure rollout, and roles for the public and private sectors in achieving it. 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. 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. 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. In March 2022, the Government published a consultation on developing the UK’s Emissions Trading Scheme (UK ETS). This included a proposal to expand the UK ETS to include domestic maritime emissions. We have extended 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 under the RTFO. We have launched a consultation on the appropriate steps to support and, if needed, mandate the uptake of shore power in the UK. We have launched the £20 million Clean Maritime Demonstration Competition (CMDC) to fund feasibility studies and technology trials. We have also launched a UK Shipping Office for Reducing Emissions (UK-SHORE) alongside £206m of new funding to accelerate research into and development of clean maritime technologies. UK-SHORE aims to transform the UK into a global leader in the design and manufacturing of clean maritime technology. In 2021, 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 plan to publish our Jet Zero Strategy

198 8th National Communication later in 2022. We have also consulted on a target for UK domestic aviation to reach We are supporting the development of new and zero carbon UK aircraft technology through the Aerospace Technology Institute (ATI) programme and are funding 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 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 to certify new fuels. 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 mandate ambitions. In 2021 we announced that – following consultation – we will end the sale of new non-zero emissions HGVs less than or equal to 26 tonnes by 2035, and that from 2040, all new HGVs must be fully zero emission at the tailpipe. In May 2022 we also announced that £200m will be invested to launch the world’s largest fleet of zero emission HGVs. An extensive zero emission road freight demonstrator programme will help decarbonise the UK’s freight industry with initial competitions for battery electric and hydrogen fuel cell technology We will also 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 W aterborne Freight Grant Schemes; oducing a rail freight growth target; and es to support more sustainable freight in urban areas. Delivering decarbonisation through places 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. 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. 88

Chapter 3 Policies and Measures 199 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 We will embed transport decarbonisation principles in spatial planning and across transport policy making. In 2020, 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 carbon emissions. Maximising the benefits of sustainable low carbon fuels We have increased the RTFO main obligation 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 modes to 2050. Hydrogen in a decarbonised transport system We expanded the RTFO to incentivise the use of renewable hydrogen in maritime and rail in 2018. As set out clearly in our 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. We invested £3 million in 2021 to establish the UK’s first multi-modal hydrogen transport hub in Tees Valley. The funding kick-started activity across the region, supporting collaborative R&D pilot trials that demonstrate hydrogen technology solutions across transport modes, forging new industry and academic partnerships. Future transport – more choice, better efficiency 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. 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

200 8th National Communication 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 endtoend journeys. The Scottish Government is committed to decarbonising all forms of transport, recognising that this is currently the highest emitting sector of the economy.
Scotland has committed to reducing car kilometres by 20% by 2030 and a draft route map89, published in January 2022, provides the initial framework of measures identified as required to deliver this ambitious commitment. The Scottish Government will also phase out the need for new petrol and diesel cars and vans by 2030. Modal shift to active travel and public transport is also being encouraged, including through the Young Person’s Free Bus Travel Scheme, providing free bus travel for people under the On public transport, the Scottish Government has committed to decarbonising rail services by 2035 and will work with the Bus Decarbonisation Taskforce, comprised of leaders from the bus, energy and finance sectors, to ensure that the majority of new buses purchased from For aviation, the Scottish Government has committed to work to decarbonise scheduled passenger flights within Scotland by 2040, and is supporting the trialling and introduction of zero and low emission aircraft operating across Highlands and Islands airports. Transport has a significant role to play in helping Wales reach net zero and generating wider benefits across health, air quality, accessibility and the economy. Through the policies and actions set out in the Net Zero Wales Plan and in ‘Llwybr Newydd’, our Wales Transport Strategy, we will put people and climate change at the front and centre of our Llwybr Newydd sets our vision for an “accessible, sustainable and efficient transport system” built on three priorities. Firstly, we will plan ahead for better physical and digital connectivity, more local services, more home and remote working and more active travel, to reduce the need for people to use their cars on a daily basis. Secondly, we need an integrated transport system that works for everyone, where people and goods can move easily from door-to-door by accessible, sustainable and efficient transport services and infrastructure. This means significant investment in sustainable modes, such as bus, rail and active travel, to create services that people want to use, can use and do use. Thirdly, we will encourage people to make the change to more sustainable transport by making it more attractive and more affordable and by adopting innovations that make it easier to use for everyone. For the journeys which cannot be made by active travel, we will also need to see a rapid shift towards zero emission technologies in vehicles. This will happen first in cars, vans, trains and buses, later in HGVs, and finally in aeroplanes and ships. In the near future, these will be cheaper to own and run than existing petrol and diesel vehicles. Fewer cars on the roads and in our towns and cities will reduce congestion, reduce the need for road building and allow us to repurpose land used to accommodate cars for potentially transformative urban realm improvements. Zero emission vehicles will result in reduced 89

Chapter 3 Policies and Measures 201 concentrations of nitrogen dioxide, which harm our health, and reducing incidences of cardiovascular disease, respiratory disease, some cancers and Type II diabetes. Overall, as a result of the uptake of zero emission vehicles the Welsh economy is expected to benefit from annual net cost savings against the baseline of between £730 million and The policies and proposals for this sector have been set out under three broad mitigation areas of demand reduction and modal shift; technological options available and the uptake of transport with low or zero emissions; and improvements to fuel efficiency. Below are the Welsh Government’s key policies; more detail can be found in the Net Zero Wales Plan and in Enable people to work at or near to home elsh Government has stated its long-term ambition to enable around 30% of Welsh workers to work remotely, at or near to home, on a regular basis beyond the Coronavirus (Covid-19) pandemic. Increase trip mode share of Active Travel from a current estimated proportion of 27% to 33% by 2030 and at least 35% by 2040 elsh Government are continuing to invest more than ever in active travel routes and facilities to help local authorities create a comprehensive network of routes. It has an ambition to invest significantly in active travel between now and 2040. Increase trip mode share of public transport from a current estimated proportion of 5% to 7% by 2030 and 13% by 2040 elsh Government are prepared to take significant action in both bus and rail as the core network of services, as well as embracing technology and emerging modes of shared transport to make public transport a more attractive, practical and affordable Plan for and invest in EV charging infrastructure elsh Government’s EV charging strategy was published in March 2021. Its approach to EV charging will ensure that the charging infrastructure in Wales is on a par with the best in comparable areas of the UK In addition to the actions to r eform bus governance, we are committed to deliver on our targets to decarbonise the bus fleet. • All taxis and private hire vehicles to be zero emission by 2028 elsh Government have committed to deliver a zero tailpipe emission taxi and • Decarbonise the Rail network ecommendations, a rolling programme of OLE electrification in Wales is recommended to form the backbone of the rail network. The Department for Infrastructure (DfI) is working with local councils to ensure that Local Development Plans (LDPs) and planning decisions take account of existing regional strategic planning and transport policies and guidelines to support active travel choices such as 90 Welsh Government (2021), ‘Electric vehicle charging strategy for Wales’, electric-vehicle-

202 8th National Communication walking, wheeling, cycling and public transport in preference to the private car. This includes building a safe and accessible cycling infrastructure by implementing the Belfast Cycling Network 2021, a bicycle network for other urban areas and a Strategic Plan for Greenways which will be delivered by councils. LDPs are vitally important documents that establish a 15 year framework for the development of council areas.
A proactive approach is encouraged in their drafting and adoption promotion of Green and Blue Infrastructure; reduction of greenhouse gas emissions, carbon offsetting; and reduction of flood risk. Promoting the increased use of public transport is also progressing through projects such as the proposed extension of the Belfast Rapid transit network, development of the Belfast and Foyle Transport Hub and the creation of over 20 Park and Ride facilities across Northern Ireland which will deliver an additional 4,495 spaces. DfI has also invested over £100M in Hydrogen zero emission and electric buses with Derry to become one of the first cities in the UK and Ireland to have a fully zero – emission fleet. Work is being taken forward to support the introduction of Ultra Low Emission Vehicles to Northern Ireland through delivery of the transport elements of the Northern Ireland Executive’s Energy Strategy, including development of a Local Transport Strategy and the establishment of an Electric Vehicle (EV) Task Force to review the provision of public EV charging infrastructure in Northern Ireland. 3.13 Natural resources, waste and F-gases 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 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 almost over 3.13.1.1 Agriculture, forestry, and other land use (AFOLU) 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 outcomes in England.91 Forestry and woodlands currently act as carbon sinks and, in 2019, captured about 4% of our emissions.92 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 13,290 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. Four new community forests were launched, Plymouth and South Devon in June 2021 and North- East, in July 2021 and Cumbria Coastal in November 2021. 91 5 Defra (2020), ‘Agricultural Transition Plan 2021 to 2024’, publications/ agricultural-transition-plan-2021-to-2024 92 BEIS (2021), ‘Final UK greenhouse gas emissions national statistics 1990 to 2019’, government/statistics/final-uk-greenhouse-gas-emissions-national-statistics1990-to-2019

Chapter 3 Policies and Measures 203 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 atural Resources, waste, and F-gases Waste management emissions consist of waste disposed to landfill sites, waste incineration without energy recovery, and the treatment of wastewater. 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 resources more efficiently. • 75% of farmers in England will be engaged in low carbon practices by 2030, rising nment is introducing farming schemes, including the new environmental land management schemes (Sustainable Farming Incentive (SFI)94 Local Nature Recovery95 and Landscape Recovery96), which will provide a powerful vehicle for achieving net zero, and goals of the 25 Year Environment Plan.97 • Incr ease investment in industry-led research and development into solutions to help deliver net zero in agriculture and horticulture, including through the Farming reble 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 consulted on a long-term statutory tree target in England within the public consultation on Environment Act targets; we have proposed that tree canopy and woodland cover increases from 14.5% of land cover e have boosted 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 e at least 35,000 hectares of peatlands in England by 2025, through the Nature for Climate Fund. Restore approximately 280,000 hectares of peat 93 Defra (2018), ‘Resources and waster strategy for England’, statistics/final- uk-greenhouse-gas-emissions-national-statistics-1990-to-2019 94 in-2022/sustainable-farming-incentive-how-the-scheme-will-work-in-2022 95 will-work/local-nature-recovery-more-information-on-how-the-scheme-will-work 96 work/landscape-recovery-more-information-on-how-the-scheme-will-work 97 Defra (2018), ’25 Year Environment Plan’, year-

204 8th National Communication in England by 2050, including via funding from the new environmental land ee planting has been mobilised 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 Peatland Code (including expanding it to cover more peatland habitats). e 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.
o 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 ent requirements and international commitments. ough the Environment Act 2021 we have legislated 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 Biodiversity co-benefits and other envir onmental objectives are maximised alongside griculture, forestry, and other land use (AFOLU) We have begun the Agricultural Transition Period from the Common Agricultural Policy (CAP) to Environmental Land Management schemes. 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 support action at farm level to make farming more sustainable, incentivising 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 support more radical and large-scale approaches to producing environmental and climate goods by funding long-term land use change projects such as large-scale tree planting, and peatland restoration projects. Net zero is a key priority of, and embedded across, the delivery of our environmental land management schemes. Take up of these schemes will be voluntary and will require a shift in the practices of landowners and farmers. We are designing our schemes in partnership with farmers and landowners, ensuring we maximise our reach and bring the voice of farmers into our

Chapter 3 Policies and Measures 205 work, including through appropriate payment rates, in line with the Payment Principles.98 Participants will still be able to benefit from private sector funding, for delivering additional benefits. We have a comprehensive programme of engagement in place. Advice and guidance will also be provided to support participants to adopt new practices. Tests and trials for the schemes began in 2020 and pilots are currently underway. We have seen a 40% increase in Countryside Stewardship application (which we see as a bridge to LNR), and we have received the targeted number applications for the SFI pilot. The schemes are due to be rolled out in full by 2024.99 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 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 private investment. We have boosted 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. 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 scheme which launched in 2021 will provide further grants to farmers, enabling them to invest in equipment, technology and infrastructure that will improve their profitability and benefit the environment. 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 restore habitats. 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 opened 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. 98 Defra (2021), ‘Environmental land management payment principles’, gov.uk/ government/publications/environmental-land-management-schemes-paymentprinciples/environmental-land- management-schemes-payment-principles 99 Defra (2021), ‘Sustainable Farming Defra’s plans for piloting and launching the scheme’, sustainable-farming-incentive-defras-plans-for-piloting-and-launchingthe-scheme

206 8th National Communication We will encourage and support increased agroforestry (trees and agriculture coexisting on the same land) through our environmental land management schemes, enabling agricultural land to sequester emissions while delivering other environmental benefits, such as air quality and biodiversity, and providing alternative income streams for farmers from trees. 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 such products. 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 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 Government is also committed to exploring the monitoring, reporting, and verification of emissions in the agriculture sector and is currently carrying out research on carbon audit tools which are a potential means of gathering data to support this. The consultation to develop the UK ETS, published in March 2022, contains a call for evidence to improve the measuring of agricultural emissions to support and inform future decarbonisation policy more widely. The government is not, however, proposing to expand the Uk ETS to include agriculture. 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. 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. 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 we launched a consultation on potential legislative measures (e.g. a sales ban) last year, which we will respond to this year. 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. 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

Chapter 3 Policies and Measures 207 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 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 launched last year has been open to supporting applications for R&D in paludiculture, with more competitions to 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 have consulted on a long-term statutory tree target in England within the public consultation on Environment Act targets; the consultation proposed that tree canopy and woodland cover increases from 14.5% of land cover now, to 17.5% by 2050. We intend 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 environmental benefits. 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 encourage woodland creation. In 2020-21 we funded new partnerships with Northumberland County Council, Trees 4 Cornwall, and England’s network of ten Community Forests. Four new community forests were launched, Plymouth and South Devon in June 2021, North-East, in July 2021 and Cumbria Coastal in November 2021. 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 natural hazards. 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, including oviding financial support to develop innovative timber products through the

208 8th National Communication • W orking 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 use of timber; ease in the use of certain modern methods of construction, some forms of which can encourage use of sustainable materials such as timber; orking with Homes England and delivery partners to explore ways to increase timber use in the delivery of housing programmes; easing public demand for sustainably sourced timber through esearch into barriers to uptake of timber, including looking at timber strength grades and the fire resistance of engineered timber structures. The 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 and 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, including air quality. 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 households from 2025. 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 Act. 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 emissions from 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

Chapter 3 Policies and Measures 209 (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 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 Act. For further information on our plans for resource efficient manufacturing see the Industry chapter. 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 Act 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 Action Week. 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 to the values on record. 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 and steady reductions 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 UN Montreal Protocol’s Kigali Amendment target of reducing HFC consumption by 85% by 2036, as well as the F-gas Regulation’s target of a 79% 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 domestic requirements and international commitments, including by looking at what additional reductions in F-gas use can be made to help the UK meet net zero by 2050. 210 8th National Communication In agriculture, the Scottish Government’s National Test Programme100, announced in October 2021, will support Scotland’s farmers and crofters in becoming world leaders in sustainable and regenerative agriculture. Advice and support for farmers and crofters on how to mitigate their emissions is provided through the Farm Advisory Service101, Farming for a Better Climate102 and Farming and Water Scotland103. Appreciating that Scotland’s landscape and natural environment is one of its’ greatest national assets, and has a vital role to play in meeting its’ ambitious climate change targets, the Scottish Government has committed to significant increases in woodland creation and peatland restoration. The Scottish Government is now aiming for 15,000 hectares of tree planting per year in 2022/23, 16,500 in 2023/24 and 18,000 a year in 2024/25. Scottish Forestry and Forestry and Land Scotland are working with investors, carbon buyers, landowners and market intermediaries to increase private investment in new woodlands in order to increase the woodland carbon market by at least 50% by 2025. The Scottish Government is also committed to restoring 20,000 hectares of peatland a year, and will work closely with delivery partners, landowners, managers, farmers and crofters to continue to In waste, the Scottish Government is currently developing a route map with stakeholders to achieving Scotland’s ambitious targets to end landfilling of biodegradable municipal waste by 2025, reduce the percentage of all waste sent to landfill to 5% by 2025 and recycle 70% of all waste by 2025. It is seeking to meet these through a Recycling Improvement Fund and a Route Map, a consultation that will be published in May 2022. The Scottish Government will also consult on proposals for a new Scottish Circular Economy Bill, to underpin measures that require primary legislation. Agriculture is at the heart of the economic, environmental, cultural and social fabric of Wales. Welsh farmers hold a unique position in society, recognised for their role in producing a supply of safe, high quality food from primarily marginal land using predominantly non-intensive systems with grass and rainwater to rear animals. Agriculture and food production rely on natural processes, and so will always cause some degree of greenhouse gas emissions; in particular, livestock will always emit some greenhouse gases. Welsh Government’s ambition and challenge is to continue to reduce greenhouse gases by improving efficiencies on farm to achieve a cumulative effect whilst maintaining the production of high quality and sustainable food and it will be important for all farmers to continue to adopt low carbon technologies as they become available. Delivering the reductions that are needed will mean our landscape will continue to evolve as our use of land changes. Welsh Government will also need to work collaboratively to deliver new woodland, creating the opportunity for communities, farmers and other landowners to be at the heart of creating a wood economy. Delivering this vision will require land use change equivalent to around 10% of agricultural land in Wales, and farmers have an important role to play. 100 102 103

Chapter 3 Policies and Measures 211 3.13.4.1 S ustainable Farming Scheme (SFS) Wales’s second carbon budget period (2021–2025) covers a time of transition for the sector as it develops and implements future domestic agricultural policies outside the EU. The Agriculture (Wales) White Paper, published in December 2020, outlined proposals for what may be the biggest change in agriculture policy for decades, setting out its proposal to introduce primary legislation which will establish Sustainable Land Management (SLM) as the framework for future agriculture support. This approach reflects the use of land for food production, whilst ensuring natural resources are preserved and enhanced for Sustainable Farming Scheme (SFS) oposed SFS will provide support to farmers – both financial and advisory – which will be targeted at outcomes not currently rewarded by the market. It is proposed the fundamental change to the current Basic Payment Scheme will be the level of payment being linked to the outcomes delivered by a farmer through undertaking a range of management actions on farm. elsh Government’s planned support for transformation in the sector is reflected in the range of policies and proposals set out below which, together with a range of pilots and interventions supporting the transition to the Sustainable Farming Scheme, will encourage the uptake of low carbon farming practices quickly and at scale. Widespread adoption of all appropriate low carbon practices will combine to reduce overall farm carbon footprint. Regulations to reduce agricultural pollution ater Resources (Control of Agricultural Pollution) (Wales) Regulations 2021 have been developed primarily to prevent the pollution of watercourses, the Regulations are also a key part of reducing atmospheric emissions from agriculture.
Glastir is the current five year whole-farm sustainable land management scheme, fering payment for the delivery of specific environmental goods and services and contributes towards tackling emissions from agriculture. A total of £40m was made available under the FBG through the EU Rural ogramme to help farmers invest in new equipment and machinery. • Sustainable Production Grant (SPG) fered a maximum 40% grant contribution (from £12,000 to £50,000) towards capital investments in equipment and machinery which have been pre-identified to specifically support famers to address and safeguard nutrient management and improve water, soil and air quality by reducing the impacts of Wales Animal Health and Welfare Framework (WAHWF) AHWF sets out our plan for continuing and lasting improvements in standards of animal health and welfare for kept animals, whilst also helping to protect public health and contributing to tackling the climate emergency. Our goal is for all livestock farms in Wales to use Animal Health Planning as an integral part of their

212 8th National Communication • Red Meat Development Programme ogramme has three strands crucial to the red meat sector’s future competitiveness, success and sustainability. From farm to fork, the projects contribute to an efficient red meat industry, leading to less wastage and therefore a reduction in greenhouse gases emitted from the supply chain. Dairy Improvement Programme (DIP) , funded by the Welsh Government through the Rural Development Programme is a £6.5m, five year programme (2014-2020) delivered by the Agricultural and Horticultural Development Board (AHDB). It delivers two distinct projects, Herd Advance and Strategic Dairy Farms which aim to increase the performance, health and resilience of the Welsh dairy sector. Contracted from October 2015 until August 2022, Farming Connect is a £28m ogramme, providing subsidised independent, tailored business support and technical advice. The Advisory Service, an element of the wider Farming Connect Programme, provides advice on how to achieve optimum results from livestock, which in turn helps to reduce emissions. Measures to release land (sharing agricultural land in Wales) Changes in consumer and farmer behaviour can r elease land from agriculture whilst maintaining an improved food production sector. Improving efficiencies on farm as well as some small changes over time to diet can also release land within Wales. e have set out our proposal to establish SLM as the framework for future agriculture support by way of the Agriculture Bill. It is proposed that SLM will reflect the use of land for production, whilst ensuring our natural resources are preserved and enhanced for future generations. ch, Welsh Government announced a package of support for farmers, foresters, land managers and food businesses worth over £227 million over the next three financial years to support the resilience of the rural economy and our and Use, Land Use change and Forestry (LULUCF) in Wales The LULUCF sector is the only one in the second carbon budget period with the capability to remove emissions from the atmosphere. Locking up atmospheric carbon through plant photosynthesis is the only available and functioning mechanism we have to tackle emissions from other sectors. To meet legislative targets, Wales must protect ancient woodlands, manage its soils better and affect a step change increase in woodland creation. Welsh Government want to plant 43,000 hectares of new woodland by 2030 in this decade of action and 180,000 hectares by 2050, aligning with the Balanced Pathway set out by the CCC. Planting more trees will capture and store carbon, but can at the same time provide a wide range of other benefits to Wales, including creating ‘green’ jobs, helping to address the nature emergency, increasing well-being, and mitigating flooding and air quality issues. Many of the trees planted will contribute to the new National Forest for Wales. As well as increasing woodland creation, Welsh Government are committed to increasing other natural carbon stores. Restoring and maintaining peatlands in good ecological condition will capture and store carbon, and also sustain their rich biodiversity. Over the next 5 years

Chapter 3 Policies and Measures 213 it will aim to restore 600-800 hectares of degraded peatland each year through its National The policy action in this area focuses on two broad areas of increasing tree cover and safeguarding and increasing carbon stores and reducing greenhouse gas emissions. Below are the key policies areas for Wales, more detail can be found in the Net Create a National Forest for Wales Over the next five years we plan to cr eate 30 new woodlands and 100 Tiny Forests to form part of the National Forest. This year we will consult on the long- term strategy, organisational principles, delivery and funding models for the ovide payments to landowners to plant trees in Wales over the next two years. We opened a new window in September 2021 to allow more applications for this funding and ensure the full budget is spent. Implementing a peatland restoration Programme ales’ first national peatland action programme (NPAP) outlines a plan of action to be taken over the next five years with six priority themes. The programme will target those peatland bodies most in need of restoration with the aim of delivering 600- 800 hectares of restoration per year. New Sustainable Farming Scheme (Woodland Strand) elsh Government intends for the new sustainable farming scheme to provide payments to farmers who choose to deliver positive benefits from planting and managing woodland on their farms. Develop a New Timber Industrial Strategy for Wales imber Industrial Strategy will seek to identify priority interventions across the timber supply chain to develop a wood economy and encourage greater use of The vision for waste in Wales is by 2050 everything will be reused or recycled. Beyond Recycling – a strategy to make the circular economy in Wales a reality was published by the Welsh Government in March 2021 and sets goals for zero waste to landfill by 2025 and zero waste (100% recycling) by 2050. This means that after 2025, there will be no need for new landfills for waste generated in Wales.
This vision delivers all sorts of benefits to health, to the well-being economy, to society as well as to our emissions. In the short term and in this carbon budget, key actions from the strategy will drive further emissions reduction as part of the wider range of cross-government actions, which set us firmly on the path to a Wales already has global recognition as a leader in recycling – in 2020-21 Welsh Local Authorities achieved a municipal recycling rate of 65%. This includes universal separate weekly food waste collection from households, which through anaerobic digestion generates valuable renewable energy. By increasing recycling further, Wales will not only reduce emissions in the sector but will contribute to wider systemic change. Increasing recycling for example means making more recycled material available to be used in new products, thereby reducing emissions elsewhere and reducing the need for virgin raw materials. It can also improve our communities and our economy by helping to shorten supply chains, improve

214 8th National Communication efficiency, create employment and increase competitiveness. Recycling, re-use and repair also provide opportunities for communities to come together to share resources and revitalise the places we live in. Fundamentally, reducing our waste and making things last longer can also save citizens and businesses money. The following policies and proposals set out how Welsh Government will continue its action to reduce landfill and maximise recycling to prevent waste from arising in the first place as part of its wider circular economy strategy. For Carbon Budget 2, as part of our action to reduce landfill overall we will halve the amount of avoidable food waste and reduce the landfilling of biodegradable waste in elsh Government’s Beyond Recycling Strategy highlights how it will strive to achieve the highest rates of recycling in the world. For Carbon Budget 2, this means it will achieve at least a 70% recycling rate for all major waste streams (household, industrial, commercial and construction). elsh Government launched the Be Mighty Campaign which asked everyone to make small but important changes in how they recycle with the aim of becoming number one in the world rankings. Further increase CH4 capture and utilisation in Welsh landfill sites by 2030 All operational landfills in Wales have been required to capture and utilise landfill gas since 1999. In Wales, this is implemented through the Environmental Permitting (England and Wales) Regulations 2016. How we manage resources has never been more important. The pandemic has shown us that the materials we use cannot be taken for granted. To effectively tackle the climate emergency and nature crisis we must address the unsustainable consumption of resources Our ambition is to implement systemic change in consumption emissions and to make the circular economy a reality. This is set out Beyond Recycling20, which states we will increase resource efficiency across all sectors, moving away from high carbon, non-recyclable materials and continuing to reduce waste. By 2050, we aim to use only our fair share of the planet’s resources and have 100% recycling (zero waste). The global biodiversity and climate systems will be the key beneficiaries, but the environment of Wales itself will also benefit, for example, from reductions in direct rthern Ireland Future Agricultural Policy The agriculture sector accounted for 26% of the total CO2e emissions in Northern Ireland in 2019. This is significantly higher than the proportion of the CO2e emissions attributable to agriculture for the other parts of the UK. In England, Wales and Scotland the proportions stood at 8.4%, 13.8% and 16.3% respectively. This reflects the different composition

Chapter 3 Policies and Measures 215 of the Northern Ireland economy and emitting sectors and the fact that agriculture in Northern Ireland is much more skewed towards livestock production and ruminant livestock in particular (which is the principal source of methane in Northern Ireland – a potent The Climate Change Committee (CCC), in its advice on reducing GHG emissions in Northern Ireland in February 2019, December 2020 and April 2021, recommended the following Low carbon farming cr ops and soil management; livestock breeding, health and diet improvement; manure management; and fuel efficiency; oforestry – integrating trees within grassland or arable land; and estoration from a carbon source to sink through re-wetting and control of uture Agricultural Policy Measures Department for Agriculture, Environment and Rural Affairs (DAERA) consulted on a range of Future Agricultural Policy Proposals for Northern Ireland in early 2022. The policy measures proposed to reduce carbon/GHG emissions following the consultation are outlined below. As science and knowledge expands, new possibilities will open up which will guide future new Reducing numbers of older livestock – Earlier finished cattle use a higher percentage of their lifetime diet for growth rather than maintenance. This increases overall efficiency of production. In addition, cattle that are kept beyond their target slaughter weight or take longer to reach slaughter weight can lead to unnecessary GHG emissions. Achieving earlier age at slaughter and first calving will in practice involve increased emphasis on selective breeding for animal health and performance traits and improved health management planning Feed additives – there is ongoing worldwide research into feed additives to reduce enteric methane from ruminant livestock. A number of feed additive products are either commercially available or undergoing regulatory approval. Consideration is being given to the development of a challenge fund model to test these additives in Northern Ireland conditions and, if the market for these products matures sufficiently, taking the steps necessary to ensure methane reducing feed additives are routinely incorporated in ruminant concentrate diets. Breeding – enteric methane emissions are subject to genetic variations. Ongoing research with dairy cattle by Wageningen University in the Netherlands and with beef cattle by Teagasc in the Republic of Ireland suggests that there is sufficient genetic variation in enteric methane emissions by cattle for methane emissions to be reduced by up to 25% through genetic selection by 2050.
This is an area where industry can take a lead in directing genetic selection programmes to drive a reduction in the carbon footprint of ruminant livestock. Urease inhibitor fertilisers – Research carried out locally by the Agri-Food and Biosciences Institute (AFBI) and Teagasc has shown that urea fertiliser treated with a urease inhibitor 20 emissions by over 70% compared to the most commonly used fertiliser in Northern Ireland, calcium ammonium nitrate (CAN). Urease inhibitor treated fertilisers are already commercially available in Northern Ireland. 216 8th National Communication Timing of fertiliser and slurry applications – Research carried out locally by AFBI has shown that an interval of 5 days between slurry and fertiliser applications significantly reduces 2O emissions by over 80% compared to application of both fertiliser and slurry on the same day. Consideration is being given to how such practices could be encouraged. Legumes and herbs (including peas and beans) – the natural fixation of nitrogen from the atmosphere through the action of symbiotic bacteria species associated with clovers and a range of herbs included in grass swards can lead to considerable reductions in the quantities of inorganic nitrogen fertiliser used on farms. In addition, ongoing research is indicating the possibility of increased carbon sequestration in soils managed to optimise the growth of mixed species swards. The soil nutrient status data made available to farmers through the Soil Testing and LiDAR measure over the next five years will assist farmers to manage soils to retain optimum clover levels in swards. Bio-methane and hydrogen – there is growing interest in the potential to use anaerobic digestion to generate bio-methane for injection into the Northern Ireland gas grid and/ or to produce hydrogen as a power source for the heavy goods transport sector using a combination of manures from livestock farms, waste streams from food processing and energy crops grown on land diverted from conventional agricultural uses. These developments have the potential to contribute to the decarbonisation of the agriculture, domestic heating and road transport sectors. Combining this with technologies to capture and recycle nutrients from the digestate that would otherwise be land spread could also help address nutrient loading and water quality problems. Work is ongoing with industry stakeholders to explore the potential development of these circular economy initiatives. A DAERA working group and work by Anderson (2021) at the Queen’s University of Belfast have reviewed the quantities of surplus livestock manures in Northern Ireland. There are 3 slurry produced annually (from housed cattle, pigs and poultry). If anaerobically digested (AD), this manure would produce approximately 250 million m3 of bio-methane or 2.5 TWh. This equates to approximately 14% of the natural gas consumed in Northern Ireland (Firmus, SGN, Phoenix and power stations) or an estimated 10% of NI’s In addition to generating renewable bio-methane and hydrogen, diverting this slurry from land spreading to centralised AD plants equipped with advanced technologies to further process the digestate fibre into peat replacing compost for the horticulture and bio-fertilisers for export, these proposals would make significant contributions to improving water quality in Northern Ireland, as well as helping to decarbonise the domestic heating sector and the elivery of Low Carbon Farming Measures A number of the Low Carbon Farming measures will be delivered through other measures within the Future Agricultural Policy programme, as outlined • Farm Sustainability Payment – conditions attached to the Farm Sustainability equirement to participate in the Soil Testing and LiDAR measure which will assess soil carbon and above ground carbon in farm ogrammes – where possible, future agricultural policy interventions will include a strong education, training and knowledge exchange

Chapter 3 Policies and Measures 217 component that should focus on improving productivity, environmental performance and sustainability, including a reduction in the carbon footprint; • Generational Renewal – bringing younger farmers into a controlling position on farm businesses should help drive the adoption of new and innovative agricultural ove productivity, reduce carbon intensity and create the conditions that will allow land to be released to other uses while sustaining ogramme will produce information and genetic evaluations to drive improvement in livestock productivity, health and welfare and thus reduce GHG emissions. It will also open up the possibility of breeding directly for reduced enteric methane emissions; The Farming with Nature Package will focus initially on habitat and biodiversity eate the conditions for greater carbon sequestration through the expansion of tree cover, hedgerow management, unfarmed margins and Peatland rewetting – Around 18% of the Northern Ireland land area is peatlands, accounting for over 240,000 ha. Active peatland in a natural state can continuously accumulate carbon under waterlogged conditions. However, of more significance to the carbon agenda is the fact that degraded or damaged peatland will release significant amounts of carbon into the atmosphere. The majority of peatlands in Northern Ireland are in unfavourable condition, either degraded or modified, most of which are not designated It is in this context that DAERA has drafted and consulted on a Peatland Strategy for Northern Ireland, reflecting the commitments in the UK Peatland Strategy and New Decade, New Approach document; the latter recognising the need for a coordinated and strategic approach to the challenge of Climate Change across government. Currently, officials are redrafting the strategy document in light of the consultation responses and seeking agreement on the final content of the document. The Draft Strategy proposes 5 Strategic Objectives with 33 accompanying actions. Once published, the Strategy will set the direction of travel over the next two decades and beyond and will provide a framework for both conserving intact peatlands and a peatland restoration programme. It is envisaged that an agreed Northern Ireland Peatland Strategy together with an Implementation Plan will be published in 2022. To support the objectives of the strategy, a scheme to encourage and facilitate the rewetting and sustainable management of peatlands is likely to be co-developed with stakeholders supported by appropriate funding.
The objectives of the proposed Northern Ireland Peatland Strategy 2021-2040 By 2030, degraded peatland habitats prioritised for restoration to favourable • By 2040, all high priority degraded peatlands ar • By 2040, that high priority degraded peatlands in Norther

218 8th National Communication • By 2040, all peatlands supporting semi-natural vegetation being managed for their peatland biodiversity and ecosystem function; – It is also proposed that the Farming for Carbon Measures be supported by existing complementary DAERA policy measures, notably in relation to woodland creation. The Forests for Our Future Programme, launched in 2020, has the objective of planting 9,000 ha of new woodland by 2030. The Small Woodland Grant Scheme provides grant aid for woodland planting area between 0.2 and 5.0 ha; with an establishment grant and annual premia. The Woodland Carbon Code (WCC) is the quality assurance standard for woodland creation projects in the UK, generating independently verified carbon storage data. Soil carbon – work to establish and refresh baseline data on carbon stored in agricultural soils and above ground biomass will be progressed through the Soil Testing and LiDAR measure. As the baseline levels of soil carbon and research supporting further soil carbon sequestration are validated to enable carbon accumulations to be credited in the GHG Inventory, DAERA will engage with stakeholders on the design of possible schemes to incentivise the farming of carbon as a business enterprise. The Soil Nutrient Health Scheme is a new initiative aimed at verifiably baselining soil nutrient levels and estimating farm carbon stocks, right across Northern Ireland (NI). The scheme will run from 2022 to 2025. Farmers will have all their fields soil sampled and analysed Results will be provided along with training, enabling farmers to match nutrient applications to crop need, thereby increasing efficiency, reducing excess nutrient run-off to watercourses and improving farm economic and environmental sustainability. In March 2016, the Northern Ireland Department for Regional Development launched Sustainable Water – A Long Term Water Strategy for Northern Ireland (2015-2040). This cross-Departmental strategy contains a long-term vision to manage flood risk and drainage in a sustainable manner, which will help to address the future risks from climate change. In March 2022, the Department for Infrastructure launched a consultation on Water, Flooding and Sustainable Drainage. Responses to the consultation will help to inform future policy on the introduction of more sustainable, environmentally friendly and green solutions to During the 2021/22-year Northern Ireland’s recycling performance remained at over 50% thereby meeting the Waste Strategy target for recycling. This was in spite of the recycling pressures experienced by Councils due to the Coronavirus (Covid-19) pandemic. A programme of work commenced to normalise recycling behaviours once again, and ensure good progress is made towards meeting future EU Circular Economy package During this period DAERA operated a continuous cycle of behaviour change campaigns aimed at preventing waste and moving our resources further up the waste hierarchy. In addition, we funded the setup of the Northern Ireland Resources Network which aims to grow the reuse and repair sector in NI by providing targeted support. The recently agreed Climate Change (Northern Ireland) Act requires that at least 70% of

Chapter 3 Policies and Measures 219 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 104, the Energy Systems Catapult105, the National Infrastructure Commission and the National Grid ESO (the GB electricity GGR is the name given to a group of methods that actively remove greenhouse gases, 2, 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 sequestration. Engineering-based such as Direct Air Carbon Capture and Storage (DACCS), Bioenergy with Carbon Capture and Storage (BECCS), wood in construction, biochar, and The 2017 Clean Growth Strategy was the first time the UK government formally addressed the need to deploy GGR methods. Since then, we Committed up to £100 million funding to r esearch and develop nascent GGR; • Published a call for evidence on GGR in December 2020; and • Commissioned 4 studies to further our evidence base on the potential for GGR deployment in the UK and understanding of possible policy incentives. Set out our ambition for deployment of engineer ed GGRs in the Net Zero Strategy, including an ambition for 5MtCO2 per year by 2030. • Working in partnership with the devolved administrations, launched a call for evidence in the coming months exploring the r ole of the UK ETS as a potential long- term market for GGRs, as part of our consultation on the UK ETS. • Set the ambition of deploying at least 5 MtCO2/year of engineered removals by 2030, in line with CCC107 and National Infrastructure Commission assessments108. 104 CCC (2020), ‘The Sixth Carbon Greenhouse gas removals’, uploads/2020/12/Sector-summary-GHG-removals.pdf 105 Energy Systems Catapult (2020), ‘Innovating to Net UK Net Zero Report’, reports/innovating-to-net-zero/ 106 National Grid (2020), ‘Future Energy Scenarios’, 107 CCC (2021), 2021 Progress Report to Parliament’, Progress-in-reducing-emissions-2021-Report-to-Parliament.pdf 108 National Infrastructure Commission (2021), ‘Engineered greenhouse gas removals’, uploads/NIC-July-2021-Engineered-Greenhouse-Gas-Removals-UPDATED.pdf

220 8th National Communication • Deliver £100 million innovation funding for Dir ect Air Carbon Capture and Storage (DACCS) and other GGRs. The £100m is made up of £70m allocated and delivered from the BEIS Energy Innovation Programme and a further £31.5m spent through the UKRI Strategic Priorities Fund.
Develop markets and incentives for investment in gr methods, by consulting on our preferred business models to incentivise early e options for regulatory oversight to provide robust monitoring, reporting and verification (MRV) of GGRs, following the recommendations of the BEIS-led MRV Task and Finish Group involving experts from industry and academia. Seek an amendment to the Climate Change Act to enable engineer contribute to UK carbon budgets. Government has a clear role to play in responsibly deploying GGRs and is committed to 2/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 attracting investment 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. 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 marketbased 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 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 March 2022, the UK ETS Authority published a call for evidence on the potential role of the UK ETS as a long-term market for GGRs. This explores a range of issues including the development of market eligibility criteria, market design options, impacts and timings for the inclusion of GGRs in the market. This will help inform future policy in this area, which will be developed in collaboration between the UK Government and the 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

Chapter 3 Policies and Measures 221 leverage private investment and enable a transition towards a market-led framework as the 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 alongside this document. 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. 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 revolution109. 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 realisation110. 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 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 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 Monitoring, reporting and verification of GGRs 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 some nature-based solutions. 109 BEIS (2020), ‘The Ten Point Plan for a Green Industrial Revolution’, publications/the-ten-point-plan-for-a-green-industrial-revolution 110 BEIS (2021), ‘Projects selected for Phase 1 of the Direct air capture and greenhouse gas removal programme’, removal-technologies-competition/projects-selected-for-phase-1-of-the-direct-air-capture-and-greenhouse-

222 8th National Communication 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 a market for GGRs. 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 CO internationally but stored in the UK may be a particular challenge. We commit to collaborating with international partners to ensure alignment on any future MRV framework. 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. The updated Climate Change Plan (see section on policy making process) includes a number of policies aimed at assessing the feasibility of various Negative Emissions Technologies (NETs) for deployment in Scotland. The Scottish Government continues to develop the evidence base on these matters. ease government investment in R&D to £22 billion; increase total R&D investment to 2.4% of GDP by 2027. UK’s first Net Zero Research and 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 oss 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 and Innovation Framework. This spending includes new programmes set out in this Strategy such as £60m Heat Pump Ready programme. ake a leadership role in Mission Innovation 2.0, a global initiative working to accelerate clean energy innovation.111 111 Mission Innovation is a global initiative of 24 countries, including the UK and the European Commission, working to accelerate clean energy innovation. It was established in 2015. Chapter 3 Policies and Measures 223 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. 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, and commitments. 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. In the Prime Minister’s Ten Point Plan for a Green Industrial Revolution112, 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 hydrogen113. This is contributing to levelling up across all regions of the UK whilst helping us to achieve our net zero target. 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. 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, 112 BEIS (2020), ‘The Ten Point Plan for a Green Industrial Revolution’, publications/the-ten-point-plan-for-a-green-industrial-revolution 113 This includes legacy funding from government’s previous £505 million Energy Innovation Programme. 224 8th National Communication 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 The Prime Minister’s Ten Point Plan for a Green Industrial Revolution, our Plan for Growth, the Innovation Strategy and the Net Zero 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. 3.15.5 Supporting innovation for net zero 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 pathway to net zero. 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 lasting change. We’ve published the Net Zero Research and 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 signal on our areas of focus. 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 achieving 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 The Transport Decarbonisation Plan committed to implementing a range of innovation programmes to support the decarbonisation of transport, with successful projects for zero

Chapter 3 Policies and Measures 225 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 next three years. 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,114 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 GVA in the UK115. 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 Revolution Challenge. 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. 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 biodiversity loss. 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 114 We published a Fusion Strategy and a Fusion Regulation Green Paper, recognising that fusion could be the ultimate clean power solution.
BEIS (2021), ‘Towards fusion the UK government’s fusion strategy’, BEIS (2021), ‘Towards fusion proposals for a regulatory framework’, consultations/towards-fusion-energy-proposals-for-a-regulatory-framework 115 BEIS analysis based on the methodology used in the Energy Innovation Needs Assessments. BEIS (2019), ‘Energy Innovation Needs Assessments’,

226 8th National Communication 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 Policy and regulatory frameworks As set out in the Net Zero Strategy and the British Energy Security Strategy, 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. Furthermore, while supporting the deployment of offshore wind through the Contracts for Difference scheme, costs have reduced by >50% in the last decade. This provides a clear example of policy ‘pull’ whereby open competition worked to drive cost reductions through deployment and innovation. As noted throughout the strategy, government will work with industry, businesses and consumers to consider the removal of regulatory barriers which may be hindering our transition to net zero. Encouraging private sector investment To deliver net zero, it is essential that public investment catalyses significant flows of private investment into innovative companies and activities. This means creating the right conditions for all businesses to innovate and giving them the confidence to do so. The right conditions will often involve de-risking capital in the forms of grants (allowing freedom to innovate) and concessionary capital (allowing businesses to commercialise and scale their operations). Providing the private sector with clarity on government R&D priorities can also help to build the confidence to invest in innovative companies and activities. As outlined, our Net Zero Research and Innovation Framework sets out a structure for this and a future update will demonstrate how the government is delivering against this Framework. In Build Back our plan for growth, and the Innovation Strategy, we set out our aim to unlock the potential of the £2.2 trillion held in UK pension schemes by addressing barriers to long-term investment. The government has established the Productive Finance Working Group, which published its roadmap for increasing productive finance investment in September 2021, and is progressing policy development through several Department for Work and Pensions consultations. These workstreams explore ways to make it easier for schemes to invest in alternative assets, including equity investment in innovative firms; creating the conditions for capital to flow into the UK’s most promising firms will help ensure that finance is available for the innovation required to meet our net zero goals and improve outcomes for UK savers. Government will continue to engage closely with pension funds and the investment industry to understand the scope for industry-led initiatives that take advantage of innovation investment opportunities. We will also provide the right conditions to attract private investment in R&D and innovation, including through tax and regulatory frameworks as well as policy signals from government. At Spring Budget 2021, the Government announced a review of R&D tax reliefs with the publication of a wide-ranging consultation. The review will ensure that the reliefs are up-to- date, competitive and well-targeted. Non-financial support in the form of engagement with businesses is also key to the development and deployment of new technologies, systems, policies and business models to achieve net zero. This includes, for example, support provided through UKRI, its Knowledge

Chapter 3 Policies and Measures 227 Transfer Network, and other bodies like the Catapult network and Intellectual Property Office. It also includes UKRI’s digital platform pilot programme, which will be used to bring net zero businesses together with investors for deal flow and to make information on companies more accessible to investors. The Innovation Strategy set out how we will build on this important support and provide advice, networking opportunities, skills development, and testing facilities. This includes a new online Innovation hub from Innovate UK, which will make it easier for businesses to navigate the government’s funding offer, and expansion of the Innovate EDGE service which helps firms to enhance their investment readiness. The Innovation Strategy also set out our ambition for government departments to procure more innovative solutions. Departments will produce clear policy problem statements that describe the priority outcomes that they want to solve or achieve. Alongside this, every major project should publish an outcome statement. Both measures will improve demand-signalling from departments, allowing them to procure innovation to accelerate the UK’s transition to net zero. This will help us to leverage public procurement as a tool that drives greener and more resilient outcomes across public services. International collaboration and leadership Building on our approach domestically, we are committed to continued active membership of Mission Innovation as the primary forum to strengthen international cooperation on clean energy innovation which is essential for our long-term climate and energy goals. An ambitious second phase of Mission Innovation is a priority for government. We will provide global leadership and commit to co-leading missions to build a renewable-powered future and deliver low cost, low carbon hydrogen. The Scottish Government is committed to using public policies and investments to create an environment where new industries, markets and innovations can thrive, and where private investment is key to driving a just transition to net-zero by 2045. The Scottish National Investment Bank has been established with a primary mission to support a just transition to net zero by 2045. The Bank will play a key role in developing new net zero markets, and will work with public, private and third sector partners to channel and crowd in The Green Growth Accelerator, launched in June 2020, is an innovative funding model demonstrating the Scottish Government’s ambitious and integrated approach with local authorities.
The programme will unlock an additional investment for emissions-reducing infrastructure to support Scotland’s transition, with outcomes focussed on carbon emissions reductions, unlocking net zero and just transition, while targeting growth in green jobs. The net zero challenge will be at the heart of a new Welsh Government Innovation Strategy, which is expected to launch in 2022. This will sit alongside and complement the UK Government’s innovation strategy launched in July 2021, which focuses on prosperity 3.15.8 Northern Ireland Executive The10x Economic Vision highlights a real opportunity to make a difference over the next decade, but can be achieved by adopting a partnership approach to delivery. Co-design and collaboration across government, businesses and academia will be vital to achieving a culture of innovation that benefits everyone. 228 8th National Communication Taking full advantage of the decade of innovation will increase incomes, create jobs, improve productivity levels, provide opportunities for all, revitalise places, realise a net-zero economy Bringing together motivations of innovation, life chances and wellbeing the vision is structured in a way to drive growth, tackle the concentration of impacts on those groups least able to absorb the shocks, increase wider societal wellbeing and contribute towards our response to climate change in facing the environmental and economic challenges of the time. Queens University Belfast – Sustainable Energy Research Centre This Pioneering Research Project (PRP) has provided for the formation of interdisciplinary teams of academics, and supported collaborative projects through the provision of equipment, studentships and other resources. The centre has focused on the interlinking areas of marine and bio-energy generation, future vehicle technologies including biofuels, after treatment solutions and batteries, and low-carbon chemical manufacturing. The centre brings together research projects from Chemistry and Chemical Engineering, Mechanical and Aerospace Engineering, Maths and Physics, and the School of Natural and Built Environment. The Centre for Advanced Sustainable Energy (CASE) CASE is an industry-led, multi-partner sustainable energy research centre based at Queen’s University Belfast. Through the Invest Northern Ireland Competence Centre programme, CASE funds collaborative Research and Development in sustainable energy, and bridges the gap between industry research needs and academic research offerings. The three strategic areas on which CASE concentrates are Bio-Energy; Marine Renewable energy; and Energy Systems (management and storage of clean energy). The Centre has funded over 30 projects in areas from floating solar to tidal turbines, developing technologies capable of delivering environmentally sensitive clean power, and has just been selected to manage the Green Innovation Challenge Fund (GICF) on behalf of the Department for the Economy NI. This new £4.5 million award will be instrumental in finding the Path to Net Zero Energy as outlined in the NI Energy Strategy 2021. Closely related to CASE, the Bryden Centre for Advanced Marine and Bio-Energy Research (The Bryden Centre), led by Queen’s University, constitutes a ‘virtual centre of competence’ that supports research into biomass and marine-based renewable energy sources, taking an all-island (Northern Ireland and Republic of Ireland) approach. The Bryden Centre’s research covers tidal and wave power, gas, liquid and biofuels, and includes a component dedicated to assuring that the energy systems are designed to support the environment. The team also works with over a dozen industrial partners. Queen’s University’s research programme includes projects developing advanced sustainable materials. The Polymer Processing Research Centre (PPRC) undertakes leading edge, industrially exploitable, fundamental and applied R&D to demonstrably improve industrial competitiveness, feeding into the theme of ‘future focussed manufacturing’ in the Belfast The Advanced Composites Research Group, within the School of Mechanical and Aerospace Engineering, brings together a multidisciplinary team of researchers, focussing on the science and engineering of composite materials and structures. The team works with partners, such as Bombardier and Bamford’s among others, on Advanced Computational Modelling; Nano-enhanced Multifunctional Composites; Material Characterisation; and

Chapter 3 Policies and Measures 229 The Gibson Institute for Land Food and Environment, based at Queens University Belfast, is involved in major research projects funded by UK Research Councils (ESRC, NERC and MRC), EU Framework Programs, and works on areas including the Economics of Renewable Energy Production and Consumption. The Department for Levelling Up, Housing and Communities recently awarded Queen’s researchers funding to look at the development of Zero-Carbon Co-operatives with business partners across NI, and to set up a Net-Zero Providing Vital Research Leadership Ulster University’s research community has developed significant strength in depth across key climate and sustainability projects most notably through the Centre for Sustainable Technologies (CST), the Centre for Engineering and Renewable Energies (CERE), and the Centre for Hydrogen Safety Research (HySAFER) as well as other key areas including Architects of Change, tourism, accounting, pharmacy and communication. All of Ulster University’s research outputs are cross-referenced via PURE to highlight relevant UN Sustainable Development Goals (SDGs). e Bank (UKIB) to crowd in private finance, support more than £40 billion of investment, and pull through low carbon technologies and sectors to maturity and scale. een gilts following the success of the UK’s debut sovereign green bond in 2021, which raised £16 billion, and build on the issuance of the world’s first National Savings and Investment Green Retail Savings Product. Support the British Business Bank’ s new objective to incorporate net zero and wider environmental, social and governance strategy across all activity, as well as the updated FCA and Bank of England remits to reflect the importance of environmental sustainability and the transition towards net zero. oducing new Sustainability Disclosures Requirements as set out in Greening A Roadmap to Sustainable Investing, building on the steps the UK has taken to become the first G20 country to make disclosures aligned to the Taskforce for Climate-Related Financial Disclosures (TCFD) mandatory across een Taxonomy and supporting the Green Technical Advisory Group to advise on greenwashing and how to implement the taxonomy Publishing a second iteration of the Green Finance Strategy for the UK, which will outline the pathway to net zero for finance in the UK. ork with external partners and data providers to better track private investment into the net zero economy going forward.
Both public and private investment will be crucial for any path to net zero. While we expect most investment to come from the private sector, market failures mean the private sector alone will not deliver emissions reductions and innovation at the pace required. 230 8th National Communication Our 2019 Green Finance Strategy demonstrated how the strategic use of public funds, long- term policy frameworks, and signalling can leverage private investment into the technologies and infrastructure that will be needed to deliver net zero. Each technology and sector will present its own challenges, and long-term government support for a large pipeline of projects We will work with the private sector to deliver a world-leading net zero financial system, ready to seize the opportunities of net zero. Climate-related financial risk will be embedded into our regulatory frameworks to help guide capital flows to green investments. We estimate that additional capital investment must grow from present levels to an average of £50-60bn per year through the late 2020s and 2030s. Most of this investment will come from the private sector, providing new opportunities for businesses and investors. This will mean supporting the full funding cycle, from emerging technologies through to infrastructure and project finance, to deliver the economic transition. Each green technology and infrastructure will require different types of financial support depending on its maturity. We must engage all types of capital, from early-stage grant and angel investment through to institutional finance like pension fund investors. The UK is a world leading financial hub, with access to global capital pools, outstanding professional services, and a robust legal and regulatory framework. As such, the UK financial services industry is poised to enable private capital to flow into our net zero Public funds will be used strategically to support new technologies, as well as emerging sectors, as they move from the innovation stage through to commercialisation and deployment. Early-stage R&D is supported by various government grants. Later-stage organisations can reach commercialisation and benefit from investment through the Clean Growth Venture Capital (VC) Fund or support from the British Business Bank (BBB). These stages of support are essential for scaling the necessary technologies and supporting the growth of businesses aligned to meeting our net zero ambitions. In addition, Government has a key role to play in generating a stable demand environment for long term investment by establishing a carbon market, which it has supported through setting up the UK Emissions Trading Scheme which came into effect in January 2021. Providing the suitable conditions for regulatory and early-stage innovation is a significant part of our Net Zero Strategy, but we must also mobilise the wider financial sector to meet the upfront investment challenge. This means stimulating new ways of providing information to markets on green investment and exposure to climate related financial risk, and providing the investment conditions to mobilise private capital into a portfolio of net zero financing. We are driving more disclosure and transparency in the markets on climate risks and opportunities through the introduction of Sustainability Disclosure Requirements, as outlined in Greening A Roadmap to Sustainable Investing. These will bring together and streamline UK sustainability reporting requirements, including reporting aligned with the Taskforce for Climate-Related Financial Disclosures (TCFD) recommendations and UK Green Targeted public intervention via the British Business Bank (BBB), UK Export Finance and the UK Infrastructure Bank (UKIB) will pull through investment from the private sector. For instance, British Patient Capital, a commercial subsidiary of the BBB, is contributing to the

Chapter 3 Policies and Measures 231 transition to net zero through its existing investment 9% of its underlying investment portfolio is in clean growth, sustainability, and mobility companies. This builds on the growing voluntary commitments from financial institutions to a net zero transition that are already pivoting financial flows towards net zero in the runup to and following COP26116. For example, the Glasgow Financial Alliance for Net Zero (GFANZ), which was launched as part of the COP26 Presidency, brings together many of the world’s biggest banks, asset owners, asset managers, insurers and service providers that are credibly committed to achieving net zero emissions. Using the UN’s Race to Zero as the entry criteria, the gold standard for net zero commitments, GFANZ has raised, deepened, and broadened the global financial sector’s net zero ambitions. GFANZ has launched as ambitious body of technical work to support net zero aligned investment and accelerate the transition to a net zero financial system and global economy. We will publish an update to the Green Finance Strategy in 2022 which will include a net zero transition pathway for the UK financial sector. This will set out how this crucial sector will transition to net zero as a whole. The scale of the net zero challenge and persistent market failures mean that public sector intervention is needed to shape and accelerate the flow of private capital. The right policy signals can act as a catalyst for private sector investment, as shown by £90 billion of new investment in renewable energy between 2012 – 2021, in part facilitated by the Electricity Market Reforms (EMR)117. By bringing down the cost of capital through strong policy frameworks, we will reduce the financing costs of reaching net zero, delivering a better deal The pathways set out in this strategy demonstrate that, whilst each sector requires its own policy framework, there are cross-cutting interventions required to support the transition to net zero. We will replicate the success of offshore wind and take actions to secure access to finance across the economy, ensuring that all sectors are able to access private investment going forward. For example, the Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme, will unlock private sector capital for industrial carbon capture and hydrogen production projects by providing long-term certainty to investors, de-risking revenue streams Through the net zero innovation portfolio, funding is provided for low carbon technology innovation. As these technologies, and sectors, commercialise, they can benefit from further investment readiness support to help them access repayable private finance.