How can the UK close the gap on its carbon budget?

Welcome to the second edition of The Net Zero Roundup, from the Carbon Trust’s Net Zero Intelligence Unit.

In the aftermath of the IPCC’s stark portrait of the worsening climate impacts being felt around the world, we’ve whittled down the most important developments on the IPCC’s only recommended solution: reaching Net Zero emissions.

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Under the spotlight

UK Net Zero transition requires further action on renewable energy and greener homes

Following a legal challenge last year, the UK republished its Net Zero strategy on 30 March 2023. The Net Zero Growth Plan, together with a raft of other documents published on the same day, charts the UK’s path to 2050. Yet, despite the volume of policy publications, the Government clearly stated that the UK would not achieve the emissions reductions required to meet Carbon Budget Six (2033-37). So where are the gaps?

We looked at two areas where the Government could, and should, take no-brainer policy decisions to unlock quick progress: renewable energy and greener homes. Our work on UK renewables and energy efficiency over the past two decades shows that these are two areas where the Government could stimulate efficient, high impact change. However, our comparison of the Government’s plan with the policy recommendations made by Chris Skidmore’s Independent Review on Net Zero shows the Government has ducked a crucial opportunity to place them centre stage of the Net Zero transition.??

Signals of intent on transitioning the energy system but a lacklustre approach to scaling renewable energy

Wind and solar have the capacity to deliver 100GW of energy in the UK by 2035, but this won’t happen without enabling policies. While the Growth Plan accepts Skidmore’s recommendation for a solar taskforce and roadmap (this won’t be published until 2024), this was effectively the only policy instrument designed to ramp up the UK’s renewable energy supplies. The Growth Plan contained no commitment to provide a roadmap for onshore wind or to advance the planning reforms needed to scale onshore wind to deliver the recommended target of 30GW of energy by 2035. In effect, this retains the defacto ban on one of the cheapest forms of low carbon energy. The Carbon Trust’s instrumental experience of scaling up the offshore wind markets in the UK and elsewhere over the past two decades, and our ongoing work on onshore wind for the devolved government in Wales, shows that clear commitments from governments can drive innovation and expansion of low carbon technologies.

The Growth Plan included some signals of intent to deliver the flexible, integrated grid infrastructure required for a Net Zero energy system. The Skidmore recommendation to publish a centralised strategic network plan was accepted, along with the publication of a hydrogen roadmap. This should help to steer innovation and investment in low carbon hydrogen, which Carbon Trust analysis shows should play a key role in enabling flexible storage and electricity generation in a Net Zero energy system. The Government also committed to ‘rebalancing’ gas and electric prices by the end of 2024 to ensure that low-cost electricity, powered by renewables, is sold at a fairer price to consumers.

However, inaction on Skidmore’s recommendation to include Net Zero in the energy regulator’s remit will limit the extent to which a whole-systems approach can be taken to the energy transition. Overall, the plan lacks the coordinated approach required to drastically scale up renewables while urgently reforming the national grid’s structure to ensure they can come online effectively.

Some boosts for heat pump roll out but critical gaps remain for delivering greener homes

Decarbonising heat is critical, and to stay on track for Net Zero the UK aims to install around 600,000 heat pumps each year by the late 2020s. This is a huge step up from the 54,000 installed in 2021. To drive progress, the Skidmore review recommended “a suite of measures to create the conditions for sustained growth of new markets for low-carbon heat”. The ￡30 million Heat Pump Investment Accelerator and the extension of the Boiler Upgrade Scheme to 2028 will drive innovation and adoption to an extent. But progress could be hampered by the decision to retain the 2035 ban on gas boilers, instead of bringing it forward to 2033, and the continued suggestion that hydrogen could play a ‘major’ role in home heating. Our work on the Heat Pump Ready programme shows that heat pumps can, and should, accelerate the decarbonisation of a significant proportion of the UK’s housing stock. But for now, the UK is missing a coordinated “suite” of measures needed to scale up heat pump installation by over 1000%.

On energy efficiency, the Growth Plan committed to implement both the Future Homes Standard and the Future Buildings Standard from 2025. However, we believe stronger interim targets are required to support earlier adoption of these modern methods of construction, and to unlock early investment in skills and supply chains. The Growth Plan was also vague on strengthening energy efficiency certifications for new buildings - a core recommendation of the Skidmore review.?

Why this Net Zero plan matters in the UK and internationally

On two core areas of any national decarbonisation strategy, the UK’s Net Zero plan is left wanting. Instead of prioritising tried and tested solutions that could deliver rapid emissions reductions, the UK Government is injecting disproportionate stimulus into the nascent Carbon Capture Usage and Storage market. This is a technology which simply cannot deliver the scale of emissions reductions required for Net Zero alone.

The gaps in the strategy matter not only for the UK’s own carbon budget, but also international diplomatic efforts to move from climate ambition to climate action. While the UK can always claim to be a first mover on target-setting, four years later the UK seems to be contributing to the ‘implementation gap’ identified by the UNEP .

To deliver on Net Zero, all governments must focus on identifying policy levers that will drive change as well as deliver wider benefits and priorities. The Carbon Trust has identified solutions that could drive progress on national emission reduction targets, including smart grids in Colombia and renewable energy action plans in Vietnam.?

Quick Intelligence

Policy: EU greenwashing directive tightens up rules on corporate Net Zero pledges

The EU Commission published its hotly anticipated Green Claims Directive this month. It proposes a series of steps businesses should take to ensure eco-claims do not mislead consumers. The Directive covers not only claims of existing environmental performance, but also future commitments to Net Zero. The Directive clearly states that any commitment to reach Net Zero must be in reference only to planned emissions reductions within the business’s own value chain. Offsets should be treated as separate ‘additional environmental information’.

This approach chimes with our analysis of international best practice on the applicability of offsetting to corporate Net Zero strategies. Steps such as this from the EU are vital to uphold the integrity of Net Zero claims. Indeed, we see strong governance as one of Net Zero’s five key enabling conditions . Similar moves could be on the horizon in the UK where the Competition and Markets Authority (CMA) is investigating greenwashing in the fast moving consumer goods sector, and in Australia where the consumer watchdog is investigating Etihad over the rigour of its ‘Net Zero by 2050’ pledge .

The Carbon Trust recently worked with the UK’s CMA, and the European Advertising Standards Alliance, to help businesses understand more about how to avoid greenwashing .?

Business: Race to Zero puts its 500 largest companies under the spotlight

A new tracker , that pulls data from CDP, allows for continual monitoring of the climate progress made by the largest 500 companies signed up to the global Race to Zero campaign. A visual dashboard makes it easy to identify which companies are reducing emissions and aligning capital expenditure with 1.5C, but also those which are missing the mark. Overall, historical emissions data reveals that companies are reducing emissions at a mean annual rate of -6.45%.

The increased transparency offered by the tool will help to improve corporate accountability by bringing together the work done by CDP and the Science Based Targets initiative.

Finance: UN Loss and Damage Fund Transitional Committee meets for the first time

The Committee tasked with operationalising the landmark COP27 agreement on a Loss and Damage fund met for the first time this month in Luxor, Egypt. The Transitional Committee is formed of official representatives of 24 major developed and developing countries. Its members are due to spend the next year deliberating how to action the historic international agreement, culminating in a series of recommendations to be adopted at COP28. ?

Though the Fund deals with providing financial assistance for damages caused by climate change, the stakes for international mitigation efforts are high, too. Without greater efforts to cut emissions, industrialised countries will face demands for damage payments which far exceed what they can ever pay. The work of the Transitional Committee is crucial to build the trust needed between the global North and South to incentivise all nations to keep driving towards Net Zero .

From the Net Zero Intelligence Unit:

Catch up on the latest from the Net Zero Intelligence Unit below. You can also read more here .

?? Our Net Zero Intelligence Manager, Nina, spoke to Attracta Mooney from the Financial Times about what’s missing from the UK Government’s Net Zero Strategy: ???

??We assessed the Net Zero commitments of the world’s 10 largest beauty companies. To learn what the leaders are doing, as well as where the industry can improve, read the report:??

?Need to remind yourself (or your colleagues) why Net Zero matters, and the conditions to enable progress? These might come in handy: ??

On our radar

In a month where the IPCC warned of the ever-increasing likelihood of 1.5C overshoot, it can be easy to lose hope. However, recent progress on electrification of heating in Europe gives cause for optimism.

New analysis finds that heat pump sales in Europe increased 38% from 2021 to 2022. ??

This trend is largely driven by sky-rocketing oil and gas prices, following Russia’s invasion of Ukraine. However targeted policy interventions to boost heat pump installations have also helped, such as Germany’s target for 65% of new heating systems to run on renewable energy by 2024.?

??The Carbon Trust is leading a consortium supporting collaboration and knowledge transfer from the UK Government’s Heat Pump Ready Programme . This programme is critical to accelerate the commercialisation of heat pumps: the most efficient and effective way to decarbonise home heating at scale. The International Energy Agency says that the carbon-intensity of heated homes needs to fall by around 10% each year by 2030 to get on track for Net Zero.

Read more about the promising uptake of heat pump sales here: How the energy crisis is boosting heat pumps in Europe ??

Thanks for reading.

Every month, we whittle down the Net Zero stories most worthy of your attention, analyse why they matter, and share our latest experience-led insights on how to make progress. Make sure you’re subscribed to keep up with Net Zero developments in the decade of action.

The Net Zero Intelligence Unit produces experience-led insights to accelerate global progress towards Net Zero. If you’re a journalist or event organiser and would like to get in touch with us, please email [email protected] or [email protected] .