Industry and government must mobilize a clear roadmap to achieve UK climate targets by 2050 says DNV

December 7, 2022

  • DNV’s UK Energy Transition Outlook predicts country is not on track to meet mid-century net zero target
  • Government must provide long-term policy clarity and stable environment so that industry, investors and society can act with confidence
  • Household energy expenditure expected to halve by mid-century, driven by increased electrification of domestic heating and passenger transport
  • Building emissions will still be a major contributor to emissions in 2050 and could be eliminated by boosting heat pump penetration and swapping natural gas with green hydrogen
  • Investment in underground hydrogen storage essential in supporting the switch to green hydrogen and to take advantage of low-cost renewables.

Over 150 leaders from energy majors, government, representatives from the investment community and representative bodies, attended the launch of the first UK ETO by DNV in London. The report forecasts that while the energy landscape in the UK will continue to shift from fossil fuels, with almost half of the country’s energy demand being delivered by electricity in 2050, this will not be enough to meet the 100% reduction in emissions, legislated for in 2019. Similarly, the UK will also not meet its Nationally Determined Contribution (NDC) commitment of reducing emissions by 68% by 2030 under the Paris Agreement.

A panel consisting of Shirley Oliveira, Vice President Hydrogen and CCUS advisory services at bp; Laurence Fumagalli, Head of UK Wind Fund, Schroders Greencoat; Dr David Joffe, Head of Net Zero at the Climate Change Committee; Viken Chinien, Head of Department, Enterprise Risk Management, Energy Systems at DNV; and Nicola Harris, Head of Energy, UK & Lloyd’s at AXA XL, discussed how the country can meet its low-carbon objectives.

While the UK has made strong progress to reduce carbon emissions, the government’s absence of a committed roadmap and relevant business models to deliver on those ambitions is stalling the implementation needed to reduce emissions to the point where net zero goals can be achieved.

In positive news for domestic consumers, household energy expenditure is expected to halve, driven by increased electrification of household heating and passenger transport, however DNV’s report highlights that the transport and building sectors are the major remaining contributors to the total annual emissions by 2050.

Building emissions could be eliminated through a combination of boosting heat pump penetration up to 20 million households and decarbonizing the remainder by substituting natural gas with green hydrogen. Investment in underground hydrogen storage is essential in supporting the switch to green hydrogen and to take advantage of low-cost renewables.

Hari Vamadevan, executive vice president and regional director, UK & Ireland, Energy Systems at DNV, said: “Our UK Energy Outlook report clearly demonstrates that early ambition and action has allowed the UK to make good progress, but unless the government implements a compelling roadmap backed by clear business models and supportive regulatory frameworks, the UK will not meet these targets.

“We firmly believe the UK can meet its 2050 net zero objective, but this will require clear and early policy decisions, particularly focused around the decarbonization of heating in buildings and transport. The UK has a major role to play in helping the world meet the targets of the Paris Agreement – as a country we need to go further and faster, going beyond our targets and investing more to support this vision.”

40% of transport emissions could be reduced by accelerating the uptake of EV/fuel cells for commercial vehicles through incentives and subsidies. Solutions aren’t as clear in aviation, and the abatement of the carbon goals is considered difficult within the timeframe. Feasible options would include offsetting these emissions through scaling large-scale implementation of Direct Air Capture, which requires close to GBP 150bn investment and/or via natural carbon sinks.

Almost half of UK’s energy demand will be delivered by electricity by 2050. Demand seasonality and variability in renewable sources require a smart and flexible system with investment in power grid infrastructure, as well as automation and analytics.

Talking at the event, Mr Vamadevan added: “We must ensure we offer support for consumers that incentivizes change, while ensuring no sections of society are left behind. This change cannot come from government alone, it needs active participation, both as an individual and for many of us as part of the wider energy industry. Social engagement and behaviour change on issues such as heating, transport, energy consumption, and efficiency and lifestyle changes such as travel reduction will all be part of the UK’s energy transition story.

“Overall, the energy transition may be a radical change to preserve our planet’s future, but we need to take urgent steps to deliver an orderly transition. Our Energy Transition Outlook shows us that immediate action is needed now to achieve net zero. Events like this are important to mobilize the industry, investment community and government, but to get there we need to be bolder and braver.”

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