Energy leaders agree more clarity needed around net zero

Net Zero light bulb

Last week’s Energy Leaders Club Industry Briefing took place during London Climate Action Week, which meant the focus fell on the UK’s new ‘net-zero’ legislation.

From how we’re going to reach the target, to how much it’s likely to cost, there were some valuable insights into what we can expect in the coming years and how it will affect businesses. The general consensus among industry insiders was that the Government needs to provide more clarity around the road to net zero so that businesses and the public can ensure we achieve the target by 2050.

Here’s what the leaders had to say on some of the key questions around net zero:

Is the net-zero target achievable?

The experts generally agreed that although net zero carbon emissions by 2050 is an ambitious target, it should be achievable.

If the Government wants to encourage businesses and the public to get behind net zero, then they must ensure their policies support them. As it stands, our existing policies just aren’t fully aligned with the net zero target. For example, deploying renewable generation will be crucial, so it’s important that it’s not cost-prohibitive to do so. Despite this, on the same day that MPs were debating adopting this increased target the Government put forward plans to increase VAT from 5% to 20% for solar and battery storage. Meanwhile, home coal suppliers will continue to receive the 5% rate, which seems to contradict their push towards a lower carbon future.

While there are a number of schemes (such as ESOS and SECR) aimed at reducing the carbon emissions of larger businesses, the Government should also implement policies that cover SMEs, which account for 99.9% of all private sector businesses[i][ii]. They also need to consider interim policies, because unless we put stepping stones in place to motivate businesses to act now then we could find that progress is too slow to meet the 2050 target. Carbon budgets are useful, but we need more information from the Government on how they intend for us to achieve them and we need to be actively measuring our progress to ensure we’re on the right trajectory.

How much will the transition to net-zero cost?

As we move towards a low-carbon future, our energy system will need to evolve, which will require considerable investment. How much it’s likely to cost us is one of the vital questions that are yet to be answered.

Earlier this year, Chancellor Phillip Hammond predicted that reaching the net-zero target will cost around £50-70bn (around 1-2% of UK GDP) per year until 2050, which will total over £1tn. This is problematic, as the public may assume that the cost of decarbonising our energy system will take much-needed funds away from essential services like the NHS.

However, the Committee for Climate Change (CCC) has highlighted that these investment predictions are the same as what the Government expected to invest to reach the previous 80% by 2050 target. They have argued that the UK economy could actually increase overall if we meet the net-zero target, despite the substantial investment required to get there. All of the experts agreed that the benefits of achieving net-zero need to be factored into the cost analysis much more than they are currently, as the benefits will greatly outweigh the costs.

What’s the best way for businesses to reduce their emissions?

A key takeaway for many of the attending businesses was that data will be key for organisations that are looking to reduce their consumption. Businesses can’t manage what they can’t measure, but as many now have data from half-hourly meters, smart meter tech and sub-metering at their fingertips, they have more insight on their energy usage than ever before.

Investing in an energy management platform can be incredibly useful for many businesses, as it’s helpful for them to be able to see all of their utility data in one place. Many platforms have features that make it easy to analyse and create reports based on this data, so businesses can recognise patterns in their usage and identify any unusual consumption quickly.

Businesses that are affected by schemes such as ESOS and SECR should also ensure that they are using the opportunities identified from their reporting obligations to reduce their emissions. As we move towards 2050, the pressure on organisations to bring down their carbon emissions is likely to increase, which means these schemes will become even more important.

While businesses aren’t required to act on the energy savings recommendations that they identify in their ESOS audits, they should at least consider implementing their recommendations. By taking action on these recommendations, they can bring their overall consumption down and keep their energy bills low. If they’re also affected by SECR (which many will be), they will be expected to report on the energy efficiency actions they’ve implemented each year, which makes it even more important for ESOS recommendations to be taken note of at the highest level.

Behaviour change will be key for many organisations, and the push for greater energy efficiency is now coming from the board within many organisations thanks to schemes like ESOS and SECR. However, pressure to reduce an organisation’s emissions can also come from staff lower down the chain, as more sustainability-savvy millennials join the workforce and demand more from their employers. Many businesses are also becoming more supply chain-focussed, which means they’re driving their suppliers to make energy efficiency improvements too.

Future-proof your organisation

Meeting the net-zero target will be a challenge, and it will be crucial for businesses to get fully on-board if we’re going to achieve it. If you’re looking to reduce your emissions and ensure your business is prepared for the journey to net-zero, talk to Inspired Energy’s experts today – call them on 01772 689 250 or email enquiries@inspiredenergy.co.uk

Or alternatively, if you are looking to keep abreast of the latest insights and analysis of the UK energy market, why not subscribe to our Weekly Audio Insights Podcasts and listen on the go. Subscribe to Utility Insight Podcasts here.

[i] https://www.fsb.org.uk/media-centre/small-business-statistics