UK Energy Research Centre study analyses extent of disruption that will be necessary across heat, transport, power, and construction sectors to meet climate goals
Delivering the UK's legally binding 2050 net zero emissions target will require economy-wide changes that reach far beyond the energy system, according to a new report published today by the UK Energy Research Centre (UKERC).
Titled Disrupting the UK energy systems: causes, impacts and policy implications, the report assesses the level of disruption likely to occur as the UK works to decarbonise business models and operating practices in four key areas: heat, transport, electricity, and construction.
It argues the government will likely have to play a guiding role in tyhe net zero transition, purposefully disrupting sectors to ensure they shift away from high carbon business models and do so in ways that minimise impacts on households and the wider economy.
For example, it highlights how heat decarbonisation is likely to prove particularly challenging, noting how the government has previously described heat as "our most difficult policy and technology challenge to meet our carbon targets". The report considers three low carbon heat technology options: hydrogen, electrification, and hybridisation. Using low carbon gases with hydrogen would result in less disruption for the consumer, UKERC notes, whereas electrification would require significant adaptation. However, whichever route is pursued sufficiently rapid change is unlikely to be led by consumers or the industry, meaning major policy and governance interventions are likely to be necessary to drive the shift to sustainable heat systems.
The report also considers how to decarbonise transport, currently the largest carbon-emitting sector for the UK economy, contributing around 28 per cent of emissions. Again, the report's authors note that transitioning to a net zero carbon transport system poses a significant challenge.
"The UK transport sector is nearly 100 per cent fuelled by fossil fuels, with only tiny niches of electrified and bio-fuelled vehicles," says Leeds University Professor Jillian Anable, UKERC Co-Director and Professor of Transport and Energy.
The report voices some scepticism about the Department for Transport's Road to Zero strategy, noting that its aim to ensure all new cars are "effectively zero emission" by 2040 would require a more disruptive policy regime than is currently planned. Namely, hybrid electric vehicles would have to be brought within the remit of the planned ban on the sale of new fossil fuel vehicles, which is currently scheduled to take effect in England in 2040. If the transport sector is to meet legally binding decarbonisation targets, vehicle manufacturers, the maintenance and repair sectors, and the Treasury are all likely to take significant disruption, the report warns.
In terms of electricity generation, the report observes that all six of the big energy companies have made notable progress in transforming their business models. Each has done so in a distinct way: Centrica has started to shift away from fossil fuel plants and focused on integrating digital technologies into its retail business, for example; SSE and Scottish Power have reoriented their energy generation towards large-scale renewables; and EDF has retained its support of nuclear power. Whether they continue to adapt to the even more rapid change that will be required through the next two decades, or are overtaken by new entrants, remains to be seen, the report concludes.
The report argues another sector where significant disruption will definitely be necessary is construction. While the industry is working hard to embed energy efficiency within new builds, the report notes that these account for less than one per cent of the UK's total stock. As a result, major reductions in energy demand will be necessary through the retrofitting of existing buildings.
"For the UK to achieve low-carbon building performance is likely to require a set of disruptive changes to the culture and practices of an entire industry," the report concludes. "This will require more joined-up thinking between energy policy and industrial policy."
Having considered the four key sectors, the report goes on to outline advice for policymakers, emphasizing the importance of taking a flexible and adaptive approach to policy development and implementation. Such flexibility should help governments respond quickly to unexpected consequences, it says, reducing the impact of unforeseen events - the repeated occurrence of which is one of the few certainties of the decarbonisation process. It should also allow the government to respond more quickly to rapidly falling clean tech cost curves and emerging technologies.
"The move to legislate for net-zero is welcome progress, but we need economy-wide action to make this a reality," concludes Professor Jim Watson, UKERC director and professor of energy at UCL. "This includes policies that deliberately disrupt established markets and business models in some sectors - and address any negative impacts."
Finally, the report sounds a further brief warning note. Polling has shown significant public support for the net zero target and a drastic increase in climate action. But a poorly handled transition that leads to significant economic disruption and cost rises for consumers could result in renewed resistance to the net zero transition and shifts in attitude that "still have the potential to undermine the current political consensus for action - and to derail efforts to meet climate targets."
The green economy is on the march and the net zero destination is clear, but UKERC provides a timely reminder that there will be major hurdles to overcome along the way.
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