DNV: With mid-century targets out of range, UK requires ‘clear roadmap’ to reach net-zero

Norway-based classification society DNV has outlined within its new report that the United Kingdom (UK) is not on track to meet its mid-century decarbonisation targets, thus, the government and the industry need to set up “a clear roadmap” to achieve net-zero by 2050.

In a bid to discuss corrective action to achieve climate targets, over 150 energy leaders from energy companies, government, representatives from the investment community and representative bodies, attended on Tuesday the launch of DNV’s first UK Energy Transition Outlook (ETO) in London.

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, the report forecasts that this will not be enough to meet the reduction in emissions, legislated for in 2019. In addition, the UK will not meet its Nationally Determined Contribution (NDC) commitment of reducing emissions by 68 per cent by 2030 under the Paris Agreement.  

Furthermore, 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 UK can meet its low-carbon objectives. 

Even though the United Kingdom has made “strong progress” to reduce carbon emissions, DNV claims that 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 light of this, DNV believes that the industry and government “must mobilise a clear roadmap” to attain net-zero targets.

Hari Vamadevan, executive vice president and regional director, UK & Ireland, Energy Systems at DNV, remarked: “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.”

Meanwhile, the report indicates that household energy expenditure is expected to halve, driven by increased electrification of household heating and passenger transport. On the other hand, the transport and building sectors are seen as “the major remaining contributors” to the total annual emissions by 2050. 

Moreover, DNV highlights that building emissions could be eliminated through a combination of boosting heat pump penetration up to 20 million households and decarbonising the remainder by substituting natural gas with green hydrogen. Additionally, the investment in underground hydrogen storage is portrayed as essential in supporting the switch to green hydrogen and taking advantage of low-cost renewables.

“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 decarbonisation 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,” added Vamadevan.

The report points out that 40 per cent of transport emissions could be reduced by accelerating the uptake of EV/fuel cells for commercial vehicles through incentives and subsidies. On the other hand, solutions are not as clear in aviation, and the abatement of the carbon goals is considered difficult within the timeframe. However, feasible options would include offsetting these emissions through scaling large-scale implementation of Direct Air Capture, which requires close to GBP 150 billion (over $182 billion) investment and/or via natural carbon sinks.  

“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,” underlined Vamadevan during the event.

DNV further underscores that almost half of the 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, explains the UK ETO report.

“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 mobilise the industry, investment community and government, but to get there we need to be bolder and braver,” concluded Vamadevan.

Electrification is seen as one of the ways of decarbonising the energy sector in the UK, especially oil and gas assets, and DNV confirms that this method is “growing and greening” in all regions and sectors. BP, Equinor and Ithaca Energy seem to agree with this, as they recently inked a deal to explore electrification options for their West of Shetland oil and gas assets. The options include the possibility of powering these assets with offshore and onshore wind energy.

DNV predicts that the long-term influence of the war in Ukraine on the pace of the energy transition is low compared with the main long-term drivers of change: plunging renewables costs, electrification, and rising carbon prices. This is in line with its previous analysis, which indicated that the war in Ukraine would not derail Europe’s energy transition.

At the time, DNV emphasised that these events would speed up the transition process, as countries pivot towards renewables in a bid to become independent from Russian gas more quickly, leading to faster decarbonisation.