Will a net-zero dash enable the UK to reap more benefits?

The decarbonization bandwagon brought changes to the energy sector, which some see as a runaway car that can no longer be stopped. Should the world hurtle towards them and embrace the energy transition aspirations without reservations or adopt a more cautious approach? If a new poll is to be believed, the majority of British people are in favor of hastening the UK’s net-zero journey, thus, the results of the fast-approaching elections are expected to hinge on the backing of green policies. Will a faster abandonment of fossil fuels and a more invigorated pivot towards low-carbon and renewable energy stop households from plunging into hardship and bring Britons relief from woes imposed by the cost of living crisis?

As the largest slice of the net-zero funding pie is expected to come from the private sector, many have pointed out that the UK needs supportive energy policies to make this happen at a time when other countries are leaving no stone unturned to step up their efforts to attract green investment. The right political environment is crucial to push such policies forward. However, the UK, like many other countries in the world, has not been spared from the chasm surrounding the net-zero and climate change policies advocated by the left-right political spectrum with the right-wing side usually pushing for a rollback of green measures.

In line with this, the Labour Party is urging for a ramp-up of renewables and a potential ban on new oil and gas developments in the North Sea. In contrast, the most prominent members of the Conservative Party, such as Britain’s current Prime Minister, Rishi Sunak, are dedicated to balancing the deployment of low-carbon and green policies with more oil and gas. They use energy security concerns to justify this approach.

This content is available after accepting the cookies.

Change cookie-settings View on Twitter.

Sunak’s recent changes in net-zero policy have come under fire from multiple sides, as they push back some of the UK’s climate targets. Over 400 NGOs and businesses wrote in a letter to the UK’s Prime Minister that weakening climate policies would be a historic mistake of his premiership, leaving a lasting impact on the UK economy, climate, and his legacy.

The Association for Decentralised Energy (ADE) and its members are also among those said to be “deeply concerned” by the British government’s delays in the implementation of – what they see as – crucial green and net-zero policies. The ADE went a step further and conducted a poll about the UK’s diluted net-zero policies with results showing that 75% of decentralized energy sector professionals and businesses have voiced a significant erosion of confidence in the wake of the Prime Minister’s announcement.

Despite the backlash, Sunak is adamant that the country will still reach net-zero by 2050, albeit following a “fairer” path towards this target to ease the financial burden on British families, as the “over-delivery” on reducing emissions provides space to take “a more pragmatic, proportionate, and realistic approach” to reaching net-zero while maintaining all international commitments.

On the other hand, many are applauding the Prime Minister’s pledge about greater transparency and accountability, as it is believed that a clear vision and a roadmap spotlighting the way to stay on track for net-zero will boost the private sector’s confidence to invest in Britain. However, critics still argue that the evidence indisputably shows a slower approach to net-zero will make the whole process of reaching the target more difficult and more expensive, which has the potential to impose additional costs on Britons.

These same critics warn that the cost of living crisis and record high energy bills stem from the exorbitant costs of oil and gas, which graced the global energy stage last year. In line with this, they argue that slowing efforts to reduce the UK’s dependency on fossil fuels leaves the country’s economy and people at the mercy of volatile and expensive oil and gas for longer stretches of time, prolonging the cost of living crisis instead of mitigating it.     

Bearing this in mind, Energy UK, the industry’s trade body, recently published results of a poll of 2,003 adults, conducted with Public First online from September 15 to September 19, 2023, to gauge public awareness and sentiment regarding net-zero. The results of this poll indicate overwhelming support for the UK government’s ambitious climate goals, including amongst 2019 Conservative voters.

This content is available after accepting the cookies.

Change cookie-settings View on Twitter.

One of the more interesting aspects of this poll is the finding that 46% of people surveyed either did not know what net-zero means or had never heard of it, underscoring the importance of public education on this issue. After net-zero was explained to all voters, Energy UK highlights that “a clear majority” expressed their endorsement for the target, with Conservative voters even more likely than the general public to support it (71% versus 69%), dispelling the misconceptions that a lack of understanding equates to a lack of support.

Furthermore, the poll also revealed that 51% of respondents were under the impression that the government was not putting in enough effort to reach the net-zero goals, while only 37% believed that existing efforts were sufficient. As a result, the trade body is convinced that voters expect more “significant” action from the government in decarbonizing the economy, which emphasizes the need to redouble the UK’s net-zero efforts and avoid complacency.

Energy UK further infers from the results of the poll that supporting net-zero is likely to reap dividends at the ballot box, with 63% of voters saying they would support a policy of standing by existing net-zero targets if it were put in a party manifesto. On the other hand, only a handful, or 9% of people would oppose such a policy, including a mere 11% of those planning on voting Conservative. With this in mind, the industry’s trade body concludes that electoral success hinges on both upholding the UK’s net-zero targets and intensifying efforts to achieve them.

Adam Berman, Energy UK’s Deputy Director, commented: “These poll results clearly show that the road to success at the next general election will be paved by commitment to an ambitious net-zero agenda. However, there is much more to be done to engage with, and educate, the public on what this transition entails. As the Prime Minister rightly emphasized, we have to bring people with us on the journey to net-zero.

“While challenges remain, the British public overwhelmingly supports the government’s net-zero ambition and expects a concerted effort to make it a reality. Private sector engagement is key; most of the investment required will come from businesses and the quicker we make the transition, the higher this proportion will be, freeing up taxpayer funding for other issues important to society.”

As challenging as this endeavor may be, Energy UK underscores the need for an action plan in ‘Accelerating Action,’ its final report in the Clean Growth Gap series contemplating how the UK can attract the investment needed to maintain its role in clean energy and ensure a secure, homegrown energy supply in years to come. The trade body’s previous reports, produced in partnership with Oxford Economics, have highlighted how, after leading the way by making the most of its existing strengths and natural advantages, the growing global competition for clean investment has increased the risk of the UK falling behind with its own energy transition.

In addition, these series also show that pushing ahead with net-zero will maximize the benefits the UK can expect in terms of investment, productivity, and job growth and illustrate how Britain’s every region will benefit from the transition and could prosper by building on existing strengths in industry and manufacturing, as well as leveraging geographic advantages. With this at the forefront, Accelerating Action looks at different measures the UK can take to ensure it does not lose out to other countries on the economic opportunities available.

This comes at the time after the last contracts for difference (CfD) auction results have raised further concerns about the current environment for investment in the UK. With an estimated 70% of the funding required for the net-zero transformation likely to come from the private sector, Energy UK’s report sheds light on seven actions the country should take to attract this investment. It is believed that a quicker transition will bring more investments from the private sector, leaving more public funding available for other priorities.

Emma Pinchbeck, Energy UK’s Chief Executive, remarked: “This series of reports has focused on how we can create an environment that builds on our country’s strengths and maximizes its attractiveness to investors in a world where there is intensifying competition for this funding. It’s also shown why an ambitious approach to net-zero will maximize the benefits to the whole country, including those areas most in need of the economic boost.”

The top seven action picks outline the need to change investment incentives in the tax system so they match the specific characteristics and requirements of low-carbon projects; amend the current Electricity Generation Levy to address the disadvantage clean energy projects receive in comparison to oil and gas and the barrier it provides to new projects; ensure the CfD scheme reflects economic realities to avoid any repeat of the last auction round while understanding the importance of a stable and predictable environment for investors and how proposed reforms, indecision and ill-advised rhetoric can adversely affect this.

Additionally, the remaining three out of these seven measures emphasize the need to tackle delays caused by the rollout of necessary infrastructure and new projects caused by restrictive and outdated planning guidance; speed up the grid connections process so that new projects can come online quicker; and link the UK Emissions Trading Scheme (ETS) with the EU ETS while also taking other measures to address recent volatility, as a stable and predictable carbon price is perceived to be a vital incentive to invest in clean energy.

While operating under the belief that sudden changes to policies and targets are putting at risk the very investment required to fund the move toward net-zero and the economic benefits and opportunities the transformation could bring in terms of jobs, growth, and greater prosperity, Pinchbeck claims that the UK’s series of U-turns on what is perceived to be key climate pledges has left “many investors questioning whether the UK has either the commitment or the belief to deliver on this. We have a vital choice to make on our future here and – as these reports have shown – the right decision is to seize the opportunity and make it the focus of our efforts to deliver economic growth, high-quality jobs and greater prosperity over the coming years and decades.”

In a bid to inspire people to join the energy sector by driving awareness about the diversity of careers available and the different pathways to entry, the Young Energy Professionals (YEP) Forum released its ‘Guide to Jobs in Energy,’ highlighting the variety of jobs within the energy sector, covering technical roles in engineering and STEM fields, as well as innovation, policy influencing, and organizations that provide a service to the sector. It is believed that bridging the skills gap will power the energy transition journey and enable Britain to turn into a clean energy powerhouse.

Following the publishing of the report, Pinchbeck stated: “The energy industry will play a vital role in helping the UK decarbonize, and yet it is well documented that there is a skills gap that could be detrimental to achieving our net-zero target. Hundreds of thousands of new jobs need to be filled by 2050 and there is a need for people who understand communications, and marketing or have commercial skills, alongside people who can invent things and solve technical issues. 

“It’s important that people from all backgrounds can see themselves working in our sector, and this guide, as well as the wider work of the YEP Forum, will help people at the start of their working life understand how they can have a long-term career with purpose.” 

Phil McNally, YEP Forum Chair and Research Fellow at UCL, said: “The transition to net-zero will require a monumental effort from hundreds of thousands of people to deliver all the new infrastructure we need and solve the challenges ahead of us with innovative ideas. These jobs span all corners of the economy, including engineering, policy, finance, and marketing to name just a few. This skills gap is a significant challenge but also a fantastic opportunity for people to play a role in the defining challenge of our time.” 

While many continue to urge the UK to create a supportive investment environment for renewable energy and low-carbon technologies, very little is done to advocate for more investment in the oil and gas industry. This has led multiple oil and gas players, including INEOS, to warn that mixed and negative signals from politicians serve to wreak havoc on the future of the industry, impeding investments needed to ensure energy security.

At the same time, climate campaigners and environmental activists are turning up the heat to halt the further development of the fossil fuels industry. They are adamant that the four biggest banks in the UK – HSBC, Lloyds, Barclays, and Natwest – should take a huge step towards putting an end to the bankrolling of fossil fuels by turning off the financial taps. Global Justice Now points out that these banks have poured £300 billion into oil and gas over the last seven years and made “gigantic” profits doing so.

These groups consider the funding of the fossil fuel machinery as a “climate-wrecking business model,” and mention that when unprecedented floods across Pakistan caused up to $40 billion of damage in 2022, and the UK saw record temperatures of over 40 degrees, Barclays alone invested almost £14 billion into fossil fuels.

Izzie McIntosh, Climate campaigner at Global Justice Now, underlined: “We can’t let these financial giants bankroll the climate crisis and get away with it! We need to make them pay for the pollution they are helping to create. The COP28 UN Climate Conference is fast approaching, and we will be demanding governments at the summit deliver on the global fund for climate loss and damage they promised last year. This fund would compensate those on the sharp end of the climate crisis, who have often done the least to cause it. It’s vital that rich countries like the UK commit to making a major contribution.

“But so far those who are doing the most to cause the climate crisis – such as big polluting banks like Barclays and HSBC, and big polluting oil companies like BP and Shell – have contributed nothing to pay for loss and damage. We need to hold these companies, which are profiting from driving the climate emergency, to account. We need to ensure our leaders feel the pressure to make them pay at every turn. When the president of this year’s COP is heading up an oil company, we can’t leave anything to chance.”

Global Justice Now, as part of the Make Polluters Pay coalition, wants to push the UK government to bring banks into line by imposing a permanent polluters tax on those like BP, Shell, Barclays, and HSBC and channel this into the UN loss and damage fund. Whenever oil majors and other companies within the fossil fuels industry reveal their latest profits, climate activists demand they pay for the damage they have allegedly done to the climate. Two weeks ago, these groups took to the streets across the country for the Make Polluters Pay Action Day.

Daisy Pearson, Global Justice Now Activism Team, underscored: “Protests like these show fossil fuel companies that we will not stand idly by while they profit from our destruction. They show our decision-makers what really matters to their constituents, and that people are willing to fight for it. And they spread a hopeful message that a fast and fair global transition away from fossil fuels is perfectly possible, if we’re willing to imagine a world where corporate power is not allowed to run rampant, and profiting from oil, coal and gas is not inevitable.”

Moreover, Global Justice Now and other climate campaigners see the move the UK government has made to review Britain’s membership in – what they deem to be – the climate-wrecking Energy Charter Treaty as a big step forward, but they are still convinced that continued pressure from the public and local activists will be “vital” in ensuring the government will exit the ECT. 

 “The COP28 UN climate summit is just around the corner. It’s more urgent than ever that we remind this government of the UK’s climate responsibilities. If the UK is going to make a significant contribution to a strong UN loss and damage fund, our leaders need to feel the pressure,” added Pearson.

As activists believe that big business will not give up their profits without a fight, they plan to make sure their calls for “climate justice” are heard as loudly as possible in the run-up to COP28. In addition, they plan to do their utmost to make the UK government aware of what they believe to be its failure to tackle the root cause of the problem, which for them is polluters getting away with paying nothing for their pollution.

“So far, progress at the UN on the loss and damage fund has been slow. As frustrating as this is, we have to keep fighting for the right thing. The agreement of a loss and damage fund was a big win for the global movement last year, and as campaigners, we must keep pushing for it to become a reality. Every step towards climate justice will be hard won. We have to make sure decision-makers hear our demands before and after COP28 as well. With the recent government flip-flopping on the UK’s climate commitments, it’s never been more necessary to show the breadth and depth of support for tackling the climate emergency,” concluded Pearson.

The UK’s thumbs-up sign for the development of one of the largest undeveloped oil fields on the UK Continental Shelf (UKCS) came on the heels of an updated pathway to net-zero by 2050, which takes into account the developments that have occurred since 2021. Following the North Sea Transition Authority’s stamp of approval for the development of the Rosebank field, Equinor and its partner, Ithaca Energy, have taken the final investment decision to progress Phase 1 of the development, investing $3.8 billion in the project. This phase is targeting an estimated 245 million barrels of oil.

The field will be developed with subsea wells tied back to a redeployed FPSO vessel, with the first production expected in 2026-2027. According to Equinor, electrification is expected to enable the Rosebank lifetime upstream CO2 intensity to decrease from 12 kg to about 3 kg CO2/boe. At its peak, the field could produce 69,000 barrels of oil or 9,000 tonnes per day, which is equivalent to 8% of the UK’s entire output between 2026 and 2030.

Despite the touted benefits for jobs, economy, emissions reduction, and energy security, climate campaigners are not happy with the government’s decision to approve Rosebank. In line with this, Greenpeace UK said the development of Rosebank was “a disaster for the climate and for people’s energy bills.”

Liz Murray, head of campaigns at Global Justice Now Scotland, stated: “At what point are our politicians going to draw a line in the sand and say that’s enough? The climate emergency, and the threat from fossil fuels, need to be seen in the same way as the threat of nuclear war and the need to eliminate weapons of mass destruction.

“So that means, instead of propping up the profits of fossil fuel giants, who are making obscene amounts of money from the climate emergency that they are in large part responsible for, we need leaders with the courage to draw that line in the sand, say no more new oil and get on with the serious work of making an exit plan from fossil fuels.”

As the approval for Rosebank came only a day after the International Energy Agency (IEA) revealed its new edition of the Net Zero Roadmap, environmental activists used this as ammunition to oppose the oil project’s approval. The IEA’s report underscored there was no room for new oil, gas, and coal beyond operating fields and mines for 1.5ºC. It also charts a faster phase-out of natural gas, as the IEA has cut its projection for gas demand in 2050 by almost half, compared to its 2021 scenario.

Within the updated net-zero scenario, a huge policy-driven ramp-up of clean energy capacity is expected to cut fossil fuel demand, making it 25% lower by 2030, and reducing emissions by 35% compared with the all-time high recorded in 2022. Bearing this in mind, fossil fuel demand is forecasted to fall by 80% by 2050. However, the agency still points out that continued investment is required in some existing oil and gas assets and already approved projects.

In the IEA’s view, sequencing the increase in clean energy investment and the decline of fossil fuel supply investment is “vital” if damaging price spikes or supply gluts are to be avoided. In addition, the updated roadmap reduces its projections for CCS deployment in 2030 by around 40% compared to the original NZE scenario.

The report shows that driving down greenhouse gas emissions from the world’s energy sector to net-zero and limiting global warming to 1.5 ̊C remains possible due to the growth of key clean energy technologies, but the momentum behind the pivot to greener energy still needs to increase rapidly in many areas. In the new zero pathway, global clean energy spending will rise from $1.8 trillion in 2023 to $4.5 trillion annually by the early 2030s.

This content is available after accepting the cookies.

Change cookie-settings View on Twitter.

Despite the IEA’s predictions of peak oil demand by 2030, OPEC‘s 2023 World Oil Outlook (WOO) estimates that global oil demand will be 116 mb/d in 2045, accounting for 29.5%. In addition, natural gas demand is anticipated to jump by 20 mboe/d over OPEC’s outlook period, reaching 87 mboe/d in 2045.

The coal decline is forecasted to downgrade the share of fossil fuels in the energy mix from above 80% in 2022 to about 69% in 2045. However, the combined share of oil and gas in the energy mix is still predicted to represent 54% in 2045, highlights OPEC’s new WOO.