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by Dr. Danial Sturge, Carbon Policy Practice Manager
If we are to achieve our ambitious climate targets then innovating to Net Zero is a necessity, but it requires more than just technological innovation – it’ll need to encompass innovations in consumer propositions and business models, and the markets that allow them to happen. The implementation of robust and enduring policies and regulation will be essential to building the necessary confidence with innovators to invest in low carbon products and services.
It was very encouraging to see the far more Net Zero focused Budget delivered on Wednesday, especially the £800m for Carbon Capture and Storage (which our analysis says is a crucial technology for whole system decarbonisation) and the doubling of the energy innovation budget. It was also important to see some tentative steps towards improving the mess of carbon incentives across the economy, although much more remains to be done – including a simplification of the array of interventions across the power and wider energy system – if we are to encourage the scale of innovation we need.
In our ‘Innovating to Net Zero’ report we set out an extensive programme of policy and regulatory reforms we think are necessary to unlock innovation that our modelling analysis shows is required. This builds on the policy work ESC has carried out to date, including our economy-wide carbon policy project, Rethinking Decarbonisation Incentives (RDI), which highlighted the imbalance of carbon-related policy signals across different sectors:
Figure 1: Effective carbon prices and emissions in the UK by sector
In addition, it draws on our Rethinking Electricity Markets project, and policy framework to decarbonise buildings. For transport, it applies the findings and recommendations of the EV Energy Taskforce and Consumers, Vehicles and Energy Integration (CVEI) project.
Our policy recommendations for Government to introduce in the near-term to support the developing of an economy-wide carbon policy framework for Net Zero include:
2020 is a crucial year for carbon policy: the Committee on Climate Change will be publishing their recommendation on the level of the Sixth Carbon Budget in September; HM Treasury will be carrying out their Spending Review; and closing out the year the UK will be hosting COP26.
We will be picking up where RDI left off with our new project, Net Zero Carbon Policy. Our first publication will be coming out before the summer, where we will look at the next steps to improve effective carbon prices across key sectors of the economy.
Independent thought leadership that combines expertise in clean technology, economics, and energy policy design, informed by cutting-edge modelling and evidence-based analysis.
Find out moreFind out more about how Energy Systems Catapult can help you and your teams
Find out more about how Energy Systems Catapult can help you and your teams