Net Zero Carbon Policy is an Energy Systems Catapult thought leadership project, focusing on how the UK can develop an innovation-friendly, economy-wide policy framework for Net Zero. We are building on the insights from our Rethinking Decarbonisation Incentives project, to develop credible policy options for an efficient and socially beneficial transition.

Hosting COP26 in 2021 – along with the forthcoming Net Zero Strategy – presents the UK with a new opportunity for global influence, this time as a leader in shaping the markets and policy reforms needed to deliver Net Zero. The need to reach Net Zero emissions by the middle of the century across all major emitting sectors – travel, heating, manufacturing, power generation, and farming practices – is clear.

UK Net Zero Strategy – Key points

In this briefing, we set out how the UK can build on its existing regime of carbon targets to create a framework of policies and governance capable of delivering Net Zero.

In doing so, the UK can play a key leadership role on the international stage, in approaches to Net Zero carbon policy design across key sectors, in ensuring robust carbon accounting, and in developing carbon markets and emissions trading as the basis of a genuinely economy-wide policy framework for Net Zero.

Recommendations for Policymakers

Ahead of COP26 this autumn, we see an opportunity for the UK to show genuine leadership in Net Zero policymaking. The UK Government can build on its recent 10 Point Plan and sectoral decarbonisation strategies by committing to develop and implement a range of policies and institutions as part of the UK’s long-term Net Zero Strategy, due to be published in the coming weeks.

Our work on Net Zero Carbon Policy over the past four years suggests that this strategy should include the following key commitments:

1. Commit to establishing a Carbon Monitoring, Reporting, and Verification and Accounting Regulator, responsible for robust empirical and scientific methods for measuring or accurately estimating emissions, and ensuring emissions reduction actually occurs in line with Carbon Budgets and the Paris Agreement.
2. Commit to expanding the scope of the UK Emissions Trading System to cover heating and road transport emissions, as part of comprehensive policy packages for reaching Net Zero in both sectors.
3. Commit to fully adopting long-term carbon performance standards in the buildings sector by 2035, creating a clear driver for innovative building energy solutions.
4. Commit to adopting a Net Zero emissions by 2035 policy driver for the electricity sector, this could be in the form of an outcome-based decarbonisation policy mandate such as a decarbonisation obligation that compliments the UK ETS.
5. Commit to developing an enduring set of incentives for deep industrial decarbonisation with appropriate mechanisms to mitigate competitiveness impacts, centred on the UK ETS while considering interactions with international trading partners’ carbon policy plans (e.g. Carbon Border Adjustment Mechanism designs).
6. Commit to linking new agricultural reward schemes to the adoption of climate-friendly farming practices and land-use changes, and to developing a long-term incentive framework for Net Zero land use.
7. Commit to creating a linked Greenhouse Gas Removals Marketplace, initially by establishing a publicly-funded and centrally-accredited system.