In March 2020, a groundbreaking report by Energy Systems Catapult found Net Zero by 2050 was possible if the UK supports innovation and scale-up across three essential areas – Low Carbon Technology, Land Use and Lifestyle.

The Innovating to Net Zero UK report modelled 100s of potential pathways to 2050 – ramping up or down different technologies and behaviour changes – to understand the combinations, interactions and trade-offs of competing decarbonisation approaches.

Meeting the UK’s Net Zero target will require unprecedented innovation across the economy. Innovation not just in new technologies, but in new ways of deploying existing technologies, new business models, new consumer offerings, and, crucially, new policy, regulation and market design.

The Net Zero opportunity

In 2018, the International Panel on Climate Change published evidence on what would be required for a 1.5°C limit and the implications of not doing so.

In May 2019, the CCC recommended to the UK Government aNet Zero emissions target by 2050. Advice that was accompanied by supporting research, including our Living Carbon Free report which set out the implications for households.

In June 2019, the UK Government amended the Climate Change Act from 80% to 100% GHG emissions reductions – or Net Zero – by 2050. ‘Net’ means balancing any residual carbon emissions by 2050 with an equal quantity of carbon dioxide removals from the atmosphere, as long as this takes place in the UK.

In March 2020, Energy Systems Catapult released an update of its internationally peer-reviewed Energy System Modelling Environment (ESME) to take account of Net Zero targets.

The new ESME report Innovating to Net Zero energy has found that meeting the UK’s Net Zero target will require unprecedented innovation across the economy. Innovation not just in new technologies, but in new ways of deploying existing technologies, new business models, new consumer offerings, and, crucially, new policy, regulation and market design.

While the challenge is daunting, the commercial opportunity for those companies able to deliver the innovations needed is huge. This analysis will help identify those opportunities, and what may be needed to unlock them on the way to a long term zero carbon economy. While our assumptions should be challenged, our goal is to show ‘what you have to believe’ in order to achieve Net Zero by 2050.

How do you get to Net Zero? Net Zero technologies and innovations

The internationally peer-reviewed Energy System Modelling Environment (ESME) is the UK’s leading techno-economic whole system model – it has been used by the Committee on Climate Change CCC, industry, academia and the UK Government. EMSE is independent of sector interests and identifies cost-optimised decarbonisation pathways.

ESME is a whole-system optimisation model and finds the least-cost combination of energy resources and technologies that satisfy UK energy service demands along the pathway to 2050. Constraints include net zero greenhouse gas emissions targets, resource availability and technology deployment rates, as well as operational factors that ensure adequate system capacity and flexibility.

Importantly, ESME includes a multi-regional UK representation and can assess the infrastructure needed to join up resources, technologies and demands across the country, such as transmission and distribution of electricity and gas, and pipelines and storage for CO2.

The previous options in ESME were sufficient for exploring 80% pathways. To reach Net Zero, new technology and behaviour change options have been added for different scenarios:

• Ships fuelled by hydrogen/ammonia
• Decarbonisation of industry via electrification or hydrogen have been extended
• Off-road mobile machinery to transition away from fossil fuels
• Carbon, capture and storage with 99% capture rates (up from 95%)
• Direct air carbon capture and storage
• More UK biomass and forestry
• Larger reductions in livestock farming.
• Slower aviation demand growth.

Key points

Net Zero narrows the set of viable pathways for the future energy system. Where an 80% target allowed considerable variation in relative effort across the economy, with some fossil fuels still permissible in most sectors, Net Zero leaves little slack. Innovating to Net Zero has found:

• Success depends on innovation across the whole system: in technology, land use change and behaviour.

• Net Zero before 2050 is not possible without highly speculative changes to lifestyle, land use and low carbon technologies. Even if demand for aviation and livestock products were eliminated by 2050, and technology deployment raised to even more ambitious rates, Net Zero could only be brought forward to 2045.

• CCS and bioenergy are both essential to delivering Net Zero. While an 80% target was still possible without CCS and scaling up biomass but with a much higher system cost. Failure to deploy either option means foregoing the negative emissions essential to offsetting continued demand for aviation and livestock products. Under Net Zero, CCS is also vital for mitigating industrial process emissions and hydrogen production.

• Land use must be optimised to balance carbon sequestration with other priorities. New forestry can provide a net carbon sink for decades during growth and bring wider environmental benefits. Biomass crops, when regularly harvested for energy (coupled with CCS), offer more intensive and indefinite sequestration.

• Hydrogen may need to grow from virtually zero to levels equivalent to today’s electricity generation to supply industry, heat and heavy transport.

• Electricity generation will need to double to supply huge increases in heating and transport (perhaps treble if hydrogen uses electrolysis). Offshore/onshore wind and solar will need to grow significantly under any scenario. Advanced nuclear technologies and small modular nuclear – 7GW or around 20 odd reactors at 300MW each – supporting ¾ of all District Heat in cities – more than a 10-fold rise.

• Net Zero cost can be limited to 1-2% of GDP  with stable, credible policies enacted this Parliament to help reduce the cost of capital for the private sector.

Net Zero UK Policy and Regulatory Reform

Robust, large-scale and enduring net zero carbon policies and regulation will be essential to building the necessary confidence with innovators to  invest in low carbon products and services.

1. Economic incentives to go low carbon – balanced, economy-wide framework of market, pricing and regulatory interventions – such as new carbon standards for buildings to promote adoption of low or zero carbon heating and potentially road transport, and new incentives for climate friendly land use choices.
2. Local Area Energy Planning – rolled out to identify the unique low carbon solutions, energy infrastructure and investment needs in different local areas to shape decision making
3. CCS and hydrogen production – direct support for innovation and early deployment in industrial clusters, including funding mechanisms for CO2 transport & storage infrastructure.
4. Reform of power markets – to improve efficiency and unlock flexibility and distributed low carbon technologies, including to match user needs and local system circumstances.
5. Open energy data and digitalisation governance framework in line with recommendations of the Energy Data Taskforce to enable tailored consumer-focused innovation, business models, market designs and consumer protections.
6. Development of tradable instruments such as carbon credits, and associated market arrangements, to enable capital to flow to sectors where reduced emissions are being delivered most efficiently, so for markets to reveal least-cost combinations.

Net Zero Innovation Support

The commercial opportunity for companies helping to deliver Net Zero is huge. Our Energy Launchpad helps innovators navigate the challenges of energy system transformation and capture the opportunities, by delivering support across Universal, Incubation and Acceleration.