As the government launches its Review of Electricity Market Arrangements (REMA) focusing on electricity supply, UK FIRES publishes a new report detailing the even greater scale of opportunity for energy sector innovation on the demand side.
Facing the reality that new energy-sector technologies won’t solve climate change fast enough reveals rich opportunities for innovation and growth in UK materials and manufacturing sectors. UK law commits us to zero emissions by 2050 with most of the reduction occurring by 2035. But we’re not on track to deliver. That’s because corporate and political strategy today is counting on new technologies, like carbon capture and storage, biofuels, hydrogen and negative emissions technologies to meet the challenge, while business elsewhere continues largely as usual.
Ahead of COP26, the UK Government has submitted its Nationally Determined Contribution to global climate mitigation which requires a 45% reduction in UK emissions from 2018 to 2030. Even if all planned new generation is delivered on time, the government’s pledge can only be met with significant restraint across all sectors.
The gap between the UK’s emissions-reduction targets and its delivery policies creates a vast and largely unexplored space for entrepreneurship and business growth. Reaching zero emissions within one generation depends on electrification, but we won’t have as much non-emitting electricity as we’d like. Without action, this means national energy poverty – but with foresight, now entrepreneurs can profit from the businesses that will give us great lives with less energy. This report reveals the breadth of this untapped opportunity for entrepreneurs.
In the rapid transition to net zero, demand is likely to exceed supply for three zero-emissions resources: non-emitting electricity, biomass and negative emissions. ZERPAs are a new financial instrument that allow capital markets to anticipate this shortage, evaluate risks and redirect capital in response.
The global steel industry is transforming from using iron ore to recycling scrap. Global arisings of steel scrap are likely to treble in the next thirty years and we will never need more blast furnaces than we have today.
We have to cut our greenhouse gas emissions to zero by 2050: that’s what climate scientists tell us, it’s what social protesters are asking for and it’s now the law in the UK. But we aren’t on track. For twenty years we’ve been trying to solve the problem with new or breakthrough technologies that supply energy and allow industry to keep growing, so we don’t have to change our lifestyles. But although some exciting new technology options are being developed, it will take a long time to deploy them, and they won’t be operating at scale within thirty years.