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Net Zero: The £50bn shopping list

Senior Green Technologies and Services Advisor Katherine Burden breaks down the size of the market opportunity for green technologies and services as the UK drives towards net zero emissions.


The UK was the first major nation to set a legally binding target to reach net zero emissions by mid-century. But what milestones are needed between now and then for us to achieve the goal and how much will it cost?

Thankfully, we have good answers to these questions. The government’s independent advisory body, the Committee on Climate Change (CCC), recently published a major report that charts the UK’s path to net zero and what must be achieved in the intervening years.

The scale of the challenge

The CCC’s purpose is to advise the government on its emissions targets, including ‘carbon budgets’ which must be set every five years to ensure adequate progress is being made. Their report documents the CCC’s formal recommendation for the UK’s sixth carbon budget, covering 2033-2037, which needs to be set in law this summer. By the mid-point of that period, the committee believes the UK’s annual emissions need to be 78 per cent lower than they were in 1990.

This is a big step-up in ambition. For comparison, UK emissions in 2019 were 41 per cent below 1990 levels. Up until 2019, when the UK set its 2050 net zero target into law, the legally binding target was to achieve an 80 per cent cut in emissions by 2050. Now we need to achieve that 15 years earlier.

Investment is already paying off

The path ahead is hugely challenging, but there is good news. One of the key takeaways from the report is that – providing action is taken at speed and scale – the transition will cost just below 1 per cent of GDP over the next thirty years, or around £50 billion per year by 2030. This surprised the CCC, who only a year before had estimated the cost to be double that figure.

The reason for this dramatic drop is the remarkable progress that has been made in clean technology. The cost of renewable energy has dropped dramatically year-on-year, far ahead of early expectations. Six years ago, the International Energy Agency (IEA) forecast that average solar power prices worldwide would reach $0.05 kWh by 2050, but we reached this price in 2020. The average cost of offshore wind power plummeted by nearly a third in just one year between 2018 and 2019.

Meanwhile, progress on electric vehicles has accelerated so fast that last year the UK government brought forward its ban on new petrol and diesel cars from 2040 to 2035, and then again to 2030 a few months later. Battery costs have declined by more than 70 per cent in less than a decade and are expected to halve again by 2030, meaning electric cars are expected to reach cost parity with conventional cars as early as 2024.

In fact, there are now low cost, low carbon solutions in nearly every sector of the economy. The substantial financial savings of these technologies and their benefits to health and nature will ultimately cancel out the up-front investment required for net zero entirely.

How to spend £50 billion

£50 billion per year is still a significant sum (to put it into context, UK economy-wide investment is currently around £400 billion per year). The majority will have to be funded by the private sector. So how will it be spent?

Below is a summary of some of the key expenditures in the CCC’s proposed net zero pathway. Remember that this is the ‘recommended’ route. There are several paths the UK could take to reach net zero, but as the government’s statutory advisor on climate change, the CCC has a strong of influence on what the final route is likely to look like.

1. Electric vehicles and charging infrastructure

The transport sector is now our biggest source of carbon emissions, so rapid progress is needed. According to the CCC, battery electric cars should have a 50 per cent share in the new car market by 2025. By 2035, there could be around 28 million electric vehicles on the road.

Charge points will need to be scaled up rapidly over the next few years to support this huge shift, reaching nearly 400,000 across the UK in total by 2035. The required investment in vehicles and charging infrastructure combined is expected to rise to £12 billion per year by 2035 and continues rising to 2050 as more infrastructure is rolled out.

2. Buildings

Retrofitting buildings is perhaps the standout opportunity in terms of economic, social and environmental impact. As well as making up a sizeable portion of our required emissions reductions, the CCC believes it could create 200,000 full time jobs through to 2050.

An average investment of less than £10,000 per home is needed over the next 30 years to decarbonise our housing stock through energy efficiency measures such as insulation and draught-proofing. This will require an investment of around £45 billion to 2035, rising to £55 billion by 2050.

Low carbon heating is also a major opportunity. Every replacement boiler should be zero carbon by the early 2030s. New fuel sources such as hydrogen are expected to play a role, but the majority will have to be electric heating systems such as heat pumps. In total, investment across all buildings (domestic and non-domestic) average around £12 billion per year up to 2050.

3. Electricity and hydrogen

The CCC says UK electricity production should be entirely zero carbon by 2035, led primarily by offshore wind and solar power. The total additional investment required to roll out new generation capacity, storage and strengthening the electricity network is expected to rise to around £15 billion in 2035, with investment peaking in the 2030s.

In areas less suited to electrification, such as shipping and some energy-intensive industries – and to a limited extent in buildings and transport – hydrogen will step in as an important low carbon fuel. Investment in the hydrogen network, including supply, storage and carbon capture technology, is expected to increase to around £4 billion per year by the 2040s. By 2035, the hydrogen sector will be nearly a third of the size of our entire power sector today.

It’s worth noting that the electrification of transport, heating and industrial processes over the coming years means that electricity demand is expected to rocket up by 50 per cent to 2035, doubling or even trebling by 2050. This will create space for a vibrant market in energy efficient technologies and product innovation.

4. Nature-based solutions

Delivering net zero will require a transformation in the use of land across the UK. By 2035, 440,000 hectares of mixed woodland need to be planted to remove carbon from the atmosphere. This would see woodland cover in the UK growing from 13 per cent today to 15 per cent in 2035, rising to 18 per cent by 2050.

There will also be increased opportunities in peatland restoration, bioenergy and low carbon farming practices. Annual investment in these areas is expected to rise from just over £100 million today to around £1.5 billion by 2035, with woodland creation and bioenergy crops responsible for the lion’s share of this figure.

This decade is the big one

The 2020s are a crucial decade in the push to net zero. According to the CCC, the most rapid emissions reductions – around 60 per cent of what’s required in total – need to be between 2025-2035. Before 2025, markets for low carbon solutions will be still be scaling up. Beyond 2035, many of the early opportunities will have been exhausted, so progress will slow down.

The pressure is now on to scale up low carbon markets and supply chains so that almost all long-lived purchases and investments are in zero carbon solutions by 2030 or soon after. Delaying action ultimately means higher costs in the long run.

Of course, it’s the government’s job to put these recommendations into action. The Prime Minister’s 10 Point Plan announced in December 2020 is just a start, but it gives us a good idea of the priorities going forward. There is much more to come later this year, when the government is due to release its full net zero strategy.

Our Green Technologies and Services team is perfectly placed to help SMEs in Greater Manchester to navigate the emerging opportunities of net zero. For more information, get in touch with an advisor today and join our Low Carbon Network to keep up with the latest updates.

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Katherine Burden

Katherine Burden, Low Carbon Sector Lead

Katherine is a skilled and knowledgeable business advisor with over 13 years’ experience working within the Green Technologies and Services sector. As co-founder of a low carbon consultancy, Katherine brings first-hand experience of running a small business coupled with specialist knowledge of the sector. With a passion for helping small businesses to thrive, Katherine has worked on numerous business support programmes and continues to use her sector insight and business acumen to advise clients on topics such as sales & marketing, exporting, business planning and market research.

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