Responding to the Independent Review of Net Zero’s Recommendations

Question 1

Introduction

Accepted Answer

We welcome the Rt Hon Chris Skidmore MP’s Net Zero Review (Mission Zero), an independent review of net zero and government’ progress towards achieving it. Chris Skidmore was asked to lead the review and focus on how we can deliver a pro-growth, cost effective net zero in the context of global economic shocks.

The review ran from September to December 2022 – with 52 roundtables across industry, government and civil society and 1,800+ responses to a public call for evidence. It made 129 recommendations focused on 10 missions. The Net Zero Growth Plan includes sections on how we are taking forward the recommendations, but we have also provided a response to each recommendation in this accompanying annex.

We agree with the review’s conclusion that net zero is the growth opportunity of the 21st century and could offer major economic opportunities to the UK – but that decisive action is needed to seize these. Other countries such as the USA with the Inflation Reduction Act are moving quickly, and we must do the same. We are focused on unlocking the ambition of places and communities to deliver net zero by 2050.

Question 2

Recommendations 1 to 9

Accepted Answer

Recommendation 1

Timing

-

Recommendation

Publish an overarching financing strategy covering how existing and future government spending, policies, and regulation will scale up private finance to deliver the UK’s net zero enabled growth and energy security ambitions. This should include setting out the role of UKIB, BBB, BII, and IPA and UKEF in the transition.

Response

In parallel to the ‘Net Zero Growth Plan’, the government is publishing its 2023 Green Finance Strategy. This sets out how strategic government support can unlock private investment to drive forward economic transformation and innovation at the scale and pace required to deliver our net zero, climate resilience and environmental objectives. The Strategy covers the role of public finance institutions in financing net zero - supporting sectors and technologies across the commercial maturity curve.

Recommendation 2

Timing

Next Spending Review.

Recommendation

At the next Spending Review, review options for providing longer-term certainty to a small number of major priorities for net zero – where we know that long-term policy commitment will be essential for success and provide long-term opportunities to save money.

Response

Government recognises the importance of long-term policy and funding certainty for net zero, particularly to mobilise private finance to invest in the transition. HM Treasury sets departmental spending budgets at Spending Reviews to enable Ministers to consider the value for money of spending proposals across government priorities and within fiscal constraints to ensure total spending is affordable.

Government does already provide longer-term funding certainty to a number of major priorities for net zero, and at Spring Budget confirmed up to £20 billion to support the early deployment of Carbon Capture, Usage and Storage. Government uses a range of policy levers to provide long term support, including the Contracts for Difference scheme for low-carbon electricity generation, through which generators have received almost £6 billion net in price support to date.

Further, government passed the Nuclear Energy (Financing) Act 2022, which enables new nuclear projects to benefit from a Regulated Asset Base (RAB) model, reducing the cost of new build nuclear and providing certainty to private finance.

At the Autumn Statement 2022, the Chancellor announced a new long-term ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030 against 2021 levels.

To lead this national effort, a new Energy Efficiency Taskforce has been established and £6 billion of new government funding will be made available from 2025 to 2028, in addition to £6.6 billion allocated this Parliament.

Government’s National Infrastructure and Construction Pipeline (NICP) also provides certainty to the major infrastructure project delivery sector. The NICP is a forward-looking pipeline of planned projects and programmes in economic and social infrastructure, and is due to be updated later this year. Government also put the UK Infrastructure Bank on a statutory footing to help create a long-lasting institution focussed on driving infrastructure investment towards projects that help tackle climate change, as well as supporting regional and local economic growth across the UK.

Recommendation 3

Timing

2023

Recommendation

Government to lead a bespoke consultation on funding scheme design – with a ministerial champion – to report on the issues and recommend reforms to government.

Response

Both the 2023 ‘Green Finance Strategy Call for Evidence’ and the ‘Independent Review of Net Zero’ highlighted concerns that the very broad range of government funding schemes that are available for businesses and project developers can at times create undue complexity and do not always suit the specific needs of the relevant sector. The government recognises the importance of ensuring the design of funding schemes is as impactful, effective and focused on value for money as possible, and we will explore the design of funding schemes for net zero projects ahead of the next Spending Review.

Recommendation 4

Timing

2023

Recommendation

Government to establish a new forum to coordinate across all regulators on the signals they are sending to businesses and investors across sectors about the net zero transition – including Ofwat, Ofgem, HSE, Environment Agency, Competition and Markets Authority, FCA, and the North Sea Transition Authority.

Response

Response

The government recognises the benefit in publishing public reports and opening itself to scrutiny. That is why there are many existing mechanisms to regularly scrutinise the government’s performance on net zero, including by Parliamentary Select Committees such as the Public Accounts Committee, independent bodies such as the National Audit Office, and – under the Climate Change Act – the Climate Change Committee (CCC). For the latter, the government provides a detailed annual response to the CCC’s Progress Report – a statutory duty – which is publicly available. The Net Zero Strategy also committed the government to report annually on 24 commitments. We have done this in the 2023 Net Zero Growth Plan. We also report on emissions and carbon budgets which are in the public domain. Consequently, we will not be expanding public reporting at this time, but we will continue to keep this under review as we progress on the pathway to net zero.

Question 3

Recommendations 10 to 19

Accepted Answer

Recommendation 10

Timing

2024

Recommendation

Government to review how often it publishes data on UK emissions – and represent this alongside GDP.

Response

Government publishes final estimates of UK greenhouse gas emissions annually, covering emissions data from 2 years prior. These statistics are used to monitor progress against the UK’s emissions reductions targets. Provisional greenhouse gas emission estimates are also published annually in March, covering emissions data from one year prior. As is standard for all statistics produced within the remit of the official statistics Code of Practice, the frequency of emissions publications is kept under review. We will commit to reviewing the frequency of statistics though it is not guaranteed that this will lead to a change.

Recommendation 11

Timing

2024

Recommendation

HMT should work with OBR and CCC to set out a process for how it will ensure the climate impacts of fiscal decision making are considered. It should commit to publishing the climate impacts of future spending reviews.

Response

Fiscal policy is only one lever to deliver the government’s climate objectives. The Net Zero Strategy set out the government’s wider approach to meeting its 2050 net zero target including the role of regulation and private finance. Departments are also ultimately responsible for assessing the impacts of their programmes.

Government to consider the adoption of a Net Zero Charter Mark – a mark to acknowledge “best in class” among firms in terms of their role in the transition to net zero.

Response

Businesses have significant power to drive change towards achieving our domestic net zero goal and we have seen significant numbers of companies signing up to science-based targets. Government’s focus is on how we can support businesses in providing consistent and comparable data to the market on their plans to transition to net zero.

As set out in our recently published ‘2023 Green Finance Strategy’, we are already focused on transparency of business action on net zero. This includes: becoming the first G20 country to require Taskforce on Climate-related Financial Disclosure-aligned (TCFD) disclosures across the economy; setting out a comprehensive approach to disclosure in the 2021 Greening Finance: A Roadmap to Sustainable Investing and establishing the Transition Plan Taskforce (TPT). The UK government is committed to continuing on this path, and creating an effective disclosure framework for sustainability information.

Recommendation 18

Timing

2023

Recommendation

The government should, by autumn 2023, undertake net zero infrastructure and technology critical supply chain analyses to inform decisions at the next Spending Review on where support akin to the Automotive Transformation Fund could add value.

Response

The transition to net zero will change the nature of the UK’s critical supply chains. Government will work to ensure that resilience is at the heart of activity to develop the UK’s green growth sectors and that the supply chains critical for net zero are secure, ensuring that the UK’s clean growth sectors have access to the critical inputs that are essential to their success. The government regularly analyses net zero infrastructure and technology critical supply chains and takes appropriate action to meet the UK’s net zero and economic growth ambitions. For example, the ‘Critical Minerals Strategy’ published in 2022 sets out government’s plan to secure supply chains, by boosting domestic capability in a way that generates new jobs and wealth, attracting investment and playing a leading role in solving global challenges with international partners.

Recommendation 19

Timing

-

Recommendation

Government and Ofgem should work with network companies to facilitate anticipatory investments in grid infrastructure.

Response

Electricity networks are key enablers for the net zero transition and energy security. The government supports Ofgem’s work to regulate electricity network companies in a way that enables the investment needed to deliver a secure, resilient, net zero network in an efficient way, including strategic and anticipatory investment where appropriate, and this will be reiterated in the forthcoming ‘Strategy and Policy Statement’. For the high voltage transmission network, the government welcomes Ofgem’s Accelerating Strategic Transmission Investment work to accelerate transmission network delivery, so key to enabling consumers to gain the benefits of renewable generation joining the grid across Britain. On the lower voltage distribution network side, the next price control begins in April, and includes £3.1 billion allocated for network upgrades to support low-carbon technologies. Nick Winser has been appointed as commissioner to look at how to accelerate delivery of strategic infrastructure and will report to Ministers in the summer. The government and Ofgem will continue to work together closely to ensure alignment of priorities for the electricity network.

Question 4

Recommendations 20 to 29

Response

This recommendation aligns with work already underway within government. The ‘British Energy Security Strategy’ outlines government’s commitment to accelerating the deployment of renewables. A cross government Action Plan, published in February 2023, sets out reforms to streamline and speed up consenting for nationally significant infrastructure projects.

Government is currently consulting on our updated ‘Energy National Policy Statements’, to set a clear strategic direction for energy infrastructure planning and reflect the importance of energy security and net zero.

Solar: Build up UK capability and provide the necessary training and certification.

Response

Government recognises that increasing skills and training for the solar workforce is key to achieving the deployment needed by 2035. In line with this ‘Independent Review of Net Zero’ recommendation, the joint government/industry Green Jobs Delivery Group is developing an action plan to address key emerging workforce challenges for solar and other renewables. The Group’s Power and Networks subgroup is also exploring ways of building UK training and capability for solar installers.

The solar sector is also working with training partners, certification scheme providers and local bodies to provide grants, learning tools, and training and placement programmes. We expect that the new solar taskforce will consider further actions to build supply chain resilience and strengthen skills capability.

Question 5

Recommendations 30 to 39

Accepted Answer

Recommendation 30

Timing

-

Recommendation

Government, regulators and industry to set up a taskforce and develop roadmap with clear milestones for onshore wind to reach required deployment level for 2035 net zero grid.

Response

Government does not consider it to be the right time to establish an onshore wind taskforce. Instead, to ensure we capitalise on this mature, efficient, and low-cost renewable technology, government is focussing on delivering the ‘British Energy Security Strategy’ commitment to develop local partnerships for onshore wind in England. To enact this, government has issued a technical consultation on changes to the ‘National Planning Policy Framework’, which closed on 2 March 2023. Separately government will shortly publish a second consultation on community engagement and benefits. Taken together, the outcomes of these consultations will fulfil the commitment in the ‘British Energy Security Strategy’ and ensure that onshore wind is built in areas where the community is supportive, and where the community is enabled to benefit from hosting the site.

In addition, the Scottish Government have published an onshore wind policy statement in 2022 setting an ambition of 20GW deployment by 2030, and established a Strategic Leadership Group that will develop an onshore wind sector deal.

Recommendation 31

Timing

-

Recommendation

Onshore wind: build up UK capability and provide the necessary training and certification.

Response

The joint government/industry Green Jobs Delivery Group is developing an action plan to address key emerging workforce challenges for renewables, including onshore wind.

Recommendation 32

Timing

2023

Recommendation

Government should implement reforms set out in the British Energy Security Strategy to double down on achieving the UK’s nuclear baseload requirement.

Expedite the set-up of Great British Nuclear (GBN) in early 2023, ensuring required funding and skills are in place.
Government and GBN to set out clear roadmap in 2023, including interim targets to reach 2050 ambition. Government to ensure funding is in place. As part of the roadmap, government should assess the possibility to increase the current ambitions supporting the development of supply chain to service a fleet of projects.
Roadmap to set out clear pathways for different nuclear technologies (including small modular reactors) and the selection process. This should consider how to use programmatic approach to deliver further cost reductions in a competitive environment.
Government to deliver on siting strategy by 2024.

Response

We are scaling-up our nuclear programme by establishing Great British Nuclear (GBN), including launching an SMR focused technology selection process. This body will drive delivery of new nuclear projects with an aim to ramp up nuclear capacity in the UK from up to 24GW by 2050. The first priority of GBN is to launch a competitive process to select the best Small Modular Reactor technology recently announced in the Budget with government providing co-funding to selected technologies.

Response

We are already making progress in our ambitions to have up to 2GW of low carbon hydrogen production capacity in operation or construction by 2025, and up to 10GW production capacity by 2030. Successful candidates for the first 2 strands of the Net Zero Hydrogen Fund (NZHF) were announced alongside Powering Up Britain: Energy Security. We aim to award contracts totalling up to 250MW of capacity from the first electrolytic hydrogen allocation round, subject to affordability and value for money, later this year. We published a shortlist of projects to progress to the next stage of due diligence for this round alongside Powering Up Britain: Energy Security. We set out that government will fund projects prior to the hydrogen levy being operationalised. We aim to launch a second electrolytic hydrogen allocation round in Q4 2023, and aim to award contracts to up to 750MW of capacity in early 2025, subject to affordability and value for money. On 15 March 2023 the Chancellor announced an unprecedented £20 billion investment in the early development of CCUS to help meet the government’s climate commitments. Alongside Powering Up Britain: Energy Security, we have now announced the Track-1 project negotiation list, including industrial capture and hydrogen projects. We also launched Track-2 of the CCUS cluster sequencing process to establish 2 further CCUS clusters.

We will continue to work with industry with a view to developing a hydrogen production delivery roadmap by the end of the year, which would provide greater clarity to investors and developers on scaling up hydrogen production and supply chain growth across the decade.

Question 6

Recommendations 40 to 49

Accepted Answer

Recommendation 40

Timing

2023

Recommendation

Government should deliver transport and storage business models as soon as feasibly possible and take a pragmatic approach to support key ‘no regrets’ transport and storage projects.

Response

The ‘British Energy Security Strategy’ made a commitment to design new business models for hydrogen transport and storage infrastructure by 2025. The government recently consulted on the need and potential approaches for T&S infrastructure strategic planning. The government response to the consultation is planned to be published by the end of June 2023, with any further details on strategic planning to align with the production roadmap. To bring forward hydrogen T&S business models, we are aiming to introduce legislative measures when parliamentary time allows, which will be crucial to designing these new business models by 2025.

Recommendation 41

Timing

-

Recommendation

Future System Operator (FSO) should take forward a role in setting out a system plan for hydrogen, considering the interactions between hydrogen storage and balancing renewables for the decarbonised grid. Government, with advice from the FSO, takes decisive leadership on naming priority areas for minimum viable pipeline and storage infrastructure, providing strategic direction that shows how we will link up demand and supply. We need early identification of strategic assets that are critical enablers of other infrastructure and therefore require at risk investment.

Response

Response

We already have ambitious plans to end routine flaring and venting. Beyond the challenging 2030 target, we signed up to the World Bank Zero Routine Flaring initiative, which aims to eliminate routine gas flaring globally. Under the initiative we committed to make every effort to ensure that routine flaring from existing oil fields ends as soon as possible, and no later than 2030.

The North Sea Transition Authority expects flaring and venting emissions to be at the lowest possible levels. New systems to stop flaring in existing facilities are expected to be operational between 2025-2030 and new developments are approved on the basis of zero routine flaring and venting.

Recommendation 45

Timing

2023

Recommendation

Government should ensure all new oil or gas fields have abatement built in now to avoid backwards engineering when they are electrified.

Response

The North Sea oil and gas industry has committed to reduce its emissions 50% by 2030, ensuring a net zero basin by 2050.

The North Sea Transition Authority is already applying its regulatory powers to require new platforms to include low carbon power such as being built ‘electrification ready’, or already electrified. The NSTA considers factors sometimes collectively referred to as an ‘effective net zero test’ when approving new field developments. The North Sea Transition Authority uses this process to ensure new developments build in carbon abatement and is continuously looking at strengthen interventions to prioritise electrification where technically feasible.

Government is additionally supporting existing platforms to deliver electrification via retrofitting their platforms to integrate with offshore wind and the onshore grid and deliver as soon as possible; long lead times for these projects mean that the 2030 target is already very ambitious.

Recommendation 46

Timing

2023

Recommendation

Government should ensure the Climate Compatibility Checkpoint is an effective tool to shape policymaking.

Response

The Climate Compatibility Checkpoint is an effective tool to shape policymaking. The design was the result of a robust process involving public consultation. We can confirm that we are committed to ensuring future policymaking on oil and gas licensing continues to be based on robust, up-to-date evidence that takes account of the latest context, and will continue to review and refine the checkpoint in operation.

Recommendation 47

Timing

-

Recommendation

Government should consider setting fossil fuel producers operating domestically a 10% storage obligation target to restore carbon dioxide to the geosphere by at least 2035, separate to any investment on nature-based solutions.

Response

The government’s CCS programme and Emissions Trading Scheme incentivise geological storage of CO2 along with other abatement options on a cost-effectiveness basis. The Net Zero Strategy already contains programmes for consumers of hydrocarbons, including buildings and surface transportation. Given the international movement of hydrocarbons and potentially of captured CO2 we are conscious that a scheme linking producers to CO2 storage could require complex administration with implications for national and international carbon commitments. We are therefore cautious about the merits of such a scheme at this time but recognise this as an area for future consideration.

The North Sea oil and gas industry has committed to reduce its emissions 50% by 2030, ensuring a net zero basin by 2050. Adding new obligations may have regressive impacts on these ambitious targets.

Recommendation 48

Timing

2050

Recommendation

Government should recognise the importance of geological net zero and works to align international ambitions toward geo zero by 2050, in line with net zero.

Response

The government’s CCS programme and Emissions Trading Scheme incentivise geological storage of CO2 along with other abatement options on a cost-effectiveness basis. The Net Zero Strategy already contains programmes for consumers of hydrocarbons, including buildings and surface transportation. Given the international movement of hydrocarbons and potentially of captured CO2 we are conscious that a scheme linking producers to CO2 storage could require complex administration with implications for national and international carbon commitments. We are therefore cautious about the merits of such a scheme at this time but recognise this as an area for future consideration.

The North Sea oil and gas industry has committed to reduce its emissions 50% by 2030, ensuring a net zero basin by 2050.

Adding new obligations may have regressive impacts on these ambitious targets.

Recommendation 49

Timing

2023

Recommendation

The 2023 consultation on the long-term tax treatment of the North Sea must include an option to create a hypothecated net zero fund.

Response

The government does not accept this recommendation. The government would have considerable fiscal sustainability concerns with regards to the use of EPL revenue for a hypothecated fund for energy efficiency investments, mostly due to the volatility of projections of EPL revenues as well the constraining impact on the management of public finances.

Further detail on the scope of the review of the long-term tax treatment of the North Sea will be set out shortly, including exploring whether the ring fence regime can better support investment in clean offshore technologies during the transition to net zero.

Question 7

Recommendations 50 to 59

Accepted Answer

Recommendation 50

Timing

2026

Recommendation

Dependent on the response to the consultation, by the end of 2026, HMT should set out a long-term plan for replacing the Energy Profits Levy (EPL) with a ‘Net Zero Fund’ that clearly ringfences revenue for investment into clean offshore technologies and/or energy efficiency improvements.

Response

The government does not accept this recommendation. The government would have considerable fiscal sustainability concerns with regards to the use of EPL revenue for a hypothecated fund for energy efficiency investments, mostly due to the volatility of projections of EPL revenues as well the constraining impact on the management of public finances.

Further detail on the scope of the review of the long-term tax treatment of the North Sea will be set out shortly, including exploring whether the ring fence regime can better support investment in clean offshore technologies during the transition to net zero.

Recommendation 51

Timing

2023

Recommendation

Greater transparency and data from industry on the carbon intensity of oil & gas (O&G) imports, and also from the North Sea Transition Authority (NSTA) and industry on O&G that is produced.

Response

Approach to confirming the pipeline of capture projects, at least up to 2030, that will receive future funding, not limited to Track 1 cluster locations. In doing so, it should set out the process and timeline for Track 2 cluster selection;
Greater clarity on planned investment for CO2 transport and storage, including a streamlined route to market for future CO2 storage sites and a plan for making economic licenses more readily available to those that have safety licenses for CCUS acreage already;
The plan for ensuring our supply chain and skills can meet demand

Response

The Independent Review of Net Zero acknowledges the critical role CCUS has in reaching net zero and the key opportunity CCUS has in creating growth. Through the cluster sequencing process, the government has made significant progress in making CCUS a reality in the UK. We have announced the negotiating list for the Track 1 clusters and a process to bring forward 2 more clusters through Track 2, and we also intend to commence a process to expand the Track 1 clusters. Nevertheless, we recognise the importance of providing further certainty for industry. In 2023 we will set out a vision for the UK CCUS sector, setting out how CCUS will support our net zero ambitions to raise confidence and improve visibility for investors.

Government and industry continue to engage with all aspects of the supply chain, through the CCUS Council Supply Chain working group chaired by Lord Hutton. This group has the objective to ensure the supply chain capacity and capability can meet the UK demand, as well as assist other countries in the plans to decarbonise using CCUS.

Recommendation 56

Timing

2024

Recommendation

By 2024, government must develop a strategy for the plan for non-pipeline transport and how dispersed sites and mini clusters can connect to the CCS network and what support should be offered for doing so.

Response

Government continues to explore the development of pipeline and non-pipeline options for sites outside the CCUS Cluster Sequencing Track 1 locations and potential interactions with business model support. We are providing £5 million for local clusters to develop strategic, area-based plans to decarbonise, which is technology agnostic and could facilitate strategic thinking on dispersed CCUS networks in different locations around the UK as well as other technologies. Later in 2023 we will set out a vision for the UK CCUS sector in 2023 to raise confidence and improve visibility for investors.

Recommendation 57

Timing

2023

Recommendation

Government should announce, as soon as is possible, its intentions for engineered Greenhouse Gas Removal (GGR) business models including timings and eligibility. This announcement must clearly outline what standards these business models are expected to require.

Response

In the Net Zero Strategy, we committed to developing incentives for investment in GGRs by consulting on our preferred business models in GGRs. In 2022, we published a consultation on both power BECCS and GGR business models. We will publish the power BECCS response imminently and intend to provide a response to the GGR consultation and set out the next steps this year.

In the consultations, we asked for opinions on factors such as net negativity and permanence to help define legitimacy in carbon removals, as well as committing to reviewing the existing landscape of standards and initiatives relating to engineered GGR MRV (monitoring, reporting, and verification). BECCS projects will be required to demonstrate compliance with strict biomass sustainability criteria. In January this year, we also held the first GGR Business Model Expert Group. This group of experts from industry will advise on the design of the GGR business model, alongside our wider stakeholder engagement.

Recommendation 58

Timing

2023

Recommendation

By Autumn 2023 HMT should review how policy incentivises investment in decarbonisation, including via the tax system and capital allowances.

Response

Government recognises the importance of incentivising investment in decarbonisation, to support businesses with their transition to net zero and to meet our legally binding carbon budgets.

From April 2023, the Annual Investment Allowance will be permanently increased to its highest ever level of £1 million, which will amount to full expensing for a significant portion of investment, covering 99% of businesses.

The government has also announced a generous economy-wide policy of full expensing, allowing companies to write off the full cost of qualifying main rate plant and machinery in the year of investment, with a 50% first year allowance for special rate plant and machinery investments.

Plant and machinery is a broad term that includes items such as computers and office furniture, to solar panels and windfarms. Therefore, many types of businesses will benefit from these generous new capital allowances, including those investing to help improve their energy efficiency.

The government expects the capital allowances changes announced at Spring Budget to improve the adoption of newer, more energy efficient technology and help support green industries, ultimately helping the UK to advance our net zero goals.

The government keeps the tax system under continuous review. We will engage with industry and carefully consider how best to incentivise businesses to invest in green technology. This will help the government to consider whether there is a case for doing more through the tax system or whether other levers are more appropriate. This could help firms to further decarbonise their operations and support the country’s path to net zero.

Future decisions on tax are for the Chancellor, and any changes would be communicated at a future fiscal event.

Recommendation 59

Timing

2023

Recommendation

Government should drive forward delivery of the recommendations of the Green Jobs.

Response

The Green Jobs Delivery Group (GJDG) was formed after the publication of the Net Zero Strategy and acts as the central government-industry forum for driving forward action on green jobs and skills. The group is driving forward the recommendations highlighted by the Green Jobs Taskforce and commitments in the Net Zero Strategy.

In line with the recommendations from the Net Zero Review, as the group progresses through its workplan, the outputs will be brought together into an overall Net Zero and Nature Workforce Action Plan in 2024. This will outline the headline actions and solutions the group is progressing to deliver the skills needed within the UK workforce to deliver net zero. These actions will be split across government and industry. Government will monitor the plan on a regular basis, alongside publishing bi-annual updates from the GJDG’s co-Chair’s, beginning in Spring 2023.

We have published head start actions for a joint government-industry Net Zero Power and Networks Workforce Action Plan. Further detail is coming later in the Spring.

Question 8

Recommendations 60 to 69

Accepted Answer

Recommendation 60

Timing

2023

Recommendation

To monitor progress against the just transition, government should swiftly develop robust regional green jobs statistics (ideally at local authority level, at least for England), breakdowns of green jobs considering protected characteristics, and publish information about salary levels, to monitor the just transition.

Response

The ONS will continue to develop green jobs statistics, including its recently published definition for ‘Green Jobs’, followed by experimental statistics based on the new definition. The government will also prioritise the development of more granular green jobs data, with the ONS initially doing so through the Low Carbon and Renewable Energy Economy Survey. Our transition to net zero will be about building new net zero industries (such as CCUS and hydrogen), and helping existing industries such as automotive to transition to meet increased demand for low-carbon goods and services. We will also work closely with the Department for Levelling Up, Housing and Communities and its Spatial Data Unit to ensure this work supports efforts to reduce geographic disparities and level up the UK.

Recommendation 61

Timing

2023

Recommendation

Government and the Green Jobs Delivery Group should explore a variety of targeted options, including:

Increasing the flexibility of the Apprenticeship Levy, and assessing whether the Levy aligns with government net zero and growth priorities, whether shorter, more intensive courses should be available alongside exploring the role of T levels
Options for retaining talent within businesses and access to international labour

Response

The Apprenticeship Levy is a key part of the government’s reforms to the apprenticeship system, and we are committed to making apprenticeships work for businesses. For example, we are helping SMEs to hire apprentices and keeping Standards up to date to support changing workforce demands, like the domestic electrician apprenticeship which was recently updated. The government is committed to improving the apprenticeship system and continues to engage with stakeholders on their ideas. Short, intensive Skills Bootcamps also enable learning in sectors and jobs that support the transition to net zero.

Recommendation 62

Timing

2025

Recommendation

Government should legislate by 2025 for the minimum energy efficiency rating for all non-domestic buildings, both rented and owned, to be EPC B, to be implemented by 2030.

Government should legislate for all new non-domestic buildings from 2025 to have an EPC B rating.

Response

The government has consulted on proposals for the private rented sector and will publish the government response in due course. We will also consider how we can further support greater energy efficiency in owner-occupied commercial buildings.

Government has already made great strides forward in improving the energy efficiency of new non-domestic buildings. In 2022, over 85% of new non-domestic buildings were rated EPC B or above. We expect to see continued improvements as a result of the recent uplift to Part L (conservation of fuel and power) of the Building Regulations. The uplift, which came into force in June 2022, ensures that new non-domestic buildings produce 27% less CO2 emissions compared to those built to previous standards.

As well as improving the energy efficiency of new buildings in the short term, the 2021 uplift acts as a stepping-stone to the Future Buildings Standard. Our intention is that from 2025, the Future Buildings Standard will produce extremely efficient non-domestic buildings, which are ‘zero carbon ready’ (meaning that no retrofit work will be necessary to ensure they have zero carbon emissions as the electricity grid continues to decarbonise).

Recommendation 63

Timing

2027

Recommendation

Government to drive the creation of sustainable material supply chains and influence market development through its public procurement standards by 2027.

Response

We are working to understand the challenges with product supply chains and what can be done by government and industry to grow these and will consider actions once our initial phase of engagement with the industry is complete. This could include public procurement considerations, however we would need to better understand the impact of these in the round.

Recommendation 64

Timing

2023

Recommendation

UK to continue to show leadership through ambitious public sector decarbonisation by conducting its own trials to ensure alignment with the targets in the Heat and Buildings and Net Zero Strategies.

Response

We agree that decarbonising public sector buildings will demonstrate leadership and encourage action in other sectors, as well as making a direct contribution to net zero. We have an ambitious target to reduce direct emissions from public sector buildings by 75% by 2037. Activities to reach the targets in the Heat and Buildings Strategy and the Net Zero Strategy, include:

Investing nearly £2.5 billion in heat decarbonisation projects through the Public Sector Decarbonisation Scheme. The latest tranche of £409 million of grant funding was announced on 22 March 2023, bringing total allocation up to more than £2 billion since 2020.
Providing support for organisations to develop heat decarbonisation plans though the Low Carbon Skills Fund, which can then be used to support decarbonisation business cases.
Providing tools and materials, such as those available through the Modern Energy Partners programme website, to help organisations access the knowledge and information they need to develop bids for decarbonisation funding and deliver projects.
Facilitating sharing of case studies and examples of best practice through the website of Salix Finance, our delivery partner.

Recommendation 65

Timing

2023

Recommendation

Building on the UK Business Climate Hub, BEIS to launch a Help to Grow Green campaign, offering information resources and vouchers for SMEs to plan and invest in the transition by 2024.

Response

In 2021, UK SMEs contributed an estimated 160 million tonnes of greenhouse gas emissions (Scope 1), representing 44% of the total UK non-household emissions (SAGE, 2021). Encouraging SMEs to reduce their emissions is therefore crucial to helping us achieve our net zero by 2050 target. It is therefore welcome that over 3,700 SMEs have already set a net zero target by making the SME Climate Commitment and joining the UN’s Race to Zero campaign.

Through their update to the Green Finance Strategy, BEIS and HMT should set out a clear, robust and ambitious approach to disclosure, standard setting, and scaling up green finance – including how it will meet existing commitments to implement Sustainable Disclosure Requirements across the economy; how it will provide a clear, long-term plan for attracting capital to meet net zero ambitions, and how to maintain the UK’s position as the leading green finance hub internationally and metrics for success.

Response

In parallel to the ‘Net Zero Growth Plan’, the government is publishing its ‘2023 Green Finance Strategy’. This sets out how the UK government will pursue its stated ambition to become the world’s first Net Zero-aligned Financial Centre, including how the government will provide the transparency, support the development of market tools, and establish the necessary transmission channels to allow the financial sector to align with net zero. This includes delivering on our commitments in ‘Greening Finance: A Roadmap to Sustainable Investing’, ensuring market participants have the information and data they need to manage risks and allocate capital where there are opportunities.

Question 9

Recommendations 70 to 79

The government is committed to decarbonising the infrastructure and buildings that it funds and uses. The Construction Playbook sets out a consistent approach to the procurement of built assets, consistent with achieving the objective of net zero carbon by 2050. The Playbook requires government departments and arm’s length bodies to undertake whole life carbon assessments of projects, and to ensure that decarbonisation is one outcome that project procurement is intended to achieve.

To support procurers to achieve decarbonisation and wider mitigation of the environmental impacts of construction, the government has also published a ‘Net Zero Carbon and Sustainability Guidance Note’ to supplement the Playbook. This provides practical advice, identifies useful standards and resources for procurers, and also a set of case studies of large and small construction projects which have successfully reduced carbon emissions.

Recommendation 73

Timing

2023

Recommendation

BEIS, DfT and Defra to develop a strategy on the decarbonisation of non-road mobile machinery by the end of 2023.

Response

Government intends to publish a Non-Road Mobile Machinery (NRMM) strategy which will set out how the sector can decarbonise in line with net zero while maintaining competitiveness, attracting investment and supporting growth. To deliver the strategy, government is developing its evidence base on NRMM decarbonisation options through ongoing external research and a Call for Evidence planned for later this year. Government has made support for NRMM decarbonisation available through schemes such as the £40 million Red Diesel Replacement competition, the Industrial Energy Transformation Fund (IETF), and the Renewable Transport Fuel Obligation (RTFO).

Recommendation 74

Timing

2023

Recommendation

Deliver urgently on commitments that the UK has already made on collection and packaging reforms, including extended producer responsibility, standardised collection and deposit return schemes. Industry engagement must be central to design and rollout of schemes.

Response

Defra is committed to delivering our Collections and Packaging Reforms as quickly and effectively as possible. We have announced that we will be introducing packaging Extended Producer Responsibility (EPR) from 2024 across the UK, and a Deposit Return Scheme (DRS) from October 2025 across England, Wales and Northern Ireland. A separate DRS in Scotland is due to launch on 16 August 2023.

We are currently finalising the consistency in recycling consultation response for households and businesses in England and intend to publish the government response shortly.

Industry engagement is at the core of our delivery approach to these reforms. We have set up a number of dedicated industry forums across the programme to ensure businesses and representatives are able to fully engage in the next phase of delivery.

Recommendation 75

Recommendation

Task WRAP with developing a report jointly for the BEIS and Defra Secretaries of State to understand the right role for government in supporting resource matching across the private sector, learning from, for example, Invest NI and the National Industrial Symbiosis Partnership. This must ensure resource planning to achieve symbiosis rather than just waste exchange.

Response

Department for Energy Security and Net Zero is exploring the role that industrial symbiosis can play in reducing emissions from industry and how best to facilitate this. We are engaging with stakeholders to learn from regional and international experiences and will consider further research in this area.

Recommendation 79

Timing

2024

Recommendation

Government to swiftly deliver the ZEV mandate, to apply from 2024, whilst maintaining regulations, and funding to support the uptake of electric and other zero emission vehicles, and continuing to drive emission reductions from internal combustion engines.

Response

Government has published a consultation on the proposed ZEV mandate regulations, to apply from 2024, to support delivery of our commitments to phase out the sale of new non-zero emission vehicles. This is alongside regulations ensuring non-ZEVs do not become more polluting over time, enabling ZEV technology to be prioritised.

Question 10

Recommendations 80 to 89

Accepted Answer

Recommendation 80

Timing

2023

Recommendation

Government to publish the Low Carbon Fuels Strategy in 2023 and the necessary legislation for the sustainable aviation fuels (SAF) mandate to apply from 2025. Recognising that an adequate price stability mechanism is vital for investments in SAF, government to set out evidence for barriers to SAF investments and options to address this.

Response

The ‘Transport Decarbonisation Plan’ committed DfT to produce a Low Carbon Fuels (LCF) Strategy, setting out a vision for LCF deployment across transport modes in the period to 2050. We are intending to publish the Strategy in 2023. The ‘LCF Strategy’ will set out the direction of government policy, to provide clarity on the role of LCF across different transport modes in the UK and address current uncertainty related to the fuel sector’s transition. The strategy will support the industry’s evolution, boosting investment in the growing advanced fuels sector and securing further carbon emission savings.

The government will confirm the design of the SAF mandate later this year following a further consultation which was published in March 2023, giving industry clarity over long term policy. This will ensure we can introduce legislation in time to fulfil our commitment for introduction of the mandate in 2025.

The barriers to investment in SAF plants are wider ranging than revenue/price stability and include feedstock, technology, and construction barriers. We commissioned an independent review from Philip New in October 2022 into how to accelerate investment in a UK SAF industry. The government welcomes Philip New’s report and will respond to it imminently. The government has been clear that it wants to see the UK continue to capture its share of the global SAF market and play a leading role in the development, production and use of SAF. This is why we launched the £165m Advanced Fuels Fund in 2022, and announced a second window for applications in March 2023. As our response to Phil New’s independent report will set out, we will continue to work in partnership with industry and investors to explore the best approach to addressing barriers to investment.

Recommendation 81

Timing

2024

Recommendation

Government to set out options for further legislative steps by 2024 and take leading role in International Maritime Organization (IMO) negotiations to decarbonise maritime sector.

Response

Response

We have set out detail on how farmers and land managers can contribute to government’s statutory environmental and climate targets, including on net zero, in the Environmental Improvement Plan and Environmental Land Management Schemes (ELMs) update, both published in January 2023.

To augment this, as part of the wider Net Zero Growth Plan package, we have set out a full list of policies and proposals which will contribute towards net zero across the agriculture and land use sectors. We will continue to work with stakeholders to further refine these policies and proposals as we progress delivery.

Funding is available through ELMs and private schemes and markets, such as through the sale of services including natural flood risk management, biodiversity offsets, and nature-based carbon from woodland, peatland or other sources. We aim to support the growth of private funding by designing our schemes to dovetail with these private schemes and markets.

Recommendation 86

Timing

2025

Recommendation

By 2025, 50% of UK-based food and drink businesses measure and report their scope 3 emissions against a government- and industry-agreed standard. Defra and UKRI research should prioritise innovations that support on-farm measurement and processes to accurately collect the remainder by 2030.

Response

Defra supports the need for UK-based food and drink businesses to consistently report scope 3 emissions. Working with key industry and civil society stakeholders via the Food Data Transparency Partnership we will consider the development of consistent reporting protocols and databases for scope 3 emissions for large food and drink businesses, which account for 66% of industry turnover. We will focus reporting requirements on large businesses to leverage their reach across the food supply chain, whilst minimising the burden on SMEs.

Consistent and accurate on-farm measurement is required to underpin company reporting. We are undertaking research to examine existing carbon audit tools across different agricultural systems and published a call for evidence exploring monitoring, reporting and verification of agricultural emissions. We will develop a harmonised approach for measuring carbon emissions on farms and by 2024 will outline how farmers will be supported to understand their emission sources through carbon audits.

Recommendation 87

Timing

-

Recommendation

Deliver accurate monitoring of carbon across broader range of ecosystems, with a view to bringing more habitats into the inventory to drive habitat creation and restoration efforts.

Response

Defra knows that protecting, restoring, and sustainably managing natural resources and broader ecosystems has adaptation and biodiversity benefits, and can contribute to carbon sequestration. We are doing further research and development to close evidence and data gaps to accurately quantify the potential contribution of broader ecosystems to net zero, with a view to considering the inclusion of additional habitats in the UK GHG Inventory.

Recommendation 88

Timing

2023

Recommendation

In line with wider thinking on voluntary carbon and ecosystem markets, ensure a pipeline of investable nature-based solutions projects is available.

Response

Defra established the Natural Environment Investment Readiness Fund (NEIRF) with the Environment Agency to support the development of a pipeline of nature projects that could generate revenue from ecosystem services and operate on repayable private sector investment. The NEIRF programme will run until 2024, developing a pipeline of 86 projects across England which will either monetise the benefits of nature or develop tools or standards to help others do so. Our refreshed 2023 Green Finance Strategy provides more detail regarding how we will support nature investment.

Furthermore, Defra committed to invest in a new blended finance impact fund to catalyse and invest in a portfolio of high-integrity, revenue-generating nature-based projects in England to help develop the market.

We are also designing our sources of public support for nature recovery to be compatible with private sector investment. Our Environmental Land Management schemes are being designed to dovetail with private investment.

Recommendation 89

Timing

2023

Recommendation

BEIS to work with DCMS and DIT to develop a campaign by Q2 2023 to promote digital technologies, including AI, robotics, digital twins, and autonomous systems, as a solution to industry’s energy efficiency needs in the short term and their role in wider decarbonisation for the long term.

Response

Government recognises the role of these technologies to improve productivity and energy efficiency and agrees there is a need to increases awareness of manufacturers of the benefits. Government funds the Made Smarter programme which aims to develop new technology solutions and increase the adoption of existing technologies including AI, robotics and digital twin by addressing barriers that include low-level awareness. There is potential to build on the Made Smarter brand that has a good level of awareness amongst manufacturers to develop a campaign supported by manufacturing trade associations and press.

Question 11

Recommendations 90 to 99

The Department for Energy Security and Net Zero already sponsors an annual net zero event of this type with The Association for Public Service Excellence (APSE) - an organisation dedicated to promoting excellence in the delivery of frontline services to local communities around the UK.

Outside of an annual summit, we also support ongoing knowledge sharing through our Local Net Zero Hubs, Net Zero Go, and the Innovate UK’s Net Zero Places Knowledge Transfer Network Stakeholder Group.

Recommendation 98

Timing

2023

Recommendation

Central government should reform the local planning system and the NPPF now. Have a clearer vision on net zero with the intention to introduce a net zero test, give clarity on when local areas can exceed national standards, give guidance on LAEP, encourage greater use of spatial planning and the creation of Net Zero Neighbourhood plans, and set out a framework for community benefits.

Response

Our National Planning Policy Framework (NPPF) makes clear that local planning authorities should have a positive strategy in place to promote energy from renewable and low carbon sources. We intend to do a fuller review of the NPPF to ensure it contributes to climate change mitigation and adaptation as fully as possible. As a first step, we have consulted on proposed changes to the planning system to support the rollout of cleaner, cheaper renewable power, and are seeking views on a form of carbon assessment. The proposed reforms to the plan-making system in the Levelling Up and Regeneration Bill (LURB) will ensure local plans are in place more quickly and updated more often, so that development happens in ways that are consistent with and responsive to environmental and climate priorities. We are also seeking powers in the LURB to introduce ‘neighbourhood priorities statements’, which will provide communities with a simpler and quicker way for communities to determine priorities for their area. Plan-makers may continue to set energy efficiency standards which go beyond national Building Regulations standards through the Planning and Energy Act 2008. The Department for Energy Security and Net Zero has work underway to consider the role of Local Area Energy Planning (LAEP) in delivering net zero and in supporting efficient network planning. This includes engaging with Ofgem as part of its ongoing governance review into local energy institutions, as well as working closely with DLUHC, UKRI, ESC, the devolved administrations and other key stakeholders.

We agree that communities should benefit from hosting net zero infrastructure. The government will seek alignment and consistency between energy technologies where appropriate, but believes it is important that the approach to community benefits for each technology reflects their unique impacts. The Department for Energy Security and Net Zero will issue consultations on local partnerships’ for ‘communities who wish to host new onshore wind infrastructure in return for benefits, and separately published a second consultation on options for community benefits for electricity transmission network infrastructure.

It is also government’s view that community benefit guidance should remain separate from the planning process, to allow the planning process to remain a robust system through which communities can give their views on individual projects.

Recommendation 99

Timing

2023

Recommendation

Government should undertake a rapid review of the bottlenecks for net zero and energy efficiency projects in the planning system, and ensure that local planning authorities are properly resourced to deliver faster turnaround times.

Response

As committed to in the Net Zero Strategy, we intend to do a fuller review of the NPPF to ensure it contributes to climate change mitigation and adaptation as fully as possible. As a first step, we consulted on proposals to address clearly-defined and pressing local planning bottlenecks on onshore wind and energy efficiency in historic buildings. We will also take forward our wider reform work to improve the Nationally Significant Infrastructure Project Planning Process, including regulatory and guidance changes to streamline the process and support digital transformation.

The ‘Nationally Significant Infrastructure Project Action Plan’ (February 2023) sets out reforms to the planning system for major infrastructure, so it is more resilient and can deliver projects faster, better and greener. System-wide improvements will be delivered through regulatory, guidance and operational changes to strengthen and streamline the process and support digital transformation. The reforms set out in the NSIP Action Plan will deliver government’s commitment within the British Energy Security Strategy to provide a fast-track consenting process for projects meeting quality standards.

To improve capacity in the local planning system, we have announced in our recently published consultation our intention to increase planning fees. We have already started to work alongside the sector to design a suite of targeted interventions to support the development of critical skills and to build capacity across local planning authorities. We are currently consulting on changes to permitted development rights for solar equipment (to support the ambitions of the ‘British Energy Security Strategy’) and local authority led electric vehicle charge points.

Question 12

Recommendations 100 to 109

Accepted Answer

Recommendation 100

Timing

2023

Recommendation

Government should commit to the Local Electricity Bill and publish a Community Energy Strategy that addresses regulatory, legislative, funding and capacity barriers in the sector. The Strategy should also consider what support should be given to innovative projects such as community purchasing and community energy sharing and storage.

Response

Response

The government welcomes the ‘Independent Review of Net Zero’s’ recommendation and remains committed to improving eco-labelling to help consumers make green choices and reduce burdens on business. As highlighted by the Independent Review, the government has committed to exploring eco-labelling for the embodied emissions of industrial products and we are currently consulting on how labelling could support demand for low carbon products by helping consumers to distinguish between them and their higher carbon equivalents. The government also welcomes the Independent Review’s support for the work to develop a mandatory methodology for eco-labelling of foods. We will work with industry and civil society through the Food Data Transparency Partnership to agree the inclusion of suitable metrics.

Further, we are continuing to build the evidence base around eco-labelling and have launched a cross-government evidence review to understand how eco-labels can affect consumer and business decision making to meet net zero and environmental targets, as well as the opportunities for alignment across sectors.

Recommendation 104

Timing

2023

Recommendation

Government should develop the distributional analysis of net zero policies started by the Review in 2023.

Response

We are accepting this recommendation and we expect to develop this analysis in the following manner during 2023:

work to reflect the latest policies on electric vehicles and buildings within the modelling
include the 1% of households on coal in order to achieve the full segmentation of the UK housing stock
update the analysis as government updates its fossil fuel price assumptions
extend the analysis to include a regional lens

Recommendation 105

Timing

2024

Recommendation

Government should amend the regulatory framework to incentivise transport providers to increase demand and improve services, and that it works with them on this vision, by 2024.

Response

In the ‘National Bus Strategy’ and ‘Plan for Rail’ we outlined a model for improving and increasing demand for public transport.

Using powers under the 2017 Bus Services Act, we are seeking a more collaborative approach between Local Transport Authorities (LTAs) and local operators. All LTAs are either implementing an Enhanced Partnership scheme with their operators or working towards bus franchising. Pursuit of one of those options was introduced as a condition to obtain access to supplementary government funding to improve bus services.

In the High-Level Output specification and Statement of Funds Available, published in December 2022, the Secretary of State committed £44.1 billion in funding for Network Rail, stressing the importance that Network Rail should support needed development in urban centres through protecting the attractiveness of rail as a mode of transport, taking steps to minimise the impact of disruption, and placing the highest priority on punctuality and reliability.

Recommendation 106

Timing

2024

Recommendation

Government to equalise VAT on public and private electric vehicle charging in 2024.

Response

Decisions on tax including VAT are for the Chancellor to make as part of the tax policy making cycle and Budget process.

Government is committed to supporting the transition to zero emission vehicles to help the UK meet its net zero obligations. Government has committed £2.5 billion since 2020 to support the transition to zero emission vehicles, which funds targeted vehicle incentives and the rollout of charging infrastructure.

Recommendation 107

Timing

2025

Recommendation

Government should regulate through a suite of measures to create the conditions for sustained growth of new markets for low-carbon heat, so that at least 600,000 heat pumps are installed each year by 2028, and up to 1.9 million by 2033. The government should implement the off-gas grid regulations that envisage the end of new and replacement fossil fuel heating systems in the mid-2020s.

Response

The government is putting in place a number of measures to reach the ambition for 600,000 heap pump installation p.a. from 2028, including plans for regulations. This includes regulating for the Clean Heat Market Mechanism which will help transform the heating appliance market in the UK. We have consulted on phasing out new and replacement fossil fuel heating systems for off gas grid properties, and will respond to these consultations.

Recommendation 108

Timing

2023

Recommendation

Government should bring forward all consultations and work to mandate the Future Homes Standards by 2025 to prevent further delays by ensuring the standard applies to all developments. This should include a consultation on mandating new homes to be built with solar and deliver the Net Zero Homes Standard, ensuring that the planning system (discussed in Pillar 4) is flexible enough to enable this.

Response

Our work on a technical specification for the Future Homes Standard has already been accelerated. We intend to consult on the specification in 2023, then legislate in 2024 ahead of implementation in 2025. As part of the consultation we will explore what transitional arrangements are appropriate to make sure that as many homes as possible are built to the new standard as quickly as possible.

The government introduced an uplift in energy efficiency standards, which came into force in June 2022. Our approach to achieving higher standards remains technology-neutral, to provide developers with the flexibility to innovate and tailor to their sites. We expect, however, that to comply with the uplift, most developers will choose to install solar panels on new homes. As part of the Future Homes Standard consultation this year, we will continue to explore what role solar should play in new homes.

Recommendation 109

Timing

2030

Recommendation

Government should ensure the right policies are in place to achieve the UK’s demand reduction targets, building on the 2022 Autumn Statement announcement, with interim targets and milestones to hit this goal. Noting the UK’s 2050 net zero ambitions the government should publish clear analysis of which mix of policy measures gets the UK to the 15% target and assure future funding for those policies.

Response

The Autumn Statement announced a new national ambition to reduce the UK’s final energy consumption from buildings and industry to 15% by 2030 against 2021 levels. To drive delivery of this target we have also established a new Energy Efficiency Taskforce. This has an economy-wide remit, covering homes, businesses, and public sector buildings, as well as industrial processes.

Question 13

Recommendations 110 to 119

The government is currently working on proposals for improving EPC metrics, and intends to consult on these, taking account also of recently published proposals from the Climate Change Committee. The government also has a continuing programme of user research to improve the way in which information is presented on certificates. EPCs currently have a validity period of 10 years and the government intends to consult on options to change this validity period. We are overhauling the building physics model underpinning EPCs to make it fit for purpose to support net zero. We aim to consult on this new model later in 2023.

Recommendation 113

Timing

2024

Recommendation

Government should provide certainty by 2024 on the new and replacement gas boiler phase out date to drive industry and investor confidence. The Review recommends bringing the proposed date of 2035 forward and legislating for 2033. including any hydrogen-ready boilers in areas possibly converting to hydrogen in the future.

Government should set a legislative target for gas free homes and appliances by 2033, to contribute to a gas free grid in future.

2023

Recommendation

Government should choose from multiple options which could help increase heat pump efficiency:

Suppliers say this could be done via a mandate stating the minimum efficiency which needs to be achieved by all installations. Government should test whether this could be done by most major installers for most properties.
Set up a heat pump coefficient of performance competition, run for example by the Energy Efficiency taskforce. This will show the state of the art technologies with higher efficiencies and allow others to replicate these.
Quality of the installation matters; training and installation standards need to be accelerated to support this.

Response

The government intends to consult on raising minimum performance standards as committed to in the Energy-Related Products Policy Framework to ensure industry makes improvements to the minimum efficiency of heat pumps. We are also supportive of doing more to incentivise lower lifetime costs and improved efficiency of heat pumps through our innovation programme and will consider the viability and options for delivering further support.

The government is committed to improving the skills of the workforce to drive improved the performance of heating systems.

On 2 March 2023, government announced an additional £5 million to support low carbon heating training, expected to support around 10,000 training opportunities. This is in addition to the £15 million previously committed to skills in the energy efficiency and low carbon heating sectors since 2020, which have supported over 16,000 training opportunities for people working in the energy efficiency, retrofit and low carbon heating sectors. All heat pump installations are expected to comply with building regulations, and the new funding will promote courses which ensure installers achieve the minimum competence requirements to join an appropriate competent person scheme. Contractors installing heat pumps within government schemes are further required to be certified by the Microgeneration Certification Scheme (MCS). In addition to ensuring that installers are technically competent, MCS also provide consumers with additional protections.

Recommendation 118

Timing

2028

Recommendation

Government should extend the Boiler Upgrade Scheme to 2028 and consider whether grant levels should be increased in light of inflationary pressures, before being scaled down over time. This should happen alongside efforts to increase awareness of government support. Support for those unable to afford the upfront costs associated with improving energy efficiency and moving to low carbon heating systems should be continued and expanded, namely through the Home Upgrade Grant (HUG), Social Housing Decarbonisation Fund (SHDF) and other existing schemes for low-income households.

Response

Government has committed a further £6 billion from 2025 to 2028 as part of the government’s 15% energy reduction target by 2030, and we can confirm that the Boiler Upgrade Scheme will be extended to 2028. Government is committed to increasing heat pump deployment under the BUS, and will enhance the current marketing campaign to increase consumer awareness and take-up.

Recommendation 119

Timing

2023

Recommendation

Government should set the policy framework and supportive investment environment to encourage reskilling and greater training opportunities in the heat pump sector. Work to encourage adoption of standards to increase firms able to take up existing schemes.

Response

Our commitment to grow the heat pump market to 600,000 installations a year by 2028 provides a clear long-term signal to industry on the expected scale of heat pump deployment, providing certainty and enabling investment. The private sector is already starting to invest in training, for example Octopus Energy has invested £10 million in a new R&D and training centre near Slough, and Ideal Heating have announced a new £1 million training centre near Hull.

Government is also providing funding to support engineers to take up this training through the Home Decarbonisation Skills Training competition which launched on September 20th 2022. This £9.2 million competition is funding training for people working in the energy efficiency, retrofit and low carbon heating sectors in England. The previous £6 million phase of this scheme in 2020 and 2021 supported almost 7,000 training opportunities, including training for over 2,000 heat pump installers.

Question 14

Recommendations 120 to 129

a) Set out a vision on the future design and operation of the ETS

b) Set out a timeline for expanding the coverage to the rest of the UK economy, as well as sectors consulted on including maritime and waste.

c) Address inclusion of GGRs to incentivise early investment in new technologies and potentially nature-based solutions.

d) Provide reassurance to businesses around how the government will mitigate the risk of carbon leakage as a result of expanding the ETS.

Response

Government accepts the recommendation that we set out a long-term pathway for the UK Emissions Trading Scheme (ETS). We will work within the ETS Authority to publish one this year. Subject to agreement within the Authority, this pathway will set out our intention to legislate to continue the ETS beyond 2030 until at least 2050. It will remain aligned with our net zero target, so giving businesses the certainty they need to invest in decarbonisation.

We will explore expanding the scheme to more sectors of the economy, including high emitting sectors. We consulted last year on expanding the scheme to cover energy from waste/waste incineration and domestic maritime emissions and on incorporating greenhouse gas removals. We will explore the potential role of emissions trading in decarbonising heat, alongside possible options for rebalancing energy costs away from electricity. We will work to develop a harmonised approach for measuring carbon emissions from farms.

Throughout, we will ensure effective carbon leakage mitigations are in place to ensure the UK’s efforts in decarbonisation lead to a true reduction in global emissions.

Recommendation 126

Timing

2024

Recommendation

Government should endorse international VCM standards as soon as possible and consult on formally adopting regulated standards for VCMs and setting up a regulator for carbon credits and offsets by 2024.

Response

The UK government recognises the potential role that voluntary carbon markets could play in the delivery of domestic and international net zero, noting that market integrity concerns need to be addressed to maximise this opportunity. We support work to improve the integrity of VCMs, including that of the Integrity Council on Voluntary Carbon Markets (IC-VCM) and Voluntary Carbon Markets Initiative (VCMI), both launched under the UK’s COP26 Presidency to develop international best practice.

We will consult on the specific steps and interventions needed to support the growth of high integrity voluntary markets and protect against greenwashing. This will position the UK to serve as a global hub for voluntary carbon trading.

Our work with the British Standards Institution will also develop nature market standards for investment in carbon and other ecosystem services, building on the international best practice such as the work of IC-VCM and VCMI, as well as the experience of the UK’s Peatland and Woodland Carbon Codes.

Recommendation 127

Timing

2024

Recommendation

Government should set up a programme for offsets and carbon credits, providing guidance to businesses looking to invest in carbon credits and offsets, for businesses looking provide carbon credits and offsets, and explore the opportunities to create a market in the UK for offsets through energy efficiency measures.

Response

The UK government recognises the role carbon markets can play in enabling businesses to transition to net zero. It is important that credits do not come at the expense of direct action by businesses; reflect genuinely additional removal and reduction in GHG emissions; and align with a credible science-based pathway to net zero. Forthcoming reports of VCMI and IC-VCM will also provide recommendations to business.

Recommendation 128

Timing

2024

Recommendation

Government should establish baseline environmental and climate protections in Free Trade Agreements (FTAs) and for removal of trade barriers to environmental goods and services.

Response

Government fully recognises that bilateral and multilateral trade can play a vital role in tackling climate change and protecting the environment, including by bringing down the cost of green goods, services and technologies and accelerating innovation. That is why we are taking action to remove barriers to green trade both bilaterally and multilaterally, for example through the World Trade Organisation. We also remain committed to aligning our trade and environment agendas as a global leader on decarbonisation and a champion for free trade.

For each of our Free Trade Agreements (FTAs), government publishes a public mandate prior to negotiations. Mandates have previously included objectives to maintain the UK’s right to regulate to meet net zero, reaffirm parties’ international climate and environment commitments, seek ways to address barriers to trade in green goods and services, and prevent parties from failing to apply environmental laws for a trade advantage.

Recommendation 129

Timing

2023

Recommendation

Government should conduct a strategic review of the UK’s international climate leadership and ensure the 2030 Strategic Framework on Climate and Nature provides practical direction for the UK’s international climate and nature leadership.

Response

Following our COP26 Presidency, and our leading role in advocating for an ambitious Global Biodiversity Framework, the UK remains committed to accelerating progress on international climate and nature action. This is essential to safeguard UK and global security and prosperity and support the most vulnerable countries to adapt to climate impacts. The 2030 Strategic Framework outlines ambitious UK action - in this critical decade for delivery - to halve global emissions, halt and reverse biodiversity loss and build resilience to climate impacts. We will utilise the UK’s strengths in green finance, science, technology and innovation, net zero delivery, international partnerships and trade and continue to drive forward high impact initiatives such as Just Energy Transition Partnerships, Mission Innovation and the Forest and Climate Leaders Pledge.

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Introduction

Recommendations 1 to 9

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Recommendations 10 to 19

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Recommendation 19

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