Skidmore’s Net Zero Review reviewed
Chris Skidmore MP’s near six month review of the UK’s progress against its Net-Zero commitments came to a conclusion in mid January with the publication of a 340 page report with some 129 recommendations to Government, industry and public to accelerate the country’s transition and to make ‘green growth’ a central pillar of its industrial strategy.
The former Universities Minister and his review team should be lauded for attempting to practically assess progress against the key challenge of the age and suggest how to improve, given frankly lacklustre progress and the lack of an identified national strategy. Early on in the report, he makes clear why recent events, including President Biden’s Inflation Reduction Act and the war in Ukraine has helped to focus minds:
Forty-two months on, then, much has changed. For this reason, this Independent Review of Net Zero was commissioned in September 2022, to ask how the UK could better meet its net zero commitments, taking account of these global changes. It was commissioned also to ask how the UK might deliver its own net zero targets in a manner that was both more affordable, more efficient, and in a pro-business and pro-enterprise way. Indeed, net zero, decarbonisation and clean energy growth will only happen if it delivers the economic benefits that can demonstrate to the whole of society the true value of the energy transition.
Its methodology appears robust. 1800 individual submissions, 50 roundtables and a grand total of 785 citations reflect the report’s desire for ‘extensive engagement’ in seeking to understand both the barriers that are preventing businesses, regions, communities, and households from taking further action to decarbonise, alongside exploring the opportunities that can catalyse further economic growth. In short:
Above all, this Review has sought to ask how the UK can deliver on its net zero commitments by demonstrating how to deliver and implement most effectively and efficiently a plan for our future energy transition. Climate commitments and net zero targets remain just words on a page without a clear, consistent, and stable transition plan. I hope that this Independent Review can provide additional clarity and certainty on how the UK can not only meet its net zero commitments but can once again demonstrate international leadership in setting out a comprehensive roadmap towards a net zero future. While forty-two months may have passed since the UK signed net zero into law, there remain just three hundred and twenty-four months until 2050. Planning effectively for that net zero future must be our priority.
This report gauges how effective the Skidmore Review is against these lofty ambitions and how well it holds a mirror up to the Government, industry and society in its lack of meaningful progress in attempting to limit temperature rises, as highlighted here. It also considers which of its recommendations should be immediately enacted and what else should be prioritised to accelerate action.
As ever, we will be hosting a BetterWorld podcast on Clubhouse with an expert panel on Monday 20th February at 6pm to talk through the key findings of this report, so be sure to register and listen in…..
A two stage review process
What immediately grabs us is the sheer bulk of its contents – 300+ pages including nearly 200 recommendations, incorporating a ‘25 by 2025’ framework — twenty-five policies that ‘could be realistically delivered by 2025’ according to the author — alongside other wider recommendations. The authors deserve credit for laying the report out in a sensible way, emphasising that the Review is split into two parts, prior to its recommendations being made:
Part 1 explains the opportunity and benefits to individuals and the economy. It places domestic action in an international context and emphasises that the UK must go further and faster to realise the economic benefits of net zero.
Part 2 sets out how to achieve this opportunity, across six pillars. It makes recommendations to catalyse action in individual sectors of the economy, and to enhance the role of local authorities, communities, and individuals to deliver net zero.
We’ll ignore some of the smoke blowing that claims that ‘the UK should be proud of the steps it has taken to achieve net zero…..Progress since 2019 has exceeded expectations’ as you wouldn’t have needed to publish this report if it was the case….and instead focus on the real substance in the review: the identification of ‘ten priority missions to harness public and private action out to 2035’ (as per the infographic below) and its subsequent supporting evidence. What makes sense and what doesn’t?
The ten missions in infographic form
Opportunity Knocks: what we agree with
NO SILVER BULLETS
On first glance, they appear to focus on the right areas. It rightly appraises that there is no silver bullet for decarbonising energy production, recognising that a portfolio of solar, wind, nuclear and hydrogen technologies will be needed as the natural replacements for oil and (longer-term) natural gas. It includes the sensible call for a ‘programmatic approach for a next generation fleet of nuclear’ including Small Modular Reactors (SMRs), echoing the calls of the likes of Rolls Royce, the University of Sheffield Nuclear AMRC and industry denizens like Professor Keith Ridgway. Hallelujah – read more here on why these are essential as part of a managed energy transition.
Small Modular Reactors vs. other types of nuclear reactor
In calling for this portfolio approach, it suggests two key recommendations:
“A cross-sectoral infrastructure strategy by 2025…we need to rapidly build and adapt the infrastructure for electricity, hydrogen, other liquid and gaseous fuels and CO2 networks that support our green economy. The scale of this challenge, and the breadth, is too much to be left to the whims of individual projects.”
It also suggests planning reform to build ‘policy on’ support for decarbonising technology. We think this is an excellent idea – so why is planned reform of the NPPF so quiet on the subject, as we reflected here? This is an issue to push within the NPPF review consultation period by the start of March, given the review suggests the following:
“Reforming our approach to planning, streamlining processes and, where locally supported, unleashing solar and developing onshore wind, the cheapest forms of generation, to be rapidly deployed in communities across the country and enable local people to reap the benefits of local, low carbon generation.”
THE FUTURE OF THE GRID AND OFGEM
The review then calls for ‘a strategic framework and delivery plan for the critical networks of the future to turbocharge onshore and offshore development’. This reflects long-term worries about the resilience and the future of the National Grid in supporting decarbonisation – reflecting the concerns of a number of other organisations in recent years. The review sets its stall out very early:
“The Review heard from hundreds of innovative companies eager to bring new technologies to market but being hampered by slow, ponderous bureaucracy and an antiquated approach to grid connections not suitable for a modern 21st century electrified economy.” (Page 11)
It then asserts that this “antiquated grid structure” offers waits of up to a decade for grid connections, thereby acting as a direct threat to the energy transition. He said this backed up his call for Ofgem to have a net zero duty. The seriousness and depth of this problem leads onto one of the Review’s key recommendations:
“Accelerating the implementation of the British Energy Security Strategy to finally update the mandate of Ofgem, create the Future System Operator which is essential to a holistic approach to solve the challenges of our future, multi-fuel energy system and accelerate the connection of our cheap renewable generation.”
We completely agree with this recommendation. The creation of a future system operator is essential in directly addressing net-zero, evidenced by the views of the National Infrastructure Commission, a host of renewables companies and the rise of off-grid lower carbon power solutions that have been developed in its wake. This operator needs to mandate and invest in getting to net-zero power well before the 2050 target – and the clock is ticking.
REDUCING ENERGY USE AT SOURCE
We also fully support the Review’s focus and conclusions on minimising the use of energy in the first place. It clearly ascribes the need for a greater emphasis on the UK’s circular economy, in particular ‘galvanising action on recycling and the critical use of materials’. This is essential; our mind immediately is cast to the rise of battery technology to power industry to reflect this recommendations importance, as:
– Rare metal demand is exponentially increasing, raising concerns over emissions in mining and distributing them given the majority comes from South East Asia.
Battery recyclers or ‘second lifers’ will inherit the earth
– There is an overbearing need to extend the life of batteries to buy time for their effective (eventual) recycling, as reflected by the University of Warwick here. As such, we believe there is a huge industrial growth opportunity in the establishment of a large-scale ‘second life’ market, acting as a further catalyst for jobs and investment.
Similarly, the review places a focus on ‘energy efficiency for households’, but interestingly placing the majority of its focus on new build (of which the UK is building around 180,000 new homes per year). It concludes that the UK should work towards:
“Gas free homes by 2035 and giving consumers greater understanding of their household through a new Net Zero Energy Performance Certificate.”
There is nothing inherently incorrect with this as a recommendation; given the amount of energy used by the domestic sector – as explored in this previous Bellona Advisors report – it is essential new homes adopt a fabric-first approach, alongside consumers becoming more aware – through certification and new technology – of their contributions to a more energy efficient world.
This focus on new homes however misses a major trick – that of the need for a huge retrofit programme in the UK, given its older housing and commercial development stock that is traditionally less efficient than its modern forebears. This is one of several areas where the review shows a curious lack of ambition…
We think it should be more ambitious than it is
We believe there are three principal areas in which we think the review’s findings and key recommendations do not go far enough.
RETROFIT IS BARELY MENTIONED
Back to retrofit. One quite amazing statistic I often parrot is that ‘Homes built after 2012 are almost 200 times more likely to have a band A to C energy efficiency rating in England than properties built before 1982’ (see here). To decarbonise how we live and work, retrofit must form part of any UK to approach to decarbonisation – so why is the review comparatively silent on it?
We repeat our previous plea from our reports on energy efficiency and housing and in future proofing commercial development that the UK should create a National Retrofit programme to eradicate fuel poverty and to create green jobs; this should include some form of retrofit loan programme for households to accelerate the adoption of the technologies that the review espouses and more efficient technologies created in the short and medium-term.
It has been heartening to see that the UK Green Building Council has assembled an expert team to accelerate action on commercial retrofit in recent days; read more on that here.
NATURE’S ROLE IS BIGGER THAN THE REVIEW STATES
One of the ten priority missions relates to ‘Net Zero nature’ – with an emphasis for the UK to:
“Embed nature and habitat restoration throughout transition plans, maximising co-benefits for climate and nature wherever possible.”
The review repeatedly states that ‘a thriving natural environment is inextricably linked with protecting our climate and growing our economy’, and calls for nature based solutions ‘wherever possible’ – including publishing a land use framework by mid-2023; the restoration of peat and forest land as carbon sequestration/sinks; and ‘doubling down’ (whatever that means) on protecting existing landscapes that contribute to net zero.
A fantastic local programme – the ‘City of Trees’ in Greater Manchester
Again, there is little to disagree with here – but what about the requirement, for instance, on promoting reforestation through new development, a challenge that (frankly) a number of land developers have already taken on (including in Greater Manchester) and advocated through the likes of Natural England through its drive for ‘Nature Recovery’? Similarly, nothing is suggested on Sustainable Urban Drainage Systems to support the effective collection and treatment of water, that most precious of commodities as the world heats up – why not? Another issue flagged by the RSPB is the review’s lack of reference to burning biomass, which we agree ought to have been covered.
The centrality of nature within the recommendations is welcome to see, but it suggests an evidence and recommendation based that needs to be beefed up in future.
LET’S GO BEYOND ‘THREE DEMONSTRATORS’ IN OUR THINKING
The final mission of the ten relates to accelerating the UK’s R&D capabilities to create the required technologies of the future in energy minimisation, production and storage, alongside the need to:
“Catalyse decisions and action with an R&D and technology roadmap to 2050, pushing for more agile regulation, and supporting up to three ten-year demonstrators.”
Stakeholders suggested that “a lack of market signals and Government commitment towards net zero R&D and technologies is a factor behind limited investment and scale-up past research stages.” This led the review team to conclude that by Autumn 2023, the Government should:
– Review how to incentivise greater R&D for net zero, including considering the role of clarity on research priorities and government support, tax credits, greater ringfencing of R&D spend, and enabling regulation; and
– Create a roadmap that details decision points for developing and deploying R&D and technologies that are critical for enabling the net zero pathway to 2050.
This is alongside a recommendation that the “Government should establish up to three new R&D demonstrator projects, out to 2035, aligning with the ten-year missions set out by this review. These should be considered when creating the overarching R&D and technology roadmap”.
We find this focus rather curious. Whilst the review is completely correct to challenge Government on the frankly byzantine funding structures that govern UK R&D – including an addiction to ‘competitions’ – why do the reviewers then focus on the Government only asking for and supporting ‘three’ demonstrators in the next twelve years? What about the private sector being encouraged to showcase its decarbonisation projects as part of a ‘place first’ approach, tying in the land and infrastructure needed to deliver clusters of excellence, given the review’s enthusiasm for driving solutions at a local level? (See the section on ‘cross-cutting themes’ later)
We need more centres of excellence like the Advanced Manufacturing Park across the rest of the UK
In practice, this could actually be more straightforward than the reviewers believe. The most forward thinking technology companies and land developers are already working together on creating key technology clusters for net-zero, similar to what has been achieved before in areas such as Advanced Manufacturing (see reports passim). The Government acted extraordinarily quickly in Liz Truss’ fateful term as Prime Minister in the Summer in pushing its initial wave of Investment Zones, receiving literally scores of entries in promising areas ‘powers and finances to turbocharge growth’. Why not apply the same logic through the new Department of Energy Security & Net Zero in demanding the acceleration of several clusters of clean growth?
The Carbon Capture and Storage process in theory
We need to talk about Carbon Capture & Storage
The part of the review that we are most cynical about is the fifth key priority mission:
“A clear plan for decarbonising energy intensive industry through investment in CCUS and hydrogen.”
Ah, Carbon Capture & Storage. Carbon capture is a nascent technology that intercepts Carbon Dioxide from emissions streams, such as gas processing facilities or power plants. Once captured, the Carbon Dioxide byproduct is piped away and either permanently stored underground or used for other industrial purposes.
Whilst the UN has frequently cited the importance of Carbon capture and storage to meet net-zero targets, the technology is at a very early stage and has been for a number of years; the UK’s highest profile example is relatively small scale at Drax in North Yorkshire. Recent reviews of its development do not inspire confidence either.
An Institute for Energy Economics and Financial Analysis report published last September concluded that the majority of carbon capture projects have failed or underperformed, while the few successful projects have mostly contributed to the procurement of fossil fuels. As emphasised in this article from SP Global:
The study authors analyzed 13 carbon capture projects in various applications, accounting for about half of worldwide carbon capture capacity. Of the projects analyzed, seven performed below their stated capacities, two failed due to technical issues and one was suspended, the study said.
It also emphasised that the successful projects tend to contribute to producing more fossil fuels, leading to further emissions. One example given is natural gas processing, which requires separating Carbon Dioxide from raw gas to produce a marketable product. The CO2 byproduct may be sold for enhanced oil recovery, in which it is injected into oil fields to extract more crude. Does this sound like a vision for 2050?
We acknowledge why the authors have placed it in the review – to harmonise findings in line with other developed countries. We’d be delighted if carbon capture worked at scale – but we remain to be convinced.
It rightly recognises tackling cross-cutting themes for effective delivery
Back to the positives however. Aside from a number of sensible suggestions on the focus of activity, the second part of the review also properly recognises that reform is needed in key cross-cutting themes: the infrastructure, governance, finance and skills needed for delivery. As the Institute for Government correctly analyses, this is “precisely where the government’s (previous) 2021 strategy was lacking.”
In its call for creating a stable policy and financial framework, it recommends the delivery of an ‘Office for Net Zero delivery’ to hold departments to account and remove barriers to investment (more on this later), and the creation of an overarching financial strategy by the end of 2023. Both are very sensible suggestions providing that the latter includes tackling two of our major bugbears here at Bellona:
– Reducing the complexity and ‘competition addiction’ that currently riddles accessing Government support for schemes and technologies alike, leading to obfuscation and delays; and
– Holds the feet of traditional lenders to the fire in supporting indigenous high-value businesses to grow, as we believe they’ve not delivered anywhere near enough. Supporting the transition shouldn’t just be a Government-funded cause.
The review also goes much further that the government’s strategy on skills, calling for reforms to the Apprenticeship Levy and a new programme to incentivise the training of heat pump and renewables engineers. It stands to reason that the UK labour market needs to respond to identified future growth, and the adaptation of current curriculum to incorporate ‘making net zero happen’ alongside the ramp-up of high-quality vocational training, including apprenticeships, appears an absolute must.
The Review also calls for a ‘Place-based approach’, to Net Zero, stressing that local authorities should play a vital role in delivering Net Zero – and that a clearer set of roles and responsibilities are needed to facilitate this. Providing this call includes the role of regional Government including as funder on its own terms, we fundamentally agree with this conclusion. Unfortunately, it runs completely contrary to the way local and regional Government is treated by its national counterparts at present, including the ‘hollowing out’ of its funding base since 2010 and a continued refusal to unlock the strings of regional funding to allow regional Mayors to focus on what they believe matters. This classic central-local relationship mistrust needs resolving and quickly.
What it really highlights: Continuing Government inaction
On balance, it is a praiseworthy effort by the former Minister and his review team. The vision within the Review is a more activist role for government – setting clear direction and taking action to enable the market to deliver progress on the ten missions. Throughout all of its contents, there is a clear emphasis on speed of delivery against the ten missions, following on from this quite brilliant fourteenth paragraph:
Work is needed to secure the benefits and minimise costs. We are at a crossroads. We can either go further and faster in the transition, capitalising on our comparative advantages on clean technologies, our world class science base, our global leadership on financial services and the natural power reserves of the North Sea – or we can hold up our hands and say it is too difficult and watch our world-leading sectors, such as the City of London or our advanced car manufacturing, pack up and move on, taking high-skilled, high-paying jobs with them.
Given decarbonisation is the gateway towards a cleaner society and better growth, it is an enormous shame this Review was needed at all as ‘a wake up call to the UK‘. It is outstanding in holding a mirror up to Government intransigence and inaction on Net-Zero, principally that there is no strategy; that funding and initiatives are piecemeal; that some of our most innovative firms in either energy minimisation, low carbon energy production or storage have not been properly supported; and that a greater number of actors need supporting to get anywhere near the UK both reaching net-zero 2050 and supporting others round the world to do the same.
Have we got an issue? Better call Shapps
Initial evidence suggests that the Government has actually taken some of the Review’s findings on board. Whilst ‘boosting green economic growth’ doesn’t form part of the Government’s fairly risible five priorities, the creation this week of a formal Department for Energy Security and Net Zero – led by its standard ‘Mr Fixit’ Grant Shapps – at the very least creates a focal point for strategy. What next? As the Institute for Government suggests:
With an election approaching, the government will come under pressure to develop a distinctive approach to net zero and get the UK on track for its commitments (an updated strategy is due by March). If the prime minister is looking for inspiration, the document he has just received would be a good place to start.
In less than two years however, it is likely to no longer be the Conservatives’ problem of course. Labour has already made investing in green industries a key plank of its policy agenda, linking it levelling up and economic renewal. It was the central theme of Keir Starmer’s 2022 party conference speech, while his New Year speech similarly outlined a “mission-based” approach to driving progress.
The PM in waiting? His party’s thinking on Net-Zero is well ahead of its opposition
Regardless of who ends up in power however, Net-Zero and Sustainability really ought to be the central element of any Government programme for a better world. We’re hopeful that the Skidmore Review will help to move things on a bit quicker than what we’ve seen in recent months.
