Radical action needed for net zero innovation

A new report from centre-right thinktank Onward has found that, at current trajectories, the UK’s target of reaching 600,000 heat pump installations each year by 2028 will not be met until 2057, almost three decades behind schedule. Reaching all of the UK’s 27 million homes will take much longer – until 2187 at current rates.

‘Green shoots: How to drive innovation to meet net zero’ argues that the government will not deliver on its commitment to reach net zero emissions by 2050 without taking radical action. It reveals that while the UK has decarbonised faster than any other G20 country since 1990, it increasingly trails behind other countries in the development of technologies likely to be critical to decarbonisation in the next thirty years.

It also analyses existing levels of innovation in carbon-intensive industries, as well as the stage of development of the technologies that may help them to decarbonise. The findings suggest that the government should go much further to incentivise the development of key low carbon technologies and to support the diffusion of innovations across the economy

In the run-up to the UK’s co-Presidency of COP26 in Glasgow in November, Onward urges the government to adopt a number of radical policies to kickstart an “explosion” in net zero innovation and diffusion to propel the UK towards net zero by 2050 and to position the UK as an industrial leader in green technology.

The authors recommend that ministers:

o   Set a “gold standard” for carbon offsets, by creating a new Carbon Accounting Regulator to oversee the monitoring, reporting and verification of greenhouse gas emissions, reductions and removals across the economy.

o   Rebalance carbon prices to reflect emissions, by increasing VAT on carbon-intensive products, and reducing it on low-carbon products. This would incentivise consumers and businesses to use more sustainable products and services, driving innovation in these sectors in the process.

o   Establish a National Energy Laboratory to conduct high-risk net zero research to overcome energy system challenges. This should be modelled on the National Energy Laboratories in the US and the Helmholtz Association Research Centres in Germany.

o   Introduce subsidies for Carbon Capture and Storage (CCUS) and Carbon Removal technologies, by introducing new Contracts for Difference to CCUS alongside Hydrogen, and introducing a Carbon Credit Tax Relief (CCTR) for Direct Air Capture credits.

o   Make heat pumps much more affordable, by making a proportion of the cost tax deductible; re-introducing a boiler scrappage scheme to allow people to trade in their old boiler, and introducing community finance schemes to help neighbourhoods adopt heat networks.

Report co-author Ted Christie-Miller said:

“Net zero means shifting, at record pace, from a heavily fossil-fuel dependent economy to one based on low-carbon sources within the space of a generation. The time available is too brief, and the risks from failure are too great, for us to just wait and see if the technologies needed are going to be ready in time.

“The Government needs to consciously create the incentives and build the institutions necessary to create an explosion in the R&D, commercialisation and diffusion of key net zero technologies. If we don’t act fast, we will pay the price in higher emissions, lower competitiveness, greater societal disruption and higher costs for consumers and taxpayers.”

The report can be viewed here.