What does the Climate Change Committee’s progress report mean for green technologies and services businesses?

Following the publication of the Climate Change Committee’s 2022 progress report to Parliament, Sam Hartley, Green Economy business advisor, highlights the key findings for businesses providing low carbon solutions.

As we transition to a green economy, the green technologies and services sector is subject to a rapidly changing and expanding environment. The release of key governmental reports can have a huge impact on the market or signify potential growth or risk areas, and the Climate Change Committee’s annual assessment of UK progress in reducing emissions is one of these key reports.

The committee’s report, released in June 2022, reviews current government actions on decarbonisation in line with the sixth carbon budget for the UK which aims to keep warming to well below 2 degrees. Key findings from the report:

• UK greenhouse gas emissions were 447 MtCO2e in 2021. This is 47% below 1990, a decrease of 10% on 2019 emissions but an increase of 4% on 2020.
• Credible plans exist for 39% of the required emissions reductions (where funding, enablers and timelines are in place) include the zero-emission vehicle mandate and renewable electricity supply.
• Areas with ‘some risks’ total 24% of the required emissions reductions (where changes are needed to mitigate delivery risks) include policies to address price disparity in car charging, zero-emission HGVs, flexible low carbon electricity generation, decarbonising new homes, and policies for industrial Carbon Capture and Storage and hydrogen, especially for dispersed sites.
• Areas with ‘Significant risk’ total 33% of the required emissions reductions (where plans are either under development without a clear timeline for next steps or need further work to mitigate a significant delivery risk) include policies for a market-based mechanism for low-carbon heat in homes, industrial resource efficiency, peatland restoration, and for the necessary infrastructure, CO2 storage sites and funding mechanisms for engineered removals.
• Areas with plans either completely missing or currently clearly inadequate for 5% of the required emissions reductions include low carbon farming practices, the UK’s strategy for biomass, energy efficiency in non-fuel-poor homes, and industrial electrification.

The committee also identified major operational risks to delivery, many of which have been grappled with by low carbon SMEs for a while, such as lack of public engagement and business support. This is particularly relevant for the reliance on retrofitting, where there is a poor awareness of the necessity to shift heating technology. This becomes a particularly risky issue when the government are relying on a market-based mechanism for heat pumps, via an obligation on boiler manufacturers to sell a rising number of heat pumps. This is an untested approach with no contingency planning in place, therefore there is a gap on engagement to drive sales of low carbon heating systems.

Skills have been a hot topic since the shift to the green economy has gathered pace, in this report the committee outline the lack of evidence on skills requirements in key growth areas like retrofitting. This feeds into an existing chicken and egg problem of aligning the correct reskilling with the increasing uptake of technology pathway and will hopefully be addressed in the upcoming Action Plan for Net Zero skills.

Adaptation is the much-forgotten topic, when acting in haste to decarbonise the true implications of our changed climate aren’t fully accommodated for. An example of this that the committee identified is that the current governmental plan relies on restoring peatlands without accommodating for the risk to these restored peatlands from increased likelihood of drought, flooding and wildfires. This should be a major consideration for all low carbon products and services providers – how will your services stand up to this risk and have you accommodated for this? As buyers’ adaptation and resilience plans reach maturity this will be a crucial focus area.

The report predictably highlights the need for rapid expansion in most green subsectors, most notably of which is due to the success of EV sales seeing a 78% growth rate the supporting charging infrastructure is lagging behind at 27%. New building regulations stipulating charge point access for both residential and non-residential will help to accelerate these installations.

The committee acknowledge that some strategies and actions are in the pipeline and not yet live, many of which will be released over the next year. The upcoming reports of note will be new or updates to the:

• Action plan for Net Zero Skills: UK’s first regional Net Zero skills plan to unlock green jobs bonanza in the North West – Net Zero North West (netzeronw.co.uk)
• UK’s policy framework under the Net Zero Strategy: Net Zero Strategy: Build Back Greener - GOV.UK (www.gov.uk)
• National adaptation programme: Climate change adaptation: policy information - GOV.UK (www.gov.uk)

The committee is also exploring longer-term issues over the allocation of costs and benefits of the transition in the coming months, as they develop their own assessment of distributional impacts on households and the Exchequer from the transition to Net Zero.

To read the committees full recommendations download the 2022 Progress Report to Parliament - Climate Change Committee (theccc.org.uk) and click through to page 515.

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