Powering up Britain: Net Zero Growth Plan

2026 (see Buildings chapter). • In April 2022, we published the Hydrogen Investor Roadmap, articulating the sectoral investment need, and summarising the government policy and funding, to provide investors with the information they need to support investment decisions. This was followed by the Hydrogen Sector Development Action Plan in July 2022. We will shortly publish an updated investment roadmap for hydrogen. • We appointed Jane Toogood as UK Hydrogen Champion to help galvanise industry and investors to accelerate the development of the UK hydrogen economy. The Hydrogen Champion has met extensively with stakeholders across industry to assess opportunities and identify barriers to achieving this, making several recommendations in an independent report published on 22 March 2023. 41 Powering Up Britain – The Net Zero Growth Plan Area Progress Continuing to • Our North Sea Transition Deal One Year On report progress announced the Government and Regulators Electrification measures to Group (GREG) to explore barriers to electrification, and an reduce GHG emissions from industry Task and Finish Group. Oil and Gas • In Autumn 2022, the GREG moved to resolve specific barriers to electrification, engaging widely to prioritise issues. We continue to work closely with projects and regulators, including NSTA and Ofgem. • We fulfilled the Net Zero Strategy commitment to launch the Climate Compatibility Checkpoint. • We introduced an 80% investment allowance under the Energy Profits Levy, incentivising industry to invest in upstream decarbonisation. • Crown Estate Scotland and the Scottish Government launched the Innovation and Targeted Oil and Gas (INTOG) sectoral marine plan and seabed leasing round for offshore wind, aiming to power oil and gas assets in Scottish Waters. The outcome of the INTOG round was announced on 24 March, confirming 13 projects. • Several North Sea electrification projects are in development, including large ‘hub’ solutions which provide power connections to onshore electricity grids and link up to nearby offshore wind - these are critical to wider electrification delivery and the emerging floating offshore wind sector. • The Health and Safety Executive (HSE) -led Iron Mains Risk Reduction Programme (IMRRP) addresses gas distribution network leaks by replacing iron mains with plastic pipes within 30 metres of buildings through to 2032. By 2032, this will deliver a 66% reduction in CO2e GHG emissions since 2014, with c.5% of iron mains remaining. 42 Powering Up Britain – The Net Zero Growth Plan Upcoming Delivery Milestones For hydrogen, we will: • Enter due diligence with 20 projects in the first electrolytic hydrogen allocation round (HAR1), through which we intend to award contracts in Q4 2023 totalling up to 250MW of capacity, subject to affordability and value for money. • Aim to launch a second electrolytic hydrogen allocation round (HAR2) in Q4 2023 and aim to award contracts to up to 750MW of capacity in early 2025, subject to affordability and value for money, to deliver up to 1GW of electrolytic low carbon hydrogen production capacity in construction or operation by 2025. • Aim to engage with industry on the draft full form Low Carbon Hydrogen Agreement (LCHA) in Q2 2023 with the intention of publishing the final LCHA for initial projects from Q3 2023. • Intend to launch a second competition window for strands 1&2 of the NZHF in spring 2023, to be run by UKRI and provide further funding routes for development and capital costs of low carbon hydrogen production projects that do not require revenue support. • Aim to publish a response to our consultation on the design of business models to support hydrogen T&S infrastructure by the end of Q2 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. • Aim to publish a delivery roadmap this year to show how hydrogen production can be scaled up over the coming decade. • Publish the first revisions of the UK Low Carbon Hydrogen Standard this year. For oil and gas, we will see: • Exclusivity Arrangements awarded by Crown Estate Scotland to INTOG projects; • The first licenses from the 33rd Offshore Oil and Gas Licensing Round in Q2 of 2023; • Further moves from industry towards our target of ending routine flaring & venting by 2030; • Future industry investment decisions to deliver the first electrification projects. Powering Up Britain – Energy Security, published alongside this plan, sets out more information on government’s approach to securing cleaner energy. 43 Powering Up Britain – The Net Zero Growth Plan Carbon capture, Usage, and Storage Carbon Capture, Usage and Storage (CCUS) is an emerging sector that is of central importance to decarbonising the UK’s economy. It will enable the decarbonisation of hard to abate industrial sectors and enable low-carbon hydrogen production and flexible low- carbon electricity generation to complement other forms of low carbon power, along with engineered greenhouse gas removals. CCUS forms part of the most cost-effective route to net zero, and represents a significant economic opportunity, with the potential to support up to 50,000 jobs by 2030 and deliver £4.3 billion in GVA by 2050 through exports. The UK is the place to invest in CCUS – it is in the top five countries globally for CCUS readiness and has one of the largest potential CO2 storage capacities in Europe. We are committed to deploying CCUS in two industrial clusters by the mid-2020s and four clusters by 2030, with the aim of capturing and storing 20-30Mt CO2 per year by 2030. By 2030, these clusters aim to enable CCUS for 6Mtpa of CO2 from industrial sectors, at least 5Mtpa of CO2 from engineered greenhouse gas removals, the gas CCUS capacity required to keep us on a pathway towards our power sector decarbonisation ambitions and CCUS support for the delivery of up to half of the 10GW ambition of low carbon hydrogen production. CCUS may need to reach storage capacity to store a total of at least ~50 Mtpa CO2 by the mid-2030s. Significant progress has been made in creating this new sector, and our policies and incentives aim to reduce upfront infrastructure costs and de-risk early investment in a competitive and growing industry. We have: • Developed business models across the value chain which provide the minimum required initial revenue support to attract private investment, ensuring an appropriate method to wind down government support when industry can self-fund CCUS and hydrogen projects. • Set out measures in the Energy Bill, that will establish an economic regulatory framework for CO2 networks. • Selected HyNet (Northwest England and North Wales) and the East Coast Cluster (Teesside and Humber) as the first two clusters. Alongside this document, we are announcing the Track-1 negotiations project list of eight capture projects for these clusters across the hydrogen, power, industry, and waste sectors that have been successful in proceeding to negotiations in the next stage of the programme. Of these, there are three Industrial Carbon Capture, two Energy from Waste, one power-CCUS and two Hydrogen projects. 44 Powering Up Britain – The Net Zero Growth Plan • The government will provide up to £20 billion funding for early deployment of CCUS. This unprecedented level of funding will unlock private investment and the creation of jobs across the UK, particularly in the East Coast, North West of England, and North Wales, and kick-start the delivery of subsequent phases of this new sustainable industry in the UK. This includes the previously announced £1 billion in capital funding through the CCUS Infrastructure Fund (CIF) to help reduce the capital costs borne by private investors in strategic CCUS infrastructure, transport and storage networks, and industrial carbon capture (ICC) projects. • Announced an intent to increase the size of the two initial clusters by expanding transport and storage capacity and additional capture projects. • Launched Track-2 of the CCUS cluster sequencing process to establish two further CCUS clusters. • Launched the UK energy supply chain taskforce to maximise opportunities, enhanced UK Export Finance’s support for attracting investment in CCUS and identified existing infrastructure that could support CCUS; industry is working through the CCUS Council to publish a Supply Chain Strategy in summer 2023. • The NSTA ran the UK’s first ever carbon storage licensing round with 13 potential areas available: 26 bids under evaluation with a view to awarding licences in April 2023. We could need as many as 100 stores to meet our net zero targets. The above actions provide a clear roadmap to meeting our 2030 commitments. To meet our Carbon Budget 6 commitments, taking into account recommendations from the CCC’s 2022 Progress Report to Parliament and the Independent Review of Net Zero, we will also: • Work with industry to progress development of non-pipeline transport in a timeframe consistent with our Track-2 objectives, supporting decarbonisation of sites away from CO2 stores or industrial clusters suggested in the Independent Review of Net Zero. • Ensure additional clusters identified for 2030 or expansion of the first two clusters can demonstrate options for the delivery of non-pipeline transport projects from 2030. • Set out a vision for the UK CCUS sector to raise confidence and improve visibility for investors as suggested in the Independent Review of Net Zero. • Shortly publish an updated investment roadmap on CCUS, summarising government policy and funding, to provide investors with the information they need to support investment decisions. 45 Powering Up Britain – The Net Zero Growth Plan On 15 March 2023, the Chancellor announced that the Government will provide up to £20 billion investment in CCUS to help meet the Government’s ambitions. This unprecedented level of funding for the sector will unlock private investment and job creation across the UK, particularly on the East Coast and in the North West of England and North Wales. The UK Infrastructure Bank (UKIB) has also identified CCUS as an investment opportunity in its first strategic plan. The Bank is engaging the market and projects, focusing on how it can accelerate delivery of the UK’s first CCUS clusters. Projects are encouraged to speak to UKIB about their financing needs. Subject to proposals meeting its investment principles, the bank stands ready to invest. The building blocks for the creation of a new CCUS sector supporting our net zero ambition are in place and the delivery of the first four clusters is underway. This, together with the additional areas outlined above, will enable industry and government to deliver on our net zero and CCUS objectives 46 Powering Up Britain – The Net Zero Growth Plan Industry Summary UK industries combine high-end technology and highly-skilled workers with the ingenuity to make products that are traded all over the world. Through the Industrial Decarbonisation Strategy, the UK was the first major economy to set out how we can have a thriving industrial sector aligned to net zero, which also supports jobs, growth, and investment. There is a role for government in helping to increase the rate of adoption of low carbon technologies, particularly when these technologies are not yet fully cost- competitive or price-competitive compared to established practices. Progress in industrial resource efficiency and energy efficiency (REEE) is key to reaching net zero. REEE measures could contribute up to 12 MtCO2e of annual savings by 2050 (excluding potential additional savings from the Iron and Steel sector).39 The Energy Efficiency Taskforce will play a vital role in bringing government and business together to deliver ambitious REEE savings. It will advise and work with ministers on the delivery of the government’s ambition to reduce, by 15%, the UK’s final energy consumption from buildings and industry by 2030, compared to 2021 levels. This applies to domestic and commercial buildings and industrial processes, with a particular focus on the role of the private sector and stimulating investment. We are also continuing to support Energy Efficiency through the Industrial Energy Transformation Fund (IETF). We are announcing an extension to the Industrial Energy 47 Powering Up Britain – The Net Zero Growth Plan Transformation Fund (IETF), increasing total grant funding available to £500 million. Subject to business case approval, we intend to open Phase 3 of the IETF for new applications in early 2024, supporting industry to cut their energy bills and carbon emissions through investing in energy efficiency and low carbon technologies. Additionally, as announced at the Budget, we are extending the Climate Change Agreements Scheme by two years, which provides reduced Climate Change Levy rates for eligible businesses in over 50 industrial sectors worth an estimated £300 million a year. We are also publishing a consultation on the detail of the extension and views on any potential future Climate Change Agreements scheme. We will replace 50TWh of fossil fuels per year by 2035 to support industrial fuel switching. Electrification has the potential to reduce annual industrial greenhouse gas emissions by between 7 and 19 MtCO2e, contributing between 15% and 40% of the necessary carbon abatement in industry by 2050.40 The level of electrification uptake will depend on a secure supply of electricity, grid access, technology innovation, and the relative cost of electricity compared to other fuels. We recognise that there are barriers to fuel switching to electricity, including the relative cost of electricity compared to gas, and we plan to launch a call for evidence in 2023 to seek views on overcoming these challenges. Low carbon hydrogen could play a role in decarbonising industrial manufacturing. Hydrogen can be used both for indirect heating applications, such as to fuel industrial boilers or combined heat and power (CHPs) plants, and for direct heating processes, such as in a furnace or kiln. Hydrogen, along with other options, can also help decarbonise non- road mobile machinery, another significant source of GHG emissions. By 2050 industry could use between 40-110 TWh of hydrogen as a fuel each year, abating between 4 – 21 MtCO2e per annum, depending on hydrogen availability.41 Our UK Low Carbon Hydrogen Standard and the Hydrogen Production Business Model are intended to incentivise the uptake of hydrogen across UK industry (see Fuel Supply and Hydrogen chapter for more on our strategy). CCUS will play a vital role in transforming industrial sectors such as refining, cement, and chemicals. It can also support the transformation of our industrial regions into low carbon manufacturing clusters, creating high value jobs to help level up the economy. We have committed to deploy CCUS in at least two industrial clusters in the mid-2020s, and in four clusters by 2030. This will enable CCUS deployment and support our ambition to capture and store 6 MtCO2 per annum of industrial emissions by 2030 and

9 MtCO2 per annum by 2035. We announced £20 billion of investment in the early development of CCUS in March 2023, and have developed business models to de-risk and incentivise private investment, and we have now announced the Track-1 project negotiation list, including industrial capture projects. We also anticipated that further savings of 1 MtCO2 per annum after 2030 could be delivered. The best mechanism for 48 Powering Up Britain – The Net Zero Growth Plan delivering these additional savings, including the role of industrial carbon capture, remains under review. We are determined that our efforts to decarbonise industry and reduce emissions are not undermined by carbon leakage. The consultation Addressing Carbon Leakage Risk to Support Decarbonisation, published alongside this plan, is a significant step forward in setting a new framework to mitigate this risk and considers a range of domestic policy options to protect against carbon leakage, including both a carbon border adjustment mechanism (CBAM) and mandatory product standards. Decarbonising our industrial sector has the potential to unlock £19 billion in public and private investment across the UK in line with our 2037 delivery pathway. This could support up to 4000 jobs directly in industry for the manufacture and installation of on- site energy efficiency measures and up to 50,000 jobs across industry, power and the transport and storage network for the deployment of CCS. Indicative emissions pathway to 2037 In 2021, industry emissions were around 76 MtCO2e making up around 17% of total UK net GHG emissions (including international aviation and shipping). The largest emissions sources include manufacturing and construction (e.g. iron and steel, chemical, cement), oil refineries and industrial non-road mobile machinery. Industry emissions have decreased by 3% since 2019 and 52% since 1990. Since 1990, the largest reductions were from manufacturing and construction (e.g. iron and steel) and adipic acid production. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels, GHG emissions could fall by 15% to 25% on average over 2023- 27, 41% to 52% by 2030 and 62% to 75% on average over 2033-37. Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets.42 Progress and delivery Metric Progress Ambition to deliver 6 • Phase 2 of the Cluster Sequencing process launched in MtCO2 per year of November 2021. Projects to proceed to the due diligence industrial CCUS by stage of the Phase 2 process have been announced. 2030, and 9 MtCO2 by • Publication package on ICC business models was released 2035 in December 2022. 49 Powering Up Britain – The Net Zero Growth Plan Metric Progress • The Chancellor announced £20 billion of investment in the early development of CCUS in March 2023. • We have now announced the Track-1 project negotiation list, including industrial capture projects. Developing our REEE • Completed six application rounds of the £289 million measures to support Industrial Energy Transformation Fund (IETF). Successful our commitment to applications can be found online and came from a diverse reduce the UK’s final range of sectors, locations, and company sizes. energy consumption from buildings and • Published the Government Response to our consultation on industry by 15% by strengthening the Energy Saving Opportunity Scheme 2030 against 2021 (ESOS) and introduced clauses in the Energy Bill to provide levels enabling powers to strengthen ESOS. • Responded to the Environmental Audit Committee’s report on Building to Net Zero, outlining our intention to consult this year on our approach to the measurement and reduction of embodied carbon in new buildings. • Collaborated with the UKRI-funded National Interdisciplinary Circular Economy Research (NICER) programme to strengthen our evidence base on resource efficiency initiatives. • Progressed work on how consumer labelling can inform consumers of durability, repairability and recyclability, and will incorporate these findings into future work. Progressed funding • Supporting energy and trade intensive industries through and financial incentives the Energy Bills Discount Scheme to drive industrial • Consulting on proposals to ‘rebalance’ the costs placed on decarbonisation whilst energy bills away from electricity to incentivise electrification maintaining UK competitiveness across the economy. • Extending the Energy Intensive Industries (EII) Compensation Scheme for a further 3 years and subsequently announced the British Industry Supercharger. • Continued to support the engineering and technical design elements of decarbonisation projects across industrial clusters through the £210 million Industrial Decarbonisation 50 Powering Up Britain – The Net Zero Growth Plan Metric Progress Challenge, delivered through UK Research and Innovation (UKRI). • Consulted with industry on implementing a net zero consistent cap for the UK ETS, reviewing Free Allocation policy and expanding the use of emissions trading across the economy. Government has published an initial response covering proposals implemented by 2023. • Responded to our Industrial Carbon Capture (ICC) business model consultation and published the latest contractual drafting underpinning the ICC and Waste ICC business models. • Introduced a spending power in the Energy Bill to provide financial assistance for CCUS, low carbon hydrogen production and hydrogen transportation and storage. This is intended to facilitate payments under the ICC business models, funded through the £1 billion CCS Infrastructure Fund (CIF) and Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme. We are working with the devolved administrations on those parts of the Bill that are within devolved competence. • Announced £5 million of grants through the Local Industrial Decarbonisation Plans competition. Grants will support industry outside the main industrial clusters (in “local clusters”) to develop strategic decarbonisation plans focused on shared infrastructure and integrated solutions. This UK-wide competition is intended to launch in summer 2023. • Announced £24 million of UKRI funding through the Transforming Foundation Industries challenge for eight innovative, industrially scaled demonstrator projects to transform the sustainability of the UK’s foundation industry companies and supply chains, demonstrating capability of future technologies to address resource or energy efficiency challenges. • Committed to consult on bolstering environmental regulation of industry to ensure it integrates regulation of GHG and other emissions. 51 Powering Up Britain – The Net Zero Growth Plan Metric Progress • Published a consultation on Addressing carbon leakage risk to support decarbonisation. Explores a range of domestic policy options to mitigate the risk of carbon leakage and ensure UK industry has the optimal policy environment to decarbonise. Responding to the CCC • Accepted the recommendation for a cross-government Annual Report and strategy to decarbonise non-road mobile machinery Independent Review of (NRMM). We are running research projects and will launch Net Zero a call for evidence to develop our evidence base on options recommendations for to decarbonise NRMM. Industry • Consulting on the policy design of measures to drive reductions in demand, in line with the CCC’s recommendation. We are consulting on policies to address carbon leakage, including a UK CBAM and/or mandatory low-carbon product standards, alongside our review of policy on free allocations under the UK Emissions Trading Scheme. • Additionally, both the CCC and the Independent Review of Net Zero make recommendations concerning policy development of the UK Emissions Trading Scheme (ETS). These have, in part, been addressed in our recent consultation on Developing the ETS, on which the ETS Authority will be publishing a response in due course. • Set out our ambitions for hydrogen (in the ‘Fuel Supply and Hydrogen’ chapter of this report). Our upcoming call for evidence on industrial electrification will address recommendations regarding the barriers to this decarbonisation technology. 52 Powering Up Britain – The Net Zero Growth Plan Upcoming milestones To drive our progress in decarbonising industry, we will: • Publish the full government response to the UK ETS Develop consultation. We also accept the recommendation that we set out a long-term pathway for the UK ETS and will work within the ETS Authority to publish one this year. • Launch a call for evidence on Industrial Electrification in 2023. • We also accept the recommendation that Government should commit to outlining a clear approach to gas vs. electricity ‘rebalancing’ by the end of 2023/4 and should make significant progress affecting relative prices by the end of 2024. • Open the £5 million Local Industrial Decarbonisation Plans competition for bids in Summer 2023. • Respond to feedback received through the consultation on Addressing carbon leakage risk to support decarbonisation. • Extend the IETF, increasing total grant funding available to £500m. Subject to business case approval, we intend to open Phase 3 of the IETF for new applications in early 2024, supporting industry to cut their energy bills and carbon emissions through investing in energy efficiency and low carbon technologies. • Extend the current Climate Change Agreements Scheme by two years, providing Climate Change Levy discounts in return for meeting energy efficiency or carbon reductions targets. • Publish the Biomass Strategy in 2023. The Biomass Strategy will review the amount of sustainable biomass available to the UK and how this resource could be best utilised across the economy to help achieve the government’s net zero and wider environmental commitments while also supporting energy security. • Launch a digital energy advice service for small businesses this year to give impartial, trusted advice on improving non-domestic energy efficiency, reducing their energy use and bills. We will also be piloting a new audit and grant scheme this year enabling small businesses to move from insight to implementation of energy efficiency measures. • 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. 53 Powering Up Britain – The Net Zero Growth Plan • Publish a consultation to review the current Batteries Regulations in the second half of 2023. This will consider measures to promote the recovery, reuse, or recycling of all battery chemistry types. • Begin work on an NRMM strategy in 2023, as recommended by the CCC. We intend to launch a Call for Evidence on NRMM decarbonisation options in Autumn 2023. • Publish a roadmap for increasing the use of timber in construction by summer 2023. • Consider options to further formalise productive cross-government policy making and joined-up strategy to support resource-efficient circular economy business models in industry. This work will build on existing industry partnerships, cross- government research, and the work of the newly created Energy Efficiency Taskforce. • Begin negotiations with three industrial carbon capture projects as part of Phase-2 of Track-1 of the CCUS Cluster Sequencing Process. 54 Powering Up Britain – The Net Zero Growth Plan UK Emissions Trading Scheme The Independent Review of Net Zero recognises that the UK has been a global leader in emissions trading for more than twenty years. Since 2021, the UK Emissions Trading Scheme (UK ETS) has placed the power of the market at the heart of the UK’s net zero strategy. The Review sets out an enhanced role for the UK ETS as a foundation for a thriving, decarbonised economy through 2050 and beyond. It shows how, with a long- term commitment to an expanded market, we can unlock investment in UK infrastructure; catalyse innovation in the UK’s world-leading science and technology; and support UK businesses with the most cost-effective and flexible means to deliver net zero. Government will meet this ambition with a vision of a UK carbon market that can meet the opportunities and challenges of the net zero century. Government accepts the Independent Review of Net Zero’s recommendations that we set out a long-term pathway for the UK ETS; we will work within the UK ETS Authority to do so this year. Subject to agreement within the Authority, this pathway will confirm that: • We will explore expanding the scheme to more sectors of the economy, including high emitting sectors. We will shortly publish a Government Response to our consultation on initial expansion of the UK ETS’s scope to cover energy from waste/waste incineration and domestic maritime emissions. • We intend to legislate to continue the UK ETS beyond 2030 until at least 2050. It will remain aligned with our net zero target, giving the private sector the certainty they need to invest in decarbonisation. • We recognise the integrity offered by the UK ETS could unlock investment at scale in the UK's greenhouse gas removal (GGR) sector by providing an integrated market where businesses can make economically efficient choices on how to decarbonise or remove their emissions. We will work within the UK ETS Authority to consider options for integrating GGRs in the UK ETS subject to the outcomes of last year’s UK ETS consultation, a robust monitoring, reporting and verification (MRV) regime being in place, and the management of wider impacts - including market stability and the permanence of the emissions stored by the GGRs. Further detail will be provided in the Government Response to the UK ETS consultation. • We will explore the potential role of emissions trading markets in gas/electricity price rebalancing as we consider options for rebalancing policy costs away from electricity and onto fossil energy use when the current high gas prices fall. • Using findings from the call for evidence on the role of robust monitoring, reporting and verification (MRV) of greenhouse gas emissions on farms in last year’s UK ETS consultation and additional evidence from ongoing research projects, we will develop a harmonised approach for measuring carbon emissions from farms, 55 Powering Up Britain – The Net Zero Growth Plan which could help unlock new routes to decarbonisation and financial opportunities. We do not propose expanding the UK ETS to agriculture at this time. Throughout the development of the UK ETS, we will undertake full consultation on our proposals. We are committed to ensuring that carbon leakage risks are mitigated at all stages of the UK’s net zero transition. We are currently reviewing our approach to free allocation of ETS allowances, looking at ways to better target free allocations for those most at risk of carbon leakage to ensure they are fairly distributed. We are also considering other potential mitigation approaches – as set out in today’s consultation Addressing carbon leakage risk to support decarbonisation. 56 Powering Up Britain – The Net Zero Growth Plan Heat and buildings Summary It has never been more critical to ensure secure, affordable heating for households, and accelerate the UK’s transition to net zero. Decarbonising our building stock will bolster UK energy security by minimising our exposure to volatile fossil fuel prices. It will drive investment into low-carbon technologies such as heat pumps, heat networks, and potentially hydrogen, while reducing bills for households and businesses. We have made significant progress since the Net Zero Strategy. We are investing over £6.6 billion this Parliament towards improving energy efficiency and low-carbon heating, with targeted regulation and new market-based mechanisms helping to reduce costs for consumers and businesses, attract greater private investment and strengthen supply chain resilience. We are delivering several ‘Help to Heat’ schemes, such as the Social Housing Decarbonisation Scheme, to support the installation of insulation and heat pumps, with targeted support for low-income households and the least energy efficient homes. We are also increasing public awareness of low- and no-cost actions through the ‘It all adds up’ campaign. We have published, following consultation, our plans for a new Energy Company Obligation scheme – the Great British Insulation Scheme. This landmark scheme will support over 300,000 households to improve their energy efficiency through measures 57 Powering Up Britain – The Net Zero Growth Plan such as loft and cavity wall insulation, keeping homes warmer and more comfortable while saving people money on their bills. However, we can still go further. That is why we have already committed an additional £6 billion between 2025 and 2028, demonstrating our long-term commitment to driving energy efficiency and clean heat in our building stock. We have launched the Energy Efficiency taskforce to help deliver our ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030, relative to 2021 levels. The taskforce will focus on stimulating private investment and increasing green finance options, galvanising supply chains, and increasing public and business engagement with energy efficiency. This will include building public understanding, awareness of support, and uptake of clean heat technologies such as heat pumps. These actions will also unlock bill savings, as a typical household heating their home to a comfortable temperature can be expected to save over £1,000 per year by improving to EPC band C from the worst energy efficiency bands.43 As well as supporting households we are putting in place measures to reduce demand from large businesses and improve the efficiency of industrial processes. Our ambition for driving the new green industry of low-carbon heating systems and energy efficiency measures has the potential to add up to £10 billion in Gross Value Added (GVA) per year in the UK and support ~240,000 jobs in 2035. For example, research shows that heat networks could provide for c.20% of total UK heat demand by 2050,44 up from providing c.3% currently.45 This represents an investment opportunity of £60 – £80 billion,46 incentivised through policies such as heat network zoning and capital support schemes. Our social housing programme also leverages co-funding from local authorities and housing associations to maximise investment and benefits. The Independent Review of Net Zero highlights substantial progress so far, with recommendations focused on how to accelerate progress to meet the scale of the challenge. The Review recommended that we provide greater certainty on increasing heat pump installations. The Government is firmly committed to making the UK one of the largest markets in the world for heat pumps, and we can confirm that, as recommended by the Review, the Boiler Upgrade Scheme will be extended until 2028. We are putting in place a combination of regulatory and public spending measures to make heat pumps as cheap to buy and run as fossil fuel boilers, to achieve at least 600,000 heat pump installations a year by 2028. We have consulted on phasing out new and replacement fossil fuel heating systems for off gas grid properties, and will respond to these consultations. The Government has an ambition to phase out all new and replacement natural gas boilers by 2035 at the latest, and will further consider the Independent Review of Net Zero recommendation in relation to this. 58 Powering Up Britain – The Net Zero Growth Plan We accept the Independent Review of Net Zero recommendation that Government should commit to outlining a clear approach to gas vs. electricity ‘rebalancing’ by the end of 2023/4 and should make significant progress affecting relative prices by the end of 2024. Indicative emissions pathway to 2037 In 2021, buildings emissions were around 88 MtCO2e making up around 20% of total UK net GHG emissions (including international aviation and shipping). Residential combustion currently makes up the largest share of these emissions (78%), the vast majority of which is from heating.47 Buildings emissions have increased by 5% since 2019 and decreased by 19% since 1990. Annual buildings emissions are particularly volatile as impacted by external temperatures. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels, GHG emissions could fall by 7% to 17% on average over 2023- 27, 25% to 37% by 2030 and 47% to 61% on average over 2033-37. Please see the Carbon Budget Delivery Plan annex for details of our proposals and policies for meeting the carbon budgets.48 Progress and Delivery Area Progress Delivered domestic • Launched a new Energy Efficiency Taskforce, to accelerate schemes, finance energy demand reduction and drive energy efficiency and advice to reduce improvements to bring down bills for households and energy bills and businesses. increase energy • Investing approximately £3 billion this Parliament in domestic efficiency, energy efficiency upgrades through our decarbonisation particularly of low- schemes, delivering improvements to 230,000 – 290,000 income households, homes, and saving customers between £400 - £700 per strengthened by a annum on their energy bills (based on £2500 price cap). We new Energy have also committed £1 billion per annum until 2026, Efficiency Taskforce supporting low-income households with energy efficiency measures through the Energy Company Obligation (ECO 4). • Integrated the Simple Energy Advice website into an enhanced government website with tailored advice and consumer options for spend-to-save improvements for people’s homes. • We have launched the latest phase of the Home Decarbonisation Skills Training Competition, with £9.2 million 59 Powering Up Britain – The Net Zero Growth Plan Area Progress funding to upskill people working in the energy efficiency, retrofit and low carbon heating sectors in England. Set higher energy • Introduced an uplift to energy efficiency standards for new efficiency standards homes in June 2022, which must now deliver around 30% for new homes and fewer GHG emissions compared to previous standards. The consulted on a more uplift is a stepping-stone to the revised Future Homes robust approach to Standard, which we will consult on in 2023, ahead of monitor energy legislating in 2024 and full implementation in 2025. performance of • Published a consultation to ensure The Energy Performance buildings. of Buildings (England and Wales) Regulations 2012 are fit for purpose and reflect our net zero ambitions. These include changes to make sure Energy Performance Certifications (EPCs) are reliable and trusted, such as considering new civil penalties when certificates are not provided. • Following the 2020 Social Housing White Paper, the 2021 Heat and Buildings Strategy committed Government to consider setting a new regulatory standard of EPC Band C for the social rented sector. We have committed to begin the consultation process on a minimum energy efficiency standard for the social rental sector, within six months of the Social Housing Regulation Bill receiving Royal Assent. Funded non- • Made over £1 billion available through Public Sector domestic schemes to Decarbonisation Scheme Phases 1 and 2 to support heat increase energy decarbonisation and energy efficiency in the public sector. efficiency in Phase 3 is delivering a further £1.4 billion between 2022-2025 buildings and to support a 75% reduction in public sector buildings GHG increase skills emissions by 2037. • Provided up to £61 million of decarbonisation skills funding through the Public Sector Low Carbon Skills Fund, supporting the identification and development of decarbonisation projects in the public sector. Launched • Launched a £450 million Boiler Upgrade Scheme (BUS), with programmes to roll over 15,000 voucher applications so far. BUS has enabled out Clean Heat energy suppliers and mortgage lenders to offer low-finance Technologies options, and installers intend to ramp up deployment. 60 Powering Up Britain – The Net Zero Growth Plan Area Progress • Launched a £30 million Heat Pump Investment Accelerator competition in March 2023, to expand heat pump manufacturing. • We have consulted on phasing out new and replacement fossil fuel heating systems for off gas grid properties, and will respond to these consultations in due course. • Implementing the Clean Heat Market Mechanism in 2024, a market-based incentive for manufacturers to increase installation of low-carbon heating systems relative to the sale of fossil fuel boilers. This is through the Energy Bill. • Cut rate of VAT on the installation of heat pumps and insulation to 0% for 5 years in March 2022, to help boost clean heat uptake. • Continued to grow and decarbonise the UK heat network market through the Green Heat Network Fund and the Heat Network Efficiency Scheme. We can now confirm that capital support will be extended to 2028 to facilitate the continued growth of low carbon heat networks, including £220 million for the Heat Network Transformation Programme over 2025/6 and 2026/7. • Supporting industry to deliver a neighbourhood hydrogen heating trial by 2024 and a village scale trial of hydrogen heating by 2025 (location to be announced in 2023) to take decisions in 2026 on the role of hydrogen in decarbonising heating. We are also supporting industry in the development of a hydrogen town plan. In addition, we have consulted on mandating hydrogen-ready boilers and broader heating system efficiencies. Upcoming Delivery Milestones • Launch the Great British Insulation Scheme. Based on proposals announced last year as ECO+, this will deliver £1 billion additional investment by March 2026 in energy efficiency upgrades, such as loft and cavity wall insulation. It will extend help to a wider group of households in the least efficient homes in the lower Council tax bands as well as boosting help for those on the lowest incomes. We plan to lay legislation by the summer to take it forward. 61 Powering Up Britain – The Net Zero Growth Plan • Work with the Energy Efficiency Task Force, which will publish its action plan later this year. • Extend the Boiler Upgrade Scheme to 2028 and enhance its current marketing campaign, to increase consumer awareness and further encourage take-up. • Enhance our consumer energy advice service by launching a digital eligibility checker for government funding and a series of pilots for in-person consumer advice across five regional Net Zero hubs in England. We are expanding the service, including a national phoneline, and are developing an eligibility checker to determine if government funding can support installing energy efficiency measures. Following the 2020 Social Housing White Paper, the 2021 Heat and Buildings Strategy committed Government to consider setting a new regulatory standard of EPC Band C for the social rented sector. We have committed to begin the consultation process on a minimum energy efficiency standard for the social rental sector, within six months of the Social Housing Regulation Bill receiving Royal Assent. • Publish a summary of responses to the consultation on improving the energy performance of privately rented homes, respond to the consultation on improving home energy performance through lenders. We plan to consult by the end of this year on how to improve the energy efficiency of owner-occupied homes. • 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. • Publish a full technical consultation for Future Homes Standard and Future Building Standard in 2023. • Introduce a regulatory framework for heat networks and begin the implementation of heat network zoning by 2025. • Confirm funding of £15 million for the 2023/24 Home Decarbonisation Skills Competition and have recently confirmed a new £5 million Heat Training Grant for heat pump and heat network skills. 62 Powering Up Britain – The Net Zero Growth Plan Transport Summary Transport is the largest emitting sector and decarbonising it is a key priority. The

2021 Transport Decarbonisation Plan and the Net Zero Strategy put the sector on an ambitious path to net zero by 2050, and we are making good progress against the CCC and Independent Review of Net Zero recommendations. Our plans will deliver wider benefits across the UK - bolstering energy security, unleashing economic growth, and supporting a healthier population and environment. We have provided strong market signals and incentives to drive supply chain development, and this is already unlocking significant private investment. For example, our commitment to zero emission vehicles has led to hundreds of millions of pounds of private investment in charging infrastructure. We are a world leader in the production and use of low carbon fuels, with independent analysis conducted for Sustainable Aviation forecasting the potential for 65,000 jobs to be created by a UK sustainable aviation fuel (SAF) industry by 2050, and £1.9 billion of direct GVA benefit per annum.49 To accelerate sector growth, we have an ambitious plan to support innovation and deployment of low carbon technologies, reducing costs to households and businesses. The rapid adoption of battery electric cars has exceeded the CCC’s trajectory,50 with industry statistics showing that nearly 17% of new cars sold in 2022 were battery electric, up from 12% in 2021.51 We are leading the way internationally with our commitment to deliver the ZEV mandate from 2024, making good on one of the 63 Powering Up Britain – The Net Zero Growth Plan Independent Review’s 25 key actions for 2025. This is supported by our Electric Vehicle (EV) Infrastructure Strategy action plan, with major government investment alongside the private sector through our Local EV Infrastructure and Rapid Charging Funds. We welcome the CCC’s recognition of wider progress in reducing emissions from surface transport. This includes consulting on ending the sale of new non-zero emission L-category vehicles and buses, coaches, and minibuses, and announcing phase out dates for the sale of new, non-zero emission heavy goods vehicles (HGVs). Our Zero Emission Road Freight Demonstrator programme will deploy hundreds of zero emission HGVs in multiple technologies on UK roads. Alongside other measures, this will support delivery of the Independent Review of Net Zero’s recommendation to accelerate decarbonisation of the wider freight sector. Progress in decarbonising aviation and maritime continues. Our Jet Zero Strategy sets out our plan for achieving net zero aviation by 2050, through rapid technology development, with ambitious targets to achieve net zero in domestic flights and airports in England by 2040. We have also played a leading role in securing agreement for the International Civil Aviation Organization (ICAO) to adopt net zero by 2050. In March 2022 we launched the UK Shipping Office for Reducing Emissions (UK SHORE) with £206 million of funding to accelerate development of clean maritime technologies. The Course to Zero consultation will inform development of targets for decarbonising domestic maritime, and the revised Clean Maritime Plan in 2023. We are also driving international progress through the International Maritime Organization (IMO) negotiations. We welcome the Independent Review of Net Zero’s recognition of the important role for low carbon fuels (LCFs) in decarbonising sectors such as aviation and maritime, and will deliver on its recommendation to publish a Low Carbon Fuels Strategy this year to provide certainty for industry and investors over the role LCFs will play across modes out to 2050. We continue to make progress delivering on our ambitions for a thriving domestic sustainable aviation fuel (SAF) market, supported by a comprehensive policy package that includes a further consultation on our SAF mandate, responding to the Government- commissioned independent evaluation of developing a sustainable long-term UK SAF industry, and launching a second application window for the £165 million Advanced Fuels Fund. An accelerated shift to public transport and active travel will support decarbonisation. Our Cycling and Walking Investment Strategy aims to deliver a world- class cycling and walking network in England by 2040, in line with the Independent Review of Net Zero. The newly launched Active Travel England will provide extensive funding and support local authorities to develop and build new walking, wheeling, and cycling routes across England. On rail, the Great British Railways Team will bring forward costed options to deliver our Transport Decarbonisation Plan ambitions. The Government understands 64 Powering Up Britain – The Net Zero Growth Plan the needs of communities in rural areas differ from those in urban environments - this is why England’s long term National Bus Strategy Bus Back Better, is explicit about improving connectivity and availability of services in rural areas. Indicative emissions pathway to 2037 In 2021, domestic transport emissions were around 109 MtCO2e making up around 25% of total UK net GHG emissions (including international aviation and shipping). Road transport constitutes the majority of these emissions. Domestic transport emissions have decreased by 11% since 2019 and 15% since 1990, though 2021 emissions were impacted by COVID-19 and resultant restrictions on movement. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels, GHG emissions could fall by 2% to 8% on average over 2023-27 27% to 39% by 2030 and 61% to 73% on average over 2033-37. Please see the Carbon Budget Delivery Plan annex for details of our proposals and policies for meeting the carbon budgets.52 International aviation and shipping were significantly impacted by COVID-19 and resultant restrictions on movement. In 2021, international aviation and shipping emissions were around 20 MtCO2e making up around 4% of total UK net GHG emissions (including international aviation and shipping). In 2019, international aviation and shipping emissions were around 44 MtCO2e making up around 9% of total UK net GHG emissions (including international aviation and shipping). In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2019 emissions levels due to severely depressed demand in 2021, GHG emissions could fall by 11% or rise by 5% on average over 2033-37. Please see the Carbon Budget Delivery Plan for details of our proposals and policies for meeting the carbon budgets.53 65 Powering Up Britain – The Net Zero Growth Plan Progress and delivery Area Progress Phasing out the sale • We published our response to the Green Paper on a new of all types of new regulatory framework for vehicle CO2 emissions, and a non-zero emission technical consultation on ZEV mandate design in April 2022. road vehicles. We have now launched our final consultation on the ZEV mandate regulations, to apply from 2024, ensuring delivery of our commitment to phase out the sale of new non-zero emission cars and vans. • We consulted on dates to phase out new non-zero emission buses and L-category vehicles. • At COP26 we announced phase out dates for the sale of new non-zero emission HGVs: 2035 for HGVs of 26 tonnes and under and 2040 for HGVs over 26 tonnes. • We completed the first year of the Zero Emission Road Freight Trial programme, including feasibility studies and deployment of twenty battery electric rigid trucks. We are expanding this as part of the Zero Emission Road Freight Demonstrator programme, to demonstrate HGV technologies at scale on UK roads. • We funded more than 3,000 new zero emission buses. To further incentivise the uptake of zero emission buses, we raised the relevant Bus Service Operators Grant rate to 22p/km from April 2022. We also announced indicative funding for 31 areas to deliver local bus service improvements, to encourage bus travel. Supporting • We supported increased availability of public charging development of the devices, more than tripling in four years from 10,300 devices UK’s charging in January 2019 to over 37,600, including more than 7,500 infrastructure rapid devices, in February 2023. network • We launched the Local Electric Vehicle Infrastructure Fund Pilot (LEVI) which provided £57 million of public and private investment to 25 different local authorities across England. This will deliver almost 4,400 chargepoints and gullies to scale up the delivery of local chargepoints and support drivers without off-street parking. 66 Powering Up Britain – The Net Zero Growth Plan Area Progress • Following a pilot and initial capability funding, a further £343m capital and £37.8m resource funding has been made available over the next two financial years to scale up the delivery of local chargepoints across England through the Local EV Infrastructure (LEVI) Fund. • In addition, the On-Street Residential Chargepoint Scheme (ORCS), remains available to all UK local authorities. A further £15m is available in 2023/24, following a total of £37m in 2022/23. • Together, our LEVI and ORCS funding means we will be providing £470m of public funding for local electric vehicle charging over three financial years, supporting the installation of tens of thousands of chargepoints in local areas. • To improve the experience of consumers accessing public charging infrastructure, we are regulating to introduce contactless payment at new chargepoints 8kW and above and existing rapids 50kW and above within one year. We are also mandating payment roaming to support fleet electrification, pricing transparency to allow consumers to compare prices immediately and open chargepoint data to support drivers to find the right chargepoint for their needs. Reliability will also be improved as government will mandate 99% reliability for each rapid network and a 24/7 free helpline across the public network. • Alongside disability charity Motability, co-sponsoring the British Standards Institute (BSI) in providing world-first specifications on designing and installing accessible public EV chargepoints. We are continuing to incentivise the purchase of battery electric vehicle company cars by confirming preferential benefit in kind rates out until April 2028. Increasing levels of • Last year we launched a new executive agency, Active Travel cycling and walking England, to ensure local authorities invest in effective, high- quality schemes that support our ambitions for half of all journeys in towns and cities in England to be cycled or walked by 2030. 67 Powering Up Britain – The Net Zero Growth Plan Area Progress • In February 2023 we announced £200 million for new walking and cycling schemes and projects to enable safer and more inclusive active travel. • In July 2022 we published the second Cycling and Walking Investment Strategy (CWIS2), which included an objective to deliver a world-class cycling and walking network in England by 2040. Accelerating aviation • We published the Jet Zero Strategy in July 2022, which decarbonisation introduces a world first in-sector emissions reduction trajectory that sees UK aviation emissions peak in 2019. • We have set a 2040 net zero target for domestic aviation and in February 2023 published a call for evidence to seek views on further action required to achieve our target for airport operations in England to be zero emission by 2040. • We have committed to having at least five UK Sustainable Aviation Fuel (SAF) plants under construction by 2025, supported by the £165 million Advanced Fuels Fund, and to introduce a SAF mandate targeting at least 10% SAF in the UK aviation fuel mix by 2030. We are launching a second consultation on the mandate’s design as well as a second window of the Advanced Fuels Fund. • We commissioned an independent review to help understand the conditions needed to create a sustainable long-term UK SAF industry in October 2022, and will imminently respond to its findings, and will work with industry on options to increase revenue certainty for UK SAF plants and options to stabilise the UK market for feedstocks. • We have committed £685 million to support development of new ultra-efficient and zero-carbon aircraft through the Aerospace Technology Institute Programme. As part of this Programme, £113 million of government and industry funding was announced in February to research zero-emission liquid hydrogen combusting jet engines and lightweight batteries for small aircraft. In addition, over £4.2 million is committed to research airport preparedness through the Zero Emission 68 Powering Up Britain – The Net Zero Growth Plan Area Progress Flight Infrastructure project which published new research in March 2023. • The UK Emissions Trading Scheme (ETS) Authority has consulted on aligning the UK's ETS (which covers domestic flights and those to the EU and Gibraltar) with net zero, while reviewing the sector's free allocation and exploring treatment of non-CO2 impacts. • We have led in ICAO negotiations on adopting a 2050 net zero target and maintaining the integrity of the Carbon Offsetting Reduction Scheme for International Aviation. • We have committed to working closely with academia and industry to better understand the science and potential mitigations non-CO2 impacts from aviation. Accelerating • We published the Course to Zero consultation in July 2022, maritime seeking views and evidence on the optimal pathway to net decarbonisation zero GHG emissions for domestic maritime by 2050. • We published a consultation with the UK ETS Authority including proposals to expand the scheme to domestic maritime. • We launched the Operation Zero implementation plan, to deliver zero-emission operations and maintenance vessels in the North Sea offshore wind sector by 2025 and announced the £206 million UK SHORE research and development programme. • We are championing a 2050 zero emissions target for international shipping through a leading role in IMO negotiations and launched the Clydebank Declaration at COP26, now with 24 state signatories, committing to support zero emission shipping corridors. As part of the Green Shipping Challenge we have announced agreements on developing green shipping corridors with the U.S., Norway and the Netherlands. 69 Powering Up Britain – The Net Zero Growth Plan Upcoming Delivery Milestones • Implement the ZEV mandate in 2024 and bolster charging infrastructure roll-out across the country to accelerate uptake of zero emission vehicles. • Set an end date for the sale of new, non-zero emission buses and an expectation for when the entire fleet should be zero emission, whilst ensuring bus services, including those serving rural areas, are not adversely affected. • Launch the Rapid Charging Fund to support the upgrade of electricity capacity on the strategic road network, enabling the roll-out of ultra- rapid electric vehicle chargepoints. • Progress Future of Freight plan actions to decarbonise the wider freight sector, in line with the Independent Review of Net Zero's recommendation and deliver Zero Emission Road Freight Demonstrations for hydrogen fuel cell and battery electric technologies, with vehicles and infrastructure being in place by March 2025. • Consult on the future regulatory framework to deliver our commitments to phase out the sale of new non-zero emission HGVs and support uptake in the interim period. • Develop the rail decarbonisation programme with the Great British Railways Transition Team, ahead of Great British Railways becoming formally established. • Update the Clean Maritime Plan, with indicative domestic decarbonisation targets, delivering UK SHORE R&D investment programme initiatives - including trials of battery electric and alternative fuelled vessels and shoreside infrastructure by March 2025 - and considering a potential phase out date for the sale of new non- zero emission domestic vessels. • Play a leading role on delivering international progress on decarbonising aviation and shipping through the ICAO and IMO. • Publish our sector-wide Low Carbon Fuels Strategy in 2023, providing a clear vision for investment, and legislating to include recycled carbon and nuclear derived fuels in renewables transport fuel schemes, enhancing fuel security and environmental benefits. • Continue work on potential measures to help address market barriers to the use of fuels with higher biocontent in compatible heavy-duty vehicles. • Develop long term funding plans for cycling and walking infrastructure and behaviour change programmes up to 2025. • Aim to complete the review of the National Networks National Policy Statement during 2023, taking account of the Government's legal net zero target. 70 Powering Up Britain – The Net Zero Growth Plan Natural Resources, Waste & F-Gases Summary Maximising co-benefits for climate and nature is vital to supporting net zero alongside other priority outcomes, including biodiversity, water quality, climate adaptation and economic growth. The Independent Review of Net Zero demonstrated that decarbonising land use sectors and sustainably managing natural resources and broader ecosystems can create sizeable economic opportunities. Delivering on these has the potential to leverage growing demand for investment opportunities in natural capital, supporting the market frameworks needed in this emerging area. We have made progress on key Net Zero Strategy commitments, publishing updates on how environmental land management (ELM) schemes will pay farmers to provide a range of public goods, including actions to reduce GHG emissions.54 We have also set a legally binding target for tree coverage in England. Our ambitious agriculture measures build on historical progress in reducing emissions. For example, the dairy sector increased milk production by 11% between 2000-2020, with 21% fewer cows and 12% less GHG emissions. We will build on progress in reducing emissions from agriculture and will set out how farmers will be supported to understand their emission sources through carbon audits by 2024 and take further actions to decarbonise their businesses, including through ELM schemes. We will shortly publish a Government Response to our 71 Powering Up Britain – The Net Zero Growth Plan call for evidence exploring the role of robust monitoring, reporting, and verification of GHG emissions on farms.55 Utilising these findings and additional evidence from ongoing research projects, we will develop a harmonised approach for measuring carbon emissions from farms, helping unlock new financial opportunities through carbon markets. We also anticipate entry of high efficacy methane suppressing products to the UK market from 2025 and will explore the role of industry and government to maximise uptake of such products for suitable cattle farm systems at pace, through a phased approach. This will include the ambition to mandate the introduction of products with proven safety and efficacy in compound feeds for cattle as soon as practically possible in England. We have also made considerable progress reducing emissions from waste, as we drive forward action to deliver the collection and packaging reforms from the Net Zero Strategy. The Climate Change Committee has recognised the effectiveness of the Landfill Tax in diverting waste from landfill and consequently reducing emissions. We will shortly issue a call for evidence to support the near elimination of biodegradable waste being sent to landfill by 2028. We will publish an addendum to the Resources and Waste Strategy in the summer, which will focus on net zero. We welcome the recommendations made by the Review and CCC’s 2022 Progress Report to Parliament, including as we prepare to publish our Land Use Framework for England later this year. Taking a systems approach, the Land Use Framework will help set out how we can deliver multifunctional landscapes that are resilient to our changing climate whilst meeting our needs for net zero, food production and environmental recovery. For example, the agricultural sector plays an important role in supporting on- shore renewable energy generation, aiding delivery of the British Energy Security Strategy, whilst maintaining domestic food production security. We agree with the Independent Review of Net Zero’s recommendation that we ensure a pipeline on investable nature-based solutions projects. We have established the Natural Environment Investment Readiness Fund with the Environment Agency to develop a pipeline of 86 projects across England to monetise the benefits of nature and develop enabling tools or standards. Our 2023 Green Finance Strategy sets out how we will meet HMG’s goal of mobilising at least £500 million per year of private finance into nature’s recovery by 2027, and more than £1 billion per year by 2030. Indicative emissions pathway to 2037 In 2021, agriculture and other land use emissions were around 49 MtCO2e making up around 11% of total UK net GHG emissions (including international aviation and shipping). Livestock (particularly cattle) currently make up the largest share of these emissions. Agriculture and other land use emissions have decreased by 2% since 2019 and 25% since 1990. The largest factor in this long-term fall has been an increase in the sink provided by forest land, with an increasing CO2 uptake by trees as they reach maturity, in 72 Powering Up Britain – The Net Zero Growth Plan line with the historical planting pattern. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels, GHG emissions could fall by 1% to 12% on average over 2023-27, 11% to 24% by 2030 and 19% to 37% on average over 2033-37. Please see the Carbon Budget Delivery Plan for details of our proposals and policies for meeting the carbon budgets. In 2021, waste and F-gas emissions were around 30 MtCO2e making up around 7% of total UK net GHG emissions (including international aviation and shipping). The largest emissions sources include landfill and air conditioning and refrigeration. Waste and F-gas emissions have decreased by 11% since 2019 and 66% since 1990. The reduction since 1990 is primarily due to reductions in emissions from landfill and halocarbon production. In line with the sectoral breakdown of the indicative pathway set out in the NZS, compared to 2021 emissions levels, GHG emissions could fall by 23% to 31% on average over 2023-27 43% to 51% by 2030 and 56% to 65% on average over 2033-37. Please see the Carbon Budget Delivery Plan for details of our proposals and policies for meeting the carbon budgets.56 Progress and delivery Area Progress Natural Resources • We published our Environmental Improvement Plan (EIP), updating on our progress on delivering the 25 Year Environment Plan and setting out our future ambitions for land use to support net zero alongside nature, biodiversity and climate adaptation goals. • Published our recent Environmental Land Management Update, which sets out how we will support farmers and land managers to sustainably produce food, while delivering benefits for climate and nature. • We are accelerating the roll-out of the Sustainable Farming Incentive (SFI) scheme in 2023 and confirmed the full range of future payable actions across the SFI and the Countryside Stewardship scheme. • We also announced the opening of round two of the Landscape Recovery scheme which will focus on net zero, protected sites and habitat creation. • We have also established a cross administration UK Blue Carbon Evidence Partnership to produce a roadmap to potential inclusion of coastal wetlands in the UK GHG. 73 Powering Up Britain – The Net Zero Growth Plan Area Progress Agriculture • Announced six new SFI standards. Actions under these standards will help towards decarbonising the agriculture sector. • In the EIP 2023 we committed to consulting this year on extending environmental permitting to the beef and dairy sectors. • Opened the £270 million Farming Innovation Programme (FIP). In partnership with UK Research & Innovation (UKRI), we have already committed £68 million up to the end of 2022 and will provide further grants of £51 million in 2023 to facilitate the development and adoption of emerging farming technologies that will help reduce GHG emissions. Peat • Launched the £5.6 million Paludiculture Exploration Fund (2022-2025) to support the uptake of paludiculture, which offers an opportunity to continue profitable agriculture while managing land in a way that supports net zero. • Announced our intention to ban the use of peat in horticulture, with limited exemptions, in 2024. • Started development of the Natural England Peatland Restoration Plan which will provide a trajectory for peatland restoration up to 2050 and will be published in 2024. Forestry, • Announced a £124 million boost for the Nature for Climate agroforestry and Fund (NCF), ensuring a total spend of approximately £678 hedgerows million on woodland creation and woodland management by 2025. • Announced the inclusion of a hedgerow standard in the SFI, due to be rolled out later this year. • Launched the Forestry Commission Development Woodland Officer apprenticeship with the University of Cumbria and the Institute of Chartered Foresters. Waste and • Published the government response to consultations on wastewater launching a Deposit Return Scheme for drinks containers. 74 Powering Up Britain – The Net Zero Growth Plan Area Progress in England, Wales and Northern Ireland and Extended Producer Responsibility for packaging. • Developed plans to improve resource efficiency. See Industry chapter for more detail. • Consulted on improving food waste reporting for large food businesses. • Set a legally binding target through the Environment Act to reduce residual waste (excluding major mineral wastes) kg per capita by 50% by 2042 from 2019 levels. F – gases • Published our F-gas assessment report on the effectiveness of the F-gas regulation Upcoming Delivery Milestones Natural Resources: • Continue to roll out our ELM schemes, with all three operating in full by 2024-5. • Publish a Land Use Framework for England this year. • Publish a summary of responses to our call for evidence on methane supressing feed products. • Develop a mandatory methodology for voluntary food ecolabelling, • Publish a Biomass Strategy in 2023. The Biomass Strategy will review the amount of sustainable biomass available to the UK and how this resource could be best utilised across the economy to help achieve the government’s net zero and wider environmental commitments while also supporting energy security. This includes providing early thinking on domestic biomass production, including short rotation forestry and perennial energy crops. • Publish a roadmap for increasing the use of timber in construction by summer 2023. • Publish our response to the Lowland Agricultural Peat Task Force report and continue to work with partners to develop the Peatland Restoration Plan for publication in 2024, ahead of the NCF ending in 2025 and transitioning to the future farm schemes as the main peat delivery vehicle. • Launch a £6.6 million lowland peat research and development programme and explore options to increase ambition in lowland peatlands, developing infrastructure and collaboration projects to transform our lowland peat water landscapes. 75 Powering Up Britain – The Net Zero Growth Plan • Respond to the call for evidence on the UK Emissions Trading Scheme (ETS) potential role as a long-term market for nature-based and engineered greenhouse gas removals. Waste, wastewater and F-gases: • Deliver our collection and packaging reforms from the Resources and Waste Strategy. This includes: publishing our response to our consultation on consistency in household and business recycling in England, introducing a Deposit Return Scheme for drinks containers from October 2025, and implementing packaging Extended Producer Responsibility from 2024. • Develop a plan to achieve the near elimination of biodegradable municipal waste going to landfill from 2028 following a call for evidence. • Respond to our call for evidence on the initial expansion of the UK Emissions Trading Scheme to cover waste incineration and energy from waste. • Publish our response to the consultation on a revised Waste Prevention Programme for England alongside the new programme 'Maximising Resources, Minimising Waste'. • Publish our response to the consultation on improving food waste reporting for large food businesses. • Support Water UK's Net Zero Route Map to deliver a net zero water supply by 2030. • Publish two rapid evidence assessments setting out options to improve our estimates of GHG emissions from wastewater treatment. • Consult on proposals to amend our existing F-gas legislation, with the aim of further reducing F-gas use and emissions. 76 Powering Up Britain – The Net Zero Growth Plan Greenhouse Gas Removals Summary Removing carbon dioxide from the atmosphere is essential to meet net zero. We intend to capitalise on the economic benefits from this emerging sector, by scaling- up engineered Greenhouse Gas Removals (GGRs) to deliver new export opportunities and high-quality green jobs across the UK, supporting energy security and levelling-up. To deliver this we need to mobilise significant private investment, supporting innovation and providing investors with long-term clarity and certainty on future revenue streams. Our priority is to reduce greenhouse gas (GHG) emissions from human activities and to only use GGRs to mitigate remaining GHG emissions that are unavoidable. The CCC agrees that nature-based and engineered removals will be needed to mitigate the impact of residual GHG emissions in hard-to-abate sectors, to meet net zero.57 The Net Zero Strategy established our ambition to develop markets and incentives for engineered GGR technologies to enable deployment of at least 5 MtCO2e pa of engineered GGR removals by 2030, potentially scaling to 75-81 MtCO2e pa by 2050. We welcome the recommendations from the CCC and Independent Review of Net Zero for GGR sector policy. These included publishing timings and details of the GGRs business model proposal, detailing plans for monitoring, reporting and verification (MRV) and undertaking legislative changes to ensure engineered removals count towards our carbon budgets. We are already acting on these and the commitments made in the NZS to support the scale-up of engineered GGRs. We recognise that there is still a financial barrier to scaling the engineered GGR sector. We have taken steps to address this; for example, in 2022 we consulted on both a GGR business model and a specific power bio-energy carbon capture and storage (power BECCS) business models, we intend to respond to the GGR consultation later this year, the power BECCS response will be published imminently. Additionally, we recognise the integrity offered by the UK ETS could unlock investment at scale in the UK's GGR sector by providing an integrated market where businesses can make economically efficient choices on how to decarbonise or remove their emissions. We will work within the UK ETS Authority to consider options for integrating GGRs in the UK ETS, subject to the outcomes of last year’s UK ETS consultation. A robust monitoring, reporting and verification (MRV) framework will be crucial to preserve the integrity of any market for negative GHG emissions and instil public and investor confidence that removals are genuine and verifiable. The Independent Review of Net Zero emphasised that government must clearly outline the standards the business models require. We have consulted on the immediate priorities for MRV, including a review of the existing landscape of standards and initiatives that could underpin 77 Powering Up Britain – The Net Zero Growth Plan business model support for initial GGR projects and proposed principles for determining the legitimacy of a negative emission. We agree with the CCC that access to CO2 transport and storage infrastructure will be critical for engineered GGR technologies that rely on long-term geological storage, such as direct air carbon capture and storage (DACCS) and bio-energy carbon capture and storage (BECCS). Our work on CCUS clusters is set out in the CCUS section of this document, and in Powering Up Britain – Energy Security. As part of this, we are exploring how early GGR projects could be connected to the transport and storage network. Subject to criteria under development, the Government is minded to enable engineered greenhouse gas removals (GGRs) to apply to Track-1 expansion and Track-2. We also agree with the CCC that understanding and ensuring the sustainability of GGRs is crucial and will differ across the different types of engineered GGR methods. To address this, we have commissioned research on resource intensity for DACCS. Relevant for biomass GGRs, we are committed to publishing the Biomass Strategy in 2023. This will review the amount of sustainable biomass available to the UK and how this resource could be best utilised across the economy to help achieve the government’s net zero and wider environmental commitments while also supporting energy security. This will outline the role that BECCS can play in reducing carbon emissions across the economy and set out how the technology could be deployed. Direct Air Capture (DAC) powered by nuclear power plant The UK Government is funding a variety of innovative GGR technologies, including several first-generation Direct Air Capture (DAC) technologies through the DAC and Greenhouse Gas Removals Innovation Programme. The objective of this programme is to produce several operational pilot plants by 2025, as well as realising investment, jobs, skills, and technology in this nascent sector. One example of a project being funded is a consortium led by Sizewell C, who are developing an innovative heat-powered DAC demonstrator plant designed to capture low carbon waste heat from a nuclear power plant. This technology could offer increased efficiency and less reliance on electricity, therefore reducing the cost of removing carbon dioxide from the atmosphere. A scaled-up DAC plant linked to Sizewell C could utilise around 400 MW of heat from the nuclear power plant to capture 1.5 million tonnes of CO2 per year. 78 Powering Up Britain – The Net Zero Growth Plan Indicative emissions pathway to 2037 As set out in the Net Zero Strategy, we set an ambition to deploy at least 5 MtCO2e p.a. of engineered removals by 2030, potentially rising to 23 MtCO2e p.a.by 2035. Headline progress and delivery Metric Progress To deliver at least • In July 2022 we published our consultation on engineered GGR

5 MtCO2e pa of business models that could support on a technology-neutral basis engineered removals by 2030. technologies such as DACCS, seawater CO2 removals, and certain BECCS applications. This included seeking views on the immediate priorities for monitoring reporting and verification (MRV). • In August 2022 we published our power BECCS consultation and project submission process, today we have published the project selection outcome and will publish the consultation response imminently • In December 2022, we published a position on GGR credits for the Industrial Carbon Capture (ICC) Business Model and Waste ICC Business Model • We have set up a GGR Business Model Expert Group to enable government to continue engagement with a broad range of stakeholders across the GGR landscape, drawing on this expertise to inform development of the business model. • In March 2022, the UK ETS Authority launched a call for evidence exploring the role of the UK ETS as a potential long-term market for GGRs. • We have acted on our commitment to seek an amendment to the Climate Change Act (CCA) to enable engineered removals to contribute to UK carbon budgets, by including a clause in the Energy Bill that seeks to broaden the definition of “removals” of greenhouse gases beyond nature-based GGRs to include engineered GGRs. The Energy Bill is currently progressing through Parliament. • Subject to criteria under development, the Government is minded to enable engineered GGRs to apply to Track-1 expansion and Track-2 79 Powering Up Britain – The Net Zero Growth Plan Metric Progress • The power BECCS project selection process sought to identify projects which could deploy to Track-1 timescales. Two projects passed the deliverability assessment for the power BECCS project submission process, Drax Power Ltd and Lynemouth Power Ltd. They have not been selected for deployment in Track- 1, but the Department for Energy Security and Net Zero will engage further with these projects following the assessment outcome. Track-1 is not the extent of our ambition, and the department remains committed to achieving 5Mtpa of engineered greenhouse gas removals by 2030. To deliver verifiable • Phase 1 of the £6 million Net Zero Innovation Portfolio DAC and removal of up to other GGRs Programme delivered 22 feasibility studies across 1000 tCO2e pa from DAC, Enhanced Weathering, Biochar and BECCS technologies. pilot projects. • In phase 2 of the DAC and GGR innovation competition, over £54 million of government funding was awarded to 15 of the most promising demonstration projects. Upcoming delivery milestones In the coming year we will: • Publish government responses and next steps following a review of the GGR business model and power BECCS business model consultation responses. For the GGR consultation response, this includes having reflected on input from our GGR Business Model Expert Group meetings. • Work within the UK ETS Authority to consider options for integrating GGRs in the UK ETS subject to the outcomes of last year's UK ETS consultation, a robust monitoring, reporting and verification (MRV) regime being in place, and the management of wider impacts - including market stability and the permanence of the emissions stored by the GGRs. Further detail will be provided in the Government Response to the UK ETS consultation in due course. • Monitor the progress of the DAC and GGR Innovation Programme which will be in the process of building pilot/demonstration projects to be fully operational by March 2025. • Publish the Biomass Strategy in 2023, which will outline the role that BECCS can play in reducing carbon emissions across the economy and set out how the technology could be deployed. 80 Powering Up Britain – The Net Zero Growth Plan Supporting the Transition across the Economy 81 Powering Up Britain – The Net Zero Growth Plan Supporting the Transition across the Economy Innovation Summary Delivering net zero will require a step change in the rate of new technologies being developed, deployed to market and adopted by businesses and consumers. The global market opportunity for UK companies from net zero could reach a cumulative £1 trillion to 2030 and supporting innovation could help unlock up to 300,000 jobs and new commercial opportunities in both exports and domestic industries across all parts of the UK.58 Since the Net Zero Strategy, government have confirmed a portfolio of net zero research and innovation (R&I) investment of approximately £4.2 billion over the period from 2022-25. This reflects delivery of net zero research and innovation programmes being a top priority. The Net Zero Research and Innovation Delivery Plan, published alongside this Net Zero Growth Plan, outlines this government’s support and aligns with the priorities set out in the Net Zero Research and Innovation Framework.59 We welcome the CCC and Independent Review of Net Zero’s recommendations on the need to disseminate knowledge and insight from R&I programmes and accelerate the rapid and safe introduction of emerging net zero technologies. The government plans to prioritise several key recommendations from the CCC and Independent Review of Net Zero and will continue to deliver our significant research and innovation portfolio. We will: • Develop a net zero technology roadmap and update the Energy Innovation Needs Assessments; • Deliver the recommendations around the role of regulators and regulation through the Patrick Vallance-led review of how the UK can better regulate emerging technologies to ensure growth; 82 Powering Up Britain – The Net Zero Growth Plan • Deliver recommendations on disseminating knowledge and reviewing greater R&D for net zero through existing and planned activity, such as the recently launched consultation on R&D tax relief reform. Progress and delivery In the last 18 months, we have made good progress against the commitments set out in the innovation chapter of the Net Zero Strategy. This includes: Area Progress Increase • At the 2022 Autumn Statement, the Government recommitted to a government £20 billion per annum public R&D budget by 2024/2025. This investment in included an additional £1.6 billion for the UK’s nine Catapults for R&D 2023-2028. This will allow Catapults to continue supporting innovation and de-risking the transition from research to commercial delivery; accelerating innovation clusters; and stimulating additional private sector investment in R&D. Publish the UK’s • The Net Zero Research and Innovation Framework, published first Net Zero alongside the Net Zero Strategy in October 2021, set out the key Research & research and innovation challenges for the next 5-10 years and a Innovation roadmap to 2050. Framework • We’ve since published a follow-up Net Zero Research and Innovation Delivery Plan alongside this plan to outline the Government’s net zero R&D programmes for the current Spending Review period 2022-25 and how these are aligned to the priorities in the Framework. Deliver a • Government expects to invest approximately £4.2 billion in net government zero research and innovation over the period from 2022-25. This programme of includes £1.5 billion allocated to net zero innovation announced in innovation to the Net Zero Strategy, as well as net zero research and innovation enable delivered through other departmental programmes and through decarbonisation UKRI. Further funding from Ofgem’s £450 million Strategic Innovation Fund (£263 million during this spending review period) is being invested in innovation relating to the energy networks. • The £1 billion Net Zero Innovation Portfolio (NZIP) and £385 million Advanced Nuclear Fund continues to support priority areas in power, buildings, industry and disruptive innovations over 2021- 2025. To date, we have already supported at least 863 83 Powering Up Britain – The Net Zero Growth Plan Area Progress organisations with NZIP funding and at least 44 programmes have launched so far. • In transport, government is investing in programmes to decarbonise land, sea and air transportation. This includes £20 million in Zero Emission Road Freight Trials (ZERFT), which involved six feasibility studies and the deployment of twenty battery electric rigid trucks into NHS and local authority fleets. We are expanding upon this work with the Zero Emission Road Freight Demonstrator (ZERFD) programme which will see hundreds of Zero Emission HGVs and their infrastructure demonstrated on UK roads. • The Net Zero Strategy committed at least £75 million on research into natural resources, waste and F-gases. The Department for Environment, Food and Rural Affairs continue to push forward key programmes in these sectors and are in the concluding stages of finalising a partnership with UKRI and the Devolved Administrations called Building a Great Future – Transforming Land Use for Net Zero, Nature and People. Take a leadership • As a leading member of Mission Innovation, we have cemented role in Mission Mission Innovation as the leading forum for international clean Innovation 2.0 energy innovation and global collaboration. The UK leads the Mission Innovation Secretariat and helps shape the overall strategy of the initiative through our role on the Steering Committee. • The UK now co-leads the Green Powered Future Mission and the Clean Hydrogen Mission, as well as the Heating and Cooling Innovation Community. The UK also participates in four other Missions. 84 Powering Up Britain – The Net Zero Growth Plan Upcoming delivery milestones • We will continue to award funding and deliver projects across the £4.2 billion portfolio of net zero R&I. We intend to publish an update on the programmes set out in the Net Zero Research & Innovation Delivery Plan by the end of the Spending Review in 2025. • Addressing the CCC's recommendation, we will continue to encourage dissemination of the outputs of funded innovation programmes. This includes through publishing programme updates such as the forthcoming NZIP Progress Report and sharing best practice through the cross-government Net Zero Innovation Board. • Addressing the Independent Review of Net Zero recommendations, we will take forward several new commitments including the development of a net zero technology roadmap and an update of the Energy Innovation Needs Assessments. Case Study: Lapwing Reverse Coal Project: Novel engineering of a natural solution will enable the removal of CO2 from the atmosphere to lock it back in the ground. The Lapwing Estate sits on lowland peat which has been historically drained and farmed for food production. This has degraded the soil and led to GHG emissions as the peat oxidises (lowland peat is responsible for 3% of UK GHG emissions). Reverse Coal was awarded nearly £3 million through the NZIP. To capture carbon dioxide and abate existing emissions, they will rewet the peat and establish fast growing willow crops which will be chipped and dried and then fed into a high temperature pyrolysis plant. This plant converts the willow (biomass) into a solid form of carbon akin to coal, called ‘biochar'. The biochar is buried underground for long term stable carbon storage with the heat and power directed into controlled environment agriculture for more sustainable and secure food production. This first-of-its-kind project is exploring an innovative new way to sustainably intensify production of high quality, healthy food, whilst at the same time supporting the government’s target for net zero by 2050. 85 Powering Up Britain – The Net Zero Growth Plan Fusion Energy Fusion has potential to be the ultimate clean power solution, delivering low- carbon, safe, continuous and sustainable energy without the issue of very long-lived, high-level radioactive waste. The UK is a recognised global leader in this technology, with the world record for fusion energy production being broken at the Joint European Torus facility in Oxfordshire, and unique capabilities in the technologies like robotics and fuel handling needed to develop fusion commercially. We have an opportunity to capitalise on our position to create a new fusion energy technology sector in the UK, creating jobs, economic growth and export potential even before fusion energy is on the grid. In 2021, the UK Fusion Strategy set out ambitious objectives to demonstrate the commercial viability of fusion by building a prototype fusion power plant capable of providing energy to the UK grid by 2040, and to build a world-leading fusion industry with high-export potential. The UK Government has already committed £222 million for the first five years of UKAEA’s Spherical Tokamak for Energy Production (STEP) programme. STEP aims to design, develop, and build the prototype fusion power plant. This will not only demonstrate a path to the commercial viability of fusion energy, but will help create a skilled fusion supply chain and provide learning and experience for the UK fusion sector as a whole. The Government has also provided £42 million for the Fusion Industry Programme. This initiative will galvanise commercial fusion innovation through a challenge fund, designed to support UK businesses to solve common technical issues facing fusion, as well as encourage R&D investment into this growing industry. This supports the Fusion Cluster, a newly created community of public organisations and businesses working together at the Culham Centre for Fusion Energy to share knowledge and drive fusion energy from theory to reality. Members have access to cutting edge technical facilities, start-up business support and experienced peers. Progress so far The Government has already identified and announced a site for the STEP power plant, which will be bult in West Burton, transforming the site of an existing coal power plant into a green energy cluster. It has set up the company that will deliver this power station and begun developing the commercial relationships need to build it. 86 Powering Up Britain – The Net Zero Growth Plan The UK is the only country in the world to develop and legislate for a proportionate regulatory regime for fusion that encourages innovation whilst putting safety at the heart of our fusion sector. Taken together, the Government's clear strategy and investment in fusion energy R&D, regulation and development of the sector has already made the UK the best place in the world to do fusion innovation. Fusion companies from around the world are interested in collaborating with the UK and several companies have made announcements about plans to build new facilities or experiments in the UK because of the unique programme started by the UK. 87 Powering Up Britain – The Net Zero Growth Plan Green Finance and Investment Summary The global transition to net zero will see trillions of pounds reallocated and invested in new projects, products and services. The UK’s world-renowned finance sector can be at the forefront of this global green future. Unlocking the potential of green finance is integral to the delivery of the Net Zero Growth Plan. It is also vital to delivering on the vision set out in the Chancellor’s 2022 Autumn Statement, and 2023 Spring Budget, for both financial services and green industries to be key growth sectors for the UK. Alongside this plan, government has published the 2023 Green Finance Strategy. This sets out how we will deliver on our ambition to become the world's first net zero- aligned financial centre, how we will utilise all levers available to mobilise the private investment into energy security and net zero, and how we will support industry to capture the opportunity of being a world-leading green finance centre. As we are clear that there is no pathway to net zero without protecting and restoring nature, the strategy explicitly incorporates nature and climate adaptation into our green finance policy framework. The UK’s COP26 Presidency in 2021 generated historical momentum in the numbers of businesses, cities, regions and investors seeking to align with climate and environmental goals, with over 90% of global GDP now covered by national net zero targets. In the financial services sector this was exemplified through the commitment of the Glasgow Financial Alliance for Net Zero, which unites over 550 members across the financial sector committed to align with a net zero future, spanning 50 countries and representing 40% of global private financial assets. This is a long-term opportunity for UK financial services. It is estimated that global sustainable finance markets are expected to grow to $34 trillion in assets under management by 2026, outpacing growth in the asset and wealth management industry as a whole. Managing this capital is a significant opportunity for UK financial and professional services, but the sector must be supported to secure significant market share. From innovative climate tech solutions seeking venture capital to grow towards their vision, to banks lending to major renewables projects and asset managers allocating capital to support the companies of the future – behind every step of our transition will be our world- leading financial services sector. The 2023 Green Finance Strategy sets out the actions government will take next to develop our green finance policy framework and respond to recommendations made by both the CCC and Independent Review of Net Zero. Policy focuses on greening the financial system, through the provision of the right information, data and tools 88 Powering Up Britain – The Net Zero Growth Plan for real economy and financial services companies to manage risks and seek opportunities; and on financing our green objectives through more efficient and effective mobilisation of private capital. We are providing further detail on the UK’s commitment and framework for becoming the world’s first net zero-aligned financial centre. We are ensuring market participants have the information and data they need, for instance by: committing to consult on the extension of transition planning disclosure requirements to the largest private companies, complementing existing requirements in place by the FCA, committing to issue a call for evidence on Scope 3 emissions reporting, and continuing to support the work of the International Sustainability Standards Board and setting up of a framework to address their suitability for adoption in the UK as soon as final standards are published. We will support industry as it develops the new market frameworks, tools and expertise required to expand green finance activity with an update on the delivery of a UK Green Taxonomy and launching a Transition Finance Market Review on how to make the UK become the best place in the world for raising transition capital. To support companies and financial institutions to invest in critical net zero sectors and technologies, we set out how the UK Infrastructure Bank, with £22 billion in capital to deploy for net zero and regional and local objectives, British Business Bank, UK Research and Innovation, and the UK’s export credit agency, UK Export Finance, support green technologies through to commercialisation. We also commit to consult on the specific steps and interventions needed to support the growth of high integrity voluntary carbon markets and protect against greenwashing. We are publishing a Nature Markets Framework setting out our approach to accelerating high- integrity markets to enable farmers and land managers to attract investment in natural capital, as well as our plans to develop a comprehensive suite of nature investment standards. 89 Powering Up Britain – The Net Zero Growth Plan Progress and delivery Area Progress Financing Green • The UK Infrastructure Bank is now operational and, as of 27th March 2023, has announced 12 deals, investing approximately £1.2 billion and unlocking over £5 billion of private capital. Projects that contribute towards meeting net zero include: − Committing £162.5 million as a cornerstone investor in Next Power UK ESG fund, the UK's largest subsidy-free solar fund. − Investing £150 million, alongside £1 billion from other investors, in the UK portion of finance for the 1.4GW NeuConnect interconnector project. − Providing £10 million to the West Midlands Combined Authority, supporting the introduction of green buses in Birmingham. • Since their launch in 2021, the UK's green gilt programme has raised more than £26 billion from gilts issued by the UK Debt Management Office, and retail Green Savings Bonds sold via NS&I. • To highlight and communicate more widely the net zero opportunities and incentives for investment in the UK, we published four investor roadmaps - covering the UK's automotive, hydrogen, CCUS, and offshore wind sectors. • Last year we hosted the Green Trade and Investment Expo. This event brought together 200 British business leaders and global investors, showcasing investment and export opportunities presented by the UK's net zero transition. Greening Finance • In 2022 the UK became the first G20 country to require the largest businesses and financial institutions to disclose their climate- related risks and opportunities under the framework set by the Taskforce on Climate-related Financial Disclosure. Through our G7 presidency, we facilitated other jurisdictions to take the same steps. Additionally, we have committed to building on this through the delivery of Sustainability Disclosure Requirements. 90 Powering Up Britain – The Net Zero Growth Plan Area Progress • Furthermore, the UK launched the Transition Plan Taskforce, a group of industry experts tasked with developing guidance for gold standard transition plans. Upcoming delivery milestones By the end of 2023, government will: • Consult on transition planning disclosure requirements for the UK's largest companies; • Consult on the UK Green Taxonomy; • Prepare a framework to assess the International Sustainability Standards Board (ISSB) disclosure standards, subject to their finalisation; • Consult on specific steps and interventions needed to support the growth of high integrity voluntary markets and protect against greenwashing; • Receive recommendations from the Transition Finance Market Review; 91 Powering Up Britain – The Net Zero Growth Plan Net Zero Workforce Summary The Government’s net zero and environmental goals depend on the UK having the right workforce with the right skills and capacity in the right locations across the UK. In the next 30 years, the net zero transition will drive opportunities for job creation, with existing occupations set to evolve as the UK’s economy decarbonises. It will be important to manage this shift, with parts of the country requiring the greatest transition often among low-productivity areas of the UK. We agree with the CCC and the Independent Review of Net Zero that government should take a proactive approach to identifying and working with industry to tackle net zero specific workforce challenges and skills gaps. As the UK transitions to net zero, one in five UK workers will experience shifting demand for skills implying a substantial need to upskill and reskill our current workforce. Alongside that, we need to bring new workers and talent along with us on the transition to net zero. Delivering a net zero workforce is a joint government, industry and education sector endeavour which is why the Government set up the Green Jobs Delivery Group. The Delivery Group builds on existing work by the Government to prepare the existing workforce for the green economy and boost the pipeline of skilled workers. Government continues to ensure the skills system is delivering for net zero. This includes the implementation of the Department for Education’s Sustainability and Climate Change Strategy, which will equip children, young people, and adult learners with the knowledge and skills to contribute to the green economy. As just one example in March 2023, the Department for Energy Security and Net Zero announced an additional £5 million to support low carbon heating training, expected to support around 10,000 training opportunities, which is starting in April 2023 and continuing until March 2025.This is in addition to the £15 million committed to skills in the energy efficiency and low carbon heating sectors since 2020 through the Home Decarbonisation Skills Training Fund, supporting over 16,000 training opportunities for people working in the energy efficiency, retrofit and low carbon heating sectors in England. A key role for government is to provide industry with certainty and clarity, so that the private sector is better able to address skills challenges through recruitment and training. The Government's commitment to its legally binding carbon budgets and sector specific plans sends an important signal to businesses. We recognise that businesses require greater policy certainty to invest in their workforces and training. 92 Powering Up Britain – The Net Zero Growth Plan While acknowledging the work done so far, the CCC and Independent Review of Net Zero made recommendations on publishing an Action Plan or Roadmap for Net Zero Skills, driving forward delivery of the recommendations of the Green Jobs Delivery Group. We agree on the need to go further and so are committing to publishing a joint government-industry Net Zero and Nature Workforce Action Plan in the first half of 2024, representing the culmination of several sectoral assessments in the coming 12 months. We are beginning with a set of head start actions from the pilot Power and Networks Working Group now, followed by a suite of comprehensive actions for this sector by Summer 2023, which can be used as a template for the other sectoral assessments (more detail set out at the end of this chapter). We will publish an update with this suite of comprehensive actions, alongside biannual progress updates from the Delivery Group’s co-Chairs on its work, later this year. We agree with the Independent Review of Net Zero on the need to develop robust green jobs figures to monitor the transition. We will continue to 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 (see box below for more information). Another key method to deliver on employers’ net zero workforce needs are apprenticeships, where Government has been driving progress. Over 100 standards are currently approved for delivery in areas including sustainability business specialist, smart meter installer, ecologist, metal recycling technical manager, and forest craftsperson. There are also more in development including low carbon heating technician and battery manufacturing technician. These standards have been developed by employers and the Institute for Apprenticeships and Technical Education (IfATE), to ensure that they continue to meet the needs of employers within the sector. In addition, IfATE asks all trailblazer groups to apply their Sustainability Framework when developing or revising apprenticeships so that sustainability is considered in a way that is meaningful to each occupation. 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. 93 Powering Up Britain – The Net Zero Growth Plan Progress and delivery Area Progress The Green Jobs Government established the Green Jobs Delivery Group in May Delivery Group 2022, as the central government-industry forum on green jobs and skills, with ministerial membership from BEIS (now the Department for Energy Security and Net Zero), Defra, DfE, and DWP, as well as membership from industry leaders, academia, the skills sector, unions, and local representatives. Following initial investigations into current workforce challenges, four task & finish groups have been established: • The Power and Networks Group is tackling near-term workforce challenges facing the power sector. The pilot industry-government working group has already started to conduct a workforce assessment in 2022 which will feed into the overarching Net Zero and Nature Workforce Action Plan in 2024. Emerging actions are set out in the initials steps below and further updates will be provided by Summer 2023. • The Nature Skills Group is developing a set of actions to create a pipeline of required nature-based jobs and skills across the economy. • The Local Capacity Group brings together place leaders, the business community, skills providers and government to explore the key local challenges and opportunities to delivering net zero though a local lens. • The Resources and Waste Group is gathering information on the skills needed to deliver the Resources and Waste Strategy and the move to a more circular economy. Boosting the • In England, DfE is investing an additional £3.8 billion in skills by skills pipeline for 2024-25. This includes funding for programmes to support green the green skills, including apprenticeships, T levels and Skills Bootcamps - economy programmes designed to respond to what employers need. We have seen employer demand for skills including retrofit construction, electric vehicle maintenance, wind power, arboriculture, heat pump installation and green heating technologies. 94 Powering Up Britain – The Net Zero Growth Plan Area Progress • The Institute for Apprenticeships and Technical Education (IfATE) is improving its occupational maps and will be adding a new 'green occupation' filter so that employers and learners can see which apprenticeships and technical qualifications support a green career. For example, a Low Carbon Heating Technician apprenticeship is in development, offering a direct route into the small-scale renewables industry. • The Green Apprenticeships and Technical Education Advisory Panel (GATEAP) has advised IfATE and the employers it works with on strengthening green content within existing standards and introducing new standards where necessary. There are already 100 standards which support green skills. Occupational standards containing green skills include Maintenance and Operations Engineering Technician, offering a Wind Turbine Technician occupational specialism; and a Plumbing and Domestic Heating Technician, including an Environmental Technologies option. • New higher technical qualifications (HTQs) will align with the transition to net zero. This includes HTQs in Digital, Construction, Engineering and Manufacturing, and Agriculture, Environmental and Animal Care. These are all sectors that will require level 4 and 5 skills for the green transition. • The Government is working with industry to establish sector- specific initiatives. For example, a new Forestry Training Fund launched in February 2023 and a research project is being commissioned on workforce growth needed in the peat restoration sector. The Government is also supporting the establishment of a new professional body for the farming industry, the Institute for Agriculture and Horticulture (TIAH), to support the agricultural transition. • The Government will work with partners to ensure that net zero and green careers are considered in all relevant current and proposed careers campaigns across government and industry. This includes the Green Careers Hub and Net Zero Ambassadors, as well as supporting awareness raising of net zero and green careers by disseminating information to careers leaders and careers advisers in schools, colleges and in the community. 95 Powering Up Britain – The Net Zero Growth Plan Area Progress Upskilling the • In England, DfE and industry are working together to train the workforce for the existing workforce for the net zero transition through programmes green economy including Skills Bootcamps, Free Courses for Jobs, HTQs and apprenticeships. These programmes are helping to upskill more workers so that they can, for example, support greater energy efficiency in domestic and commercial buildings, and work with green technologies that contribute to the lowering of carbon emissions. • These Skills Bootcamps train workers in high demand skills such as electric vehicle charger installation, retrofit, and arboriculture. DfE is continuing to expand Skills Bootcamps, with up to £550 million in funding allocated for financial years 2022-25. • Industry have committed to work with DfE to propose new Skills Bootcamps in FY 2023-24 aimed at addressing immediate workforce skills needs in key low carbon sectors. They will work at pace to identify common skills demands that could be addressed by Skills Bootcamps. By the end of 2023, we will have at least 35 different bootcamp courses across England supporting greener construction, transport, and green energy and industry sectors. • Employers (including those with a role to play in delivering the net zero transition) are encouraged to use the 'find training and employment schemes for your business' website for more information on the full range of government programmes available to help them hire employees, offer work experience, or upskill existing staff (including those which offer financial incentives). • From April 2022, the Government widened the eligibility criteria of Free Courses for Jobs. Any adult in England who is earning under the National Living Wage or is unemployed has free access to these qualifications. Options includes green skills such as the built environment, conservation, and forestry. Supporting • DWP is continuing to support people into green jobs through individuals into jobcentre interventions and a range of different programmes. This green jobs includes Sector-based Work Academy Programmes and the Restart Scheme, as well as by referring people to wider skills provision. DWP is increasing knowledge of green jobs across jobcentres and launched a new green jobs toolkit in April 2022, 96 Powering Up Britain – The Net Zero Growth Plan Area Progress with information on sectors including forestry, wind, recycling and waste, water and building retrofit. • DWP's National Employer and Partnership Team (NEPT) established a green jobs team in December 2021 to ensure green jobs opportunities are accessible to jobseekers. • DWP launched a green jobs single point of contact (SPOC) network in March 2022, with a SPOC in each of DWP's 37 districts helping to improve local feedback and support, promote national messaging and ensure colleagues are aware of green jobs and skills opportunities. 97 Powering Up Britain – The Net Zero Growth Plan Green jobs and skills data It is estimated that since November 2020, over 80,000 green jobs are currently supported, or in the pipeline across the UK economy as a result of new government policies and spending. Our ambitions could support up to 480,000 jobs in 2030. The Government is working with the Office for National Statistics (ONS) to improve data on the green economy. The ONS estimate a 16% increase in direct employment in low carbon businesses across the economy from 2020 to 2021 - reaching nearly 250,000. However, this is only part of the picture, and the ONS has undertaken work to develop a broader definition of green jobs: “Employment in an activity that contributes to protecting or restoring the environment, including those that mitigate or adapt to climate change”. This definition has been developed following extensive engagement with stakeholders. ONS will develop a framework underneath this definition and publish associated experimental statistics for green jobs throughout 2023. It will continue to improve its existing estimates, publish related research articles, and engage with users. Progress also continues with monitoring jobs in the green economy using experimental government analysis of online advertisements. For four net zero sectors - heat and buildings, electric vehicles, wind, and new and advanced nuclear power - the key trends identified in online job advertisements were examined, showing: • Their share of UK online job advertisements has increased in recent years (in Technical Annex) • They are spread throughout the UK while individual sectors appear more concentrated in a few, varying geographic areas (Figure below) • They have higher advertised average salaries compared to the UK average salary for online job advertisements (Figure 4 in introduction) This analysis provides insight into part of the demand side of the online jobs market, producing outputs at local authority level, and information about salary levels, to monitor the impact of the net zero transition on the job market. The experimental nature of the analysis means it does not capture all online job advertisements in these four sectors. The Technical Annex provides more detail behind this analysis. Additionally, the Unit for Future Skills (UFS) is building a jobs and skills data ecosystem, which will help identify skills mismatches at an individual, sectoral, and economy-wide level. 98 Powering Up Britain – The Net Zero Growth Plan Figure 7: Job advert distribution by local authority for select net zero sectors, UK, 2014 to 2022 Source: Department for Energy Security and Net Zero experimental analysis of LightcastTM online job advert data, 2023. Note: The percentage share is the number of online advertisements in that local authority divided by the total number of online advertisements for that sector 99 Powering Up Britain – The Net Zero Growth Plan Upcoming delivery milestones • From 2023 the Government will improve data collected from net zero and environmental schemes on supporting green jobs data, including building a granular understanding of the geographic distribution of green jobs and their economic impact on places, and making as much of this information as possible available publicly. • From Spring this year, the Department for Energy Security and Net Zero will publish the Delivery Group’s biannual updates from the co-chairs. • In 2024, the Delivery Group will publish a Net Zero and Nature Workforce Action Plan. • We also continue to join up across the devolved administrations, who have already made excellent progress, with the Welsh Government having launched their Net Zero Skills Plan in March 2023, and the Scottish Government and Skills Development Scotland having launched their Climate Emergency Skills Action Plan 2020-2025 in 2020. 100 Powering Up Britain – The Net Zero Growth Plan Pilot government-industry action on the power and networks sector workforce The Green Jobs Delivery Group is taking action and, as priority, established a pilot power and networks sectors government-industry working group, due to these sectors’ importance to delivering on net zero and energy security. Challenges these sectors face, include issues with the STEM skills pipeline; competition for skills with other sectors; lack of diversity and inclusion in the sector; and an aging workforce. In response, industry has asked for more agile upskilling and reskilling training. This early work of the power and networks working group has both helped to establish a process, that we will encourage other sector groups to follow, and agreed head start actions which government and industry will make early progress on. The group will publish a comprehensive suite of actions within the Green Job’s Delivery Group co-chair's update by Summer 2023. Principles of intent: Process (that we will encourage other sector groups to follow) 1. By summer 2023, industry (led by EDF, with support from Energy and Utilities Skills partnership (EUSP) and the Engineering Construction Industry Training Board (ECITB)) will conduct and collate research on workforce demand and skills gaps within the power and networks sectors, specifically related to net zero. This will cover the skills and workforce picture in England, as well as that of the devolved administrations where relevant. 2. By summer 2023, industry (led by EUSP) will then refine the group’s initial assessment of workforce barriers. This will cover skills and workforce in England, and of the devolved administrations where relevant. 3. By summer 2023, industry (led by ECITB, with support from EUSP) will next map and identify gaps in routes to competence, including through apprenticeships, qualifications, and industry schemes. This will draw upon the work of the DfE and Institute for Apprenticeships and Technical Education (IfATE). This will cover skills and workforce in England, and of the devolved administrations where relevant. 4. In autumn 2023, government and industry will work together to identify how best to overcome barriers which threaten the sectors' ability to get people into key occupations in sufficient numbers. For example, DfE will identify opportunities to flex skills programmes in line with the challenges identified via 1 and 2 above. 5. These actions, along with information on how progress towards them will be monitored, will then be included as part of the Net Zero and Nature Workforce Action Plan in 2024. 101 Powering Up Britain – The Net Zero Growth Plan ‘Head start’ actions on power and networks: 1. Building upon this, by autumn 2023, industry (led by National Grid and supported by EUSP), and government will work together to support modular and agile training routes into key occupations within the power and networks sectors. 2. Industry, led by EUSP, will identify where investment in modular or short courses could be increased by developing new Skills Bootcamps. DfE will respond by supporting the roll out of new Bootcamps, through the Dynamic Purchasing System (DPS) or by responding to the local grant holder. 3. By autumn 2023, industry (through EUSP) will work with the IfATE via the Energy and Utility Employer Advisory Panel (EAP) to explore how apprenticeships and modular technical qualifications can best support skills development in sectors. 4. By winter 2023, Industry, led by EUSP, will pilot an approach to maximising the employer training estate, delivering training to an industry standard, aimed at meeting industry rather than individual employer needs. This would involve, for example, industry collaborating on using one another’s training estate to maximise the talent pipeline, and providing training on behalf of other employers where capacity allows. This requires industry to explore agreeing and setting output standards. 5. By spring 2024, DfE will provide communications to industry, to support employers and training providers to engage with recently launched flexi, portable, and accelerated apprenticeships, to boost apprenticeship numbers by maximising use of the variety of progression routes. 6. Industry, led by EUSP, will use its ‘workforce assessment’ to inform regulators of projected workforce demand as part of efforts to ensure sufficient provision for workforce resilience. 7. Industry, led by EUSP, will explore (jointly led with ECITB) potential skills passporting arrangements for the power and networks sectors. 8. By autumn 2023, industry, led by EUSP, will identify opportunities for growth and routes to competence presented by apprenticeships. There are no plans to review the Apprenticeship Levy at present, but we will continue to develop and support a suite of improvements to the apprenticeships system for employers. 9. In 2023, industry (led by IEMA/CIEEM) and IfATE will explore how apprenticeships and other non-degree level routes to environmental management and regulation could be improved or created. 10.The group has discussed wider workforce issues, including attracting people into net zero roles, and addressing diversity and inclusion issues. As a first step, the group is collating and analysing a range of data and evidence available to identify potential actions. 11.Government will work with partners to ensure that net zero and green careers are considered in all relevant current and proposed careers campaigns across government and industry. This includes the Green Careers Hub, as well as supporting 102 Powering Up Britain – The Net Zero Growth Plan awareness raising of net zero and green careers by disseminating information to careers leaders and careers advisers in schools, colleges and in the community. In summer 2023, industry and government will add to this initial list, forming a more comprehensive set of actions covering the steps being taken to address both skills and wider workforce challenges. This will then be reflected in the Net Zero and Nature Workforce Action Plan in 2024, alongside actions for other key sectors and the detail of how progress will be monitored. 103 Powering Up Britain – The Net Zero Growth Plan Embedding Net Zero in Government Summary The government has made significant progress in embedding net zero in its processes and decision making. In February, the Prime Minister created the Department for Energy Security and Net Zero, whose focus alongside energy security, is driving overall delivery of net zero and maximising the economic opportunity the transition presents. Additionally, the creation of the Domestic and Economic Affairs (Energy, Climate and Net Zero) Cabinet committee, ensures a coordinated approach to delivering net zero across government. This Cabinet-level governance is supported by Departmental governance, as well as other groups such as the Net Zero Business and Investment Group, the Green Jobs Delivery Group, and the Jet Zero Council and the Local Net Zero Forum. We have embedded net zero considerations into our key financial decision-making frameworks including publishing further detail on the environmental impacts of Spending Review 2021 and the methodology for assessing these. We have also laid the final environmental principles policy statement before Parliament. The policy statement sets out how policymakers should interpret and proportionately apply five environmental principles to support environmental protection and sustainable development. Ministers of the Crown will be required to have due regard to the statement when making policy from 1 November 2023.These are two key milestones we committed to in the Net Zero Strategy. All the while we have adopted a whole systems approach, helping us to deal with the inherent complexity of the challenges faced. We continue to embed systems tools and practices to support cross-sector decision making, account for dependencies, and maximise the benefits of net zero. In the next 18 months we are committed to strengthening governance even further. We will continue to embed net zero into decision-making frameworks and share more information on how we are set-up to deliver net zero within government, directly addressing the themes of enhancing coordination and transparency identified through the CCC’s 2022 Progress Report to Parliament progress report and Independent Review of Net Zero. We note the CCC’s and Independent Review of Net Zero’s recommendations on increased focus on government coordination and consistency and expanding our suite of public reporting. We have made strong progress in this area to date and: 104 Powering Up Britain – The Net Zero Growth Plan • In response to recommendations on expanding public reporting and improving transparency of internal government processes, as part of the government’s 2023 response to the CCC’s 2022 Progress Report to Parliament we will: − Share further detail on the tools and processes used to inform internal decisions and policy-making, including publishing a map of the governance landscape. − Publish the findings of a review that assesses how often we publish data on UK emissions. • We will work with the UK Regulators Network (UKRN) to build from their existing cross-regulator Climate Change Network and test the best way to bring-in regulators from beyond the UKRN’s core membership. Committing to confirming proposals for the form and governance of this forum by Summer 2023. • We will consider the case for new delivery agencies where they are the right model - using Great British Nuclear, among others, as case studies for the efficacy of these modes of delivery. • Improving the quality and coverage of data in decision- making, and ensuring climate and environmental impacts are considered in all fiscal decisions, remains a priority. HM Treasury will continue to work with departments to build climate impact assessment capability to ensure that spending decisions and measures at future fiscal events can be made using improved data. HM Treasury received a recommendation to work with the OBR and CCC to set out a process for how HM Treasury considers the climate impacts of fiscal events, and we will engage the OBR and CCC on this. Progress and delivery Area Progress Reporting • We promised to report annually against 24 commitments we made in the Net Zero Strategy. An account of these commitments is provided by 40 quantitative metrics, which are set out in the Technical Annex. Governance and • Established the Domestic and Economic Affairs (Energy, Climate other groups and Net Zero) Cabinet Committee, picking up on the successes of the Climate Action Committees and ensuring net zero continues to have a Cabinet-level forum dedicated to it. • Set-up a Climate Non-Executive Board Members Liaison Forum, which draws on the knowledge and expertise of non-executive 105 Powering Up Britain – The Net Zero Growth Plan Area Progress board members from across Whitehall to provide strategic insight and support to the implementation of the Net Zero Strategy and British Energy Security Strategy. • Introduced a new Net Zero Business and Investment Group, which convenes business and finance leaders to accelerate emissions reduction across key sectors and maximise the economic opportunity of net zero. • Created a Local Net Zero Forum which brings together national and local government to provide a single and coordinated engagement route into Government on strategic local net zero policy and delivery issues. Procurement • Required suppliers bidding on qualifying central government contracts to commit to achieving net zero and to detail their emissions via a Carbon Reduction Plan. Between September 2021 and the start of February 2023, the measure was applied to 129 procurements, which are valued at c.£187.5 billion over their contractual term. • Published the Construction Playbook and associated Net Zero Carbon and Sustainability Annex, which include stronger guidance and additional resources on how government construction projects should undertake whole life carbon assessments, and seek to reduce both embodied and operational carbon emissions. Civil Service • Developed a new training offer available to all civil servants, capability and skills expanded training for Fast Streamers, and are developing a climate and environment specialism to be embedded in the Civil Service policy profession standards. • Funded carbon literacy courses for the public sector more widely with courses now available for organisations such as the NHS, local government, and universities. Fiscal decision • At Spending Review 2021 (SR21) HM Treasury required making departments to assess the climate impacts of major spending bids. Decisions made at SR21 were informed by these assessments and proposals were considered and assessed according to these impact assessments and within the context of the broader suite of policies set out in the Net Zero Strategy. HM 106 Powering Up Britain – The Net Zero Growth Plan Area Progress Treasury also required departments to provide qualitative commentary against the delivery of the 25 Year Environment Plan. • Since SR21, HM Treasury has continued to work with departments to improve the quality and coverage of their emissions impact data. In December 2022, HM Treasury published further detail on the methodology for assessing environmental impacts at SR21. • HM Treasury and HMRC also carefully considered the climate change and environmental implications of relevant tax measures. The Government incorporated a climate assessment in all relevant Tax Information and Impact Notes (TIINs) for measures at Budget 2021 and has continued to do so. • In January 2023, the then Department for Business, Energy and Industrial Strategy published updated Supplementary Guidance to the Green Book to reflect the latest evidence and the UK's net zero target. This provides practical information on embedding carbon methodologies and on the effectiveness of climate change policy. Decarbonising the • Over £1 billion of funding was made available over 2020/21 and public section 2021/22 through the Public Sector Decarbonisation Scheme, which provides grants for public sector bodies to fund heat decarbonisation and energy efficiency measures. A further £1.425 billion is currently being invested through Phase 3 of the scheme over 2022/23 to 2024/25. • We provided £15 million in 2021-22 and £14 million in 2022-23 through the Low Carbon Skills Fund to enable public sector organisations to acquire expert skills in order to unlock decarbonisation projects, bringing total funding for this work to £61 million since 2020-21. • We published the Greening Government commitments in October 2021, setting out the actions departments and their agencies will take to reduce their impacts on the environment. 107 Powering Up Britain – The Net Zero Growth Plan Upcoming delivery milestones • Sponsored by the Department for Energy Security and Net Zero, the Modern Energy Partners programme will publish a suite of public sector decarbonisation guidance on the ESC website in spring 2023. This will help to address the capacity and capability barriers that public sector organisations face when they seek to decarbonise their built estates. • The next application window to the Public Sector Decarbonisation Scheme, Phase 3c, is expected to open to applications in Autumn 2023. • We are developing plans for future phases of the Low Carbon Skills Fund and will make further announcements in due course. • Ministers will be required to have due regard to the environmental principles policy statement when it legally comes into force on 1 November 2023. • We expect the Procurement Bill to receive Royal Assent, which would place the National Procurement Policy Statement (NPPS) on a statutory basis. The NPPS sets out clear principles that contracting authorities should follow - tackling climate change and achieving net zero is one of these. • HMRC will explore options to further strengthen the analytical approach to monitoring, evaluating, and quantifying the environmental impacts of tax measures, including their wider impacts. 108 Powering Up Britain – The Net Zero Growth Plan Local Net Zero Summary Local areas play an integral role in supporting the transition to net zero. Local authorities have strong powers, assets, and responsibilities across many of the areas where emissions reductions are needed, and civil society organisations can enable communities to take collective action to accelerate the net zero transition in their neighbourhoods. Local government is also uniquely placed to attract private sector net zero investment that wouldn’t otherwise be obtained; maximising the local opportunities the transition will bring, such as the growth of green jobs and skills. The government has made excellent progress in supporting local areas to deliver net zero. This includes establishing the Local Net Zero Forum, continuing the Local Net Zero Hubs Programme, and establishing Net Zero Go, the UK’s free-to-use digital platform providing advice to help local authorities make progress on net zero. We have also agreed devolution deals which contain shared agreements in relation to net zero/climate adaptation and/or clean energy. We welcome the recognition from the CCC and Independent Review of Net Zero of the promising steps central government are making towards harnessing the ambition of local government, including the recognition of the success of the Local Net Zero Forum which has been widely welcomed by local government. The Independent Review of Net Zero also affirmed that Government should continue to support the Local Net Zero Hubs Programme, given their role supporting local authorities on capacity and capability building. We have made excellent progress in this area to date and will continue to work collaboratively with local actors to progress still further: • We will strengthen our support to local authorities on capacity and capability building and ongoing knowledge sharing through our Local Net Zero Hubs Programme, Net Zero Go, and the annual net zero conference for local government that we sponsor with The Association for Public Sector Excellence (APSE). • We will pilot a devolved approach to buildings' retrofit from 2025 in the devolution deals with Greater Manchester Combined Authority and West Midlands Combined Authority. • We will strengthen the partnership with local government through ongoing engagement in the Local Net Zero Forum. 109 Powering Up Britain – The Net Zero Growth Plan • We will look at the opportunities offered by blended finance models, and explore simplification of the net zero funding landscape for local authorities where this will deliver better outcomes for net zero. • We will continue to work with the Community Energy Contact Group on some of the key policy and delivery issues which impact the sector and support community energy projects through UK-wide growth funding schemes and Ofgem's Industry Voluntary Redress Scheme. • As announced in the Budget, all new Investment Zones will be required to demonstrate how they will support the UK's net zero target. Progress and delivery In the last 18th months, we have delivered against the key commitments we made in the Local Climate Action chapter of the Net Zero Strategy. Area Progress Investment • We are testing new business models for investment into net zero, and to explore simplification of delivery. One approach is using devolution deals to pilot new approaches. We have recently announced wide-ranging devolution deals with Greater Manchester Combined Authority and West Midlands Combined Authority which include first-of-kind pilots for retrofit funding from

2025 (subject to conditions such as outcomes to be achieved) and which provide scope for a greater role to plan new energy infrastructure investment strategically. Alongside this, we have also agreed 6 other devolution deals since August 2022 (in York & North Yorkshire, the North East, Norfolk, Suffolk, East Midlands and Cornwall), all of which contain shared agreements in relation to net zero, climate adaptation and/or clean energy. Government's experience with these deals will inform future devolution deal negotiations. • As announced in the Budget, new Investment Zones will drive local economic growth. Green business sectors are one of the five priority sectors for the Investment Zones, and all Investment Zones are also required to demonstrate their contribution to national Net Zero and environmental targets. • To support local authorities' access to funding and increase investment, we have worked across government to ensure economic growth funding contains a net zero principle; and that 110 Powering Up Britain – The Net Zero Growth Plan Area Progress clean growth and green job opportunities are highlighted. This includes for example, the £2.6 billion UK Shared Prosperity Fund which states that investment made under this Fund should demonstrate the extent of contribution to net zero and nature recovery objectives. • Government-funded research through 3Ci and Innovate UK is helping to identify opportunities for local areas and local government to work with the private sector to finance the net zero transition. Proposals to develop work on blended finance are set out in the accompanying publication, the 2023 Green Finance Strategy. • We are supporting Freeports in England, Wales and Scotland to produce net zero plans. Engagement • We have established a Local Net Zero Forum to strengthen our partnership with local government. Alongside the Forum, we have also established the Net Zero Places Stakeholder group to engage directly with non-governmental organisations who work with local authorities. Capacity and • We continue to fund our five Local Net Zero Hubs which build Capacity Building capacity and capability in local government, The Hubs support local authorities across England to develop net zero projects and attract commercial investment. • The UK Infrastructure Bank is building its local advisory function to a steady state through 2023, and will also lend up to £4 billion to local authorities at a preferential rate for high value and strategic projects of at least £5 million. • We are funding Net Zero Go, the UK's free-to-use net zero delivery platform for local authorities. It is a one-stop shop which brings together the support and practical tools local authorities need to develop, deliver, and evaluate locally focused net zero programmes and projects. Sectoral Support • We are working closely with Local Authorities to deliver practical policy measures across a range of different sectors. For example: − As outlined in the Transport Decarbonisation Plan, the new Local Transport Plan (LTP) guidance will provide updated 111 Powering Up Britain – The Net Zero Growth Plan Area Progress strategic guidance for the development of LTPs and will support places to quantify local transport carbon emissions and assess the carbon impact of planned interventions in their LTP. − The Government's 'Help to Heat' schemes ensure homes will be warmer and cheaper to heat. Working with Local Authorities, the Government will deliver upgrades to over half a million homes in the coming years through our Social Housing Decarbonisation, Home Upgrade Grant Schemes and Energy Company Obligation Scheme. Innovation • We are supporting place-based energy system innovation through Innovate UK's £60 million Net Zero Living Programme. There have been two rounds of funding announced to date. This includes: − Net Zero Pathfinders for UK registered businesses and local authorities to apply for a share of up to £2 million to plan for a place-based demonstration of ways to accelerate progress towards net zero. − Fast Followers for local authorities to apply for a share of up to £6 million to build skills and capabilities to accelerate local progress towards net zero. Community Energy • Through our Local Net Zero Hubs we are supporting local authorities and community energy groups to work together, this includes funding a pilot programme which provides local authorities with direct support to develop community-led energy groups and projects. We have also established a Community Energy Contact Group to increase engagement with the sector. Upcoming delivery milestones • We will continue to invest £5 million/year in the Local Net Zero Hubs Programme and progress our ongoing projects, such as Net Zero Go, to support delivery at the local level. • We will continue to support the UKIB to build its local advisory function and to work closely with the Local Net Zero Hubs. • We will support work to promote net zero investment in Freeports. 112 Powering Up Britain – The Net Zero Growth Plan • We will pilot a devolved approach to buildings' retrofit from 2025 in the devolution deals with Greater Manchester Combined Authority and West Midlands Combined Authority. • Green business sectors are one of the five priority sectors for the Government's Investment Zone programme announced in the Budget and all Investment Zones will be required to demonstrate how they support the Government's net zero and environmental targets. 113 Powering Up Britain – The Net Zero Growth Plan Empowering the Public and Business to Make Green Choices Summary By choosing green products, services and goods, the public can help grow the green economy and support progress towards reaching net zero. Many of the commitments set out in the Net Zero Strategy will require the public to make green choices, with the installation of heat pumps and purchase of electric vehicles playing a particularly important role. As an example of how we will make these green choices easier, we will continue to deliver energy advice to the public on how to reduce their energy use, and in doing so their bills, and explore the case to expand this further, including our digital offer. We recognise that supporting the public and businesses with green choices must address multiple barriers, e.g., cost, convenience, awareness, and that everyone - government, industry, businesses, and civil society - must work together to achieve net zero to gain the economic benefits and ensure the environment is in a state for future generations. As the CCC acknowledged in their report, we have already included in the Net Zero Strategy a clear set of principles for how we will engage and empower the public to make green choices. Across net zero sectors, we are introducing measures which support these six principles. • Principle 1 - Minimise the ‘ask’ from the public by ‘sending clear regulatory signals.’ • Principle 2 – Make the green choice the easiest. • Principle 3 – Make the green choice affordable. • Principle 4 – Empower people and businesses to make their own choice. • Principle 5 – Motivate & build public acceptability for major changes. • Principle 6 – Present a clear vision of how we will get to net zero and what the role of people and business will be. The public will play a key role in the transition and therefore we will set out further detail on how Government will increase public engagement on net zero. This includes detailing how the government will (i) support public awareness of our actions through our digital platforms, (ii) develop a roadmap setting out plans and proposals under net zero and (iii) construct a guiding framework, in conjunction with partners and trusted messengers, to amplify net zero messaging. 114 Powering Up Britain – The Net Zero Growth Plan Government is establishing a new partnership to work with business and finance leaders to support the delivery of our net zero target - a new Net Zero Business and Investment Group. The group will look to develop a shared view of market barriers across different sectors to deliver net zero and the respective roles across Government, industry and the finance sector in addressing these. Progress and delivery Area Progress Advice on Energy • In July 2022, the government launched an online advice tool that Saving Actions provides high-level trusted, impartial and tailored advice to consumers on how to improve home energy performance and information on retrofit recommendations. In March 2023, we also launched an accompanying phoneline service that provides a digital assist service for the tool. • In December 2022, the Government also launched the 'It All Adds Up' campaign with £18 million funding. This campaign provides advice on simple, low, or no-cost actions that households can take to cut energy use. • A targeted sister campaign to the consumer energy campaign has supported businesses through a period of record high energy prices. With £4.25 million in funding, the campaign is designed to help businesses, in particular small businesses, manage energy bills by improving efficiency and reducing overall consumption. • In 2022, we ran a digital discovery to explore whether there is a user need for new content on net zero on GOV.UK or a new resource to link together different sources of information and support on net zero in a comprehensive platform. We will run an alpha phase later this year. Supporting UK • In the year to COP26, the former Net Zero Business Champion, businesses to Andrew Griffith MP, engaged large businesses and led Together meet net zero for Our Planet, a campaign targeting small and micro businesses commitments across the UK. The UK remains a global leader in the global Race to Zero, with almost 4,000 small and medium-sized enterprises (SMEs) and two thirds of the FTSE100 companies signed up to date. 115 Powering Up Britain – The Net Zero Growth Plan Area Progress Environment • While labels already exist for energy-using products and homes impact labelling (in the form of Energy Performance Certificates), we are exploring of products, the use of eco-labels for a wider a range of goods and services. goods and • We are exploring the use of product labelling to show the services durability, repairability and recyclability of products, as well as their environmental footprint. • We have announced our intention to require recyclability labelling on packaging and will introduce this as part of new regulations on packaging and packaging waste. Behavioural • The Department for Energy Security and Net Zero and Defra have science and bolstered its behavioural research capabilities by launching an embedding Energy & Climate Behavioural Science Framework, a call-off participatory and contract that allows us to rapidly procure behavioural research. deliberative DfT has launched a similar contract for transport. processes • We have regularly funded public dialogues on a range of net zero issues and will continue to do so, using the findings to inform policy development. For example, in the past year, the Department for Energy Security and Net Zero has commissioned a public dialogue on biomass and bioenergy with carbon capture and storage to feed into the delivery of the Biomass Strategy in 2023. Upcoming delivery milestones • We will set out further detail on how Government will increase public engagement on net zero. • Government will launch a series of local demonstrator projects, which will test various approaches to delivering in-person advice, with a particular focus on harder- to-treat properties and digitally excluded consumer groups. We will also be reviewing further advice and measures that the ‘It all Adds Up’ campaign can include. • We will continue to pursue the role of ecolabelling across sectors to help consumers make more informed purchasing decisions. We will create a mandatory methodology for eco-labelling which the food and drink industry must follow when providing voluntary information to consumers regarding their food's emission and sustainability claims. 116 Powering Up Britain – The Net Zero Growth Plan International Leadership Summary The UK has been – and will remain - at the centre of global efforts to tackle climate change and transition to a global net zero economy. Collectively, we must reach our target in a way that protects energy security, supports green growth and innovation, and maximises benefits for businesses and consumers. Successfully addressing the challenges of climate change requires an unprecedented level of international action, collaboration, and coordination. The UK is driving international collaboration and focusing our actions on areas that will have the biggest impact. We are building strategic alliances to accelerate the global net zero transition, championing ambition and driving forward real-world action to keep 1.5 alive, and mobilising finance at scale – whilst maximising opportunities for the UK. Current global challenges such as Putin’s invasion of Ukraine, food and energy security, the rising cost of living and the recovery from the Covid pandemic underscore the urgent need to accelerate climate action. Further action on climate mitigation, adaptation and nature can bolster national and global resilience to current and future shocks and enhance economic stability. The UK will continue to be a world leader in the drive to net zero. Between 1990 and 2021 we’ve cut emissions by 48% while growing our economy by 65%. In 2020 there were over 400,000 green jobs in low carbon businesses and their supply chains across the country. However, while countries have increased their emission reduction targets, the science is clear that emissions need to be halved by 2030 to keep 1.5C within reach and reach net zero by 2050. country - including the UK - will face, it also drives down the cost of transition faster by increasing demand for low carbon technologies. As the Independent Review of Net Zero made clear, the UK has comparative advantage and stands to benefit from the huge economic opportunities this brings. The 2030 Strategic Framework for International Climate and Nature Action will define the UK Government’s vision and role in tackling global climate change and biodiversity loss in this critical decade. Taking an integrated approach to climate and nature, the Framework will build on our COP26 Presidency, the outcomes of COP27 and the Convention on Biological Diversity (CBD), COP15. The UK International Climate Finance Strategy underpins this, outlining how the UK is delivering on our commitment to provide £11.6 billion of international climate finance between 2021/22 and 2025/26, supporting developing countries to take climate action, and delivering on our international priorities and commitments. 117 Powering Up Britain – The Net Zero Growth Plan We welcome the recommendations of both the Climate Change Committee (CCC) and the Independent Review of Net Zero and full responses can be found in the annexes. As recommended by the CCC and in response to the Glasgow Climate Pact, we revisited our 2030 Nationally Determined Contribution and strengthened it with information on delivery of our target to reduce all greenhouse gas emissions by at least 68% by 2030 on 1990 levels, including plans to expand the territorial scope of the NDC to include the UK’s Crown Dependencies and Overseas territories. Progress and delivery Area Progress During the UK’s • Keeping 1.5 degrees alive: Over 90% of the world's GDP, up from UNFCCC 30% when the UK took on the COP Presidency, is now covered Presidency – at by net zero commitments. More than 170 countries have now put the COP26 summit and forward new 2030 climate plans, known as nationally determined beyond contributions, amounting to around 6 Gts in emissions reductions. • Increasing funding and launching UN work for dealing with climate impacts: To accelerate progress towards achieving the $100 billion goal, the UK secured enhanced public finance commitments from 95% of major donors, showcased in the 'Climate Finance Delivery Plan' launched in Glasgow. In addition at COP26, countries agreed to double 2019 levels of adaptation finance by 2025, the first quantified adaptation finance target, with the UK subsequently pledging to triple its adaptation finance against the same timeline. Record levels of finance to help countries adapt to the effects of climate change were also pledged to the Adaptation Fund and the Least Developed Country Fund under the UK Presidency. An ad hoc work programme towards setting the post-2025 new collective quantified goal on finance was launched, and investor initiatives worth trillions were launched, including the Global Financial Alliance for Net Zero (GFANZ). • Accelerating unprecedented low-carbon transitions of industries such as transport and energy, with commitments covering power, coal, methane, fossil fuel financing, forests and land, transport and sectors, including the first ever agreement to coal phase down in a UN climate decision. 118 Powering Up Britain – The Net Zero Growth Plan Area Progress • Establishing a new Glasgow Dialogue on Loss and Damage to discuss the arrangements for funding activities to avert, minimise and address loss and damage. • Finalising the Paris Rulebook after 6 years of negotiations, which sets out the instructions and products needed to fully implement the Paris Agreement on climate change. These guidelines build confidence and transparency as countries deliver on their commitments to meet the goals of the Paris Agreement. Driving progress • During COP27 our focus was building on the Glasgow Climate in COP27 Pact. We welcome the landmark progress made on loss and damage and the agreement to establish a fund to support those most vulnerable to the effects of climate change. We also saw progress on key work programmes launched in Glasgow. This includes the work programme for urgently scaling up mitigation ambition and implementation in this critical decade (known as the mitigation work programme) and the Glasgow - Sharm El-Sheikh work programme on the Global Goal on Adaptation (GlaSS). Delivering our Our results to date demonstrate the transformative impact that UK commitments to ICF can have. Between 2011 and 2022, our programmes: developing • Supported 95 million people to better adapt to the effects of countries under climate change the Paris Agreement, • Improved access to clean energy for 58 million people including our • Reduced or avoided 68 million tonnes of greenhouse gases contribution to the $100 billion • Installed 3.3 gigawatts of clean energy capacity mobilisation • Avoided deforestation across 410 thousand hectares target, through UK International • Mobilised £5.7 billion of public and £5.2 billion of private finance Climate Finance for climate change purposes (ICF). • Supported the sustainable management of 910 thousand hectares of land. • We have doubled our International Climate Finance commitment to £11.6 billion between 2021/22 and 2025/26. This will enable a step-change in the UK's impact long-term and supporting developing countries and delivering Glasgow Climate Pact outcomes. This funding increase will be used to: unlock affordable 119 Powering Up Britain – The Net Zero Growth Plan Area Progress and clean energy; help countries, economies and communities become more resilient; halt deforestation and prevent irreversible biodiversity loss; support the development of sustainable cities and transport systems. Upcoming delivery milestones Continuing to drive global ambition and implementation of net zero commitments is vital to the future of our planet and more must be done. The UK will continue to champion international climate action, noting the urgency required in this critical decade to 2030. Ahead of COP28 we will need to revitalise efforts to keep 1.5°C in reach, including in pushing for emissions peaking before 2025, active follow-up on the phase down of coal, and phase out of all fossil fuels. We must rapidly decarbonise key sectors of the economy, delivering on sector commitments made at COP26, including through the Breakthrough Agenda. We will support the most vulnerable to adapt and build resilience to the effects of climate change, delivering on the Glasgow Climate Pact, and halt and reverse biodiversity loss as agreed through the Kunming-Montreal Global Biodiversity Framework. We will work with partners on the design of the funding arrangements and fund for loss and damage, and to shape the framework for the Global Goal on Adaptation. The Global Stocktake must enable us to genuinely shift gears on delivering the Paris Agreement goals. Beyond COP28, the UK will work with international partners to refine the post-2025 climate finance goal. The UK will: • Publish the 2030 Strategic Framework for International Climate and Nature Action which will set out the priorities for UK action through to 2030. • Publish the UK’s International Climate Finance Strategy. It outlines how the UK’s high-profile commitment to spend £11.6 billion on ICF in 2021/22-2025/26 is being spent and is delivering results as part of the promised contributions to the UNFCCC commitment to mobilise US$100billion climate finance a year for developing countries. The strategy also shows how we are delivering on the ICF sub-targets which we have announced publicly, on nature, adaptation, and innovation. 120 Powering Up Britain – The Net Zero Growth Plan Endnotes 1 HM Treasury, (2006), ‘Stern Review: The Economics of Climate Change’

2 McKinsey, https://www.mckinsey.com/capabilities/sustainability/our-insights/opportunities-for-uk- businesses-in-the-net-zero-transition

3 University of Oxford net zero tracker, https://www.bsg.ox.ac.uk/research/research-and-policy-updates/net- zero-tracker-report-finds-major-credibility-gaps-remain

4 International Energy Agency (IEA) (2021), ‘Net Zero by 2050: A Roadmap for the Global Energy Sector’, https://www.iea.org/reports/net-zero-by-2050

5 Department for Energy Security and Net Zero (2015), Contracts for Difference (CFD) Allocation Round One Outcome https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round- one-outcome Department for Energy Security and Net Zero (2022), ‘Contracts for Difference (CfD) Allocation Round 4: results’, https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round-4- results

6 This includes public and private sources of funding. DESNZ analysis of the BloombergNEF, Energy transition investment dataset converting to 2022 prices, available at: https://www.bnef.com/. The BNEF series captures investments made across different low-carbon technologies and sectors, including power, energy storage, transport, heating, hydrogen, and CCS. Figures should not be taken as fully representative of all low-carbon investments made across the economy and are likely to be a conservative estimate.

7 DESNZ analysis of Bloomberg New Energy Finance data estimated £27 billion was invested in 2021 and £23 billion in 2022. Bloomberg New Energy Finance, Energy Transition Investment Trends 2022

8 EY (2021) Why cleantech investments in the UK are encouraging for future growth, https://www.ey.com/en_uk/attractiveness/21/why-cleantech-investments-in-the-uk-are-encouraging-for- future- growth#:~:text=The%20UK%20attracted%20one%2Din,spread%20of%20cleantech%20investments%20 nationwide.

9 Bentham, M., Mallows, T., Lowndes, J. and Green, A. (2014), ‘CO2 Storage Evaluation Database (CO2 Stored). The UK’s online storage atlas’, https://nora.nerc.ac.uk/509387/1/1-s2.0-S1876610214023558- main.pdf

10 European Automobile Manufacturers’ Association (acea), (2023), ‘Fuel types of new cars: battery electric 12.1%, hybrid 22.6% and petrol 36.4% market share full-year 2022’, https://www.acea.auto/fuel-pc/fuel- types-of-new-cars-battery-electric-12-1-hybrid-22-6-and-petrol-36-4-market-share-full-year-2022/

11 Times Higher Education (2023), ‘World University Ranking 2023’, https://www.timeshighereducation.com/world-university-rankings/2023/world-ranking

12 EDF, (2022), Socio-economic Impact Report, https://www.edfenergy.com/energy/nuclear-new-build- projects/hinkley-point-c/about/realising-socio-economic-benefits

13 Internal DESNZ research, Dataset: Low carbon and renewable energy economy estimates: https://www.ons.gov.uk/economy/environmentalaccounts/datasets/lowcarbonandrenewableenergyecono myfirstestimatesdataset and UK trade: goods and services publication tables: https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/datasets/uktradegoodsandservice spublicationtables

14 DESNZ analysis (2023)

15 BEIS (2020), BEIS electricity generation cost report, https://www.gov.uk/government/collections/energy- generation-cost-projections

16 Department for Energy Security and Net Zero (2023), ‘Social Housing Decarbonisation Fund Wave 2.1: successful bids’, https://www.gov.uk/government/publications/social-housing-decarbonisation-fund-wave- 21-successful-bids 121 Powering Up Britain – The Net Zero Growth Plan

17 European Automobile Manufacturers’ Association (acea), (2023), ‘Fuel types of new cars: battery electric 12.1%, hybrid 22.6% and petrol 36.4% market share full-year 2022’, https://www.acea.auto/fuel-pc/fuel- types-of-new-cars-battery-electric-12-1-hybrid-22-6-and-petrol-36-4-market-share-full-year-2022/

18 CCC (2020), Letter: Advice on the UK’s 2030 Nationally Determined Contribution (NDC), https://www.theccc.org.uk/publication/letter-advice-on-the-uks-2030-nationally-determined-contribution- ndc/#:~:text=Key%20recommendations&text=We%20encourage%20the%20Prime%20Minister,internatio nal%20credits%20to%20do%20so.

19 BEIS (2021), ‘Net Zero Strategy, p19’, https://www.gov.uk/government/publications/net-zero-strategy

20 Internal DESNZ analysis based on DDM Reference Case 2022 - https://www.gov.uk/government/statistics/the-dynamic-dispatch-model-a-fully-integrated-power-market- model

21 BEIS (2022), Appendix 1: Electricity networks modelling, section 3.2, Electricity networks strategic framework, https://www.gov.uk/government/publications/electricity-networks-strategic-framework.

22 BEIS (2022), Appendix 1: Electricity networks modelling, section 7, Electricity networks strategic framework, https://www.gov.uk/government/publications/electricity-networks-strategic-framework.

23 BEIS (2021), p99, ‘Net Zero Strategy’, https://www.gov.uk/government/publications/net-zero-strategy

24 BEIS (2022), ‘British energy security strategy’, https://www.gov.uk/government/publications/british- energy-security-strategy/british-energy-security-strategy

25 BEIS (2022), ‘UK government takes major steps forward to secure Britain's energy independence’, https://www.gov.uk/government/news/uk-government-takes-major-steps-forward-to-secure-britains- energy-independence

26 DESNZ analysis of the Final UK greenhouse gas emissions national statistics: 1990 to 2021, https://www.gov.uk/government/statistics/final-uk-greenhouse-gas-emissions-national-statistics-1990-to- 2021

27 Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. The 'Meeting carbon budgets' section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met.

28 HMT (2021), ‘Budget and Spending Review – October 2021: What you need to know’, https://www.gov.uk/government/news/budget-and-spending-review-october-2021-what-you-need-to-know

29 BEIS (2022), ‘UK government takes major steps forward to secure Britain’s energy independence’, https://www.gov.uk/government/news/government-readies-sizewell-c-nuclear-project-for-future- investment

30 BEIS (2023), Press Release, https://www.gov.uk/government/news/government-readies-sizewell-c- nuclear-project-for-future-investment

31 BEIS (2021), ‘UK backs new small nuclear technology with £210 million’, https://www.gov.uk/government/news/uk-backs-new-small-nuclear-technology-with-210-million

32 National Grid ESO, ‘The Pathway to 2030 Holistic Network Design, https://www.nationalgrideso.com/future-energy/the-pathway-2030-holistic-network- design#:~:text=The%20HND%20facilitates%20the%20connection,towards%20our%20net%20zero%20fu ture.

33 BEIS (2022), ‘Offshore Coordination Support Scheme guidance’, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/11354 67/Offshore_Coordination_Support_Scheme_guidance.pdf

34 BEIS (2023), Smart Meter Statistics in Great Britain: Quarterly Report to end December 2022, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/11438 90/Q4_2022_Smart_Meters_Statistics_Report.pdf 122 Powering Up Britain – The Net Zero Growth Plan

35 July and December 2022 Hydrogen Strategy update to the market

36 North Sea Transition Authority (2022) Emissions Monitoring Report. https://www.nstauthority.co.uk/news- publications/publications/2022/emissions-monitoring-report-2022/

37 NSTA (2022) Data set, https://www.nstauthority.co.uk/news-publications/publications/2022/

38 Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. The 'Meeting carbon budgets' section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met.

39 This figure has been updated since the NZS publication. DESNZ analysis (2023), ‘Net Zero Industry Pathway (N-ZIP) model’, https://www.theccc.org.uk/wp-content/uploads/2020/12/N-ZIP-Model.xlsb. For further details see Sector Modelling in Technical Annex.

40 DESNZ analysis (2023), ‘Net Zero Industry Pathway (N-ZIP) model’, https://www.theccc.org.uk/wp- content/uploads/2020/12/N-ZIP-Model.xlsb.

41 DESNZ analysis (2023), ‘Net Zero Industry Pathway (N-ZIP) model’, https://www.theccc.org.uk/wp- content/uploads/2020/12/N-ZIP-Model.xlsb. For further details see Sector Modelling in Technical Annex.

42 Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. The 'Meeting carbon budgets' section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met.

43 DLUCH (2022), 'English Housing Survey 2019-20 Report’, https://www.gov.uk/government/collections/english-housing-survey#2019-to-2020

44 BEIS (2021), ‘Opportunity areas for district heating networks in the UK: second National Comprehensive Assessment’, https://www.gov.uk/government/publications/opportunity-areas-for-district-heating- networks-in-the-uk-second-national-comprehensive-assessment

45 DESNZ internal analysis

46 Heat Networks Industry Council

47 BEIS (2021), https://www.gov.uk/government/statistics/provisional-uk-greenhouse-gas-emissions- national-statistics-2021. Includes IA&S in total emissions. Consistent with CB6/NZS analysis. Source: BEIS, Energy Consumption in the UK 2021, table U2

48 Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. The 'Meeting carbon budgets' section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met.

49 Sustainable Aviation forecasts based on independent analysis conducted by ICF consulting firm. Analysis assumes UK SAF production costs match or are lower than wider global SAF production costs.

50 CCC (2022), Progress-in-reducing-emissions-2022-Report-to-Parliament.pdf (theccc.org.uk), pp.112-113 51 https://www.smmt.co.uk/2023/01/chip-crisis-subdues-new-car-market-but-evs-now-second-only-to-petrol/. December saw battery electric vehicles (BEVs) claim their largest ever monthly market share, of 32.9%, while for 2022 as a whole they comprised 16.6% of registrations, surpassing diesel for the first time to become the second most popular powertrain after petrol.

52 Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. The 'Meeting carbon budgets' section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon 123 Powering Up Britain – The Net Zero Growth Plan Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met.

53 See 44.

54 Defra (2023) Environmental Land Management (ELM) update: how government will pay for land-based environment and climate goods and services, https://www.gov.uk/government/publications/environmental- land-management-update-how-government-will-pay-for-land-based-environment-and-climate-goods-and- services/environmental-land-management-elm-update-how-government-will-pay-for-land-based- environment-and-climate-goods-and-services

55 Published within the UK ETS Authority’s consultation on ‘Developing the UK Emission Trading Scheme’: Developing the UK Emissions Trading Scheme (UK ETS) - GOV.UK (www.gov.uk)

56 Please see the Carbon Budget Delivery Plan for details of our policies and proposals for meeting the carbon budgets. The 'Meeting carbon budgets' section of the Carbon Budget Delivery Plan makes clear how we have reached the conclusion that Carbon Budgets will be met. Whilst the indicative pathway set out in the NZS remains our view of the most economically advantageous way to meet the Carbon Budgets, and we therefore continue to use it as a means of developing and testing policy, the pathway plays no role in our conclusion that that Carbon Budgets will be met.

57 Nature-based solutions, such as afforestation, are included in the Agriculture and LULUCF subsector. For further detail, see the Natural Resources, Waste & F-Gases chapter.

58 Internal DESNZ analysis based on Energy Innovation Needs Assessment technology deployment paths (2019): https://www.gov.uk/government/publications/energy-innovation-needs-assessments. Note this data is based on 80% emission reduction target by 2050, not the current net zero (100% reduction) target, hence likely to be an underestimate.

59 BEIS (2021) Net Zero Research and Innovation Framework, https://www.gov.uk/government/publications/uk-net-zero-research-and-innovation-framework-delivery- plan-2022-to-2025 124 Powering Up Britain – The Net Zero Growth Plan 125 Powering Up Britain – The Net Zero Growth Plan E02888048 978-1-5286-4019-0 126