The Skidmore report is the culmination of one of the largest UK-wide engagement exercises on Net Zero. In just a few short months, Chris Skidmore MP and his team at the Department for Business, Energy and Industrial Strategy gathered over 1800 pieces of written evidence (including our own) and spoke to hundreds of business and civil society leaders. The resulting report is a comprehensive analysis of how the UK’s Net Zero target by 2050 can be delivered in an economically valuable way. If there was any lingering doubt at the outset of the review over whether it would find growth and Net Zero compatible, the report well and truly puts this question to bed.
A fresh economic narrative and three key principles
Running throughout the report is a fresh economic narrative about the benefits of Net Zero. Net Zero is presented as 'the economic opportunity of the 21st century', especially for global players who move early and capitalise on the transition. Net Zero is demonstrated to be not just compatible with, but a gateway to, the UK’s growth. According to the report, harnessing the opportunities will require adherence to three key principles:
- Swift action: the report emphasises that urgency is key to unlocking the potential economic benefits of Net Zero and that delay weakens progress on both climate and growth objectives.
- Stable policy and finance: it recommends an Office for Net Zero Delivery is established, and an overarching finance strategy is put in place by the end of 2023. This would place Net Zero at the heart of all government decision-making and create a stable environment for investment.
- Place-based approach: the report is clear that local authorities play a vital role in delivering Net Zero, however a clearer set of roles and responsibilities are needed to facilitate this.
The report’s recommendations are structured around six pillars of the Net Zero transition: securing, powering, the economy, community, individuals and the future. Of the 129 recommendations there are 25 priorities for 2025 spanning everything from constructing cleaner, greener homes to publishing an offshore industries strategy.
Our pick of the report’s recommendations
It was particularly encouraging to see the recommendations related to accelerating the deployment of renewables, enhancing the role of local authorities and securing business and investor confidence through consistent policies and finance. The report suggests that in each of these areas, the UK government needs to ramp up its level of ambition and action.
Accelerated deployment of renewables
Respondents to the Skidmore review highlighted that cross-government and industry collaboration on offshore wind in the UK, much of which has been led by the Carbon Trust over the last 20 years, has been effective at streamlining new initiatives and delivering supply chain cost reductions. The report now recommends a similar collaborative, mission-led approach for both onshore wind and solar – specifically the creation of roadmaps in 2023 to enable each technology to secure the ‘required deployment levels’ to make the grid Net Zero by 2035. The UK’s leading global role in offshore wind provides an opportunity for the UK to place itself at the centre of future Net Zero technology supply chains.
Going hand-in-hand with the deployment of renewables is the report’s emphasis on transitioning away from fossil fuelled power and heat, and transformation of the grid. The report recommends bringing forward the planned end of routine oil and gas flaring from 2035 to 2030, a commitment to gas free homes by 2033, as well as significant investment in and a strategic overhaul of grid infrastructure to enable greater system flexibility. Central to this is a recommended update of Ofgem’s mandate to incorporate the UK’s Net Zero target and prioritisation of the Review of Electricity Market Arrangements.
Enhanced role for local authorities and greener homes
Leading from a place-based approach to securing Net Zero, the report sets out a series of recommendations to enhance the role of local authorities, many of which are in line with our written evidence to the review. Principally, the report recommends a statutory duty for local authorities to take account of the UK’s Net Zero target. This is very welcome, as the implications of local authorities’ targets for local businesses and supply chains can help to accelerate the pace of change towards Net Zero. Additionally, the report recommends a drastically simplified funding landscape, which would help move local authorities towards quickly securing funding for a pipeline of decarbonisation projects. Finally, an interesting new idea to raise the bar, is the report’s recommendation that the government back at least one city, local authority and community to become a “Trailblazer” and go Net Zero by 2030.
One of the paradoxes we highlighted in our written evidence is that existing construction regulations allow homes incompatible with Net Zero to continue to be built. The report recommends bringing forward all consultations and work on the Future Homes Standard to ensure it is mandated by 2025, though interim targets are not recommended. The report also recommends that all homes sold by 2033 have an EPC rating of C or above, and that EPC ratings become one metric within a more holistic Net Zero Performance Certificate. The report’s emphasis on the value of energy efficiency, from both a climate and economic perspective, marks a step change from previous years of government policy.
Consistent policies and finance to secure business and investor confidence
Realising the huge economic benefits of Net Zero requires a cross-society approach, with business leaders and financial decision makers playing a key role. The report criticises the lack of a stable environment for investment in new business models and technologies for diminishing the UK’s comparative advantage. It envisions an alternative in which continuity, certainty, consistency and clarity are provided through an overarching finance strategy, a forum to coordinate regulation and an Office for Net Zero Delivery. These steps would help to align policy and finance with longer business-planning horizons, unlocking business-model innovation and driving investment in the technologies of the future.
As the UK government gears up to republish its Net Zero Strategy by March 2023, the Skidmore report will hopefully cross the desk of all ministers and officials involved. The report is full of crucial suggestions to realise the huge value of delivering Net Zero. If the government actions them with the urgency needed, the UK’s path to Net Zero could be accelerated and its prosperous role in a Net Zero world secured.
Find out more about the Carbon Trust Net Zero Intelligence Unit