Powering Our Net Zero Future

The UK Government has Released its Long-Awaited Energy White Paper – What Does This Mean for our Industry?

In December, the UK government published its long-awaited Energy White Paper, “Powering Our Net Zero Future”. The aim of the paper is to lay out the pathway for making the UK carbon neutral by 2050. The document is ambitious in scope, covering areas from infrastructure development to market reform. It focuses around three main topics:

  • Transforming Energy – Infrastructure development
  • Green Recovery – Measures to assist in recovering from Covid-19 sustainably
  • A Fair Deal – Increasing market equality

LGE has read the 140 page document in full and we’ve outlined the highlights, points of interest and LGE’s take on the plans below. Read on for everything you need to know about the Energy White Paper.

1. Transforming Energy

  • Targeting 40GW of offshore wind by 2030
  • Supporting the deployment of CCUS in four industrial clusters
  • Establishing a new UK Emissions Scheme
  • One large scale nuclear project to the point if final investment decision (FID)
  • Consult on ending gas grid connections to new homes being built in 2025
  • Growing the installation of electric heat pumps
  • Building world-leading digital infrastructure for our energy system

Most of the measures mentioned above have already been announced previously; the 40GW wind target was widely publicised back in October 2020 and the formation of the UKETS has been an accepted part of the UK’s withdrawal from the European Union for over a year.  Questions remain on the level of funding the government is making available to support the massive expansion of wind generation required to meet the target – the published figure of £160m is believed by many to be well below what is actually required.

The investment in another large-scale nuclear project (likely to be Sizewell C) will also raise eyebrows amongst industry. The current development of Hinkley Point C has suffered a number of delays and cost increases, and the rate guaranteed to EDF for the electricity generated through the contracts for difference scheme has been criticised for being too high. Nevertheless, a nuclear plant will provide large amounts of continuous carbon friendly generation (though not green, but blue) to a grid increasingly powered by intermittent energy sources.

Building new digital infrastructure is essential for the future of the energy market. Small scale decentralised generation is going to play a much larger part of supply going forward and systems need to be in place to fully support this. Decentralisation will create the opportunity to move away from the “supplier hub” model that has existed since deregulation in 1989, where the supplier sits at the centre of everything. Peer to peer markets and electric vehicles (EVs) selling charge back to the grid are all likely to be realised in the coming decade and systems will need to be in place to aid these developments. This is an area of particular interest to LGE and we are working with a number of partners to develop such technology.

Other areas mentioned include:

  • Publication of a Smart System Plan in spring 2021
  • Launch a major competition to commercialise the first of a kind longer duration energy storage
  • Enable competitive tendering in the building, ownership and operation of the onshore electricity network

2. Support a Green Recovery from COVID-19

  • Deliver four low carbon industrial clusters by 2030 and at least one net zero cluster by 2040
  • Invest £1 billion up to 2025 to facilitate the deployment of Carbon Capture and Utilisation (CCUS) in two industrial clusters by the mid-2020’s and a further two by 2030, saving 10MtCO2 by 2030
  • Develop 5GW of low-carbon hydrogen production capacity by 2030

The UK’s reliance on gas for heating, industrial processes and electricity generation is one of the largest issues to overcome in the path to net zero. It is generally agreed the government has two options: transition away from domestic gas heating to electric and/or to introduce green gas and hydrogen into the gas network. Transitioning to electric heating is referenced in the document but the government’s scheme for industry is the development of four low carbon zones by 2030. A consultation on how to finance the projects will be held later this year.

The paper also discusses a spend of £1 billion up to 2025 to facilitate the deployment of CCUS, aiming to capture 10MtCO2 per year by the end of the decade. Whilst this sounds positive, this actually only accounts for 0.03% of the UK’s 2019 CO2 emissions. To put in perspective, UK emissions dropped 5Mt from 2018 and 19 anyway.  At this rate of decarbonisation, it does seem a very large amount of money which has the potential to be spent more effectively elsewhere.

3. Create a Fair Deal for Consumers

  • Creating the framework to introduce opt-in switching
  • Considering how the current auto-renewal and roll-over tariff arrangements could be reformed
  • Assessing what market framework changes may be required to facilitate the development and uptake of innovative tariffs and products
  • Ensuring the retail market regulatory framework adequately covers the wider market
  • Establishing the Future Homes Standard
  • Consulting on regulatory measures to improve the energy performance of homes
  • Requiring that all rented non-domestic buildings will be Energy Performance Certificate (EPC) Band B by 2030
  • Extending the Energy Company Obligation to 2026

Encouraging users, particularly domestic, to switch suppliers has been a government ambition since deregulation. The opt-in switching outlined in the paper has previously been demonstrated to increase switching and is outlined as an important step to the government’s tentative plans to introduce opt-out switching in a few years’ time. Electricity affordability for domestic users has been a topic of discussion in politics for years, so it comes as no surprise that the government is including this as a measure to facilitate increased competition.

An important reference within ensuring the market framework covers the wider market is the mention of a consultation in Spring 2021 on regulating energy brokers and comparison websites. TPI’s have previously had little in the way of regulation for years except for a voluntary code of conduct to follow and there continues to be examples of unscrupulous business practices by single rogue consultants and larger intermediaries alike. As an early adopter of Ofgem’s voluntary principals, LGE welcome this proposal and look forward to seeing the industry held to proper account.


The goals and actions set out in this document are ambitious but necessary if the UK is to meet its net zero goals. In some areas, the measures detailed are already in-flight; in others, we await to see the finer detail. A large number of actions and consultations are to be held in 2021, including but not limited to: broker regulation, customer switching, the definition of green supply and the role of hydrogen ready appliances. Given the White Paper itself suffered numerous delays in publication, it seems optimistic that the Government believes all these and the other actions will be met within the year.

It is clear that a paradigm shift will be required in areas such as transport and building if the net zero by 2050 target is to be realised. Implementing a large number of the referenced projects will ensure the UK will remain at the forefront of clean technology development for the next few decades. However, the real goal is maintaining a sustainable environment for future generations; it remains to be seen if the UK will meet this goal.