Over the last month, we’ve seen a series of important energy policies published (such as the Net Zero Strategy and the Heat and Buildings Strategy), and now that COP26 has taken place, there’s plenty for us to update you on! So let’s get straight into it – here’s what you need to know…

As COP26 came to a close, the New Glasgow Climate Pact was agreed, which looks set to guide nations towards key efforts to decarbonise and is the first climate deal to explicitly plan to reduce coal and inefficient fossil fuel subsidies. The aim of the pact is for countries to replace their 2030 national climate action targets with more ambitious emission reductions by the end of next year. While the pact is not legally binding, it sets a global agenda for the next decade.

With COP26 prompting leaders from across the globe to consider how they can do more to tackle climate change, there have been a significant number of encouraging pledges made and goals set which – if achieved – could really help to ensure that we can limit further global warming.

Some of the key commitments include…

• The Global Methane Pledge, in which over 100 world leaders have pledged to cut methane emission levels by 30% by 2030
• A new deal between more than 40 countries and over 100 financial institutions to ‘consign coal to history’, pledging to phase out coal in the 2030s, or by the 2040s for smaller economies
• A declaration to accelerate the transition to 100% zero emission vehicles by 2040 globally.
• A number of new net zero pledges including pledges from countries such as India (which is aiming for net zero by 2070) and Nigeria (which is aiming to reach net zero by 2060)
• The Glasgow Deforestation Pledge, in which more than 100 countries pledged to halt and reverse deforestation by 2030

“At Bryt Energy, we’re delighted to see that for the first time, ‘fossil fuels’ have been directly mentioned within a COP agreement – because coal is the single biggest contributor to climate change, and there’s no time to waste when it comes to transitioning to renewable energy.

“We were also encouraged to hear that developed countries have taken a step to increase their funding to help developing countries cut their emissions and adapt to the impacts of climate change. Some of the world’s poorest countries are the worst affected by the climate crisis, so it’s vital that we come together to support them.

“However, analysis by Climate Action Tracker (CAT) has shown that despite all of the new and increased commitments made at COP26, emissions are tracking to be twice as high in 2030 as they need to be to stay within our 1.5°C goal¹. There’s also a significant gap between countries’ pledges and the plans they have in place – CAT found that if countries’ current policies and carbon reduction measures are taken into account, the global average temperature is likely to rise by 2.4°C.

“We’re proud that the UK hosted COP26 and helped shine a light on such important global issues, however we all have a part to play if we’re going to successfully limit global warming to 1.5°C. So although COP26 may be over, now is the time to act; time for businesses and governments alike to increase the ambition of their targets and take urgent action to become more sustainable.”

Ian Brothwell, Managing Director

Looking more closely at these commitments, some positive steps have been made towards a more sustainable global future over the past two weeks:

One of the key announcements for UK businesses came from the Chancellor of the Exchequer, Rishi Sunak, who declared his goal for the UK to become the first net zero-aligned financial centre in the world. To achieve this goal, the Chancellor will require all UK listed companies, asset managers and regulated asset owners to publish net zero transition plans that detail how they will adapt and decarbonise as the UK moves towards a net zero economy by 2050². The government will be setting up a Transition Plan Taskforce to develop a reporting standard for these plans, and we’ll be sure to keep you in the loop on the implications to your business.

Meaningful targets were also a key concern for the UN Secretary General, Antonio Guterres, who announced a new expert group to create clear standards for net zero targets³. He claimed that there is currently a lack of clarity around net zero, with organisations using different definitions and metrics to measure their carbon reduction efforts. In establishing straightforward, consistent sustainability terminology and measurement metrics, Guterres is striving to reduce the confusion around net zero and ensure companies’ claims are clear and credible.

Here’s what our Sustainability Manager, Jos Mister, had to say about these developments:

“It was great to see a real emphasis throughout COP26 on encouraging businesses to take action. But ambitious targets need to be backed up by a robust strategy and transparent reporting – and we’re sure businesses are up for the challenge.”

“It’s also really encouraging to hear that 60% of the FTSE 100 are now signed up to the ‘Race to Zero’ campaign. This means that some of the UK’s leading businesses are now committed to halving their emissions by 2030, and reaching net zero by 2050, which should inspire organisations throughout their supply chains and beyond to follow suit.”

In addition to commitments to ‘consign coal to history’⁴, the UK was also among the 20 countries and financial institutions that agreed to halt all financing for fossil fuel development overseas and divert the funds to low carbon energy instead from 2022⁵. It’s steps like these that will be crucial to ensuring that the UK can meet its target of achieving a fully decarbonised electricity system by 2035, a new goal outlined within the Net Zero Strategy⁶, which was published in the weeks before COP26.

The Strategy revealed that the Government is planning to reach this goal by introducing new measures designed to accelerate the deployment of low-cost renewable generation. These measures could include steps such as increasing the frequency of the Contracts for Difference (CfD) auctions, which help to support the development of new renewable generation by providing developers with an agreed ‘strike price’ for the energy their assets produce⁷.

Another key element of the Net Zero Strategy was the Heat and Buildings Strategy, which outlines how the government will decarbonise heating in domestic and commercial buildings across the UK. Within the strategy, ministers have proposed switching green levies from electricity to gas, in an effort to encourage homeowners and businesses to switch from gas heating to other low carbon sources of heat, such as heat pumps and hydrogen.

Today, around 23% of the cost of electricity is made up of environmental and social obligation costs, such as the Feed-in Tariff (FiT) and Contracts for Difference (CfD) levy, whereas green levies only account for less than 2% of the price of gas⁸. The Government is therefore planning to launch a call for Evidence on Energy Consumer Funding, Fairness and Affordability to determine how best to allocate these levies as we move towards a more sustainable future. We’ll let you know when this call for evidence opens so that you can have your say if you’d like to.

In addition to commitments to ‘consign coal to history’⁴, the UK was also among the 20 countries and financial institutions that agreed to halt all financing for fossil fuel development overseas and divert the funds to low carbon energy instead from 2022⁵. It’s steps like these that will be crucial to ensuring that the UK can meet its target of achieving a fully decarbonised electricity system by 2035, a new goal outlined within the Net Zero Strategy⁶, which was published in the weeks before COP26.

The Strategy revealed that the Government is planning to reach this goal by introducing new measures designed to accelerate the deployment of low-cost renewable generation. These measures could include steps such as increasing the frequency of the Contracts for Difference (CfD) auctions, which help to support the development of new renewable generation by providing developers with an agreed ‘strike price’ for the energy their assets produce⁷.

Another key element of the Net Zero Strategy was the Heat and Buildings Strategy, which outlines how the government will decarbonise heating in domestic and commercial buildings across the UK. Within the strategy, ministers have proposed switching green levies from electricity to gas, in an effort to encourage homeowners and businesses to switch from gas heating to other low carbon sources of heat, such as heat pumps and hydrogen.

Today, around 23% of the cost of electricity is made up of environmental and social obligation costs, such as the Feed-in Tariff (FiT) and Contracts for Difference (CfD) levy, whereas green levies only account for less than 2% of the price of gas⁸. The Government is therefore planning to launch a call for Evidence on Energy Consumer Funding, Fairness and Affordability to determine how best to allocate these levies as we move towards a more sustainable future. We’ll let you know when this call for evidence opens so that you can have your say if you’d like to.

Both the world leaders at COP26 and the Net Zero Strategy acknowledged that some sectors will find it harder to reduce their emissions than others, and began to propose ways in which we can address this challenge through technology.

In the UK, there are several geographical areas (or ‘clusters’) that have a large concentration of heavy industry. These organisations – largely manufacturing and refining companies – use a lot of energy in their processes, so they’re likely to face more of a challenge than most when it comes to decarbonisation. The Net Zero Strategy outlines plans to develop four carbon capture and storage (CCS) trials in these clusters, as well as tests for hydrogen to replace fossil fuels for organisations operating in heavy industry. With goals to replace around 50TWh of fossil fuels per year with lower-carbon fuels by 2035 and meet the UK’s target of 5GW of hydrogen production capacity by 2030⁹, the government is determined to establish the UK as ‘a leader in low carbon fuel production’.

Those that are looking to invest in new technologies to support their sustainability strategies should be aware of the new business rate exemption announced in the Chancellor’s Autumn Budget. Rishi Sunak declared that plant and machinery used for on-site renewable energy generation and storage will be exempt from business rates from 1st April 2023 to 31st March 2035. Technologies will include rooftop solar PV, battery storage (when used in conjunction with renewable generation) and electric vehicle charging points. For more information on the business rate exemption, read the Government guidance.

If you have any questions about any of the updates we’ve discussed or how they might affect your business, our team of experts is on hand to answer them. Simply call us on 0330 053 8620 or email us at heretohelp@brytenergy.co.uk.