Following the launch of Your Business Blueprint - The road to Net Zero, we wanted to speak to businesses to gauge their views on the net zero target, and how they aim to get there. In this blog, we speak to Frank Gordon, Head of Policy at the Association for Renewable Energy & Clean Technologies (REA).
Q: While we wait for the government's Energy White Paper and Net Zero review, what do you think is important to put in place to support the UK – and especially businesses – in achieving the 2050 net zero target?
A: It is vital we have support for business and industry to decarbonise. This means support for renewable power, heat and transport, alongside the enabling technologies such as energy storage.
Examples of possible support include incentives for renewables via policies being developed on the Green Homes Grant, Future Homes Standard (ensuring zero carbon homes are built in the future), renewable gases blended with and replacing fossil fuel gas supplies, and expanded large-scale power support auctions to replace coal, oil and gas. Alongside this, introducing targeted tax support such as VAT reductions for renewable and clean-tech installations on business premises and reforming the Business Rates system to incentivise renewables will both help businesses transition, as will a reform of how the costs of using the grid system are levied.
Q: What do you see as the key barriers to the UK – and businesses – achieving net zero currently?
A: We must have a route to market for all forms of renewable energy and to enable businesses to make the transition to clean energy. This could be in the form of tax incentives (such as Business Rates and VAT reform) and direct support (such as via grants), changes to planning and other ways of ensuring that businesses can make the switch.
Q: In our own research (for Your Business Blueprint – The road to Net Zero), 75% of the businesses we spoke to believe achieving net zero is a realistic target. Does this surprise you? And do you find a similar level of optimism among renewable generators/your members?
A: This excellent report’s findings are not a surprise to us at all – for example, the government's own public attitudes tracker shows support for renewables at historic highs and consistently above 70%. Our members are confident about the opportunities in the long term. But without an improved policy landscape, they do have concerns about how we get there in the timeframe required. For example, did you know that many forms of fossil-fuel heating attract far lower VAT rates than renewable heating options?
Q: Businesses are understandably concerned about funding the Net Zero transition. What are your thoughts on the best way to do this?
A: The cost of low-carbon subsidies have in the past largely been put on energy bills, no matter who pays them. But there is now increasingly a case for these to be subject to taxation in a more progressive way. For example, including more of the cost of decarbonisation on types of tax that vary based on income, so the highest earners pay proportionally more. Groups such as the IPPR Environmental Justice Commission are looking at progressive change in more detail, which is welcome.
Alongside this, it’s important to note that the cost of decarbonisation is falling rapidly. For example, the most recent round of offshore wind projects is projected to be at zero cost to any consumers or government. Forms of renewables can have near-zero cost of producing new units of energy once the initial investment is paid (because wind and solar supplies don’t need to be bought in the same way as gas or coal do). This can be shown to lower wholesale energy prices in the longer term.
Overall, discussions on financing are at a very early stage and much is still to be decided. Clearly we need an equitable way of funding the Net Zero transition.
Q: What you do believe to be the main barriers to more businesses embracing on-site renewable generation? And how can these be overcome?
A: These are broadly speaking a lack of financial incentives, planning and regulatory hurdles, lack of physical opportunities at sites, and challenging economics. Many of the measures I’ve previously outlined can help address these.
Q: Are there any new developments, technologies or opportunities that businesses tend not to be aware of that can help to enhance/strengthen the business case for renewable investment?
A: Energy storage and smart electric vehicle (EV) charging are receiving a lot of attention right now. Energy storage can help smooth out demand and supply and reduce imports of power from the grid, while also generating some revenues if used in certain ways. Using renewables to power EV charging creates a work-based ecosystem of energy (for example, using solar carports at car parks) and can lead to new opportunities in future areas such as 'vehicle to grid', whereby EVs send power back to the grid as well as drawing from it.
Q: How important do you think co-locating battery storage is to allow renewable generation to deliver greater flexibility? Do you think businesses should be looking at both?
A: Very important on a national scale. At an individual level, obviously one should always plan around your own business's circumstances first and look to create solutions that fit around these, rather than getting storage 'for the sake of it'. But energy storage does offer many benefits and possible future opportunities, be that around flexibility services markets, vehicle to grid and on-site EV charging, or as a UPS component on-site.
Q: Corporate PPAs are another common route for businesses looking to reduce emissions. Do you believe there is sufficient supply to meet demand if this option becomes more popular? And if not, how can we ensure there is?
A: Supply will ultimately grow to meet demand and there are a range of projects and technologies already available for such PPAs, with innovative projects to match output to demand. More supportive policy will again help deliver this – and these so-called subsidy-free renewables are the future of the industry that we are aiming for.
Q: Many of the businesses we spoke to for Your Business Blueprint – The road to Net Zero identify electric vehicles as an important part of their future low-carbon energy strategy. Do you agree – and is there anything specific that business should consider?
A: Electric vehicles are seen as a big part of a net zero future – we agree they are set to revolutionise personal and business transport. When considering the best EV options, businesses should look at their annual mileage and average length of trips – there will be a big difference in the types of vehicle and battery required depending on whether you need to facilitate long business trips, commuting, or just depot-to-depot runs along assigned routes.
Businesses should also consider whether you can charge your own vehicles at your business premises or if employees need access to chargers at home. This could in the future offer opportunities for vehicle to grid and direct charging from renewable sources.
For commercial vehicles, it is also worth noting the wider range of decarbonised transport options available, such as Biomethane for heavy goods vehicles (as used by the likes of the John Lewis Partnership).
If you would like to find out more about renewables and get involved in the campaign for renewables, contact REA.
You can read more about the research and findings in Your Business Blueprint – The Road to Net Zero.