The cost of inaction is too high, we must deliver net zero

Rishi Sunak’s row back on a number of net zero targets has divided the country. Naked Energy chief executive Christophe Williams writes for Utility Week on why the prime minister’s change in tone could prove a costly gamble for the future of the country.

As the effects of climate change ramp up, it’s clear the UK must accelerate its transition to renewable energy. However, Sunak’s recent speech to reverse a host of net zero policies – and granting new licences for oil and gas exploration in the North Sea – threatens the country’s progress at a time when fierce global competition is leaving the UK behind.

We’re facing a backlog of renewable energy projects that have been delayed by bureaucratic red tape and an outdated national grid. Many in the sector are voicing concerns that the government’s indecisiveness on net zero could lead to large-scale job losses, stagnation of domestic manufacturing and lost investment opportunities.

If the UK is to regain its status as a net zero leader, we must see rapid and decisive policy that halts the pursuit of additional hydrocarbons and stimulates growth in all areas of our burgeoning renewables sector. This would send a clear signal to investors and the public that the UK is committed to the 1.5 Celsius degree target. The cost of inaction is simply too high to do anything else.

Barriers to decarbonisation

In the vast challenge of the renewables transition, the government has historically gotten some things right. The £3.2bn Public Sector Decarbonisation Scheme (PSDS) and Renewable Heat Initiative

are shining examples of the kinds of incentives that can drive true progress throughout the country.

At Naked Energy, we’ve been involved in several PSDS-funded projects, installing our solar heat technology on schools and leisure centres to help them generate their own energy and protect themselves against volatile energy markets. The urgent need to support such institutions to gain energy independence was made clear following last year’s mass leisure centre closures as a result of skyrocketing energy costs.

Schemes such as the PSDS are valuable, however they often run for a short period of time or only apply to specific technologies. This results in councils and other public sector bodies missing the

application window, or being unable to install their desired technology. The combination of complicated application processes and tight submission deadlines makes it difficult for some projects to apply for funding despite concerted effort.

On the commercial side, many businesses find the hurdles too high for them to take advantage of these incentives, with the process mired in unnecessary red tape. This has prevented a lot of green-minded organisations from taking advantage of the measures as they are forced to focus on cost savings instead of carbon savings.

Bringing investment back to our shores

Naked Energy is an early stage business with a strong track record: we design and manufacture the world’s highest energy density solar technology and have just opened our Series B capital raise to continue scaling our production and reinvesting in our British and European supply chains. We’re proud to be a British manufacturer with a global footprint – but we can’t access any incentives or receive any advantages for making our innovative products here.

Over in the US, more than 100 new clean energy manufacturing facilities or factory expansions have been announced since the Inflation Reduction Act’s introduction, totalling nearly $80 billion in new private investment.

Those investors understand that the energy transition provides a huge opportunity to build domestic supply chains, revitalise our national industries, and generate economic growth and jobs. However, Sunak’s widely criticised intention to backtrack on green policies looks set to destabilise domestic manufacturing and supply chains at a time when these industries are already at risk.

If our government wants to keep pace with the remarkable growth taking place across the US and the European Union, it must pull out all the stops and dramatically increase long-term funding to reestablish this country as a prime destination for cleantech capital.

Additionally, special tax credits for British manufacturers would be an important incentive to grow operations, further develop our products, generate green jobs and eventually reduce costs of products to keep them attractive for international buyers.

The IPPR’s most recent report proposed a “Dragons’ Den” type approach to increase investment in British renewable energy projects. This is spot on and specifically valuable for pre Series A-stage businesses.

Most importantly, regulatory and trade alignment with the European Union – one of the largest economies in the world – would have a huge impact on strengthening our green tech sector.

Long overlooked in the conversation to supercharge Britain’s renewables production, solar heat technology can deliver numerous advantages to the UK’s energy resilience, security and competitiveness – yet it is solar PV (photovoltaic) that has historically received the lion’s share of policy support and subsequent investment.

In contrast to the vulnerabilities of solar PV, solar heat manufacturing can flourish in the UK. Growing separately from the solar PV market, solar heat’s domestic manufacturing success is due primarily to the difference in materials needed. The technology doesn’t require critical minerals that are essential to solar PV and must be imported from foreign powers. A variety of local supply channels are available for its main components of copper, aluminium and glass.

The value of solar heat as a highly competitive renewable source has long been neglected by UK governments, despite its immense potential as a wide scale source of completely clean heat and energy.

Germany has deployed 10 times more and Austria 25 times more solar thermal capacity per citizen than the UK. In Italy, solar thermal grew by 83% in 2021, owing to an innovative tax incentive scheme by the government.

The value of solar heat as a highly competitive renewable source has long been under-invested in – something that a shift in policy can easily change. A national target of 11 GW of solar thermal installed by 2030 would put the UK on par with today’s EU average, which would equal an annual growth of 26%. Admittedly, this is a tall order, but possible to achieve with grant schemes like the successful PSDS and the revival of the Green Homes Grant for the residential sector.

Under current policies, the cost to the UK of not investing in the net zero transition is projected to reach 3.3% of GDP by 2050 and 7.4% by 2100. Conversely, investing in the transition is estimated to cost a maximum of 2% of GDP and is expected to have a net benefit of 4% GDP. As a recent LSE study asserted, going all in on net zero is a ‘no-regrets’ policy for any UK government.

Getting the UK back on track with its peers presents a great investment opportunity for government and business alike. We’ve already seen the cost of inaction of previous decades today, and we can’t let it happen again.