Future of Energy

Why funding net zero is contentious

Posted on 29 September 2020
By Dr Mark Burrows
Dr Mark Burrows
Technical Energy Solutions Manager

Mark is a leading energy management sector professional with considerable experience in developing, commercialising, managing and delivering large scale energy efficiency, demand and generation related projects within the UK's largest energy users. He currently works as Technical Energy Solutions Manager within npower, with responsibility for supporting both industrial and commercial organisations to achieve their carbon net zero targets.

Cutting the UK’s emissions to net zero by 2050 is going to require big changes. And potentially big investment.

While research we recently conducted found businesses are optimistic about embracing these changes, there is understandably concern about how the transition will be funded.

Perhaps unsurprisingly, views on who should foot the bill vary according to who’s answering the question.

Government versus energy intensive businesses

Of the nearly 100 multi-sector businesses we surveyed for our Your Business Blueprint – The road to Net Zero report, the top two answers were the government and large energy intensive businesses.

Financial institutions were also a popular choice, mirroring the growing trend for investment firms and banks to move away from fossil fuels to finance more sustainable alternatives. This move needs to coincide with energy end users exploring the options available for financed solutions, typically under guaranteed savings models such as energy performance contracts or Energy as  a Service.  

Smaller businesses (SMEs) and households were the least popular options.

While non-energy-intensive users may believe the largest consumers should pay the most, this doesn’t mirror current government policy, where exemptions for green levies exist to reduce huge invoices that would otherwise render these businesses uncompetitive in international markets.

New incentives needed

For manufacturers, two thirds say funding needs to come via new incentives to invest in either renewable technologies or flexibility to give businesses the opportunity to change their demand, generate their own energy and support the grid.

But one quarter (26%) of the manufacturers we asked recognised that there would be some level of general taxation, while a third (33%) believed it should form part of their existing climate obligations.

Differing views across the sectors

In the professional services sector, the picture is somewhat different. When asked who should foot the bill for the net zero transition, large energy intensive businesses was the most popular option, followed by financial institutions and then the government, with general large businesses in fourth place.

For the public sector, large energy intensive businesses also came top. But the government was the second most popular choice, and general large businesses third.

Interestingly, according to our research, public sector organisations have also invested most heavily in some form of renewable generation – 83% compared to 26% for professional services firms and around 53% for other sectors.

Taking the road to net zero

You can read more about funding net zero – and what the different sectors think – in Your Business Blueprint – The road to Net Zero.

As well as a core report, there are also sector-specific versions that look in more detail at how businesses in the retail, manufacturing, professional services, public sector and transport/logistics industries are approaching net zero.

Alongside funding and approach to net zero, the reports also look at the benefits for businesses and five actions businesses can take now.

Our team is also on-hand to answer questions or provide support to your business on any of the issues related to net zero. You can get in touch via nBS@npower.com. Or if you’re already a customer, contact your Client Lead.

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