More than £900bn could be required to transform the UK’s energy supply in readiness for net zero in 2050, new research warns.
New policy interventions, investments and corporate partnerships will need to be put in place to unlock energy transition opportunities ahead of the target deadline.
The new report by NatWest and Boston Consulting Group (BCG) has found that there is “significant opportunity” for both private and public investment into the UK’s energy transition that would act as a foundation to help deliver the national net-zero target.
The research found that, currently, more than £900bn in capital expenditure is required to achieve net-zero by 2050.
The report claims that the move to a net-zero energy supply will involve massive investment into renewable generation, network infrastructure and new technologies such as energy storage systems, carbon capture and storage, and hydrogen.
NatWest Group’s managing director of commercial mid-market Andy Gray said: “The UK needs clean, stable and affordable energy supplies, but huge capital expenditure is needed to make this a reality. This report estimates that the UK’s energy supply needs over £900bn to reach net zero by 2050.
“Mobilising the capital needed will be complex, and the findings serve as a clear call for all actors across the system to work together to find solutions.
“To decarbonise the UK’s energy supply, the industry needs to scale its infrastructure and technology, all of which will require finance. It’s clear that there needs to be greater collaboration between policy, regulation and finance to enable this to happen.
“Investment in green infrastructure will help to pay for itself through generating jobs and economic growth, so it’s vital the entire value chain works together to make this happen.”
According to the new report, Government will need to introduce legislation to enable banks to work with and support supply chains to overcome current investment challenges.
The report also suggests businesses collaboratively test low-carbon solutions that build greater grid resiliency and unlock new revenue streams.
The report also explores the role of oil and gas as part of the energy transition with 27 new North Sea oil and gas licences issued at the end of last year in stark contrast with scientific guidance around fossil fuels.
The BCG report states that decarbonising the use of gas for fuel supply and electricity generation may still be an option, provided plants are “retrofitted with carbon capture and storage or converted to produce blue hydrogen” depending on the state of national infrastructure moving into the 2030s.
But it warns that oil and gas levels could remain higher than what is projected under numerous net-zero pathways, including that of the IEAs.
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