UK Energy Policy Recap
The UK Energy Transition is defined by its Net Zero Greenhouse Gas 2050 goal. In February 2023, the Prime Minister created the new Department for Energy Security and Net Zero to replace Britain’s energy sources with more affordable, cleaner, and domestic options. Championing renewables, the UK is focusing on wind and solar, hydrogen, power with carbon capture, usage and storage (CCUS), and new nuclear plants. These efforts are focused on creating stable infrastructure and reducing the cost of energy in the UK, generating accessibility and stability amidst volatile foreign energy markets and policy transitions.
Quick Overview of Policy Targets
As one of the global leaders in decarbonisation efforts, the UK has set out bold benchmarks to significantly reduce CO2 emissions and champion energy efficiency. Notably, in 2019, Parliament established a legally binding 2050 net zero target (Climate Change Act 2008) to which Scotland and Wales have also created their own 2045 and 2050 goals, respectively.
Key Targets:
Net Zero Greenhouse Gas Emissions by 2050 (with a 68% reduction in emissions by 2030)
Decarbonised Electricity Grid by 2035
100% Clean Power by 2030
Decoupling Emissions and Economic Growth
The UK’s carbon emissions have fallen despite economic growth, seemingly “decoupling” emissions from GDP. The UK has shown a 10.1% growth in total economic value generated by its Net Zero Strategy since 2023. The UK’s Net Zero Growth Plan encourages increased exports through creating market opportunity within the renewable and low-carbon industry, boasting that the UK will become the “world’s number one centre for green technology and finance” (The Ten Point Plan for a Green Industrial Revolution, 2020). Since 2020, the government has estimated 80,000 “green” skilled jobs in the pipeline, and the UK currently ranks in the top 5 countries for green innovation. The government is expecting £100 billion in private sector investments to support the transition, promoting 480,000 new jobs by 2030. Its Green Finance Strategy seeks to encourage private investment and tackle financial barriers preventing decarbonisation by working to provide competitive tax relief and incentives for R&D Small and Medium-sized Enterprises (SMEs). Yet, these investments are not guaranteed.
Investing in Independence: Energy Security
Between climate, security, and economic factors, Parliament recognises the necessity of transitioning away from a carbon-based infrastructure. However, they also acknowledge that decarbonisation efforts are rooted in transition. The emphasis is on the word “transition” itself; movement away from fossil fuels cannot be abrupt. The UK is working to leverage the estimated £100 billion of private investments to secure domestic gas supply for the continent.
The Department for Energy Security and Net Zero launched a Powering Up Britain Plan with particular focuses on energy security and net zero plans. The focus of these frameworks is to create energy security and accessibility through investing in domestic innovation and infrastructure, promoting the country’s resilience and stability. However, independence does not equate to isolationism; the UK is committed to building and maintaining international partnerships. The UK coordinates with its G7 partners and, following Brexit, has entered the EU-UK Trade and Cooperation Agreement (TCA) to help reduce energy costs, support knowledge sharing, and promote investments in shared green technology. The UK has partnerships with the Republic of South Africa, Canada, and Kazakhstan to secure mineral rights for oil and gas production as the demand for minerals is expected to more than double by 2040. These partnerships are crucial for energy security as international mineral markets are becoming increasingly volatile.
Challenge: The Rise of Energy Demand
Though UK CO2 emissions have decreased nearly 50% since 1990, the consumption and demand on energy is steadily increasing. PwC found that 89% of businesses have reported increased energy consumption in 2024, and 83% anticipate further increased consumption in 2025. The UK champions decarbonisation and green investments, however 50% of industrial consumption is still fueled by fossil fuels. This could be due to a myriad of reasons–for example, inconsistent regulations, turbulent global markets, and unprecedented demands on energy. Particularly, the UK’s focus on electrification and increased role of technology and AI have significantly contributed to energy consumption and demand. Furthermore, 60% of businesses have reported that they anticipate higher prices to compensate for the market and energy demand. This places further economic barriers on SMEs who are trying to keep up with their larger counterparts.
The UK’s energy policies are robust and have proven effective in decarbonisation. Their prioritisation on security and affordability are commendable, however, they do not reflect the exponential growth of energy demand through heightened tech and electrification. The Climate Change Committee reported that the UK Parliament needs to accelerate its progress in order to meet its commitments. The energy infrastructure needs significant investment to support the increased demand, future-proofing growth and safeguarding smaller businesses from being out-priced. Without sufficient infrastructural investment, the UK will not be able to support both its growing energy demand and transition goals.