The Energy White Paper 2020: Key points for innovative businesses

The Energy White Paper was released at the end of 2020. It elaborates on the Prime Minister’s ten point plan and sets out ambitious climate targets for the country to meet over the next few decades. This White Paper addresses a number of areas and will affect many sectors.

Prior to the White Paper’s publication, and a week before the Climate Change Summit in December 2020, the UK committed to reducing greenhouse gas emissions to become net-zero by 2050. This target is the basis for many of the plans contained within the White Paper.

Businesses that contribute to these targets and reduce their environmental impact will have an increased competitive advantage, making their products more appealing and thus in demand, as well as reducing their costs over the long-term.

As attitudes to energy and emissions change, there is a greater need for innovative new technology, predominantly in heavy industry, transport, and buildings. This opens the door for innovation and growth-focused SMEs who are ideally placed to create profound new innovations to open up new markets or transform existing ones.

So what are the main opportunity areas and how can you join net-zero focused businesses such as Extreme Low Energy and TFP Hydrogen Products in benefiting from Innovate UK EDGE to realise your ambitions?

A UK Emissions Trading Scheme

While in the EU, the UK was part of the EU ETS, the world’s first major carbon market. The basis of this market is that it allows businesses to buy to sell emission allowances within an overall emission cap (that decreases over time), avoiding fines for going over their allowance, or making money off excess carbon allowances.

There will now be a UK Emissions Trading Scheme, the world’s first net-zero emissions trading scheme, which the White Paper claims “will underpin the decarbonisation of energy in the UK.” There may be linking partners in the future so carbon credits can be traded internationally under the scheme, but this has not yet been decided.

The White Paper has explicitly stated these hopes, that the new UK ETS market will “encourage innovation in emerging decarbonisation technologies.” In other words, doors are opening for innovative new technologies from SMEs to assist the country in reaching this 2050 target.

Participating directly or indirectly in this trading scheme is a good revenue opportunity for businesses. Whether selling excess carbon credits to others or inventing things that will help other companies reduce their emissions created in their production cycle, you are making money while doing good by the planet – it’s a win-win situation. We can help with your innovation management and IP to foster and protect your innovative output.

Carbon Capture and Storage Opportunities

Following the White Paper accentuating the commitment made in the ten point plan, the Government set aside £1bn towards the innovation and deployment of carbon capture and storage (CCS) technologies, to be introduced at four industrial clusters by 2030.

CCS is a solution to reducing the volume of CO2 in the atmosphere and industry by capturing and storing it (usually underground). There is hope that having this technology in place will attract investors and industries, and revive existing ones, as it removes carbon produced by industrial processes, and prevents it from escaping into the atmosphere.

However, as much as CCS is a priority for the Government over the next few decades, the technology is currently still for the most part at the early stages of development. The innovation needs to be scaled rapidly and successfully so the development cycle can be accelerated.

Any high potential SMEs working in this space can get help from Innovate UK EDGE with their funding strategies and eventually conduct a commercial launch, grow and scale. We are present in all regions so will be able to help businesses in any of the industrial clusters chosen by the Government.

Hydrogen Will Diversify Renewable Energy

As one of the renewable energy sources that is predicted to experience a boom in popularity, the White Paper has committed to “kickstarting the hydrogen economy”. To do this, a £240m net-zero Hydrogen Fund will be set up to assist in revolutionising the way hydrogen is produced and used, with the aim to create a 5GW low-carbon hydrogen capacity by 2030. There will also be support for new hydrogen buses alongside the more favoured battery-electric version.

The key phrases used in the White Paper are ‘low-carbon’ and ‘low-cost clean’. This is because there are a number of cons with this renewable source. Although constituting 75% of the universe and necessary for life on earth, methods used to create hydrogen (such as electrolysis and steam reforming) are fairly expensive and inefficient, with polluting waste materials often involved in the steam reforming method. It is also hard to transport and store due to its high flammability.

There are however many benefits of hydrogen, and this renewable has a lot of potential. Oil and gas companies are likely to look into hydrogen as a potential primary source of renewable energy as they are encouraged by the Government and the Oil and Gas Authority’s financial incentives to invest in renewables. To take advantage of this potential and stay on track with the Government’s timeline, innovation and production technologies need to be scaled properly and the development cycle expedited.

A more developed Hydrogen Strategy is to be published in Spring 2021.

Innovate UK client TFP Hydrogen Products is a Cornwall-based electrochemical innovator helping accelerate the transition to net zero by making the production of hydrogen more efficient and affordable. It is planning global expansion, following marketing, innovation and internationalisation support from Innovate UK EDGE.

Local Effects

The Government’s focus on clean energy and promoting a healthy environment isn’t novel. Although there has been a spike in interest in the topic, the Government has been taking steps for a number of years to increase awareness of climate change and promote a greener lifestyle. In 2015, it launched the 5p levy to discourage people from using plastic shopping bags, and before that, it introduced the 2008 Climate Change Act to govern national carbon targets and established the Climate Change Committee the same year.

There were efforts to coordinate these efforts by engaging local councils in taking action to greenify the landscape and economy, allowing a focus on certain cities with higher carbon emissions than others. There will also be policy and legislative changes at local, regional and national levels to work towards Net-Zero.

In England and all other devolved UK nations, there have been a number of measures taken within city centres to reduce carbon emissions. Clean Air Zones have been introduced in Bath and Birmingham, meaning that any vehicle driving in a set area of either city exceeds emission standards would have to pay a charge to drive through. For Birmingham, these vehicles will include cars, but exclude scooters and motorcycles.

Each of these initiatives create new incentives for people and companies to do things differently and open opportunities for innovation-driven companies to expand.

Extreme Low Energy is one such UK business specialising in green, low-energy lighting, heating and power. In 2020, the company was chosen by Innovate UK EDGE for its Scaleup Programme. It has helped with finance in particular: Developing a business plan with its coach has helped it to see the business from the outside.

Conclusion: The Energy White Paper

The Energy White Paper covers a broad range of topics, expanding on commitments made in the Prime Minister’s ten point plan and setting timelines for priority Government goals. It will be a historic year for climate change policy in the UK, and the Government will elaborate on its primary goals and aims before hosting the Conference of the Parties (COP) 26, taking place in November 2021 in Glasgow. 197 countries will be present at this event, and the UK is taking advantage of the attention the country will have to show off its efforts on climate change.

There are plenty of signposts indicating when more comprehensive papers are set to be published in specific areas (many scheduled to come out in 2021). Hopefully, these papers will give more clarity over policy specifics and how the Government plans to accelerate necessary development cycles, allowing UK businesses to take the lead on climate action. In the meantime, there are arrows pointing to where technology must be developed and a clear for innovative businesses into areas they can have the greatest impact.