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Sustainability

The future of energy

We worked with Boston Consulting Group to explore the key technologies needed for the transition to net zero.

Look out for more great content with energy innovators including a full Q&A session with Emma at SSE.

The time to mobilise across the energy ecosystem is now

  • The Paris Agreement is an international treaty on climate change aimed at keeping average global temperature rises to well below 2°C above pre-industrial levels.
  • Major shifts underway today are set to result in a considerably different global energy system by the end of this decade, according to the International Energy Agency’s new World Energy Outlook 2023.
  • To limit global warming the UK must ramp up renewables and other low-carbon solutions.
  • Our analysis estimates that more than £900bn of investment could be needed in the next three decades to support the transition to net zero.
  • Collaboration across the energy system and supply chains is critical to reduce carbon and support the next generation of energy technologies.

Net zero is likely to depend on numerous fuel sources and technologies

We are already seeing the impact of climate change on our planet. Failing to act could have profound consequences for people, businesses, and communities, as climate change disrupts global economies, supply chains and our natural world.

Over the years, we have seen how investing in solar or wind has moved from being perceived as a highly risky new technology to being no riskier than investing in any other energy source. However, it’s clear we cannot stand still.

Emerging technologies such as hydrogen and carbon capture and storage could enable the reduction of greenhouse gas emissions at significant scale, but investment has been constrained by several risks and challenges. We must work collaboratively to overcome these challenges and support the next generation of green technologies to play their role in the UK’s transition.

To reduce the country’s reliance on fossil fuels and achieve a net zero energy supply by 2050, there is a need to scale UK technology and infrastructure – all of which requires extraordinary levels of finance.

Our analysis with Boston Consulting Group (BCG), using data from organisations including the UK’s Climate Change Committee, the International Energy Agency and the Intergovernmental Panel on Climate Change, estimates that more than £900bn of capital could be needed in the next three decades. This must provide maximum benefit for businesses and consumers while embedding energy security at its heart. As well as investment, supporting the UK energy system to decarbonise requires innovation and powerful partnerships.

With challenge also comes business opportunities

We recognise the road ahead is not straightforward and senior leaders in energy, its value chain and ecosystem must make crucial strategic decisions today that will impact sustainability in the long term. That’s why we’re calling for coordinated action and collaboration to deliver change.

This new era could transform the energy system and open even bigger opportunities for businesses.

Carmen Cheng, our Head of Natural Resources, Renewables & Utilities says: “As the need for green energy continues to gather pace, we’re committed to helping to grow a more sustainable economy. Our sector has a big role to play in making the most of the opportunities created by the transition to net zero, and we stand ready to support our customers at every stage of their own journey”.

UK businesses are shaping a net zero energy system

The 2022 Net Zero Strategy: Build Back Greener policy paper identified a range of practical ways in which UK net zero could feasibly be delivered with technology and resources known today.

It anticipates a suite of technologies, including renewables, networks, hydrogen, batteries, carbon capture and storage, together with nuclear, may have a key role to play in future energy systems.

UK businesses in the sector are already acting on net zero strategies by investing in programmes designed to accelerate decarbonisation of the power sector. One example is SSE, which sits across key parts of the electricity value chain. It has a £20bn five-year capital deployment plan, focused on deploying more renewable electricity generation, building out the electricity networks to transport clean energy, and pioneering flexible power generation technologies. 

It’s building renewable electricity generation (offshore wind, onshore wind and solar) to harness natural resources – you may have heard about Dogger Bank off the coast of Yorkshire? When it’s finished, it’ll be the world’s largest offshore wind farm, able to power the equivalent of six million homes. SSE is also deploying solutions to store that renewable electricity (batteries, pumped storage, and hydro) and electricity networks to then transport it to storage/demand centres.

Emma Leishman, Head of Group Strategy at SSE, says: “We will continue to advocate for accelerated deployment of net zero technologies, to help decarbonise electricity and support our customers in achieving their climate change commitments. This will help to accelerate the decarbonisation of the wider economy in the process. Fundamentally, for SSE, net zero is not only the right thing to do but also a significant growth opportunity.”

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This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of the NatWest Group Economics Department, as of this date and are subject to change without notice.

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