UK sectors face system shocks during net-zero transition
19th June 2019 | Commercial Energy
The road to net-zero emissions in the UK will create system shocks and disruption that will hit organisations across the electricity, heat, transport and construction industries the hardest, according to new research published by the UK Energy Research Centre (UKERC). Published today (19 June) the report notes that all businesses will need to make “fundamental change to their business models and operating practices” in order to transition to a net-zero economy, but that the actual pathways to this change remain undefined.
The report notes that the heat, transport, electricity and construction industries will be severely disrupted by the transition. The report claims that the extent, nature and impacts of the transition are “subject to a lot of uncertainty” but that firms should adopt a “flexible and adaptive approach” to policy development and implementation and technological innovation.
UKERC’s director and professor of energy policy at UCL Jim Watson said, “The move to legislate for net-zero is welcome progress, but we need economy-wide action to make this a reality. This includes policies that deliberately disrupt established markets and business models in some sectors – and address any negative impacts.”
The report notes that some sectors may need to be “deliberately disrupted” by policy and legislation if they are to be compatible with a net-zero economy.
For heat, a “patchwork mix” of different low-carbon solutions will need to emerge, with policy needed to drive decarbonisation in an industry that has been historically slow to reduce emissions. Widescale disruption has already occurred in the electricity sector, with the Big 6 aligning strategies and business models to account for climate change, low levels of trust and new entrants emerging in the market. However, the report is unable to clarify whether the new entrants will become incumbents in the future.
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