Energy transition outlook: UK

UK net zero scenarios depend on rapid deployment of decarbonised power, low-carbon hydrogen and CCUS infrastructure

3 minute read

Energy policy is a political hot topic in the UK. Broadly, ambition is high: net zero by 2050 targets are enshrined in law, and the UK has set goals to reduce carbon emissions by 68% by 2030 compared to 1990 levels, rising to 77% by 2035.

However, several interim government targets were adjusted in 2023, notably delaying the target of 100% zero-emission vehicle (ZEV) passenger vehicle sales from 2030 to 2035. Key targets, such as net zero power by 2035, remained unchanged – albeit behind schedule. Investment in enabling infrastructure and robust funding for EVs, heat pumps and new technologies also remains an imperative.

Our energy transition outlook (ETO), part of our Energy Transition Service, maps three different routes through the global energy transition with increasing levels of ambition. And our regional updates delve into the detail at country-level. You can access a complimentary copy of the ETO executive summary by filling in the form at the top of this page. And read on for three highlights from the UK outlook.

1. Wind is a cornerstone of net zero power in the UK – but there have been setbacks

Renewable resources are plentiful in the UK. In our net zero scenario wind (primarily offshore) represents 54% of UK capacity by 2050, and solar 30%. But targets of 50 GW offshore wind (2030) and 70 GW solar (2035) are not on track.

The UK has long been a global leader in offshore wind energy, with the largest operational fleet outside of China. However, in September 2023 there were no bids for offshore wind in the UK Contracts for Difference (CfD) auction round, known as Round 5 (AR5). This setback, attributed to higher project costs and an inadequate bid price ceiling, raised questions around growth rates and timing. But it could also provide a jolt that steers the industry in a more sustainable direction. Issues with the price and process must be solved to bring offshore wind developers back to the table for AR6.

It is notable that while fossil fuels are in decline, oil and gas have a role to play to 2050. In 2023 we saw a commitment to continued oil and gas extraction from the UK. New licensing rounds were announced, and the controversial Rosebank oil field was approved.

2. Electric vehicle adoption delays and EV infrastructure bottlenecks are short-term

The UK has ambitious road transport decarbonisation targets. And while the goal of 100% ZEV passenger vehicle sales has been delayed to 2035 (from 2030), in the long term this alone should not push the EV rollout off course. In all three of our energy transition scenarios we expect 87% of the passenger fleet to be electric by 2050.

Infrastructure is a short-term bottleneck but targets are for 300,000 public chargers by 2030. Grants will facilitate passenger vehicle charger installations, with 86% of installations expected to be residential by 2050.

3. New technologies will be key to the UK’s successful transition

Carbon capture, utilisation and storage (CCUS) is gaining momentum in the UK, as an indispensable tool for reducing emissions from essential coal, oil and gas use across all three of our energy transition pathways.

The UK has emerged as a global leader in planned CCUS capacity, second only to North America. To date, the government has committed more than £20 billion in funding, and around 90 Mtpa capture projects have been announced. In our base case, carbon capture reaches 33 Mtpa by 2050, compared to 56 Mtpa in our net zero scenario.

Meanwhile, low-carbon hydrogen is an export opportunity. The government has committed £240 million to the industry and has launched a CfD-style Hydrogen Production Business Model, with 17 electrolytic projects bidding for the first round. We expect the UK to reach 2.5 Mtpa production and 2.6 Mtpa demand by 2050 in our base case, while our net zero scenario sees the UK achieve 3.4 Mtpa export capacity by 2050.

However, low-carbon hydrogen targets require significant acceleration of funding. UK announced capacity is in the top six regions globally, but mid-term production targets are unlikely to be met.

The full ETO report explores key themes, including:

  • Electrification drivers and trends
  • Power demand to 2050
  • The UK’s share of global carbon emissions, by sector, to 2050
  • Oil and gas demand outlook
  • The transmission connection queue as a roadblock to renewables deployment
  • Nuclear’s role in the UK energy mix
  • And more.

Fill in the form at the top of the page for a complimentary copy of the ETO executive summary.