Energy Transition Outlook 2019

Prospects for the next five to ten years suggest a continuation of some existing trends while the scope in some areas is becoming exhausted. With just 30 years until the net-zero emissions target must be met, there is a clear need for investment to be started for long lead time items and innovation in heating, transport, and industry, whilst keeping those UK industries competitive.

Business and Industrial Processes Industrial GHG emissions have reduced by nearly half since 1990; however, most of this reduction had taken place before 2010. Meanwhile the non- industrial business sector has seen a 40% reduction in GHG emissions. Decarbonising industry’s use of gas for high-temperature heating is a significant challenge for the UK’s energy policy. Reducing emissions whilst maintaining industry in the UK will prevent moving the issue elsewhere. The CCC estimates overall abatement costs of £120/tCO2e for industrial processes. Decarbonised gas through hydrogen production may provide a cost-effective solution, although carbon capture applied post-combustion may be suitable in some applications. There will also remain a significant ongoing demand for oil and natural gas for feedstock. These will not be affected by climate change policies (e.g. when used for vital plastics in hospitals, everyday goods, lubricants etc). Although further restrictions on single- use plastics are likely, these will have minimal impact on feedstock demand.

Energy Extraction, Refining and Transport The production and transformation of energy and fuels is, in itself, a significant proportion of energy demand and emissions in the UK. Oil and gas production produces around 14.6 million tonnes of CO2 emissions per annum in the UK and the figure for refineries is similar. generated offshore, separate to the main electricity grid. Electrification of offshore oil and gas installations and further efficiency improvements in the refining and treatment of oil and gas at refineries and terminals will further reduce emissions in the sector. For oil and gas production, most emissions are from electricity Meanwhile oil and gas production and the transportation of natural gas can also lead to emissions of methane, another GHG. However, UK methane emissions from the sector are relatively low compared to global estimates and shorter transportation links help further lower the impact. More widely global oil and gas producers are proactively seeking to reduce emissions from their own operations.

Land Use and Agriculture (LULUCF) There has been limited change over the period since 1990 with a gradual shift from a net positive effect on emissions to a net negative impact. However, GHG emissions from agricultural and land use sectors is largely in the result of methane and NO2 emissions and these are equivalent to around 50MT CO2. A large proportion of these are associated with meat and dairy production and so emissions from agriculture are closely associated with food and diet choices. Land use also provides considerable opportunities to absorb GHGs. The CCC estimates that alternative land use could lead to a net reduction in emissions of up to 40MT CO2e5 through a combination of: the adoption of healthier diets; reduced food waste and increased grazing intensity; increased land area for afforestation and bioenergy of up to 2.7 million hectares by 2050 which would increase woodland cover from 13% of UK land area currently to 17–19%; reduction of grasslands and rough grazing area by 3.8–4.5 million hectares; and Peatland restoration of an additional 0.7–1.1 million hectares by 2050.

5 Land use: Reducing emissions and preparing for climate change (CCC, 2018)

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