The Secretary of State for Business, Energy and Industrial Strategy (Alok Sharma)

Building on the Prime Minister’s 10-point plan for a green industrial revolution, this White Paper provides further clarity on the practical actions that will shift our energy system from one reliant on fossil fuels to one that makes us a world leader in clean energy. We will do this in a way that creates jobs, as we build back greener from covid-19. And we will protect the most vulnerable in society by keeping bills affordable as we transition to net zero.

We will transform our energy system from one that is 80% based on fossil fuels today to one that is consistent with net zero. This will see us changing how we heat our homes and travel. It will lead to a doubling in how much electricity we use and the emergence of a new hydrogen economy.

Low-carbon electricity will be a key enabler of our transition to a net zero economy with demand expected to double due to transport and low-carbon heat. Our trajectory will see us have overwhelmingly decarbonised power in the 2030s, and fully decarbonised electricity generation by 2050.

To support businesses to decarbonise, the Government are today confirming a new and ambitious UK emissions trading scheme (UK ETS) will be in place from 1 January 2021. This new UK carbon market will be the foundation on which the UK achieves net zero emissions cost-effectively.

The scheme has been designed by the UK Government jointly with the Scottish Government, Welsh Government and Northern Ireland Executive and is a crucial step towards net zero, and will bring benefits for business, trade, and innovation.

Our UK ETS is more ambitious than the EU system it replaces—from day one the cap on emissions allowed within the scheme will be reduced by 5%, and we will consult in due course on aligning it with net zero.

The UK ETS will also allow us to expand carbon pricing across the economy and encourage innovation in emerging decarbonisation technologies. We have committed to exploring expanding the UK ETS to the two thirds of uncovered emissions, and will set out our aspirations to continue to lead the world on carbon pricing in the run-up to COP26. This will also include how the UK ETS could incentivise the deployment of greenhouse gas removal technologies. In addition to this, the UK is open to linking the UK ETS internationally in principle and we are considering a range of options, but no decision on our preferred linking partners has yet been made.

As we move out of the shadow of coronavirus, this energy White Paper opens the door to exciting new opportunities for our country, creating new jobs as we build the economy of tomorrow. Taking action now ensures the UK is set on the path to ending its contribution to climate change while enabling UK industry to seize new opportunities.

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