Future of Energy

The bottom-line impact of the net zero transition

Posted on 28 October 2019
By Wayne Mitchell
Wayne Mitchell
Director of npower Business Solutions, Energy HQ

Wayne has worked in the energy industry for 20 years, starting as an Analyst for an energy consultancy before moving into business development and pricing for npower Business Solutions. Upon joining the company he focused on strengthening relationships with external consultants, before taking up his current position heading up Energy HQ, which provides energy solutions and risk management services to UK businesses.

Our business is unusual. We sell a product (gas and electricity) – but a key focus is on helping our customers to use less of it through our energy management solutions.

That’s clearly good news in terms of helping the companies we supply to reduce their overheads.

But many of our customers are also concerned about the wider business implications of the large-scale emission reductions that will be required as we transition to a net zero economy.

Earlier this month (15 October), the government published a much-awaited paper to outline how it intends for the UK to meet its net zero target by 2050.

£1bn energy savings

A key proposal concerns the built environment, which accounts for 40% of national energy use and around one-third of emissions.

The government is considering setting a target for all rented commercial buildings to achieve a minimum energy efficiency standard of Energy Performance Certificate (EPC) band B by 2030.

It estimates that this alone could save businesses £1bn per year in energy bills.

Decarbonising transport

The transport sector – which recently overtook energy as the UK’s largest source of emissions – is also on the agenda, with the government saying it will develop a plan to decarbonise “every single mode of transport”.

Consulting with businesses, local authorities and trade bodies will be a key part of developing this plan. But the government says harnessing new technologies will also be vital.

For example, using tele-conferencing to reduce business travel and redesigning cities to incentivise walking or cycling over driving.

The risk of ‘business as usual’

While change certainly brings uncertainty, it’s becoming clear that adopting a ‘business as usual’ approach is potentially far riskier.

For example, a recent report by the National Bureau of Economic Research (NBER) calculates that if we carry on as we are, we’ll see temperature rises of 4˚C by the end of the century – and the impact to global gross domestic product (GDP) will be significant.

The report predicts that the UK’s GDP would drop by 4%, with other countries facing far greater losses.

The United States is estimated to lose 10.5%; Japan, India and New Zealand 10%; Switzerland 12% and Russia 9%.

Economic stress of extreme weather

As well as a global fall in GDP, more severe and extreme weather events are predicted to add further stress to national economies.  

“Without mitigation and adaptation policies, many countries are likely to experience sustained temperature increases relative to historical norms and suffer major income losses as a result,” says Dr Kamiar Mohaddes, a co-author of the report from Cambridge’s Faculty of Economics.

“This holds for both rich and poor countries as well as hot and cold regions.”

Paris Agreement could limit GDP losses

However, delivering the aims of the Paris Agreement and limiting temperature rises to 2˚C or below will – according to the NBER report – limit GDP losses.

Indeed, earlier research by European agency Eurofound has found that if nations can deliver the emission reductions required, GDP would increase.

It estimates that global GDP would rise by 0.1% by 2030, with the European Union benefiting from an average 1.1% uplift in GDP.

Help with a plan of action

It’s apparent taking action is necessary.

But until we have clear legislation or national guidelines to make emissions-saving behaviour mandatory, knowing where to start can be challenging.

Our Energy HQ experts can provide advice and practical support. So do get in touch if you would like help determining your options and the best direction for your business to take.

To find out more, call us on 0800 193 6866 or send an email to nBS@npower.com (or if you’re an existing customer, contact your dedicated Client Lead).

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