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10 Things You Need to Know About the UK’s Net Zero Strategy

Client Updates

Ahead of the COP26 being held in the UK between 31 October and 12 November, the UK has launched its long-awaited Net Zero Strategy (the Strategy). The Strategy lays out a comprehensive road map for the UK to achieve net zero by 2050 and is one amongst a series of climate change initiatives planned by the UK.

This net-zero strategy is effectively a road map for how the whole UK economy will be decarbonized, so it affects every business in the UK.

Here are the 10 key points that businesses and investors need to know:

  1. Investment and emission targets
    • Unlock £90bn in transition investment by 2030
    • Achieve net zero by 2050
    • Reduce the UK’s carbon emissions by 78% by 2035


  2. A fully decarbonised power grid
    • All electricity to come from “low-carbon sources” by 2035 (subject to security of supply)
    • £380m in additional funding for offshore wind. 40GW of offshore wind by 2030 including 1GW of floating wind
    • Add more onshore, solar, other renewables and energy storage
    • Review the frequency of its contracts for difference (CfD) auction rounds - CfD auction will be the key mechanism for adding renewables to the grid


  3. New nuclear
    • Secure a final investment decision on a large-scale nuclear plant by 2024
    • £120 million Future Nuclear Enabling Fund to explore future nuclear technologies, including Small Modular Reactors


  4. Hydrogen
    • 5GW of hydrogen production capacity by 2030
    • £140 million for the Industrial Decarbonisation and Hydrogen Revenue Support scheme to fund new hydrogen (and CCS) business models
    • £100 million from the scheme to award contracts of up to 250MW of electrolytic hydrogen production capacity in 2023 - 2024
    • Hydrogen heating trials to make a decision by 2026 on its future role


  5. Carbon capture, utilisation and storage (CCUS)  
    • Plans to leverage more than £220bn of public-private investments by 2030
    • East Coast Cluster in North East England and the HyNet North West projects as the first two CCUS. The Acorn Project in the Scottish Cluster as a reserve
    • Deploying at least 20-30MtCO2 per year of CCUS by 2030 and 50MtCO2 by 2035
    • Use of a new dispatchable power agreement – similar to the CfDs – to bring forward at least one CCS plant to the mid-2020s


  6. Emission trading
    • Consult on a net zero consistent UK Emissions Trading Scheme cap


  7. Heat and buildings
    • Aim for no new gas boilers by 2035
    • £450 million Boiler Upgrade Scheme - households to be offered grants of up to £5,000 for low-carbon heating systems
    • Shift energy levies “away from electricity to gas” to encourage uptake of heat pumps
    • £3 billion to reduce emissions from public sector buildings by 75% by 2037
    • Insulate and upgrade poor homes and social housing by 2030 with a £1.75bn investment


  8. Transport
    • New mandate to require carmakers to sell an increasing percentage of emissions-free vehicles from 2024 to help meet the 2030 target for the phaseout of petrol and diesel cars and that all cars must be fully zero emissions capable by 2035
    • 100% of the government car and van fleet zero emission by 2027
    • £620 million (on top of the £1.9bn already pledged) for zero emission vehicle grants and EV Infrastructure
    • £350 million to support the electrification of UK vehicles and their supply chains
    • £2 billion to enable 50% journeys in towns and cities to be cycled or walked by 2030
    • £3bn in buses, including 4,000 new zero-emission buses, more bus lanes and services


  9. Shipping and aviation
  • Consultation on “innovative financing models” for carbon removal technologies and biomass strategy
  • Extending demonstrations and technology trials of clean maritime vessels and infrastructure to decarbonise the maritime sector
  • £180 million funding for the development of SAF plants
  • Commercialisation of the UK sustainable aviation fuel (SAF) to enable delivery of 10% SAF by 2030

10. Oil & Gas

  • Climate compatibility checkpoint for future licencing on the UK Continental Shelf


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