The UK government has launched an ambitious plan to achieve net-zero emissions and expand renewable energy use.
However, there is evidence to prove that the government could do more to encourage producers and consumers to shift from fossil fuels to green, renewable energy.
In this update, we explore what more can the government do to accomplish their goals.
What can the government do to support the energy sector?
Invest more resources into bridging the gap
Overhauling energy production and distribution requires innovation; however, research shows insufficient resources poured into actual energy transformation.
Despite the presence of digital technology that can facilitate the transition to green energy, most organisations have not undertaken the change.
One reason could be that the risk of transition can be risky, and most organisations are not willing to foot the bill.
Studies show that over 24% of the annual budget was dedicated to energy transformation, compared to 26% for roads and highways and over 32% for rail.
In such cases, the government could do a better job of encouraging the transition by pouring more resources into it. If the goal of the net-zero transmission is to be accomplished, organisations require a greater incentive to make the transition.
Provide more information on the customer
Consumer buy-in is critical for meeting net zero-emission targets. However, there seems to be a disparity between what producers are doing and what consumers perceive producers are doing.
A GHD survey revealed a disparity between producers and consumers over the issue of decarbonisation. Where consumers do not believe that producers are not doing all they can to reduce emissions.
In order to mitigate this, the government needs to do a better job of informing consumers of the actions taken by producers to integrate renewable energy production and distribution into their process.
When there is awareness of what producers are doing, consumers are more informed about what type of green energy options they have, allowing them to buy into the idea.
This will make consumers believe that they have viable options for renewable energy, and it becomes easier to meet renewable targets.
Offer sovereign bonds to encourage investment
The transition to renewable energy requires extensive investment in infrastructure.
For example, offshore wind power will help make hydrogen production even more cost-effective, which is crucial for generating carbon-free electricity.
However, key players within the energy sector feel that the government has not provided support to the industry.
This is because there are still immense challenges to overcome when it comes to expanding the capacity of renewable energy and making their production and consumption the norm.
One way the government could lend additional support to the energy sector is to use sovereign guarantees.
These guarantees from the government would make it easier for independent power producers (IPPs) to invest in renewable energy because there are additional investment instruments, such as private/public co-finance models that are crucial to fund innovation.
Moreover, a sovereign guarantee can cover non-payments by off-takers, unilateral changes in tax treatment, currency transfer restrictions, and termination clauses, which are critical for reducing the risk of energy transition.
Paving the way for clean, renewable energy
If the government is to meet their net-zero emission goals and increase renewable energy sources, then they need to do more to facilitate the transition from fossil fuels to green energy.
The changes are expansive and ambitious, and most private organisations are reluctant to spearhead this initiative. Hence, the government needs to adopt more initiatives and policies to encourage more producers and consumers to adopt green energy in the form of renewable energy law.