Shaping UK energy in 2025 with innovation, investment and skills for net-zero
This year is critical for the UK’s clean energy future. With key projects and innovations in the pipeline, the country has a unique opportunity to lay the groundwork for a sustainable power transition.
The coming 12 months will define the UK’s energy landscape, presenting a golden opportunity to become a global leader in the energy transition.
The need for a successful energy transition has never been more pressing. The Paris Agreement goal was to keep the long-term global average surface temperature increase to well below 2C above pre-industrial levels and pursue efforts to limit the warming to 1.5C. In 2024, the World Meteorological Organization announced that warming has temporarily hit this 1.5C target.
And yet, global CO2 emissions — despite a decade of relative plateau — reached a record 37.4bn tonnes in 2024, 0.4bn tonnes higher than the previous record set in 2023. Meanwhile, stated policies by governments across the globe put the world on course for 2.4C of warming by 2100.
Despite significant progress, policies in the UK are not immune. The Climate Change Committee — the UK’s independent climate watchdog — states that only about one-third of the emissions reductions required to meet the 2030 UK target are covered by credible plans.
Harnessing the UK's potential
The good news is that the UK boasts a highly skilled workforce, a resilient supply chain, and world-class renewable resources.
Energy Secretary Ed Miliband’s ambition to achieve a decarbonised power system by 2030, alongside the launch of GB Energy in Aberdeen, sets a strong foundation. Headquartered in the UK’s energy capital and backed by £8.3bn in funding, GB Energy is uniquely positioned to accelerate transformative solutions.
As it begins its initial investments this year, GB Energy has the potential to act as a catalyst for innovation, driving the scale-up of technologies, improving efficiency, and reducing costs.
But it must be supported by streamlined planning processes and competitive funding to deliver results. Stable, predictable policies are crucial to attracting long-term investment.
In addition, we must place the existing oil and gas workforce at the forefront of the energy transition. Consider the North East of Scotland, where one in five workers is in the oil and gas-dominated offshore energy sector. In Aberdeen alone, the decline in the oil and gas industry has resulted in 18,000 job losses since 2010.
We must therefore look at technology solutions and policies that consider both the 1.5C target and the one in five at the same time, building on the decades of experience in the North Sea and its existing supply chain.
Take floating offshore wind (FOW) as an example. Analysis by Rystad for OEUK forecasts that annual expenditure in the UK FOW market will average £10.1bn per year from 2035 to 2040. This represents 35 per cent of the global market and offers significant export potential for the UK supply chain. Notably, 57 per cent of this market is expected to be addressable by existing UK oil and gas supply chain firms.
Innovation through collaboration
At the Net Zero Technology Centre (NZTC), we are leveraging the UK’s natural resources and energy supply chain expertise to drive innovation and secure a leadership role in the global energy transition, and we are ideally placed to help accelerate the formation of Great British Energy. With a team experienced across renewables, oil and gas, hydrogen, carbon capture and storage (CCS), and digital, the NZTC focuses on accelerating the journey to net-zero.
We also drive collaboration across industry, government, and the supply chain — key to unlocking the full potential of future opportunities.
To date, we have invested £430m in nearly 350 projects, evaluated over 3,000 technologies, and successfully commercialised almost 60 innovations, while accelerating 69 clean energy start-ups. This has created and safeguarded nearly 1,440 jobs in north-east Scotland and is forecast to prevent 42m tonnes of CO2 emissions by 2030.
However, the International Energy Agency states that 35 per cent of the emissions reductions required for 2050 will come from technologies not yet commercially available. Accelerating the deployment of innovative technologies over the next year and beyond will be critical.
The role of hydrogen
Hydrogen will be central to the energy transition. It has the potential to decarbonise hard-to-electrify sectors such as heavy transport and heat-intensive industries while providing critical energy storage capacity to overcome challenges with intermittency in renewables. Scotland’s vast renewable resources could create a thriving hydrogen industry with significant export opportunities. At NZTC, our Hydrogen Backbone Link project demonstrated that 0.9m tonnes of hydrogen per year could be exported from Scotland to Europe via a new dedicated hydrogen pipeline.
Hydrogen will also be integral as a feedstock for alternative fuels. Last year we ran a world-first trial with Siemens Energy retrofitting a gas turbine for the use with bio and e-methanol. The successful trial enables the use of existing engines and their systems and infrastructure for use with alternative fuels, making it a good solution in the short term and for some sectors, like aviation and marine, in the long term too.
Supporting industries to decarbonise
One of the most challenging aspects of the energy transition is industrial decarbonisation. Our focus on industrial decarbonisation is on reducing the emissions of oil and gas production while we still need it in the energy system. The same technologies used — monitoring, inspecting, detecting, preventing or displacing emissions in the oil and gas industry — are also applicable to other sectors, from downstream refinery and chemicals to industrial plants, distilleries and manufacturing.
CCS will also be essential for these essential sectors which are extremely hard to decarbonise. This entails capturing the CO2 from these plants, transporting it and storing it underground in depleted oil and gas reservoirs, or saline aquifers.
CCS is not only integral for reducing emissions but also provides a means to secure the future of the existing oil and gas supply chain and workforce. Around 80 per cent of the domestic UK CCS market is targetable by the oil and gas supply chain — more than any other energy transition technology — with a supply chain expenditure of £1.6bn annually in 2030 if UK CCS targets are met.
In addition to CCS, we also need solutions that capture CO2 directly from the air, providing a means to balance emissions that are difficult to mitigate. While natural solutions such as afforestation are currently the most cost-effective, Direct Air Capture (DAC) is a technological alternative. The International Energy Agency states that 780m tonnes of DAC capacity will be needed to reach net-zero by 2050.
Taking CO2 straight from the atmosphere is still very expensive, but a lot can be innovated to reduce its cost. At NZTC, we are working with DAC developer CO2CirculAir to develop their novel SMART-DAC technology, with a successful demonstration at a pilot plant in Larne paving the way for a commercial plant. Furthermore, once captured, the CO2 can be stored or used to produce net-zero synthetic fuels. There are also other applications for utilising captured CO2 emerging, such as construction materials or advanced materials.
The power of digital
Lastly, the energy sector must grasp the opportunities brought about by the recent acceleration in the capabilities of digital technologies. In just the past month we have seen Nvidia’s Project Digits AI supercomputer which can fit in the palm of a hand, and Google’s new quantum chip, Willow, which can complete certain tasks in five minutes that would take supercomputers longer than the age of the universe.
The applications and benefits of digital technologies are vast. Efficiencies can be improved by using AI to optimise equipment in response to environmental conditions. Downtime can be decreased by utilising increased computing power to leverage vast datasets gathered from monitored equipment. And safety can be improved by deploying drones and robotics in harsh environments — both above and below the surface.
A sustainable energy future
The future of our energy landscape hinges on bold decisions and unwavering support for innovation. By fostering an environment where cutting-edge technologies can thrive, and by ensuring that our policies are agile and forward-thinking, we can harness the full potential of our resources. This is not just about meeting our targets; it’s about setting a global standard for the energy transition.
PoliticsHome Newsletters
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.
