Support for innovation to deliver net zero – Report Summary

Summary

Creating the right environment for research and innovation to succeed is vital if the UK is to achieve net zero by 2050. Businesses need to have confidence to invest in developing new technologies and bring them to market. There is also the potential to deliver valuable exports for the UK and for the creation of tens of thousands of new jobs. In October 2021, The Government published its Net Zero Research and Innovation Framework (the Framework), setting out for the first time the 31 technology challenge areas it intends to support and the timescales within which it expects technological solutions to be delivered. The challenge for government now is to target its cross-government support effectively to help the research community and businesses develop and deploy new technologies that consumers will want to buy and adopt quickly. However, we are not yet convinced that The Government’s delivery plans match the ambitions set out in the Framework.

The Government has allocated £4.2 billion of funding for net zero research and innovation up to 2025. But it is difficult for businesses to know what funding is available and from where, with support being delivered through 115 funding programmes across government. In terms of the private sector, The Government estimates a significant increase in external investment to deliver net zero. The Government expects that overall low-carbon investment will need to increase in total from an estimated £23 billion in 2022 to between two to three times that level per year through the late 2020s and into the 2030s, with most of this increase coming from the private sector. Yet the Government itself has made few public sector funding commitments in its delivery plan beyond 2025, providing little comfort for investors in the medium to longer-term, particularly in the context of the government’s announcement in September 2023 to delay the phasing out of new fossil fuel vehicles and heating systems.

Investment in innovation always involves risk. The Government must be prepared to act quickly to support promising technologies and to reduce support if a technology shows little promise. Responsibility for overseeing the individual net zero innovation priorities is siloed across numerous government bodies, and the Government has not defined what success might look like for each of the challenge areas in the medium or longer term, which will make it difficult to determine whether progress is on track.