Net Zero & Industry News

The government has published 2 key documents impacting infrastructure and development across the UK: the Modern Industry Strategy (with supporting Sector Plans currently covering Advanced Manufacturing, Clean Energy Industries and Digital and Technologies); and CP1344 UK Infrastructure: A 10 Year Strategy. The Modern Industrial Strategy is part of the government’s wider ‘Plan for Change’ and sets the economic and strategic vision. CP1344 lays physical and digital groundwork to support/help realise that vision, with specific focus on transport and logistics, energy networks, housing and planning, digital infrastructure, and environmental resilience.

Funding for sustainable energy

Key items affecting energy and climate from the June 2025 spending review (non-exhaustively) include:

• Up to £27.8 billion capital to be invested through the National Wealth Fund, which prioritises investment into the clean energy, digital and technologies, advanced manufacturing, and transport sectors
• Around £300 million Great British Energy (GBE) support for offshore wind supply chains
• £14.2 billion for Sizewell C
• Great British Energy – Nuclear (GBE-N)to assess proposals within a new framework (to be published shortly) with the National Wealth Fund exploring potential investment opportunities and with the Department for Energy Security and Net Zero (DESNZ) exploring revenue support for viable projects
• Up to £80 million for port investment to support floating offshore wind deployment in Port Talbot, subject to final due diligence
• GBE and GBE-N to invest more than £8.3 billion in homegrown clean power
• Supports for the Plan for Change through:
• Allocating £9.4 billion to Carbon Capture, Usage and Storage (CCUS)
• Committing £2.6 billion capital investment to decarbonise transport from 2026-27 to 2029-30. This includes £1.4 billion to support the continued uptake of electric vehicles, including vans and HGVs, and £400 million to support the rollout of charging infrastructure
• Investing to upgrade homes and support jobs nationwide through the Warm Homes Plan
• Further details to be provided in the government’s Carbon Budget and Growth Delivery Plan in October
• Investment in climate adaptation and the natural environment, including:
• More than £2.7 billion a year in sustainable farming and nature’s recovery until 2028-29
• £4.2 billion from 2026-27 to 2028-29 to build and maintain flood defences.

DESNZ has published its Clean Flexibility Roadmap, outlining a vision for a clean, flexible, and consumer-focused electricity system. Key focus areas include:

• Short duration flexibility -empowering households and businesses to shift energy use, grid-scale batteries to balance supply and demand, and interconnection with other countries to share electricity
• Long duration flexibility -developing tech for storing energy over days or weeks and ensuring reliable backup from clean energy sources
• Reforming electricity markets to reward flexibility
• Upgrading infrastructure
• Leveraging digitalisation and smart data
• Streamlining planning and supply chain capacity.

Pathways to net zero

The National Energy System Operator (NESO) has published its Future Energy Scenarios (FES) 2025: Pathways to Net Zero – an independent view of future pathways to net zero across energy demand and supply.

Industry commentator Glenigan has published its Construction Industry Forecast for 2025 and 2026. It predicts significant growth across civil engineering and energy infrastructure.

On 10 July 2025, DESNZ released its Summer Update on the Review of Electricity Market Arrangements (REMA). The updates affirms a single national wholesale electricity market and rejects zonal pricing. It also outlines the direction of transmission upgrades, connection charges, and operational procedures.

The UK Emissions Trading Scheme (ETS) Authority has confirmed new timelines for bringing the domestic shipping, energy-from-waste, and carbon removals sectors into the national carbon market.

Also on the UK ETS, the government has published its interim response to the consultation on including the maritime sector in the scheme.

Ofgem has provisionally endorsed, subject to consultation, a £24 billion programme of 80 infrastructure projects focused on new power lines and substations. The investment aims to transform Britain’s energy grid and reduce dependence on imported gas.

DESNZ is consulting, until 9 September 2025, on proposed changes to the economic regulatory framework to best suit the needs of 100% hydrogen pipeline networks, established under the Gas Act 1986.

The government is scrapping plans to introduce a green taxonomy. It has confirmed, however, in its Financial Services Growth and Competitiveness Strategy, it will support the growth and integrity of the transition finance market, voluntary carbon and nature markets, transition planning, and UK sustainability reporting standards. It’s also reiterated plans to table legislation for ESG ratings providers regulation later in 2025.

Commentators are suggesting that the UK government may abandon plans to introduce electricity market zonal pricing. The plans are controversial because although they’re likely to result in some efficiency gains, incentivise investment and lower bills, they could also mean regional inequality, complexity and unpredictability. A decision is expected in late summer 2025.

The Financial Times (22 July 2025) has reported that Shell and other leading energy groups have abandoned a six-year-long attempt to define a net zero emissions strategy after being told that such a standard would require them to stop developing new oil and gas fields.

bp has announced its biggest oil and gas discovery for 25 year, off the coast of Brazil.

The Competition and Markets Authority (CMA) has launched a market study into the civil engineering sector. The CMA has said it will focus on how to improve the design, planning, and delivery of key road and railway infrastructure in the UK in support of the government’s growth mission and 10 year infrastructure strategy. It intends to conclude the review within 10 months.

The government is consulting on changes to the scope of the Notifiable Acquisition Regulations (NARs) under the National Security and Investment Act 2021 (NSI Act). The NSI Act gives the government powers to scrutinise and intervene in acquisitions of control of entities and assets in, or connected to, the UK economy that may pose a risk to national security. Where a target entity carries out activities in any of 17 sensitive areas of the economy described in the NARs, an acquisition of control over that entity will trigger a mandatory notification requirement. In relation to the energy sector, the proposed changes broaden the scope to include entities holding a multi-purpose interconnector licence, and add a new cumulative capacity threshold where the target entity is active in electricity generation or aggregation.

National Infrastructure and Service Transformation Authority (NISTA) has launched the UK’s Infrastructure Pipeline Portal. It will be regularly updated and contain comprehensive information on major infrastructure projects. NISTA’s pipeline spatial digital tool should strengthen the local evidence base for infrastructure investment decisions.

The Royal Dutch Shell case

We’ve reported previously on the Milieudefensie et al v Shell Plc (AKA, the Royal Dutch Shell case). In November 2024, Shell ‘won’ its appeal against a court order requiring it to reduce its emissions by 45%. But the Dutch Court of Appeal’s decision was more nuanced than headlines may suggest. In fact, the appeal decision clarified that businesses have a duty which likely goes beyond just complying with existing laws and regulations. Rather, compliance should be seen as the starting point, rather than the goal, of corporate climate responsibility.

In the latest iteration of its green litigation ‘campaign’, Milieudefensie is bringing an action against Dutch Bank ING. It alleges that, as a large corporation, ING owes the Court of Appeal-confirmed duty of care to mitigate its climate change impact, and its inadequate climate policy amounts to a breach of that duty. The policy is allegedly inadequate in terms of: ING’s level of emissions; the level of emissions in the sectors it finances; its financing of companies involved in oil and gas projects; and its failure to require clients to advance robust climate plans. The claim is extremely far-reaching, and is definitely one to watch. It’s an example of the trend towards green claims being used to advance climate goals, and an example of climate-related claims prompting jurisdictions to consider whether funders should be liable to account for climate (and other) issues through their choice of investments.

The Climate Change Committee has published its 2025 progress report. It concludes that the UK’s preparations for climate change are inadequate.

On 2 June 2025, the Secretary of State for the Environment announced intentions to: publish the revised Environmental Improvement Plan for 2025 (expected later this year); publish a response to the Office for Environmental Protection’s assessment report for 2023–24 (this summer); implement the recommendations from the Corry report; and consult on reforming air quality from domestic burning and industrial permitting.

DESNZ has published a working paper on ‘Community Benefits and Shared Ownership for Low Carbon Energy Infrastructure’, to facilitate the deployment of low-carbon infrastructure. The paper considers proposals on how to make the transition equitable and widely accepted. It proposes a more consistent, and potentially mandatory, approach.

The UK government launched its principles for voluntary carbon and nature markets integrity in November 2024. It’s now consulting, until 10 July 2025, on the implementation of those principles.

In related news, the Voluntary Carbon Markets Integrity Initiative recently launched its Scope 3 Action Code of Practice. It aims to help businesses grappling with how to deal with Scope 3 (indirect) emissions across their value chain and the issue of integrity in the voluntary carbon market.

At the UK-EU summit on 19 May, Sir Kier Starmer agreed with the president of the European Commission to explore the participation of the UK in the EU’s internal electricity market, and to work towards linking the EU’s and UK’s Emission Trading Systems covering electricity generation, industrial heat generation, industry, maritime transport, and aviation.

National Grid has published its Clearview Clean Power 2030 report, which provides a regional view of the generation and storage connections eligible for the ‘Gate 2 to whole queue’ process under grid connection reform. The report can help connecting customers identify their relative queue position.

Grid connection reform

In relation to ongoing grid connection reform, Ofgem has increased the capacity threshold for transmission impact assessment (TIA) referrals applying to electricity generation projects seeking a connection to a distribution network in England and Wales. Previously, any generation project with a capacity of 1 MW or more needed to be referred for a TIA. Subject to certain exceptions, that threshold is now being increased to 5 MW. NESO has indicated that it will review TIA thresholds in Scotland.

Turner & Townsend’s Q2 2025 Market Intelligence report has noted that UK grid capacity is struggling to keep pace with new development. Compared to Q1 2024, domestic electricity use has risen by 2% as more homes switched to heat pumps, and electric vehicle adoption has caused demand from transport to increase by 28%. The report also finds that the sharp rise in data centre energy use has become “a critical factor” in project viability, now on a par with planning and funding issues.

The House of Lords Industry and Regulators Committee has published Power Struggle: Delivering Great Britain’s Electricity Grid Infrastructure. The report follows the Committee’s inquiry into the regulatory, planning and funding barriers to delivering energy grid infrastructure. It makes recommendations to support grid reform.

National Grid has announced a new approach to the way it works with Britain’s supply chain, designed to accelerate the delivery of £8 billion worth of substation infrastructure across England and Wales.

DESNZ is considering technical changes to the Contracts for Difference (CfD) scheme to relax eligibility requirements for unconsented fixed-bottom offshore wind projects and enable smooth interaction with the grid connection reform process.

The government has confirmed, following its consultation on the reform of the UK capacity market, that it will introduce new termination fees for unproven demand side response (DSR) Capacity Market units (CMUs). Where any unproven DSR CMUs fail to obtain a DSR test certificate by the deadline, they will be subject to a termination fee of £5,000/MW. This fee will apply to both T-1 and T-4 Capacity Market auctions in the hope it will deter participants from dropping out of one agreement (under either of the auctions) to fulfil its obligations in the other agreement. The termination fee will be in addition to the existing loss of credit cover (which is also £5,000/MW), and will apply to all DSR tests for agreements secured from auctions in 2026.

The Climate Change Agreements (Administration and Eligible Facilities) (Amendment) Regulations 2025 will come into force on 1 January 2026, providing for a new phase of climate change agreements (CCAs) to 31 December 2030. The new scheme will require sectors and operators to enter new CCAs with amended terms, and to meet new targets. It also moves to facility-level reporting, to simplify compliance and provide the government with more detailed information on energy usage. CCA scheme participants will be eligible for reduced rates of the climate change levy up to 31 March 2033.

Data centre electricity consumption

The Financial Times reported, on 4 July 2025, that Hitachi Energy is calling for rules to alert utilities to fluctuations in data centre demand which could destabilise global electricity supply. Huge surges in power demand, occurring while data centres train AI models, are challenging electricity supply. The International Energy Agency has predicted that data centre electricity consumption will double to 945 terawatt-hours by 2030 – more than the power currently used by an entire country such as Japan! The FT reports that Ireland and the Netherlands have already restricted the development of new data centres due to concerns about their impact on the electricity network. Hitachi Energy is at the centre of a global shortage of power transformers that are essential for adjusting voltage. It plans to invest $6bn to increase production capacity and hire an additional 15,000 workers by 2027 to meet orders from utilities and grid infrastructure providers.

The Administrative Court has dismissed claims for judicial review brought by two interest groups against the Government’s Jet Zero Strategy.

Logistics UK has published a report exploring current and future energy demand from road freight. The report notes that 30% of logistics industry respondents are spending more on decarbonisation than last year, but that there’s significant nervousness around both the different technologies available and infrastructure constraints. The report shares insights on where energy infrastructure will be needed and when, and on current industry thinking on alternative fuels and technologies.

Logistics UK has also published its waterborne freight logistics network report, which considers the environmental, traffic congestion and regional connectivity benefits of expanding and innovating use of the UK’s coastal, river and canal network. The report suggests that there’s significant potential growth using existing and improved infrastructure, noting issues such as access to waterways and planning implications.

The International Association of Ports and Harbours launched a new set of  cyber resilience guidelines to help mitigate against the threat of emerging technologies across the supply chain.

The European Parliament has endorsed the European Commission’s proposal to simplify the EU carbon border adjustment mechanism (CBAM). A key change will be the introduction of a new de minimis mass threshold of 50 tonnes. It will exempt 90% of importers (primarily SMEs and individuals) from CBAM rules.

The new Supplier of Last Resort Levy Offset rule will mean customers are shielded from, and failed suppliers are liable for, costs claimed by energy companies for taking on customers from firms that go out of business. (The costs will be recovered through the insolvency process where the failed supplier has residual assets available to pay creditors.)

Renewables, Green Energy and Carbon Capture, Usage and Storage (CCUS)

The government has published its new onshore wind strategy, as part of its clean energy superpower ambitions.

The Crown Estate has announced plans to invest up to £400M in the UK’s offshore wind supply chain.

As part of a raft of reforms to the CfD scheme, offshore wind farms will be able to apply for energy contracts while they are still awaiting full planning permission. Energy secretary Ed Miliband said the changes will give developers “the certainty they need to build in Britain” and invest in more clean energy projects.

The government has also published its solar roadmap, detailing government and industry actions to radically increase the deployment of solar across the UK.

The government has indicated its Low Carbon Flexibility Roadmap will be published during 2025. The document is expected to set out the UK’s strategic vision for an energy system that can decarbonise at pace, while remaining secure, affordable, and resilient. RenewableUK has published this article on what the Roadmap needs to deliver.

As a ‘kickstart’ to what could be a £100 million investment into fusion energy in the UK, the government has unveiled a £20M investment to launch Starmaker One, a private investment fund that will help fusion businesses and start-ups in the sector grow and commercialise at scale.

Google has announced it’s agreed a new deal through which it will make the largest direct corporate purchase agreement for nuclear fusion energy and fund scientific and engineering research into commercialising fusion.

The government has published its response to the consultation on the National Policy Statement (NPS) for Fusion (EN-8). The government has confirmed it won’t amend the thresholds to include fusion reactors below 50MW or capture nuclear fusion research facilities at this time. The government has also confirmed an ‘open-sited’ process, whereby suitable sites can be put forward by developers. Siting criteria are awaited but the government has said brownfield sites will be prioritised but, for the most part, environmental criteria will be based on the general NPS for energy (EN-1).

Nuclear technology updates

EDF has confirmed it will take 12.5% stake in Sizewell C, bringing the nuclear project a step closer to a final investment decision.

The Nuclear Regulatory Taskforce has published its interim report into reform of the civil and defence nuclear regulatory systems. The aim is to help the UK’s nuclear sector thrive and take advantage of global resurgence in nuclear technology.

The European Commission is ramping up support for ‘blue’ hydrogen. It’s published a comprehensive methodology to calculate emissions savings in low-carbon fuels, enabling qualification of low-carbon hydrogen. (‘Green’ hydrogen is produced using renewable sources; ‘blue’ hydrogen is produced from natural gas with a process of steam methane reforming. There’s some controversy over blue hydrogen because its production inevitably results in methane emissions and, while methane does not last in the atmosphere as long as carbon dioxide, it’s a much more potent greenhouse gas.)

Industry Today has reported that the hydrogen fuelling infrastructure market is expected to surge from USD 6.15 Billion in 2025 to USD 40 Billion by 2035, growing at a 20.59% CAGR.

Google has agreed to secure as much as 3GW of US hydropower in the world’s largest corporate hydroelectricity deal. It’s part of Big Tech’s drive to pursue clean power for the expansion of energy-hungry data centres.

In international renewables news, China has launched its first long-distance green hydrogen pipeline. When up and running, the ambitious pipeline will move up to 100,000 tonnes of green hydrogen a year, produced entirely from wind power, over roughly 400 km from Mongolia to Beijing. It’s a major step forward for large-scale hydrogen infrastructure and for China’s broader push toward industrial decarbonisation.

Waste & Resources

The government has said that the UK faces water shortage in the next decade. It’s taking steps to secure water supplies. As an immediate step, it’s convened a National Drought Group, following the driest spring since 1893. It’s also announced that it has secured over £104 billion of private sector investment to fund essential infrastructure, including nine new reservoirs, and to cut leakage by 17% over the next 5 years. Water stress is beginning to affect businesses across all sectors, in the UK and internationally.

In related news, the Cunliffe Review Independent Water Commission has published its Interim Report which proposes “major and ambitious change” across: strategic direction and planning; legislation; regulatory reform; company structures, ownership, governance and management; and infrastructure and asset health. The government has also published its updated Water Resources Infrastructure National Policy Statement.

On 28 May 2025, Ofwat handed out its largest-ever fine, £123 million, to Thames Water, for breach of rules governing wastewater management and unjustified payment of dividends. A parallel investigation by the Environment Agency (EA) is still ongoing. The EA has also launched a new unit to bolster enforcement efforts. Legal commentators are suggesting that the Thames Water fine, and the direction of travel in relation to environmental enforcement generally, is a warning – not only for the water/waste industry, but for companies across all sectors – that ESG compliance is a priority for the UK’s enforcement agencies. In line with that trend, Ofwat has issued South West Water with a £24 million enforcement package and Northumbrian Water with a £15.7 million enforcement package, and the EA has been given the largest ever budget to deal with water pollution.

And, against that context, in the biggest shake-up of the water sector since privatisation, the UK government has confirmed that Ofwat will be abolished. Its functions will be merged with water functions across the Environment Agency, Natural England and the Drinking Water Inspectorate to form a new single, powerful regulator. In announcing this significant reform, the government has said “There are currently four separate regulators responsible for the water industry, a complex, tangled system of confusion. It is a merry-go-round of regulators blaming each other for breaking this country’s water system. Ofwat has failed customers, allowing water companies to mismanage billions of pounds.”

See Walker Morris’ briefing on water stress and environmental and commercial concerns, for information and practical advice.

The Department for Environment, Food and Rural Affairs has published non-statutory standards for the design, maintenance and operation of sustainable drainage systems (SuDS) in England. The standards apply to new infrastructure and development on both greenfield and brownfield sites. They address runoff destinations, the management of rainfall and flooding, water quality, amenity, biodiversity, and the design, construction, operation, maintenance, decommissioning and structural integrity of SuDS.

Data centres have been designated ‘Critical National Infrastructure’, and there’s no doubt they present significant opportunities, and are a key focus for growth. A challenge, however, is the fact that they require access to large volumes of water for cooling purposes. The BBC has reported that industry is considering the use of recycled, treated, pumped effluent from the last stage of a sewage plant, or desalinated seawater, as alternatives to potable water.

Construction/Development

Nearly a year after the Supreme Court’s decision in Finch (which requires regulators to consider the impact of scope 3 emissions and burning oil and gas in the Environmental Impact Assessment for new projects), DESNZ has published guidance setting out how developers are to assess downstream greenhouse gas (GHG) emissions in Environmental Impact Assessments for offshore oil and gas projects. The guidance focuses on projects requiring a mandatory Environmental Statement under the The Offshore Oil and Gas Exploration, Production, Unloading and Storage (Environmental Impact Assessment) Regulations 2020, but also covers other project types where downstream GHG emissions may be relevant.

The government has announced its proposal to introduce mandatory biodiversity net gain (BNG) for nationally significant infrastructure projects (NSIPs) from May 2026 (6 months later than originally planned). The consultation closed on 24 July 2025.

On 30 May, a new Code of Practice: Rights over land for electricity installation was published. It’s been endorsed by RICS, the Central Association of Agricultural Valuers and the Energy Networks Association. It aims to provide best practice guidance to encourage timely and fair negotiation between the parties and balance the interests of the licence holders who install and operate the electrical infrastructure and landowners who are impacted by the equipment. Although a voluntary code, it’s expected to be influential in helping the parties reach quicker and fairer access agreements.

Development consent has been granted for the Byers Gill solar project. See the SoS decision letter here and the development consent order here.

Plans have been submitted to build the UK’s largest battery storage facility. The 450 MW battery energy storage system near Corsham, Wiltshire, would store energy produced by solar farms and wind turbines to support the grid when needed.

The High Court has dismissed a challenge to a decision to grant planning permission for a solar farm at Longhedge. The case clarifies the interpretation of national policy regarding solar farm development and the practice of ‘overplanting’ solar panels (i.e. the practice of installing more solar panels than would be needed for a solar farm with a particular maximum AC capacity).

The Court of Appeal, in the Boswell case, has dismissed a judicial review challenge to Net Zero Teesside. Development consent for the infrastructure project was granted in February 2024. The Court of Appeal described the judicial review challenge as “… a classic example of the misuse of judicial review in order to continue a campaign against a development (and the policy in a NPS) once a party has lost the argument on the planning merits”.  The challenge was based on the emissions impact of the project. Of interest are the findings that the evaluation of the significance of an estimated amount of GHG emissions and its acceptability is a matter of fact and judgement for the decision-maker. There’s no legal principle requiring a public authority to contextualise emissions or compare them with a benchmark. The Court of Appeal confirmed “There is no legal or practical reason why national planning policy should not provide guidance on the question of the ‘significance’ of environmental effects of one kind or another. And there is no reason in law why national planning policy in a NPS should not include guidance on the question of whether particular effects will be, or are likely to be, ‘significant’ in the sphere of EIA.”

DESNZ has launched a consultation, open until 15 September 2025, on policy options for growing the market for low carbon industrial products, focusing on steel, cement and concrete.