Earth Day 2023

ENERGY EFFICIENCY

Promoting energy efficiency.

The UK has some of the most poorly insulated homes in Europe. Heat from buildings accounts for 23% of the UK’s carbon emissions, so taking strides to improve the efficiency of our buildings is essential if we are to meet our 2050 Net Zero targets. Historically, the UK has struggled to tackle this problem, with various retrofit programmes being introduced and then removed, sometimes at short notice. This causes confusion for householders and uncertainty in the market and means progress to improve the energy efficiency of our buildings has historically been slow.

However, installing measures such as cavity wall and loft insulation, solid wall insulation, double glazing and draught proofing can have a significant impact. Not only does it reduce the amount of heat a building wastes and the associated carbon emissions, but it also helps to bring energy bills down at a time when the cost-of-living crisis is causing serious challenges for many people.

Looking further ahead, if we want to fully decarbonise our heating then technologies such as heat pumps and heat networks will be required. Heat pumps work best in efficient homes so retrofitting buildings will not only help reduce the amount of heat we’re wasting but will also help to green the remaining heat we will still need to generate.

Gemserv has been at the heart of the energy efficiency and retrofit market for over a decade. From our role as the Green Deal Oversight and Registration Body (GB ORB), through to more recent work with the Greater London Authority (GLA) to deliver their Warmer Homes 3 programme, we have been supporting both those on low incomes and the able to pay sector to improve the efficiency of their homes.

We have been at the heart of the energy efficiency and retrofit market for over a decade. Our research and policy work with DESNZ ensures we understand the energy efficiency landscape from the policy perspective right through to the installers and householders on the ground.

We support the development of the ECO+ scheme (now Great British Insulation Scheme) and programme delivery support with Agility Eco to deliver the National Grid’s Connected for Warmth Insulation programme. Supporting Turner and Townsend to deliver the Social Housing Retrofit Accelerator service has also given us an insight into the complex requirement for retrofit in the social housing sector.

Insulation is an absolutely fundamental role to play in our decarbonisation journey, and to help support people through the cost-of-living crisis too.

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HEAT NETWORKS

Investing in a sustainable heat network market.

Heat Networks are vital in making net zero a reality in the UK. They are a proven, cost-effective way of providing reliable, efficient, low carbon heat at a fair price to consumers, while supporting local regeneration. In recognition of their importance to the future energy mix, the Climate Change Committee has estimated that around 18% of UK heat will need to come from heat networks by 2050 if the UK is to meet its carbon targets cost effectively.

An established method of distributing heat, heat networks can utilise otherwise wasted energy, provide grid balancing services in an increasingly electrified heat market and offer low carbon heat at competitive prices to households and businesses alike. They are uniquely able to unlock otherwise inaccessible sources of larger scale renewable heat and work within a hydrogen economy at the same time. They can also be used to provide cooling, helping UK cities to adapt to climate change and the urban heat island effect.

A significant barrier to heat networks is high upfront costs, which is why the Government is investing in this area through the Heat Network Transformation Programme. Gemserv is heavily involved in the delivery of the programme, working across the Heat Networks Investment Project (HNIP), the Green Heat Network Fund (GHNF) and the Heat Network Efficiency Scheme (HNES) to support the commercialisation and construction of heat networks, as well as improving the operational performance of existing networks. We are also helping to develop the Heat Network Technical Assurance Scheme which will drive up standards across the industry. Additionally, we have worked with local authorities to help them understand the skills and knowledge required to build and maintain heat networks in their regions.

By transitioning to low carbon heat networks, we can reduce our reliance on fossil fuels, decrease greenhouse gas emissions, and mitigate the impact of climate change on the planet.

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HEAT PUMPS

Investing in heat pumps as a solution to low carbon heat.

The Government wants to reduce energy consumption in buildings by 15% by 2030, and our team is working hard to ensure this can be achieved in the most sustainable, economically sound, and efficient way.

Heat Pumps can contribute two thirds of the required domestic energy consumption reduction to meet these crucial targets and installing 600,000 heat pump systems per year by 2028 will equate to 47.0TWh of annual energy consumption reduction. Our pivotal work with the Heat Pump Association (HPA) is a crucial part of our mission to drive the deployment of renewable technology to reduce our carbon footprint and push towards Net Zero.

Gemserv has played a vital role in the development of effective and internationally recognised expertise and analysis highlighting the benefits of heat pump systems, whilst developing effective stakeholder engagement strategies to fast track the rollout of heat pump systems in homes and buildings.

Our work with the Association has seen it flourish to an industry recognised body representing over 95% of the UK heat pump market, whilst our excellent links to Government, policy makers, press contacts and a diverse array of important stakeholders has helped to advocate for policy that foregrounds the importance and efficiency of heat pumps on the route to net zero. More specific wins for the industry include our economic analysis which highlighted the cost savings for consumers when upgrading to heat pump systems, and our policy work responding to consultations on the Future Homes Standard, Boiler Standards, and the Energy Company Obligation. Our team has also been instrumental in developing installer, training, and technical working groups for industry to provide insight into the workings of current heat pump guidance and legislation, and how best to shape the future of home heating.

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HYDROGEN

Decarbonising the UK with Hydrogen.

Hydrogen is seen as one of the key solutions to reduce emissions in hard to decarbonise sectors. The Government have set an ambitious target of 10 GW of low carbon hydrogen production by 2030, with at least half of this coming from electrolytic sources. This equates to approximately 64 TWh of hydrogen production assuming an even split between CCUS-enabled and electrolytic production and reasonable load factor assumptions. This is equivalent to roughly a quarter of all electricity demand last year – significant growth from a baseline of almost zero today.

Through Hydrogen UK, Gemserv works to develop the low carbon hydrogen sector including working closely with government to resolve policy and regulatory challenges for this new and diverse area. This involves producing analysis, reports, thought leadership and  hosting events. Separate to Hydrogen UK, Gemserv has supported private clients and government over a range of projects including:

• Economic modelling and market assessment of hydrogen transport
• Policy and regulatory support for regional hydrogen development
• Market engagement and dissemination for government funding programmes
• Project management of an ammonia cracking innovation project
• Assessment of the likely role of different hydrogen storage technologies
• Assessment of skills requirements for hydrogen and other net zero technologies

With the finalisation of the Hydrogen Production Business Models, expected this year, we will move from an era of hydrogen targets to investment and deployment. As well as production, Hydrogen Transport and Storage Business Models, currently expected in 2025, will be necessary to provide secure access to this low carbon fuel for a range of end users. Once available these business models will create the market for large scale investment in the enabling infrastructure necessary for the hydrogen sector.

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SUSTAINABLE TRANSPORT

Driving transport electrification.

Transitioning our transport systems away from fossil fuels will require an unprecedented level of capital spending across the entire transport value chain and associated energy infrastructure. Bloomberg New Energy Finance estimates that investments in the global electrified transport system will rise from $1.5 trillion between 2023-2030 to $3.9 trillion between 2031-2040. This will represent over half of the investments made towards the energy transition.

Like wind and solar, electric vehicles are a success story of public and private finance working together to commercialise a cost competitive alternative to fossil fuels. In the UK today, the majority of the ~$28 billion invested last year in energy transition finance was funnelled into electrified transport. This has built on the growing UK capability in battery gigafactories, electric vehicle assembly and our emerging charging infrastructure.

The key challenge now is that because capital investments are expected to increase significantly, the need for independent expertise to expediently validate these investments also increases. Furthermore, as investment moves from late-stage R&D funding to final investment decisions, the level of technical due diligence needed enhances significantly, which means the investment community need neutral technical expertise.

At Gemserv, we have a track record of helping investors navigate the complex transport landscape and provide a balanced evaluation of investment propositions. We meticulously analyse the hardware and software engineering underpinning a solution, evaluate the complex value chains involved in bringing a product to market, and highlight any commercial or technological red flags that could derail investments. This expertise has led to Gemserv providing technical due diligence services on leading EV technology companies for several respected investors. The investments we’ve helped facilitate have made a tangible impact on ensuring both the UK and Europe achieve its electrified transport vision.

Nevertheless, while the historic and current investments in electrified transport are encouraging, Gemserv appreciates that the finance community is only just getting started. With that in mind, we are committed to working alongside the investment community, businesses and government to accelerate the transition to a sustainable transport system via sensible investment decisions.

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CIRCULAR ECONOMY

Investing in the circular economy is an investment in the planet.

Sustainability strategies have rightly focussed on reducing carbon emissions due to the urgency of mitigation but the impact of organisations on the planet go much further than just their carbon impact. In fact, as we shift to a low carbon ecosystem, it is crucial that we make sure negative social and environmental impacts are not being redirected somewhere else where it cannot be captured by the carbon metric. Our clients are more focussed than ever on reducing the resource impact of their operations and their products after use.

One way is to focus on embedding circular economy principles in their businesses. This is a commitment to the planet, their employees and customer base. It helps to secure supply chains, reduce material impact, and save customers money. Studies have shown that circular business transition is estimated to yield global 4.2t€ GDP growth by 2030. In fact, it is widely shared that 20% of material input costs can be saved by reducing or reusing material input. Just like this, our clients have found economic benefit in the form of pioneering product take back schemes, remanufactured and recycled products to deliver better value and sustainability for customers.

To effectively transition to a low carbon economy before 2050, a coordinated and concerted push is needed by policymakers, industry and civil society to deploy technology in time. With the promise of low-carbon technology comes the need to develop ‘green’ skills in the workforce which will be needed to enable change. From manufacturing electric vehicles, to maintaining offshore wind turbines, and installing heat pumps in homes, we estimate that the Net Zero transition could support over 800,000 direct, low-carbon jobs by 2030.

We continue to do our bit at Gemserv by working with our partners – which includes national and local government, trade associations and industry leaders – to define, measure and project the number of green jobs which will be required for Net Zero. We continue to produce research which assesses skills-gaps and develops recommendations for addressing emerging challenges across low carbon sectors and regions of the UK.

This is a huge opportunity for businesses to transition to a more sustainable model; investing in the circular economy is an investment in the planet and an investment in your business.

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CORPORATE SUSTAINABILITY

60% of the UK’s carbon emissions are from non-domestic sources. The private and public sectors therefore have a key role in reducing these emissions through their own operations, but they can also play a key role in supporting consumers in addressing the 40% of emissions from households. Diligent corporate sustainability, however, goes far beyond an organisation’s direct carbon emissions or those associated with the use of its products and services, it must encompass much more to attract both investment and talent.

Corporate reporting and sustainable investment funds already require large companies to disclose both the effects of environmental and social factors on their business as well as the impacts, positive and negative, of their entire value chain on the environment and society. This includes climate change mitigation and adaptation, protection of water, marine resources and ecosystems, pollution control, modern slavery and wider impacts on society.

Employers should also recognise that current and future talent want to work for organisations that have a positive impact on society and the environment and lead in fighting climate change. Recent research found that 78% of UK adults believe it is important to play a part in achieving net zero. Moreover, a career in tackling climate change was the second most popular choice for young adults, with almost one in two wanting the company they work for to demonstrate a commitment to environmental and social responsibility.

Public sector procurement is also driving change in the private sector, with requirements for integration of social value into contracts, submission of supplier carbon reduction plans and a new framework for reducing modern slavery risks all being introduced in the last 2 years. The NHS, for example, has also committed to net zero target of 2045 for its entire value chain and will require its 80,000 suppliers to demonstrate progress against this target within the next 5 years.

The NHS has also recognised that investing in our planet is good for population health. Improving nutrition, increasing active travel and improving air quality all reduce environmental harm and improve health.

It is not surprising then that companies that are leading on climate action are more than twice as likely to exceed financial targets. At Gemserv we support Public Sector clients, such as the Department for Work and Pensions, and private sector clients, such as those in the NHS’ supply chain, to understand their impacts and invest in our planet to drive organisational value.

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