What is the net zero emission strategy?

Put simply, net zero means cutting carbon emissions to a small amount of residual emissions that can be absorbed and durably stored by nature and other carbon dioxide removal measures, leaving zero in the atmosphere .

What is the global transition to net zero?

In practice, in line with understanding of available carbon budgets, this is widely understood to mean reducing global anthropogenic greenhouse gas emissions to 'net zero' by 2050 . A simple definition of 'net zero' widely used defines this as being a state of balance between emissions and emissions reductions.

What are the criticism of net zero?

The “net” aspect of net-zero targets could dampen efforts to rapidly cut emissions. Critics are concerned that this could foster an overreliance on carbon removal , allowing decision-makers to use net-zero targets to avoid emission reductions in the near term.

What are three ways to improve net-zero emissions targets?

Here are three approaches companies should take to demonstrate that their net-zero targets are credible and will accelerate climate action: Set Near-Term Science-based Targets. ... Set Long Term Science-based Net-Zero Targets. ... Invest in Cutting Emissions Beyond the Value Chain. Nov 2, 2021

Will net zero stop global warming?

Our current best estimate is that global warming will stop once we reach net zero CO₂ emissions . Palazzo Corner et al. raise a red flag however, highlighting that this estimate comes with substantial uncertainty. How can we better predict future climate change risks?

Is net zero by 2050 realistic?

There are many possible paths to achieve net zero CO 2 emissions globally by 2050 and many uncertainties that could affect any of those pathways; the NZE Scenario is therefore a path, and not the path to net zero emissions.

Will global warming stop at net zero?

The UN Climate Panel's latest best estimate is that warming will end at net zero . But the new study, by an international team including Imperial College London and the University of Exeter, warns significant warming could occur after that.

What is net zero and why is it important?

The term 'net zero' refers to the target of reducing the greenhouse gas emissions that cause global warming to zero by balancing the amount released into the atmosphere with the amount removed and stored by carbon sinks . This is also described as 'carbon neutrality' or 'climate neutrality'.

What is the net zero strategy for 2030?

The Environment Agency's road map for cutting carbon emissions by 45% by 2030 , on the way to organisational net zero by 2045 to 2050.

Accelerating cashflows as we move to net zero emissions (2024)

Countdown to COP26: Energy Transition

Predictions become easier with convergence to a grand theme

As we move deeper into decarbonisation and the trajectory towards net zero emissions globally, the roadmap going forwards becomes easier to read in some respects as convergence to net zero will have to result in certain behaviours within and between sectors along the way. This will be true of the quantum of investment needed, the number and type of investors, generation, demand, storage, balancing the power grid at large and how innovation solves some of the more difficult challenges. One such prediction, backed by what we are seeing, is that there is and continues to be a rise in competition for grid connections in a feedback loop resembling Figure 1:

Accelerating cashflows as we move to net zero emissions (1)

In the past 6 months the UK development pipeline continues to grow; offshore wind (+36%), onshore wind (+13%), solar PV (+23%) and battery storage (+30%). Increasingly, grid reinforcements will be triggered as offshore wind seabed leasing rounds move into the execution phase driving more pivotal change in GB grid design and operation.

So, a question we ask is how can our clients accelerate value capture in an increasingly crowded marketplace whilst also moving towards net zero emissions?

The answer may be – partially – blowing in the wind

One near term strategy may favour investors with existing operational and/ or development pipelines of onshore wind. If solar PV can be added using the same grid connection in a hybrid renewables scheme, we may flip our grid scarcity model on its head to a grid optimisation model as shown illustratively as Figure 2:

Accelerating cashflows as we move to net zero emissions (2)

Moreover, as we start to model what this system looks like, we can ascribe certain illustrative KPIs and trends as shown in Figure 3:

Accelerating cashflows as we move to net zero emissions (3)

The first two commercial benefits relate to reducing the total solar PV capex by up to 15% as the same grid connection is used and the way in which NPV and IRR formulae work. The third commercial benefit exists from the potential range of grid connection times that may add years onto a standalone solar PV project. Using the existing grid connection removes this from the project critical path in many cases.

A diagram of project delay due to grid connection being a pacing item versus NPV today is an interesting insight. This is shown illustratively in Figure 4.

Accelerating cashflows as we move to net zero emissions (4)

Finally, ESG benefits are enhanced by a hybrid renewables portfolio as renewable energy density increases, improving the carbon intensity of grid electricity. It is also likely that balancing requirements are reduced with the negative correlation of wind and solar. Execution risk also has the potential to lower given the established relationships with key project stakeholders from the wind development.

Offsetting curtailment risk

Curtailment may be a risk that can be calculated when optimising the size of the solar PV project to be added. It is possible to derive what the shape of this risk if the impact is born entirely by the solar PV project as Figure 5 below:

Accelerating cashflows as we move to net zero emissions (5)

An insight ITPEnergised has identified is that this risk could be traded off with some of the NPV acceleration by superimposing the two trendlines of NPV acceleration and NPV loss due to curtailment and shifting these lines as appropriate to the case under consideration as Figure 6:

Accelerating cashflows as we move to net zero emissions (6)

Sharing value

The foreseen benefits may also be shared with the wind portfolio “owners” as well as the added solar PV “owners” incentivising strategic action across the combined portfolio from TopCo. The NPV upside can also be used as a value shield or sacrificial NPV, to enable an investor to take some merchant risk in the battery storage and/ or green hydrogen markets for example, all without cutting off the nose to spite the face.In summary, net zero is accelerated and the GB grid utilisation factor is increased resulting in acceleration of cashflow, enhancing ESG benefits and reducing project execution risk.

Hybrid renewables have been written about in our thought leadership series here. ITPEnergised has recently developed a smart digital tool to systematically produce a prioritisation funnel for your wind portfolio, producing a range of technical, commercial and ESG KPIs, to help inform the hybrid renewables conversion investment decision.

For more information on this article, please contact Peter Lo, Head of Onshore Renewables & Storage at peter.lo@itpenergised.com.

_{* Please note} _{figures are illustrative and vary from project to project and route to market}

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Accelerating cashflows as we move to net zero emissions (2024)

Countdown to COP26: Energy Transition

Predictions become easier with convergence to a grand theme

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