18.03.202113:08 Forex Analysis & Reviews: UK on track for net zero carbon emissions

The UK government has launched the Industrial Decarbonization Strategy. It aims to reduce carbon dioxide emissions by about two-thirds over the next 15 years.

The plan is part of the country's ambition to effectively eliminate greenhouse gas emissions by 2050. That being said, the Department for Business, Energy and Industrial Strategy has committed more than £ 1 billion ($ 1.4 billion) to projects that can help reduce emissions in hospitals and schools, as well as factories.

However, mitigating emissions is one of the biggest challenges in the fight against climate change. This is because some processes such as oil refining, chemical industry and steelmaking rely on fossil fuels and they cannot be easily switched to renewable electricity.

The new strategy requires the industry to shift 20 terawatt-hours of energy from fossil fuels to low-carbon sources by 2030. This is equivalent to 17% of all renewable energy generated in the UK in 2019.

Extremely high temperatures are also usually obtained by burning coal or gas. Since this must change now, the government is working on the development of hydrogen to help replace fossil fuels, especially in energy-intensive industries.

That being said, demand for hydrogen could skyrocket to 16 terawatt-hours per year by 2030, and 86 terawatt-hours by 2050. Consumption of industrial gas was about 102 terawatt-hours in 2019.

The decision to launch this program came after lawmakers around the world called for more ambitious plans ahead of the United Nations climate talks in November.

The UK government also pledged to work with the steel industry to see if it is possible for steelmaking to achieve near-zero emissions by 2035. It also plans to reduce industrial emissions by at least 90% by 2050.

Obviously, the UK is being pressured to lead by example. In fact, its desire for green energy has been called into question in connection with its plans to build a new deep coal mine in Northern England.

As a response, the government said it will do its best to ensure that its climate ambitions do not affect the competitiveness of its industry. For example, it intends to use free credits in its carbon market.

But in the long term, the UK is considering other options. These could be diplomacy or working directly with other countries and with multilateral organizations, or doing something with imported products to level the playing field between foreign and domestic companies.

And while the UK has a vague strategy on what its policies might be, it is reminiscent of the European Union's proposal to impose a tax on imports to adjust carbon emissions.