Power Up: How can we support the UK's energy transition?
If the UK is to meet its net zero ambitions, then over the next three decades we will need to drive a fundamental shift in the way that energy is generated, distributed, and used.
This will demand changes in behaviour from consumers in their purchasing and lifestyle choices. It will need action from energy suppliers and generators to create clean, affordable, and reliable market alternatives.
However, those alternatives will only be adopted by consumers if there is a wider Green Infrastructure put in place to support their choices. This makes investment in the rapid development of a new, modern, cleaner energy infrastructure essential if we are to achieve the zero-carbon target by 2050.
The Aldersgate Group, which L&G belongs to, expects nearly £700 billion will need to be invested in UK low carbon infrastructure by 2031. Felicity Buchan MP, who sits on the influential Treasury Select Committee, is clear that such investment will play an important role if we are to achieve the nation’s decarbonisation goals.
“Green finance will be an essential step in our path to net-zero,” she told The House. “One of the most exciting aspects of our net-zero commitments is seeing these innovative new technologies and initiatives receive the necessary investment to solve our climate emergency.”
John Godfrey, L&G’s Corporate Affairs Director, agrees that the rapid development of a comprehensive green energy infrastructure is absolutely essential if the UK is to achieve its decarbonisation plans. “We need to develop cleaner, greener ways to heat our homes, and to move people, goods, and services”, he tells The House. “This cannot be about piecemeal approaches. It requires a system-wide rethink of how we produce and use energy as a society, and a new energy infrastructure to deliver that change.”
This is why, over the last few years, L&G has been investing in ground-breaking UK technology businesses that deliver clean energy. These high-tech, high-growth companies are delivering critical energy infrastructure solutions that cut carbon emissions and generate returns for investors.
Road transport contributes around a fifth of all carbon emissions in the UK. Manufacturers and consumers are leading a switch towards electric and hybrid vehicles but this can only be fully achieved if there is a nationwide infrastructure that makes it as quick and convenient to recharge your car as it currently is to fill it with petrol.
To help deliver this, Legal and General has invested in PodPoint, a UK technology business whose mission is to put an electric chargepoint everywhere you park. PodPoint is already one of the UK’s leading providers of charging infrastructure and, as this market develops, it is companies like this that will support the transition to Electric Vehicles.
For Treasury Select Committee member Felicity Buchan MP, an expansion of public charging networks is vital to build both investor and consumer confidence. “It sends a clear message to the private sector that green projects are a sound investment opportunity,” she tells The House, “while also indicating to consumers that Electric Vehicles are not only a viable purchase in the immediate term, but a positive investment in our collective future.”
John Bromley, Head of Clean Energy at Legal & General Capital, is confident that the high-growth market in electric vehicles will deliver both economic returns for investors, and environmental benefits for society as a whole.
“With an increased number of electric vehicles expected on the road over the next 10-20 years, the availability of home, destination, workplace and public charging points will be vital,” he tells us. “Our investment in Pod Point anticipates a clean, electric and digital energy future that will be accessible and affordable for all.”
Kensa Heat Pumps
Another major contributor of greenhouse gas emissions is domestic heating. UK homes make up 25% of total energy use and are responsible for 15% of damaging emissions. If we are to transition to a net zero economy, then the way we heat our homes will have to change. As BEIS research has shown, that will only happen if there are affordable, clean, and reliable alternatives for home heating.
One way that L&G is supporting the development of new heating technologies is through its investment in Kensa Group, the UK’s market-leader in the ground source heat pump technology sector.
This technology can revolutionise the way Britain’s homes are heated, by providing heating without the need to burn fossil fuels. A ground source heat pump works by extracting ambient energy stored naturally in the ground and converting this into effective heating for the home. These small, quiet and highly efficient heat pumps can provide a building with 100% of its heating and hot water all year round and even passive cooling on hot summer days. New build and existing homes or apartment blocks can be connected to the same shared ground network, reducing costs and facilitating roll-out at scale, and L&G's Inspired Villages Group are deploying this solution to create the UK’s first operational net zero retirement development.
Supporting the Energy Revolution
There are still coal-fired power-stations operational in the UK that first opened in the 1960s. For instance, West Burton Power Station in Lincolnshire first opened in 1966 and remains operational to this day. The nation will not be able to deliver 21st century energy solutions if it remains reliant on such 20th century energy infrastructure.
The truth is that the world today is very different to the world of the late 60s, when Harold Wilson occupied 10 Downing Street and The Beatles topped the charts. We know more about the impact of energy production and consumption on the environment, we have different challenges, but we also have new technologies which open up fresh opportunities.
Supporting new heating and transport technologies is essential if we are to drive a step-change in the UK’s energy infrastructure that can support the nation on its journey to net zero.
That is why Legal and General is identifying and supporting leading UK companies that are transforming the way in which energy is produced and used to support this transition to a decarbonised economy. Not only will this deliver social, environmental, and economic returns, but it also positions the UK as a global leader in creating a future that is both cleaner and greener for us all.
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