Puraffinity, a start-up developing technologies which remove PFAS from water, has announced plans to scale, following the appointment of Vincent Caillaud as its new CEO and securing £6.73 million in new investment from BGF.

Mr Caillaud brings exceptional industry experience, with more than 20 years working in the water sector. He was previously CEO of Veolia Water Technologies & Solutions, a global water technology business unit within the world’s largest water, energy and waste management company, Veolia.

BGF’s investment completes Puraffinity’s £16.93 million Series A funding round, following existing funding from Octopus Ventures, HG Ventures, Kindred Capital, and Verve Ventures, as well as materials science sector specialist fund Universal Materials Incubator Co (UMI).

The funding is intended to allow Puraffinity to scale up production of its patented, PFAS-capturing material, “Puratech ®”, “to meet exceptionally strong and growing demand across multiple sectors”. It will also support the company’s work developing fresh commercial applications that use Puraffinity’s patented materials.

Founded in 2015 by Henrik Hagemann & Gabi Santosa and spun out of Imperial College London, Puraffinity provides a differentiated solution to the world’s ever-growing PFAS problem as its technology consistently and reliably removes PFAS from water, in a much more cost-effective manner compared with conventional treatments.

Puraffinity said its precision technologies place it at the forefront of the fight against PFAS, which have been linked to multiple health issues, including cancer. Developed in the 1940s, PFAS’ molecular make-up makes them resistant to water, grease and oil, meaning they have multiple industrial uses. However, these same qualities make them hard to destroy, hence the name “forever chemicals”, and according to the National Institute of Environmental Health Sciences, they have entered water supplies worldwide, with an estimated 97 percent of people having PFAS in their bodies.

International regulators are examining bans or limits on the amount of PFAS drinking water can contain in an attempt to tackle the estimated €16 trillion annual cost of environmental remediation and healthcare costs.

Puratech, described as a breakthrough adsorbent media that Puraffinity has developed, can be applied across use cases as it features a customisable plug-in solution that fits into any existing water treatment system. Puratech can also be tailored to capture specific PFAS compounds, ensuring that global users can meet the regulatory standards of different markets.

The high-performing material also adopts a green chemistry technology which, according to Systemiq 2022, results in 60 percent less carbon emissions in its manufacturing than existing petroleum-based products.

“Attracting such a respected water industry figure as Vincent, alongside investment from BGF underlines not only the progress Puraffinity has already made, but the incredible potential of the business, said Henrik Hagemann, founder and chief product & innovation officer at Puraffinity, “The new management structure will allow me to focus on accelerating our existing technologies and developing new product roadmaps, confident that Puraffinity’s business development is assured with Vincent as CEO.”

Vincent Caillaud, CEO of Puraffinity, said: “At Puraffinity, we are delighted to join BGF’s growing network of climate tech start-ups as the company continues on its mission of providing PFAS-safe water to the world. With BGF’s expertise in helping start-ups in breakthrough technologies achieve transformational growth, we look forward to meaningfully expanding our commercial capability and extending the global reach of our patented PFAS-removal solutions.”

“Puraffinity is well-positioned to fulfil its vision of bringing PFAS-safe water to one billion people by 2030,” said Luke Rajah, investor at BGF. “BGF is thrilled to work with Puraffinity as it enters a new phase of rapid, global growth, taking a meaningful step towards enhancing water safety. BGF has developed a strong reputation for identifying and providing early-stage support for companies creating technologies which not only have huge potential but offer huge societal benefits.”

India’s plans to scale up fracking operations without robust regulations could spell disaster for the country’s finely balanced water security, according to research from the University of Surrey. 

India is positioning shale gas as a key transitional energy source and has announced 56 fracking projects across six states. Despite the promise of energy independence, the new study appears to raise alarm bells about the country’s preparedness to handle the unique water risks posed by fracking. 

Hydraulic fracturing, or fracking, involves injecting high-pressure fluid into shale rock to release natural gas. This process has been controversial worldwide due to its significant environmental impacts, particularly on water resources. The study points out that India’s regulatory framework for fracking is currently based on rules designed for conventional drilling processes, which do not adequately address the distinct challenges fracking presents. 

A landmark Supreme Court judgment on 2 July could open up new legal avenues for water companies to be sued for sewage dumping incidents.

The ruling, described as a “sensational victory” by campaigners, follows a hearing in March 2023 in which United Utilities said the canal’s owners, the Manchester Ship Canal Company, were not entitled to seek damages for the release of untreated water into its extent, citing the 1991 Water Industry Act, which seemed to specify that only regulators can seek this kind of action.¹

As not-for-profit Good Law Project explained,  the Environmental Law Foundation (ELF), backed by Good Law Project and represented by Hausfeld, brought an intervention in the hearing.²

Through ELF’s intervention it was demonstrated that sewage pollution was a significant problem for river and marine communities across the country and not just the Manchester Ship Canal. The judgment sets a significant precedent that has implications far beyond the Manchester Ship Canal.

The judgment overturned two previous rulings in the High Court and Court of Appeal in favour of United Utilities, who brought legal action against the Manchester Ship Canal Company in 2018.

Good Law Project said these previous rulings shielded United Utilities and other water companies against legal challenges from individuals and businesses affected by sewage discharges.

Figures published by the Environment Agency show that United Utilities has been one of the worst offending water company for sewage dumping since 2020. Last year the company discharged untreated sewage 97,500 times for a duration of over 650,000 hours.

Good Law Project’s interim head of legal, Jennine Walker, said:

“This is a sensational victory and a real boost to the clean up of our rivers, waterways and seas. It gives people stronger legal tools to turn the tide on the sewage scandal and hold water companies to account, after our toothless and underfunded regulators have failed to do so.

“We hope this landmark ruling empowers people and businesses to use the courts to challenge industrial-scale polluters like United Utilities, who have put profits and the shareholder interest over protecting our environment”.

Environmental Law Foundation co-director and casework manager, Emma Montlake, said:

“This was a ‘monster case’ as characterised by lead Counsel for the Manchester Ship Canal. Enormously complex, the outcome has the potential to be a game changer for communities up and down the land.

“Our water environments have been regularly polluted with untreated sewage, water biodiversity denuded and degraded with impunity by private water companies. A national scandal doesn’t come close to describing what we have put up with. This is a glad day for environmental justice, not just for the public, but for nature.”

Notes
[1] https://www.ft.com/content/9e7e840e-6d16-47ee-8ac1-9586a3de1495
[2] “Water companies could face raft of legal challenges after landmark sewage ruling”. From Good Law Project press office, Tuesday 2 July 2024.

Sona Dadhania of market intelligence firm IDTechEx offers a brief look into the global regulatory landscape of PFAS, including findings from the group’s new report “Per- and Polyfluoroalkyl Substances (PFAS) 2024: Emerging Applications, Alternatives, Regulations”.

The signing of the Stockholm Convention on Persistent Organic Pollutants (POPs) in 2001 marked a historic moment, as it was the first global treaty aimed at eliminating or restricting chemicals harmful to human and environmental health. The addition of perfluorooctanesulfonic acid (PFOS) to the Convention in 2009 marked yet another milestone, as PFOS and its related substances became the first of the PFAS family to be regulated on an international level. PFAS stands for per- and poly-fluoroalkyl substances and are colloquially called “forever chemicals” for their persistence in the environment. PFOS would not be the only “forever chemical” regulated by the Convention, as PFOA (perfluorooctanoic acid) and PFHxS (perfluorohexane sulfonate) were added in 2019 and 2022, respectively.

Despite the Stockholm Convention’s international reach, its inclusion of just three PFAS chemicals only scratches the surface of the PFAS family, which, under the OECD definition of PFAS, includes nearly 5,000 substances. Given that research is increasingly identifying further risks that different PFAS pose to human and environmental health, activists and legislators worldwide are beginning to take a more active approach to regulating PFAS.

With a new framework of PFAS regulations potentially developing internationally, it is essential for businesses to understand the new PFAS regulatory landscape to identify its potential effect on them. This is particularly relevant for businesses in emerging high-tech industries, whose technologies may rely on the utilization of PFAS. In IDTechEx’s report,

Asia-Pacific (APAC): Aligning with the Stockholm Convention
In major APAC countries such as China, Japan, and South Korea, there appears to be a general trend towards adopting and enforcing the restrictions on the specific PFAS outlined in the Stockholm Convention. This is most notable for China, which is a major chemical producer (including PFAS like PFOA). However, China does appear to be increasing regulations on its chemical industry broadly, having published the first List of New Pollutants for Priority Management in 2023.

Still, for the most part, APAC countries do not appear to be moving towards broader PFAS bans beyond those PFAS identified in the Stockholm Convention. However, there are some instances of PFAS regulations being introduced for specific industries. For example, South Korea proposed the ban of 8 PFAS in the cosmetics industry in 2022.

Europe: The most aggressive approach to PFAS regulation
The introduction of the universal PFAS restriction by the European Union (EU) was by far the most aggressive approach to regulating PFAS to be considered. Under this restriction, the manufacture, import, and use of all PFAS would be banned in the EU, except for very specific exceptions. Currently, the European Commission is debating the proposal, having received over 5,000 from relevant stakeholders last year.

The universal PFAS proposal does allow for time-limited exceptions, where certain industries lacking an appropriate alternative to PFAS or needing time to ramp up production of the alternative would have more time to comply with regulations. For example, in the initial proposal, proton exchange membranes for fuel cells were identified as an area requiring a time-limited exception. PFSA (perfluorosulfonic acid) membranes are key materials in this field, and IDTechEx’s report examines potential alternatives for this key fluorinated material.

United States: A mixed approach to PFAS on a federal and state level
The United States (US) is a key economic market for PFAS, but the approaches to PFAS regulations in the US are far from settled. For starters, the US is technically not a signatory to the Stockholm Convention. On a federal level, the US Environmental Protection Agency (EPA) is responsible for regulating and managing harmful chemicals, and a key priority for the US EPA currently is to control the level of PFAS found in municipal water supplies. Still, at a federal level, no PFAS is definitively banned; instead, the US EPA has regulations in place to prevent companies from resuming the manufacture, import, and use of phased-out PFAS. There are also programs to encourage the voluntary phase out of certain PFAS by companies.

However, at the state level, there are far more aggressive regulations on PFAS being adopted. Both Maine and Minnesota have adopted universal PFAS restrictions similar to the restrictions being debated in the EU. Other states are restricting PFAS in key consumer-facing sectors, like food packaging and cosmetics. A key market to monitor will be California; they are already restricting PFAS in numerous industries, and in 2024, a state legislator introduced a bill to ban all PFAS in the state.

For more information on the IDTechEx report “Per- and Polyfluoroalkyl Substances (PFAS) 2024: Emerging Applications, Alternatives, Regulations”, including downloadable sample pages, visit www.IDTechEx.com/PFAS.

The UK’s net zero economy grew 9% in 2023 according to a new report commissioned by the Energy and Climate Intelligence Unit (ECIU), with analysis provided by CBI Economics and The Data City.¹

The total gross value added (GVA) by businesses involved in the net zero economy now stands at £74 billion. This is in contrast to stagnation in the wider economy with GDP growth at just 0.1% in 2023.² But CBI Economics is warning that without further investment and policy stability, the strength of future growth is in jeopardy as the US and EU compete to attract and develop clean industries.

The analysis found that jobs in the net zero economy are highly productive, generating £114,300 in economic activity, more than one and a half times the UK average of £72,550. They are also better paid by almost £10,000, the average net zero salary being £44,600 compared to the £35,400 UK average.

Scotland, Wales and the Midlands have particularly strong net zero economies with London having the lowest proportion of its economy based on businesses in net zero sectors.

Battleground constituency seats in England and Wales (based on new boundaries) are three times more likely to be a net zero economic ‘hotspot’.³ These seats include: High Peak, Stroud, Cheadle, Derby North, Lancaster and Wyre, Broxtowe and Hazel Grove.

Some areas with particularly high concentrations of net zero activity are amongst the most deprived in the country, for example, Hartlepool, Nottingham, Redcar and Cleveland are among the top 10% local authorities for income deprivation in England.

In addition, around two in three (65%) of the top 25 net zero hotspots and half of the top 50 net zero hotspots in England and Wales are classified as key electoral battlegrounds heading into the general election.

Louise Hellem, Chief Economist at the CBI, said: “The UK’s transition to net zero brings immense opportunities for our economy. Our report, together with the Energy and Climate Intelligence Unit, highlights how businesses are already seizing those prizes – creating jobs and attracting investment, whilst boosting our energy resilience. But we also know that there’s much work to be done to fulfil the UK’s potential, and accelerate our journey to net zero.

“Businesses continue to face difficult headwinds this year, leading many to pull back on investment plans. Where firms can invest, they want to see greater clarity on a long-term plan for our energy transition – or we risk failure to reach our net zero targets and missing out on sustainable, productivity-led growth.

“It’s clear that action is required to grow our net zero economy. In the CBI’s Spring Budget submission, we call on the Chancellor to establish a Net Zero Investment Plan – to identify green investment gaps and implement policy aimed at crowding in private finance. That’s one of many levers the Government can pull to support businesses in doubling down on green growth – but there are many more. We hope this report kickstarts a wider conversation about how the UK can realise those opportunities.”

Peter Chalkley, Director of the Energy and Climate Intelligence Unit, said: “Against the backdrop of economic stagnation, the net zero economy is bucking the trend, but it’s clear that the policy U-turns of the past year have damaged investor confidence at a time when the US and EU are investing billions to compete for clean industries. Thousands of jobs depend on net zero in constituencies right across the country, including many key battleground seats. The question now is will political parties provide the leadership, stability and investment needed to generate further growth or shy away from the global race for net zero.”

The analysis found that net zero businesses had received £279 million of public InnovateUK funding and £12.3 billion of private investment during 2021-2022. 2022 saw £1.5 billion invested in the low emissions vehicle sector, more than for example, the biopharmaceutical sector (£1.4bn). But the UK has fallen down the EY clean energy attractiveness index in the past year.⁴

Net zero economic sectors include renewable energy, energy storage, green finance and recycling.

Thomas Farquhar, Chief Commercial Officer at cleantech startup Heatio⁵ said: “The UK net zero economy is a vibrant, dynamic area to be a part of, offering huge opportunities for new, innovative businesses to grow. SME’s will be the driving force behind the Net Zero economy, and account for 61% of private sector employment. However, for this growth to materialise, it is imperative that Government provide policy consistency and unwavering ambition.

“Frustratingly, we are lagging behind the rest of Europe in the transition to cheaper, more secure and cleaner energy in homes. Countries like Norway have already transitioned 66% of their homes to low carbon heating, Sweden 43% and Finland 41% whereas the UK has less than 1%. When it comes to Solar the UK has uptake of 5% of suitable homes behind the likes of Italy at 23%, the Netherlands 16%, Germany 11% and further afield Australia with 31%. The numbers are startling and highlight the scale of the opportunity but necessity for investor confidence.”

Table 1: Top 25 Parliamentary Constituency net zero hotspots in England and Wales (GVA)

Table 2: Top 10 Parliamentary Constituency net zero hotspots in Scotland (GVA)

Notes

1. The report, The UK’s net zero economy: The scale and geography of net zero economic activity in the UK, along with business case studies, and a recording of a media briefing featuring the CBI, Energy UK and Heatio spokespeople is available via this link: https://eciu.net/analysis/reports/2024/the-uks-net-zero-economy-2024
2. ONS Data: https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpfirstquarterlyestimateuk/latest
3. A battleground is defined as one of the top 50 most marginal conservative seats according to the recent BBC analysis and ‘a net zero hotspot’ is one of the top 25 constituencies for the net zero economy in England and Wales.
4. EY Renewable Energy Country Attractiveness Index: https://www.ey.com/en_gl/recai/are-the-global-winds-of-change-sending-offshore-in-a-new-direction
5. Thomas Farquhar is Chief Commercial Officer of Heatio, a clean tech business developing a home energy platform and virtual power plant driving access to clean affordable energy for consumers by creating smart, connected, low carbon homes: https://www.heatio.co.uk/our-story

Barclays has relaunched its Cambridge Eagle Lab with an apparently new focus on becoming a centre of excellence for climate tech start-ups.

The group says it wants to help high growth climate tech startups to connect, grow and scale.

The International Energy Agency has estimated that 35 per cent of emission reductions needed by 2050 will come from new technologies currently not on the market¹. Support for new businesses is therefore vital, and climate tech businesses can also get involved in a number of dedicated pre-seed and bridge programmes, run by Barclays and leading industry partners:

• Carbon 13 Venture Launchpad: a virtual 20-week virtual programme to help pre-seed and early-stage businesses launch scalable solutions to climate related issues.
• Bridge programmes: A series of industry bridge programmes, in collaboration with Codebase, designed to connect leading corporations with startups to share knowledge and strategic thinking:

• Sustainability Bridge Programme: funded by Government (as part of the Digital Growth Grant) and focused on sustainable transport.
• Energy Transition Programme: Funded by Opportunity North East and focused on how innovation can help deliver the Energy Transition

• Rise Start-Up Academy: a 10-week digital-first programme to equip early-stage founders with skills and tools to help them get fit for market. A dedicated Climate FinTech edition will launch later this year to support companies developing exciting solutions to help the world transition to net zero.

A retrofit to reduce carbon footprint
As part of Barclays’ declared ambition to achieve net zero operations by 2050, the Cambridge Eagle Lab has been retrofitted to improve energy efficiency, in partnership with companies from its Sustainable Impact Capital portfolio and Unreasonable Impact programme, such as Save Money Cut Carbon, who consulted on the plans.

Reaching net zero means finding low-carbon ways of doing necessary activities – including electricity generation, transport, and heating. Upgrades to the building include:

• • Solar panels by Naked Energy, a hybrid solar technology that generates both heat and power, resulting in a higher energy density than alternative solar technologies
  • Energy efficient double-glazed windows with solar control to prevent overheating, as well as roof and cavity wall insulation, and water reduction technologies
  • A smart heating, ventilation, and air conditioning system, powered by the site’s renewable energy sources, to help improve regulation of the building’s temperature
  • Automatic lighting and window-blind controls have been fitted, to optimise the level and quality of light, while also improving energy consumption.

Nick Stace, Head of Sustainability, Barclays UK, said: “We want to play a leading role in supporting climate tech and sustainability-focused businesses, by giving them the tools to help them connect, grow and scale. It was crucial that the retrofit and internal redesign of the building accurately reflected the ethos of the businesses that will use it and we expect it to provide significant energy efficiency improvements, allowing us to take an important step forward in reducing our own operational emissions.

“We know that startups need more than just a space, which is why we’re also supporting businesses through our climate tech accelerator programmes from the Cambridge Eagle Lab. We hope this package of support enables businesses to scale at pace and tackle some of today’s most pressing climate tech challenges.”

To find out more, visit https://labs.uk.barclays/locations/cambridge/

Notes
[1] Net Zero Roadmap: A Global Pathway to Keep the 1.5°C Goal in Reach 2023 Update, International Energy Agency

Professional services firm KPMG has launched Turning the tide in scaling renewables, described as a comprehensive report which pinpoints 10 pressing challenges defining the energy transition and provides recommendations for solving them. The report, and accompanying survey, seems to find that the current pace of renewable deployments is nowhere near sufficient to achieve Paris Agreement levels of ambition with limiting global temperature rise to 1.5°C above pre-industrial levels. The findings are published as the COP28 presidency pushes for global commitments to triple renewable energy by 2030, with the report outlining the real-world challenges that will need to be overcome to achieve these ambitions.

Over 80% of survey respondents agreed or strongly agreed that significantly accelerating renewables deployment is the most pertinent issue requiring attention, with 84% identifying that current market barriers are causing substantial delays and, in some cases, even the abandonment of renewable energy projects. In addition, 40% of survey respondents said current government policies are ineffective in accelerating renewable deployment, and these inhibiting government policies and regulations were cited as the number-one barrier to scale, with 77% of respondents identifying this challenge. Respondents ranked the other most significant obstacles to scaling renewables as follows: market structures and design (75%), supply chain risks (61%), access to capital (48%), lack of investment in grid infrastructure (47%).

KPMG survey data included in the report is based on the results of an anonymized online survey conducted by KPMG International. In total, 110 respondents from various positions across the renewable energy industry, at both public and privately held companies, in over 24 countries answered questions about the need to accelerate renewable deployments, current market challenges, and policy effectiveness.

“Understanding the extent of these challenges and the scope of the proposed solutions allows for smart and bold action to be taken, helping ensure a path towards scaling,” said Mike Hayes, Global Head of Renewable Energy, Climate Change, Nature and Decarbonization Leader, KPMG International. “Achieving climate goals will likely require tripling annual renewable capacity by 2030 and then scaling dramatically up to 2050. For this to happen, the world must wake up and attendees must come to COP28 ready to join forces to help remove these barriers or risk meaningful progress slipping through our fingers. It is time for immediate urgency and implementation or otherwise the reality is that the world will need to burn fossil fuels for much longer than is currently anticipated.”

The starting point for effective action is an accurate diagnosis of the primary challenges preventing a dramatic scale-up of renewable energy. The challenges identified in the report and a sampling of the recommended actionable next steps include the following, in order of significance to survey respondents:

1. Market structures (75%): The flexibility needed to support a large buildout of intermittent renewable generation is not supported by most current market structures and rules.
2. Supply chain issues (61%): Ensuring resilient and reliable supply chains is one of the foundations of scaling renewables quickly.
3. Access to capital (48%: Funding the energy transition requires an enormous amount of capital.
4. Investment in grid infrastructure (47%): Because the grid has operated in largely the same manner for well over a century, the policies, rules, and paradigms guiding investments have not needed to evolve.
5. Planning and permitting (44%): The energy transition is arguably the world’s most ambitious and complex construction project. The problem is that it takes far too long to build renewable energy projects and the supporting infrastructure they depend on.
6. Emerging markets: Catalyzing investments in emerging markets is key to accelerating renewable development and providing millions of people with life-transforming access to energy.
7. Just energy transition: The goals of a just energy transition are to ensure that the benefits of the shift to a decarbonized energy system are shared equitably while potentially negative impacts are mitigated or eliminated.
8. Nature and biodiversity: While nature and biodiversity depend on a rapid expansion of renewables to limit temperature increases, there are potential negative impacts of renewable development, and steps need to be taken to alleviate or avoid them.
9. Access to critical raw materials: Scaling renewables requires cost-competitive access to a huge volume of raw materials, like cobalt, nickel, graphite, copper, and lithium.
10. Accelerating storage solutions: Energy storage must achieve scale, and storage technologies must advance to provide electricity and other grid services for longer durations.

“Identifying these barriers and enacting solutions for improvement is so important for both developed and developing countries,” said Anish De, Global Head for Energy, Natural Resources & Chemicals, KPMG International. “Confluence across sectors is key. As the world prepares to discuss these issues at length at COP28 and beyond, now is the time for government, industry, and all of society to collaborate and move from identifying challenges to taking deliberate action in a meaningful way.”

KPMG will share this report at the COP28 events in Dubai in early December. For more information on the Turning the tide report, or to meet with KPMG professionals at COP28, visit www.kpmg.com/energytransition.

Eleni Diamantopoulou writes

The Energy Act 2023 (the Act) is finally here. After sixteen months of consideration in Parliament including a short ping-pong round between the houses of Parliament and Lords, one of the biggest pieces of energy legislation in recent years has been received with enthusiasm in the public and private energy sector.

The Act seeks to strike a balance in the so-called energy trilemma: transitioning the energy sector to net zero in an affordable way for households and businesses while securing resilient supply of energy.

This brief analysis is an introduction to some of the changes brought by the Act, with more targeted insights to follow.

£100 billion of private investment: A breakdown
The Act seeks to implement the British Energy Security Strategy (BESS) that will unlock £100 billion of private investment in the energy sector and create 480,000 jobs by 2030.

How? By putting in place the enabling primary legislation that bridges legal gaps, creates new laws, or brings clarity to existing laws.

Indeed, in WBD’s recently published 2024 Energy Transition Outlook Survey Report, businesses still identify effective legislation as a key accelerator of the energy transition.

Let us have a look below at some of the key areas in which the Act will support private investment.

Carbon capture, utilisation, and storage (CCUS) and hydrogen: The Act sets a clear economic licensing framework for CCUS and hydrogen transportation and storage, providing financial support through industrial carbon capture (ICC) and hydrogen business models.

The UK Government has made significant progress in financial support frameworks having recently concluded the consultation process, and by having published the almost final versions of both the hydrogen and ICC contracts.

The Act also empowers the UK Government to fund hydrogen though a levy and to set strategic priorities in CCUS though a CCUS Strategy and Policy Statement.

Decarbonisation of heat: The regulation of heat networks is one of the key changes which the Act brings, following a recommendation of the Competition and Markets Authority (CMA).

The design of consumer protection secondary legislation has already started and a relevant consultation closed recently.

The Act does more though to drive net zero in the heat sector by introducing heat network zoning in England, and low carbon heat schemes to allow for the creation of markets for low carbon heating appliances like heat pumps.

Energy Storage: The Act brings the missing clarity that was blocking investment by adding a clear definition for energy storage. It also amends the Electricity Act 1989 to state storage qualifies as a generation subset.

Multipurpose interconnectors (MPIs): MPIs are a novel asset class, which are subsea cables connecting both the electricity system of Great Britain with neighbouring countries and offshore generation stations like wind farms with the mainland network. The Act bridges a legislative gap by introducing a definition and a licensing regime for MPIs.

Nuclear: The Act includes several changes for nuclear; licensing for and regulating of disposal facilities, changes in the decommissioning regime, and acceding the Convention on Supplementary Compensation for Nuclear Damages to name some. Perhaps the most noticeable change is the establishment of the Great British Nuclear (GBN), evolving the nuclear sector.

Offshore wind: The Act delivers on the implementation of the offshore wind environmental improvement package (OWEIP) through new measures that are expected to halve consenting times for offshore wind projects whilst protecting the environment.

These include tailored Habitat Regulations Assessments (HRA) and compensation for inadvertent environmental impacts of offshore wind projects in a strategic and coordinated fashion through Strategic Compensatory Measures and Marine Recovery Fund(s).

New technologies: The Act supports the UK’s ambition to be a global leader in new technologies through explicit provisions on fusion, CCUS, hydrogen, energy storage, recycled carbon fuels and nuclear derived fuels amongst others. Additional provisions indirectly promote investment in new technologies such as investment in small modular reactors through GBN, with a competition to allocate funds already on the way.

Four new strategic entities in the energy system
The Act sets up at least four new entities with new responsibilities or existing responsibilities transferred to them.

The Independent System Operator and Planner (ISOP): Known broadly through consultations as the Future System Operator (FSO), this new independent body will bring a whole systems approach to energy infrastructure joining electricity, gas, and new technologies networks and market functions.

The FSO will have three strategic objectives that correspond to the three aspects of the energy trilemma: a net zero duty aligned with the Climate Change Act 2008 (CCA) targets and carbon budgets, ensuring security of energy supply, and promoting a coordinated and cost-efficient energy system operation.

The ISOP will be called on to balance these three objectives and make trade-offs if necessary in cases of conflict. Several consultations and decisions on the ISOP already mark significant progress in having the new strategic body operational in 2024.

Great British Nuclear (GBN): A public company, GBN is the delivery vehicle through which the UK Government will implement new nuclear projects and policy. Investors can rest assured GBN will help to de-risk investment through co-funding of projects to make the ambition of 24 GW of new nuclear generation by 2050 more achievable.

Zone Coordinators: The Zone Coordinator, who will possibly be a local government, will play a lead role in zone identification, enforcement of zone requirements, and information-sharing in moving to heat network zoning in England.

Code managers: The Act establishes a new governance framework for energy codes, with code managers to be licensed by and held accountable to Ofgem. This role will take responsibility for code governance from existing industry led bodies, bringing more independence and transparency to energy codes governance.

At least eight new powers and duties for Ofgem: Ofgem is one of the protagonists in implementing the vision set within the Act, gaining new roles, new duties, and new powers.

• Net Zero duty: Ofgem had already a duty to consider reductions in greenhouse gases in its decision-making process But this was too broad and it was not clear whether it included the net zero targets and 5-year carbon budgets of the CCA. Section 202 brings clarity and adds a net zero duty for Ofgem.
• Energy code governance: Ofgem is the key authority to deliver changes in energy codes governance and to move away from the previous industry-led framework. Some of the new functions include the duty to publish an annual strategic direction on how energy codes should evolve, the power to amend the codes in limited circumstances, and the power to issue directions to IT system bodies to support the energy market.
• Regulator: Ofgem is the economic regulator for the licensing of CCUS and hydrogen transportation and storage, as well as the regulator for heat networks. Ofgem will also monitor and regulate the relevant electricity operator and gas system planner licences of the ISOP.
• Licensing: The Act expands the licensing powers of Ofgem, with the body appointed as the licensing authority of heat networks in Scotland, as well as now being able to grant licences for MPIs and code managers.

The Act serves sixty million…
So, the Energy Act brings many changes, but where do those changes apply and when do they take effect?

Almost all parts of the Act apply to England and Wales and Scotland, but some of the Act’s provisions have a specific territorial extent. For example, the provisions on heat network zoning apply only to England.

The Act’s extent is more restricted in Northern Ireland, where some parts s such as the licensing of hydrogen pipeline projects, the changes regarding the ISOP, the governance codes and market reform and consumer protection do not apply.

On the other hand, the commencement of most of the provisions of the Act depends on the adoption of secondary legislation, but certain sections – for example, the designation of a hydrogen counterparty and provisions governing low carbon heat schemes and heat networks – are applicable as of the day when the Act was passed, on 26 October 2023.

Several other provisions enter into force after 26 December 2023, and these include CCUS and hydrogen transport and storage licensing and revenue support, Ofgem’s net zero duty, and OWEIP.

From Great British Nuclear to Great British Energy
Politics can be a key obstacle to achieving the net zero goals according to the feedback which we received in our 2024 Energy Transition Outlook survey report.

We are currently in a pre-election period in the UK and the USA, with the main opposition party in the UK – the Labour party – announcing a manifesto for energy which declares an aim to “switch on Great British Energy”, proposing the creation of a National Wealth Fund to support investment in gigafactories, clean steel plants, ‘renewable-ready ports’, green hydrogen, and energy storage.

“Great British Energy” (GBE) will possibly be the delivery body of Labour’s energy aspirations, and like GBN, it will be a publicly owned company eventually absorbing GBN.

Labour says GBE will own, manage and operate energy generation projects, set a super-tender to unblock grid infrastructure, and put local communities at the heart of the clean energy transition. The Labour manifesto also adds to ISOP’s functions a decentralised and local dimension.

What is coming up next?
Without a doubt, the Act is a significant milestone in the decarbonisation pathway of the UK. But while it is lengthy at almost five hundred pages, more is needed with its success depending on the adoption of massive secondary legislation.

The UK Government has already been running several consultations relevant to the enabling legislation and has even adopted the first regulations on the Energy Savings Obligations Scheme and Energy Network Mergers (both topic not covered by this article).

The devil will be in the detail as these regulations touch upon complex and technical matters. Other pieces of legislation (for example, the recently adopted Levelling Up and Regeneration Act 2023 and the upcoming energy market reform through the Review of Electricity Market Arrangements (REMA)) will possibly affect the pace at which the Act delivers on its objectives.

Whatever the pace, the Act has already accelerated the countdown to net zero.

The annual Sustainability Report produced by enterprise software firm SAP appears to reveal that 8 in 10 (83%) UK leaders will maintain or increase their investment in sustainability action by 2026. Yet, despite these intentions, UK businesses continue to create their own barriers to environmental progress, say the report’s authors.

The global study of over 4700 business leaders, including over 300 from the UK, is the third edition of SAP’s annual Sustainability Study exploring the key motivations and challenges facing organisations looking to reduce environmental impact at scale.

It seems to find that while 31% of UK businesses say environmental action is already having a strong impact on revenue and profit opportunities, just 12% have assigned accountability for this work to the Chief Financial Officer (CFO). While almost one-in-three (28%) have difficulty proving return on investment, making long-term progress harder to prove and sustain.

Sustainability as a financial incentive, not burden
In the past, measures to safeguard the planet may have been seen as just a moral or ethical obligation but the business mindset is evolving and today, UK businesses are increasingly seeing the long-term financial benefits. In fact, almost two-in-five (37%) report that revenue and profit opportunities are a leading motivator for sustainability action.

Against a backdrop of inflation, supply chain issues and a rising cost-of-living, UK leaders are steadfast in their environmental commitments as they view sustainability action as a means to offset economic uncertainty. Now, over half (57%) of UK leaders expect to see a positive financial return on their sustainability investments within the next five years.

Commenting on the research, Renaud Heyd, Chief Financial Officer, SAP UKI said: “Our study shows that it’s time that finance leaders realise that having a solid sustainability action plan makes business sense. It is imperative to attract funding from investors who need to make their portfolio greener, and to get a competitive advantage as customers demand sustainable products throughout the supply chain. As taking steps to improve the planet becomes more than just an ethical question, and UK leaders see long-term material gains, CFOs have the authority and expertise to champion the environmental roadmap.”

Building their own sustainability barriers
Yet, despite the link between environmental action and long-term revenue generation, SAP’s research shows that UK businesses are not involving finance leaders in taking sustainability actions and this is holding back progress.

Currently, just 5% of businesses have assigned responsibility for setting the strategic direction on sustainability action to their organisations CFO. Instead, it falls to an array of other leaders, including the Board of Directors (25%), CEOs (21%), Chief Sustainability Officers (15%) and Chief Operating Officers (10%). The study suggests this approach isn’t working to translate the economic value of sustainability progress across the business. As many as 38% of UK businesses cite funding issues as one of the top five barriers to taking sustainability action, while 20% cannot get the support from senior stakeholders to take concerted action.

Falling into the measurement trap
Matters are made worse for UK businesses who continue to find that measurement is a stumbling block to progress, and ultimately economic returns.

Just 37% can track scope 1 emissions (greenhouse gas emissions produced directly) to a ‘strong degree’, while 10% are not able to track scope 3 emissions (those produced indirectly across the supply chain) at all – causing many leaders to rely on estimates or ‘gut feel’ when disclosing environmental impact. UK leaders are also struggling to adopt a standardised reporting framework, with over one third having no consistent methodology for calculating the environmental impact of their products.

This is being further exacerbated by the use of conflicting measurement methods for reporting. While leaders are overwhelmingly using direct measurement to track energy emissions (83%), resource availability (82%), fresh water availability (75%), solid waste (74%) and materials use (73%), they rely upon guesswork and estimates for air pollution (83%), nature loss (78%), supply chain impact (69%) and water pollution (60%). This is leading to almost nine in 10 (89%) reporting difficulty with gathering or analysing data for regulatory compliance, at a time when UK leaders are already having to navigate an assortment of changing regulations, taxes and levies associated with carbon footprint.

Stephen Jamieson, Global Head of Circular Economy Solutions, SAP said: “In a climate where stricter regulations are now requiring businesses to disclose environmental impact, leaders who cannot accurately report this data risk allegations of greenwashing, and fines and reputational damage. Focusing on implementing a standardised reporting framework will ensure businesses are substantiating their green credentials, getting measurement right, and setting in motion steps that will directly lead to long-term impact. Organisations can use this data to redesign products, reuse materials, reduce waste and regenerate natural systems across the supply chain – in effect, powering the circular economy.

“Our portfolio means we are well-equipped to support businesses and ensure they are in the best possible position to navigate these challenges in the years ahead. This will allow leaders to unlock further investment, reap the financial rewards of taking sustainability action, comply with changing regulatory requirements, and reach net zero in the future.”

Commenting on the research, Edward Manderson, Lecturer in Environmental Economics at the University of Manchester, said: “The connection between sustainability action and financial performance will play a critical role in shaping environmental progress in the future. Over the last few years, academic literature has shown that firms benefit financially from sustainability measures, and SAP’s research demonstrates that this is indeed a reality for businesses who are looking to recover fast from the pandemic environment. As this research shows, business strategy and sustainability action are now so intertwined that there is simply no excuse for organisations if they fail to address shortcomings in their environmental performance and enact meaningful change.”