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Transcript

Ross Fairley, Burges Salmon

Hello and welcome to the Burges Salmon Net Zero podcast. My name is Ross Fairley and I chair our Net Zero services here at Burges Salmon and today we're going to be discussing a few of the challenges and some of the opportunities arising from the UK Net Zero challenge and target. I'm delighted to be joined by experts in various areas of the firm and particularly the quadrants which we believe make up Net Zero, which have to work together in order to achieve the government's target.

So, I have Sian Edmunds, our lead partner in agriculture, food production and land use. Ross Polkinghorne, for the built environment and Lucy Pegler on the transport side. I, myself, will contribute to the conversation covering energy and we hope for a fruitful discussion today.

Burges Salmon is committed to Net Zero, we set our own target of achieving Net Zero by 2026 and we passionately believe that we have a big role to play in helping sectors and our clients achieve Net Zero, partly because we do operate in the key sectors that are going to make up those areas that have to work together to achieve the result.

So, without further ado, I'd like to turn to our panel.

So, turning then to our experts and I'd like to move to Lucy first, if I may, Lucy? What are the key areas and the key challenges that the transport sector, in particular, are focusing on at the moment when it comes to Net Zero?

Lucy Pegler, Burges Salmon

Thanks Ross. I think this is quite timely because last week we saw that the public accounts committee published a report on the government's plans to achieve Net Zero, and that highlighted the need to have a clear plan to achieve the 2050 target, being achieving Net Zero greenhouse gas emissions by 2050. Importantly that report flags the need for sector strategies and calls on BEIS to develop a public engagement strategy, noting that the transition to Net Zero will require behavioural change by the public. I think that's one of the key issues that we're seeing in the transport sector, we need to see a shift to public and active travel and a real push to promote fewer car trips.

This is a really good example of the need for public engagement because achieving this really does require significant behavioural changes in the way that people move around. The success of this is going to be really dependent on ensuring a joined up cost-effective public transport network which offers travel solutions based on the way people want to travel and the places they want to travel to, so we're really seeing more focus from local authorities who'll be key in the shift in initiatives like mobility hubs and introducing new forms of mobility, for example, the e-scooter trials that have popped up in various city centre locations over recent months.

Alongside this, the sector is also focusing on the decarbonisation of road vehicles, so we're already seeing investment from public transport operators in electric and hydrogen vehicles but more generally this sector is pushing for continued investment in new technologies and highlighting the need to secure sustainable supply chains. I think the third thing for me is really in that continued push for investment in new technologies in freight so with the focus on both heavy-duty vehicles but importantly last model deliveries where the sector is exploring innovative technologies, for example drone technologies, for moving some goods to relieve pressures on major roads and to reduce emissions.

Ross Fairley

Thanks Lucy, that's great and really interesting. We can come back to the collaboration and the crossovers between the other sectors for some of those things that you've just highlighted. Can I move on to Ross Polkinghorne? Ross, you're in our built environment sector.  Built environment, of course, is a massive area that covers all our infrastructure, factories, housing.

What things are really occupying that sector's mind at the moment as it gears up and faces up to achieving Net Zero?

Ross Polkinghorne, Burges Salmon

Thanks Ross.

There are a multitude of issues in the context of the built environment but I'm going to focus on four. The first one is actually the existing building stock and in particular the amount of carbon output from existing buildings is huge and in order to tackle Net Zero that in itself has to be tackled as well and one of the key issues particularly in the context of each of our own homes is heating. So we've got about 30 million gas boilers in the UK at the moment, effectively they've all got to be removed and replaced with electric or some other form of heating in order to achieve Net Zero and that's going to require some sort of government intervention, possibly via the tax system, in order to ensure that happens.

Second one is value. At the moment the cost of achieving carbon reduction is not reflected in the values that have achieved on sale in all sectors and that's really about changing mind sets from the top bottom to ensure that ESG in particular is embedded into the building life cycle and how buildings are built, let and sold and occupied.

The third issue is data. How do you measure carbon particularly in the construction of the building? How do you measure ensuring that a building is carbon friendly? In some sectors in particular, for example offices, some investors are prepared to pay a premium and occupiers expect this for a whole hope of social or well-being issues and it really is difficult to measure.

Finally, just picking up on a point that Lucy mentioned earlier, which is power particularly in the context of industrial with new fleet procurements moving to electric vehicles, there's a real need to ensure that there's connectivity at a number of industrial developments in order to ensure that the drones and freight of the future can be powered and there are good constraint issues with that.

Ross Fairley

Thanks very much Ross, really, really interesting and again we'll come back to the co-dependencies and on that and I might pick some of that up in what I'm saying about energy in a moment but first I'd just like to turn to Sian if I may, Sian, on the land use and the food production side. What's the sector saying?

Sian Edmunds, Burges Salmon

Well the big thing we're starting to hear more about is new forms of land use to achieve Net Zero. Of course renewable energy has been an opportunity for landowners for some time but there's no doubt that the use of land for greener energy production is a continued area for growth.

On top of that though we now have some other issues which do involve a bit of a mind set change but really do provide opportunities for landowners.

So we're starting to see land being heralded as a means of carbon capture via initiatives such as, tree planting and soil management. The new environmental land management scheme or ELMS which has been introduced to replace the old common agricultural policy subsidy regime is destined to provide around £2.4 million per year in subsidies for the provision of public goods and that's going to include issues such as carbon capture initiatives and increasing diversity and biodiversity. We're still waiting to hear the real detail on that and the regime isn't going to be fully implemented until 2028 but there's a lot of consultation going on around not only what sort of initiatives will be set up but also, how their success can be measured and recorded.

Then on the food production side of things, we're waiting to hear what part two of the National Food Strategy says, that's due out later this year. It's looking at a blueprint for a joined up UK food system which is designed to no longer make us or our planet sick, it's likely to focus on sustainable use of resources, investment in science and tech and high-rise urban greenhouses and food production methods all geared towards that sustainability Net Zero picture. The Government's committed to producing a white paper following the recommendations from the food strategy report but we have little information about exactly what that's containing and what the timeline is likely to be, other than a commitment to produce a white paper within six months of the report coming out, so we're waiting to hear what that might say in detail.

Ross Fairley

Thanks Sian, really interesting. I think the change in dietary requirements as well is just going to have huge implications across the piece, also for the infrastructure that supports those new dietary requirements as well so we mustn't forget that.

Just before we come on to some of the areas where this crossover between the various sectors that we've just been talking about, I suppose I ought to pick up the energy baton and the decarbonised energy baton and run with that.

I think the energy sector in particular has obviously faced up to decarbonisation over the last couple of decades and with a huge degree of success on the electricity side to be fair, with the development of renewable energy, wind and solar and other forms of generation. I think the key things that the generation sector and the electricity and energy sector need to face up to is the fact that there's going to need to be a lot more of it frankly and I think Ross was mentioning heat, heat is a huge issue for energy and has not really been tackled thus far and I think everyone's attention is moving to that. The challenge we all face with heat and energy faces with heat is that different forms of heat, different specs of heat are needed for different purposes and it's not easy. Ross mentioned the interactions there and the retrofit of heat but if you look at it on an industrial scale as well it's not an easy thing to get to grips with but to get to grips with it we have to do.

I think the other thing that's occupying people's mind in the energy sector, is the fact that we are just going to need more of it, everyone talks about electrification being the answer to everything and that means a massive deployment of additional renewables, so we've already gone through a renewable energy boom in the UK but we're going to have to go through another one and some are predicting that frankly we're going to need every piece of energy and every technology that we can get our hands on.

That leads you then on to talking about and thinking about what the opportunities for the UK economy are in terms of jobs and input and technology that we can sell to other countries and that's indeed focusing the minds of Government at the moment. It's no doubt that there is going to be no doubt that some of this electricity and generation and energy is going to be intermittent and that leads us down a path of having greater flexibility to compensate for that when the wind is not blowing and the sun's not shining. I think the last point that has occupied everyone's mind for quite some time now as we've moved towards decarbonised energy is what do we need to do for the infrastructure the grid infrastructure to get electricity, the infrastructure to get the replacement from natural gas into houses. All of that infrastructure is it fit for purpose? What investments needed into it? And how are we going to approach that? So, those are the big macro issues affecting the energy sector. As I say the electricity industries had a good head start possibly compared with other sectors that we've talked about today but there's a lot of work to do.

Okay so, I think it would be useful now just to go around the room, if we can call it that, and just ask you to highlight from your particular areas some of the interdependencies that that you see between your area and sector and quadrant if you like and the others. So, I'd like to go back to Lucy, if I may, on the transport side. What are the key interdependencies that you're seeing Lucy?

Lucy Pegler

Well I think for me there are two that really stand out and they're actually really closely related so the first one is something I mentioned earlier which is around sustainable supply chains and I think this is an issue not just for the transport sector but for all sectors across Net Zero, where we are going to be relying on a number, a small number of participants in the same supply chain so I think energy is a really obvious example where the transport sector is likely to put a huge demand on the energy sector but so are all of the other sectors that we've spoken about, so it's how do you build that resilience in that supply chain to ensure that it can meet the demands that are going to be placed on it for meeting the 2050 target.

The other thing for me is ensuring access to data to enable strategic decisions to be made that are informed by relevant, accurate and importantly up-to-date data from the other sectors and that's really going to inform how we move forward with the planning for the transport sector but also for other sectors that are impacted by this.

Ross Fairley

Thanks Lucy. Ross, what would you say?

Ross Polkinghorne

Again I'll look at three actually.

So one of the key ones in the context of built environment is energy and energy resilience. Obviously all buildings need power, well most buildings need heat and the requirements in relation to energy resilience are different in the context of asset classes, so Ross has already mentioned heat, as I mentioned before, particularly the context of homes is a huge challenge in terms of the sheer number of gas boilers already in existence and power, as Lucy mentioned earlier, in order to power electric fleet there's going to need to be new power and an energy supply into logistics and warehousing distribution facilities. A link to that I suppose is transport, the built environment is integrated completely with our transport network, whether that's in the context of logistics, whether it's freight, drone or trains, you know for example railway stations, hydrogen trains, the impact of these new forms of technology and transport becomes more of a service effective will have a huge impact on what the built environment looks like going forward.

Finally but just picking up land usage, as Sian said, land use itself is key in unlocking Net Zero and then put simply the built environment is built on land, I mean it's absolutely integral in terms of how they interact with each other and in particular one thing we must forget is biodiversity and net gain when it comes to land use, and the move to biodiversity compensation in particular is a really interesting challenge and for all those involved in owning, building, occupying and developing and repurposing the build environment going forward, all three of those core sort of sectors are absolutely fundamental to how the built environment achieves its goal of Net Zero.

Ross Fairley

Great, thank you. Sian, what's your views on this?

Sian Edmunds

Well, food production in a sustainable but also a resilient way with the use of energy and other resources is a really big issue and continues to be one that we're all going to be grappling with going forwards.

We're certainly going to see and indeed at Burges Salmon we're working on vertical farming initiatives and other forms of innovative sustainable urban-based food production systems and of course, there's a big interplay there with a built environment. Use of energy and resources right through the food supply chain from primary production through to food manufacturing is crucial and the transport systems involved in all of that really play into the Net Zero picture. How do food producers go about making their transport systems Net Zero? Also their manufacturing processes and their buildings? All of this is there's a real interplay between these various areas. Of course, as we've mentioned before and as has already been touched on, there are a lot of Net Zero initiatives which are going to require land at their very core so the land sector is really eyeing up the opportunities that Net Zero can bring.

Ross Fairley

Thanks Sian. I suppose from the energy side, it's quite interesting to listen to you all because all of you have mentioned energy and of course, energy has a huge role to play in all of this, in all of these areas and there is the challenge for us in one shape or form. I would tend to agree with Ross in terms of the energy resilience because I think that's going to be huge interdependency amongst all of the sectors and particularly I think where energy is going to be generated and produced and where it's going to be cited and how that's going to work with all of the sectors. I couldn't agree more with Sian, and I think Ross also mentioned it, that let's not forget when we talk about energy, you have to build projects somewhere and building projects somewhere requires land and where is that land going to be? Where are they going to be situated?

And I think the other key macro issue which cuts across all of these is how are we going to get the energy to the users? Because there is a tendency sometimes to talk about energy generation in whatever form and talk about it as a sort of isolated we need to generate this but the reality is we need to get it to the users and we also need a demand for the energy that's produced. So what's going to happen about that? How we're going to get it to the people? What are they going to use it for? I think is an interesting one going forward and will involve interactions with all of these sectors I think.

Okay look, I'd like to wrap up if I may, by just going round the team here and just asking you for one thing that you think is going to lead to a success or would need to be tackled in order to reach success in Net Zero that seems to be weighing heavily on your mind at the moment. Maybe if I can go to Lucy?

Lucy Pegler

Thanks Ross.

I think for me and hearing what you've all said in terms of the interdependencies between the sectors and the need for decisions to be made and that decision making to develop over the next months and years, one of the key things for me then is really data and ensuring that we've got a really well-resourced data sharing pool across the sectors. That's going to be absolutely key to creating efficiencies and ultimately achieving Net Zero and that data needs to be available to Government to local authorities, businesses but also importantly to people, so that individuals can understand how their decision making impacts on reducing carbon emissions and for me one of the key challenges here is really around data sharing and that is something that I think really needs to be unlocked to ensure that flow of accurate and reliable data across sectors so that people can start using it to ensure that those informed decisions that are being taken and that strategic planning is really able to progress.

Ross Fairley

Thanks Lucy. How about you Ross?

Ross Polkinghorne

It's a similar thing to Lucy actually. One of the key things for the built environment is basically the embedded carbon within a building so that's both during the construction whether it's the materials the supply for the chain and also during its occupation and I know there's something that the UK Green Building Council is looking at in its route to Net Zero as a sector for the built environment but there is evidence out there at the moment that people will pay a premium, particularly in some sectors like offices, for carbon for any buildings but effectively at the moment it's really, really difficult to measure.

Ross Fairley

Data everywhere. Data is going to be needed. Sian?

Sian Edmunds

For me, I think the issue is going to be around making sure that there's a collaborative and joined up approach across Government departments as far as the food supply sector is concerned.

At the moment, the sort of rural land use side of things sits under DEFRA's remit whilst the further down the food supply chain you have BEIS responsible for the various issues that affect food manufacturing businesses and I think ensuring that there's a joined up approach between those Government departments so that we get a across the supply chain a sustainable and collaborative approach to how we go about achieving Net Zero is going to be crucial.

Ross Fairley

Thanks Sian.

I couldn't agree more in terms of collaboration and I probably go even wider than that I think there needs to be collaboration across, as we've talked about, all of these sectors and government at the highest level to achieve this because there's a real danger that if initiatives are focused in one particular area or sector they may not actually fit with what everyone else is trying to achieve elsewhere so we really need to watch that and be careful of that.

I suppose my point that I'd like to make is really around mobilising local Government and the regions. I think if we're going to deliver Net Zero successfully we have to have the regions brought into it and mobilise them, they're the ones that will be delivering it on the ground in their particular areas. It does focus again on collaboration between regions obviously but I think we really do need to mobilise them use them to best affect and find a way of a way of doing that successfully.

I think I'd probably also like to say that  we've talked a lot about the challenges here and there's some big challenges here but it's also fantastic opportunity to decarbonise for our population for our generations to come but also, if you look at what the Government's doing in calling a poor in terms of the green recovery there is a fantastic opportunity if we can get this right to produce new industries, to develop new skills, to boost employment and I think we should focus on that and be really positive about the results that Net Zero can achieve if done properly.

Look, I'd like to thank you all for contributing today and I'd like to thank you all out there for listening to the Burges Salmon podcast.

Thank you to Lucy, Sian and Ross for your great contributions to this podcast.

This year is going to be very busy I think in terms of Net Zero and setting the agenda and of course, we have COP26 coming up which is no doubt going to lead to a raft of announcements from UK Government as well.

We're going to be watching that very closely and of course Net Zero is only starting out so this is going to take decades to fulfil so this is an ongoing project and we will be certainly holding more roundtables as we go along and updating the thinking around what's happening in the space. If you'd like to know a bit more about what we're doing on Net Zero go to our website, we have a Net Zero blog and we also have a webpage around that and you can also find our names and details there as well.

I'd finally like to thank you all again for listening to this Burges Salmon Net Zero podcast. Thank you very much!

 

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