ENERGY TRANSITION OUTLOOK UK 2025

FOREWORD A substantial green prize lies ahead forthe UK as it decarbonizes its economy. As we navigate this transformation, we must keep inmind that change of this scale happens incremen-tally. Even though the UK continues to take largebites out of its reliance on fossil fuels, we need torecognize that oil and gas will remain dominant inour energy mix up to the early 2040s. Hence, weneed to ensure robust plans are in place to manageour existing gas infrastructure, while working steadilyon decarbonizing parts of the energy systemthrough Carbon Capture and Storage (CCS) andhydrogen infrastructure. realized through continued policy support, strategicinvestment, and strong collaboration across all sectors.The path ahead is challenging but clear: we mustmaintain our momentum while being agile enoughto adapt to new technologies and opportunities. 2025 — reveals a mixed picture of progress andchallenges against each of these targets: First, by 2030, we expect to see a dramaticexpansion of clean power infrastructure, withinstalled renewable capacity forecast to double,reducing our reliance on gas to less than 12%, butfalling just short of the Clean Power 2030 target.Second, we see progress towards the UK’s newNationally Determined Contributions (NDC) targetby reducing today’s emissions by more than a thirdby 2035. Finally, our forecast for 2050 sees the UKsuccessfully decoupling economic growth fromenergy consumption, reducing UK energy demandby 25% and emissions by 82% compared with 1990levels. But clearly the UK is not reaching net zero. As we enter 2025, the energy industry stands ata pivotal moment in its history. Despite globaleconomic headwinds and geopolitical uncertainties,we've witnessed unprecedented momentum in cleanenergy deployment and DNV forecasts that theworld will hit peak emissions this year. Together, we can build an energy system that isnot just cleaner and more efficient, but also moreequitable and resilient. The time for action is now,and the UK must continue to lead by example inthis global energy transition. The build-out of CCS infrastructure is finally out ofthe starting blocks with the first Final InvestmentDecision (FID) for the Hynet project and we forecastthat CCS capacity will be close to governmenttargets by 2035. The role of hydrogen in our energyfuture remains both promising and uncertain. Whiledemand is growing, particularly in industrial clustersand transport, expanding to a national hydrogeninfrastructure requires careful planning andsubstantial investment. Similarly, our energy storagecapabilities must evolve to match the increasinglydecentralized nature of our power generation. The UK's energy landscape is transforming rapidly,with record-breaking renewable energy generationand falling costs of clean technologies setting newbenchmarks for what is possible. Let’s challenge the art of the possible in 2025. Significant challenges remain to be tackled, particu-larly in electrifying our demand in heating andtransport sectors. The transformation of domesticheating systems requires coherent implementationplans and associated incentives for heat pumpadoption and building efficiency improvements.In transport, while the EV fleet and infrastructure isexpanding rapidly, replacement of the current largelypetrol/diesel-based vehicle fleet will be a gradual,slow process. The UK must also accelerate the devel-opment of solutions for heavy transport and aviation,including synthetic fuels and hydrogen technologies. The past year has demonstrated the UK’s potentialon this transition journey. We've seen wind powergeneration reach historic highs, battery storagecapacity expand significantly and Electric Vehicle(EV) adoption showing signs of recovery. However,these achievements, while significant, are merely theinitial steps toward our 2050 net-zero goal. Hari Vamadevan The ambitious new transition pathway mapped outby the UK government includes three critical mile-stones that will shape our journey towards net zero.This DNV report — the UK Energy Transition Outlook Looking ahead, we see enormous opportunities inthis transition. The green economy promises newjobs, enhanced energy security, and technologicalleadership. However, these opportunities can only be Regional Director,UK & Ireland, EnergySystems, DNV CONTENTS ForewordExecutive Summary 5Industrial Clusters — CCS and Hydrogen485.1Carbon capture and storage485.2Hydrogen50 1.1About this Outlook121.2General assumptions14 6.1Non-renewable energy sources566.2Renewable energy sources and nuclear60 2UK climate change policy 15 7Energy expenditure707.1Energy infrastructure investment70 3.1Transport3.2Buildings3.3Manufacturing3.4Non-energy use 8UK emissions and climate implications74 References79The project team80 4Electricity and gas grid 4.1Electricity4.2Power grids4.3Flexibility and storage4.4Gas grids In the transport sector, we see a more pronouncedemission reduction of 25%, mainly driven by electri-fication of the p