With so many moveable parts and little time to remaining to the necessary changes, Manidaki said it was a case of “making the planets align” on shared objectives.
Utility Week posed some questions on hard-to-decarbonise areas such as process emissions, as well as the role of regulators and government in supporting the industry’s ambitions.
Process emissions remain the toughest part of the water sector reaching carbon net zero and the clock seems to be running down on getting to grips with them. How can wastewater companies quickly make changes?
“Some companies have been really getting to grips with prioritising investment, especially those expanding or building new treatment works that need investment anyway to consider technologies that would result to lower nitrous oxide.”
Is 2030 too ambitious to make a difference on process emissions?
“The importance of having the roadmap work early is it opened up this conversation and is accelerating action. If we had said the sector had to be net zero by 2050 like all other sectors then maybe that action wouldn’t start now, there’s an acknowledgement by all companies that process emissions won’t be zero.”
For everything above zero, how credible is offsetting when making a commitment like this?
“In the water sector we recognise the importance of following the Oxford offsetting principles that are to prioritise removals over offsets.
“The UK will need a credible offset credits market – by prioritising removals – to achieve its goals by 2050 so we’re interested to see the government response but also how different players in the offsets value chain could develop and credibly certify new schemes quickly. There are smaller developers undertaking soil management projects, or peatland or forestry but the question is will we have enough time to get credible markets that are big enough to have that transparency and invest quickly?”
For a sector often considered to be risk-averse, how can nature-based solutions be introduced in time to make a meaningful impact on 2030?
“We are not charging into fully unknown territories, but as an engineer I see it’s important to start implementing with the right evidence base and applications because there will be some less risky than others, which can be trialled rather than waiting.”
How could this be supported at PR24?
“Ofwat is keen to help companies promote these but there’s always a matter of risk. Water companies have been piloting catchment management schemes but the implementation of anything can be a risk, so it’s important to start trials with monitoring to assess the benefits.
“Another issue is the current regulatory regime where the regulatory capital value (RCV) incentivises more capex solutions, so is there a piece at looking at incentivising such solutions – the softer accounting / regulatory aspects of such solutions to incentivise those.”
With so many factors at play – a significant number that are known unknowns – how can the strands be brought together?
“It’s really encouraging to see the dialogue starting to happen to align objectives on nature-based solutions, process emissions and making the water sector fit in the national carbon budget. The 2030 Routemap highlighted the importance of aligning the key players in the value chain together to get something practical together to unblock barriers.
“For government, regulators, asset owners, contractors, consumers – it’s important to keep pushing the levers. For net zero that means government and regulators providing more incentives to get there.”
Early indicators about the next price review show decarbonisation will be a core theme, what role does Ofwat and the government have to play?
“Defra and Ofwat have to be the key catalysts for decarbonisation. There are companies driving the agenda but it needs to be a collaborative effort between regulators and government.
“Ofwat has been really focused on getting their heads around decarbonisation and follow the government 2050 net zero target because they know it will be important, hopefully central to the next price review. They have published a consultation on whole life carbon emissions and particularly scope three, and have started the dialogue with the companies, which is very encouraging.”
Beyond the 2030 date, what steering is required?
“Everyone is waiting for the national Net Zero Strategy. There is a net zero target and great work from the CCC, but apart from the carbon budgets there has not been sufficient clarity from the government on how to meet the targets in each infrastructure sector, with the exception of energy.”
“There are many unknowns that would benefit from clarity on how to cascade down from the national commitment to the practical nitty gritty detail so that asset owners and their supply chains can act quickly.”
“For the water sector, we are talking about the net zero commitment for operational emissions by 2030 but also as an industry we are planning for billions of investment in water resource plans. So, it’s so important to have conversations between Ofwat and the companies about capital carbon. Alignment is essential between regulators, companies, BEIS and Defra to align on future plans to 2050.”