Ofwat has published a Net Zero Technologies Review to identify technologies and interventions likely to be capable of reducing greenhouse gas (GHG) emissions during the AMP8 investment period 2025 – 2030. 

The water sector regulator commissioned Jacobs to conduct the Review – which had a particular focus on identifying and reviewing the applicability, readiness and scalability of GHG reduction technologies and interventions applicable to water and wastewater companies in England and Wales.

While recognising the scope of emerging technologies and the role of innovation looking at the medium to long term, the Review has been set in the context of significant uncertainty on how the companies may meet Net Zero targets and the likely costs and benefits of Net Zero technologies.

The review is focussed on Net Zero solutions that could potentially be implemented during the 2025-30 PR24 investment period. Jacobs has pointed out that while it is important to reduce both operational and embedded carbon emissions, “a greater focus on operational emissions is borne out through the technologies identified and shortlisted in the project.”

The assessment included a global literature review to identify possible Net Zero technologies and gather information for analysis - e.g. any data around costs and carbon emissions. Jacobs compiled a longlist of identified technologies which was then refined into an ultimate shortlist.

Interestingly, sludge liquor phosphorus recovery, sewage sludge (co)combustion, green electricity purchase and Nature Based Solutions - treatment wetlands for wastewater treatment, were among the technologies which failed to make the shortlist.

According to Jacobs, very little work has been undertaken to assess what Net Zero technologies are available and whether technologies being proposed by water companies and referenced in sectoral route maps are actually aligned with Net Zero principles e.g. those set out by Ofwat and by the Science Based Targets ™ Net-Zero Standard.

Key findings of the Review include:

• A range of GHG reduction technologies and interventions are currently available to Water only Companies (WoCs) and Water and Sewerage Companies (WaSCs) to reduce their GHG emissions. All shortlisted technologies, applicable to WoCs and WaSCs respectively, will be applicable to all such companies. However, the extent of their applicability could vary. For example, differences in geography and population distributions will plausibly impact the applicability or size of some opportunities across the sector;
• Technologies and interventions focused on the improved monitoring and mitigation of process emissions, in particular nitrous oxide and methane, have the potential to reduce overall greenhouse gas emissions the most;
• After mitigation of process emissions, other technologies which scored highly in the MCA included renewable electricity procurement through Power Purchase Agreements (PPAs), pump efficiency, vacuum methane recovery, advanced digestion technologies with energy recovery, low energy sludge drying and leakage and water efficiency measures;
• A wider range of viable options exist for WaSCs to reduce GHG emissions, particularly when such emissions are viewed from an overall and sector wider perspective;
• The viable options for WoCs to reduce GHG identified through this analysis were fewer by number than for WaSCs due to much lower direct process emissions. However, as most of the GHG emissions for WoCs are from scope 2 and 3 emissions, in particular power consumption), large reductions are feasible from reducing electricity consumption through reducing overall water demand (e.g. leakage reduction, water efficiency), improving asset energy efficiency, and power purchase agreements;
• Grid electricity remains the largest reported source of GHG emissions in the water sector. Water UK’s Net Zero 2030 Routemap shows that 85% of negative emissions reported are from electricity purchase via Green tariffs;
• Energy recovery from wastewater residuals is already undertaken at scale through advanced or conventional anaerobic digestion. However, upgrading of biogas to biomethane for grid injection, where companies require a reciprocal increase in the import of fossil (also termed natural) gas does not offer alignment with Net Zero principles as set out by Ofwat;
• Resource recovery technologies, beyond production and local reuse of biogas, may not actually reduce emissions in alignment with Net Zero Principles as set out by Ofwat and as per science based frameworks (e.g. where these require additional imports of fossil gas and increase in Scope 1 emissions);
• Offsetting to achieve Net Zero is not aligned with Net Zero principles but the carbon benefits of resource recovery (e.g. biomethane, heat recovery from final effluent, nitrogen stripping and recovery) may offer the opportunity to reduce emissions in agriculture or industry (e.g. nitrogen recovery to substitute fossil-based fertilisers or heat recovery to substitute fossil gas derived heating). Strong cross-sector collaboration will support development of associated technologies and solutions. Key barriers will exist during AMP8 – for example resource recovery technologies lack end of waste status

Existing technology solutions are likely to offer substantial mitigation opportunities and are also likely to have multiple additional benefits

According to Jacobs, existing technology solutions are likely to offer substantial mitigation opportunities and are also likely to have multiple additional benefits e.g. greater water efficiency helping to reduce home energy usage (and costs) which in turn leads to reduced GHG emissions.

However, Jacobs concludes that to reach their full potential, some technologies will require further innovation development to reach their net zero potential – e.g. low energy ammonia recovery without the need to import additional fossil based gas which would otherwise increase Scope 1 emissions. Important areas for further work are indicated for promising but less developed solutions.

Jacobs also highlights two important considerations which need to be borne in mind:

1. Shortlisted technologies are likely to allow a net emissions reduction at a technology/solution level. However, evaluation of their Net Zero credentials requires consideration of their integration at the wider systems level and the possibility this negatively impacts their decarbonising potential or even results in a net positive carbon emission. For example, biomethane to grid, if this results in a reciprocal increased import of fossil (natural) gas and grid electricity.

2. The project recognises that companies who have signed up to science-based targets, aligned with the Paris Agreement, cannot ‘net off’ emissions through carbon offsets. This also aligns with Ofwat’s Net Zero principles position paper expectation that reducing emissions should be water companies’ focus before offsets are considered.

More work still needed to collect evidence, improve understanding and knowledge base

Jacobs describes the project as representing an important step in the water sector’s understanding of the scope, challenges and opportunities in achieving Net Zero.

However, the Review also suggests that currently there is a lack of evidence for the carbon impact of or alignment of technologies in relation to allowing companies to mitigate GHG emissions in line with Net Zero principles. This was subsequently identified as a gap requiring further work such as needing to focus on providing sector specific case studies and apply existing methodologies with respect to carbon impacts to support whether technology solutions are aligned with Net Zero principles.

Jacobs also cautions that while company emission reduction plans are likely to be accredited through third party schemes such as Science Based Targets Initiative (SBTi™), substantive work is still needed to improve understanding and knowledge base of the Net Zero attributes of technologies.

“Additionally, business cases need to be built upon recognised protocols and methodologies, Ofwat guidance and use site specific assessments which align with recognised GHG inventory assessment frameworks. This will enable them to demonstrate transparency, accuracy, completeness, comparability and consistency,” the Review says.

Click here to download Net Zero Technologies Review in full