Governing for Low Energy Futures: Implications of Risk Opportunity Analysis

Reaching net zero will require faster and wider adoption of climate change mitigation solutions. At the same time, policies to promote net zero solutions also seek to deliver a wider range of benefits, including enhancing living standards, making societies fairer, and ensuring energy systems are reliable and secure.

As a result, there is a need for better ways to assess the extent to which energy and climate policies contribute to providing these benefits under conditions of uncertainty.

This project examines the potential for reforms to national policy appraisal in the UK, together with a trial of risk-opportunity analysis, to strengthen the evidence base for low energy pathways and assess the feasibility of energy demand policies which have been argued to provide multiple benefits.

In 2026, the UK Treasury will update its guidance for assessing policies – known as the Green Book. The new rules will encourage decision-makers to look more at how policies affect different places and groups of people, and how they shape long-term change, rather than focusing mainly on direct costs and benefits.

Additionally, the Department for Energy Security and Net Zero will trial risk-opportunity analysis alongside a more traditional cost-benefit analysis during the setting of the Sevent Carbon Budget Delivery Plan, expected in Autumn 2026. Risk-opportunity analysis aims to assess the impacts of policies on processes of change in the economy, assess a wider range of risks and opportunities, and assess quantitative and qualitive impacts using appropriate units of measurement.

This project aims to achieve the following objectives:

• Explore how changes to the Green Book may affect how energy demand-side measures are valued and considered in decision-making.
• Assess whether using a “risk and opportunity” approach changes how energy supply and demand measures are treated in UK energy policy.
• Provide evidence on how to improve the way energy policies are assessed to identify policies that deliver transformative change across multiple areas.

We will undertake a rapid review of evidence from academic and policy literatures on climate policy assessment, risk-opportunity analysis, and changes to the Green Book. This review of evidence will seek to explore the implications of ongoing changes to policy assessment for the valuation and feasibility of energy demand policies.

We will also conduct a discourse analysis of how these changes embed a particular set of values and assumptions about energy demand reduction. This will involve conducting 15-20 interviews with expert groups to examine the implications of ongoing changes for the legitimacy, ambition, and fairness of energy demand reduction measures.

Reducing energy demand has many well-known benefits, but these are not always fully reflected in UK energy policy decisions. This project will give policymakers practical evidence on how new ways of assessing policies could make energy demand reduction solutions easier to adopt and help speed up the transition to net zero, while also improving living standards, reducing inequality, and enhancing energy security.