irroring the proverbial London buses, last week the government published not one but four Net Zero policy documents in one day. These were: Net Zero strategy: Build back Greener, Heat & Buildings Strategy, Greening Finance and the Net Zero Cost Review
Clearly the strategies are in part an attempt by the UK to ‘lead by example’, as the Government seeks to persuade other countries to match UK ambitions. Yet the content of them also gives some insights into where Net Zero policy and politics has got to.
Three of these documents have been delayed since Spring and their tone bears the hallmark of the internal arguments. While most of the actual conclusions and decisions in the document are pretty much what would have been expected, a number of punches have been pulled in an attempt to shore up public support for Net Zero, especially among less affluent voters in ‘red wall’ seats.
The result is a broad front strategy which makes some progress on each of the main technologies deemed essential by the Committee on Climate Change (CCC) analysis: heat pumps, hydrogen, offshore wind, nuclear, CCS, greenhouse gas removals. The aim is to put in enough funding and policy ‘nudges’ to pump prime private sector investment and innovation at scale, while keeping options open so that as a country we have the flexibility to exploit areas where falling costs and innovation allow big carbon cuts to be generated efficiently. Alongside this there are repeated pledges that households will not be forced into paying for expensive low carbon technology that they cannot afford, and planned sections on the need to reduce meat and dairy consumption have been dropped altogether.
Reaction to the documents has mostly been of muted support, with recognition that this is just the start of a challenging 10-15 years ahead Matthew Farrow, EIC
Reaction to the documents has mostly been of muted support, with recognition that this is just the start of a challenging 10-15 years ahead. The decision to back a range of technologies has been broadly welcomed, although commentators have pointed out that in areas such as heat pumps, the amount of new funding allocated, combined with the pledge not to force homeowners to buy them, means that the pace of deployment envisaged – 600,000 per year by 2028 – still seems a long way off.
Lastly, there is a sense that the No10/BEIS vs. Treasury tensions on Net Zero remain manageable for the moment, but also unresolved. The Treasury’s Net Zero cost review has ended up being relatively low-key, making a series of observations around how certain types of household and business may end up being exposed to Net Zero transition costs, and emphasising the need for nuanced policy to address this.
There is also a warning that a future pandemic alongside the Net Zero transition could put significant strain on public spending. At the same time the Greening Finance report contains a proposal that may turn out to be of the most significant across all the documents – a new Sustainability Disclosure Requirement covering corporates, asset owners and investment products. Together with the ‘green taxonomy’ (a way to decide which sorts of economic activity are ‘green’ and which are not) currently being developed, this is an area definitely worth watching.
Matthew Farrow was previously director at EIC.