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Net Zero is a ‘historic opportunity’: UK Net Zero Review

© Shutterstock / Sansoen Saengsakaorata graphic with 'net zero' and different shapes representing a net zero global economy

Former Energy Minister Chris Skidmore has published his independent review of UK net zero policy, warning that the country is “falling behind” on climate policies and net zero targets and needs a “new approach”.

  • The review calls for 25 actions within two years (129 overall), including food eco-labelling, and phasing out gas boilers by 2033. It said that policy must supply ‘certainty and consistency’.
  • Skidmore calls on the government to move ‘further and faster’, as failure to do so could expose the UK to higher risk and missed economic opportunities.
  • It describes the climate crisis as the economic opportunity of the century but steps must be taken to build resilience and reframe economic development.

The report Mission Zero: Independent Review of Net Zero calls for a serious ‘step change’ in approach. It goes into detail regarding the economic opportunity of net zero, and calls for rapid action on phasing out gas boilers, easing planning for solar and providing longer-term funding certainty for major net zero projects by 2033.

David Lloyd, GM of Connected Energy Performance at Johnson Controls says that thisis an obvious sign that we must take serious collective action towards a low carbon economy at speed and scale”.

Greenpeace UK’s policy director Dr Doug Parr said: “We have all seen what our dependence on fossil fuels is doing to our world – from devastating floods and heatwaves to budget-busting energy bills. Moving away from this destructive energy system is not just necessary and possible – it’s also a great economic opportunity.

He added: “Those who want to slow down climate action are the equivalent of 19th-century canal owners urging caution over the new-fangled railways. A 100% renewable energy system and climate-friendly food production are feasible and cost-effective so we should stop faffing about and get on with it.”

UK has an opportunity to lead the green economy

The former energy minister says the UK’s leadership on tackling climate change has led to changes at home and around the world – with more than 90% of the world’s GDP now committed to net zero.

Official statistics show there are already around 400,000 jobs in low carbon businesses and their supply chains across the UK, with turnover estimated at £41.2 billion in 2020. Both the British Energy Security Strategy and Net Zero Strategy aim to leverage an additional and unprecedented £100 billion of private investment, while supporting an extra 480,000 British jobs by 2030.

He argues that more can be done to develop the green economy, and urged the government to grasp what he called “a historic opportunity”. The review makes 129 recommendations, all to seize opportunities for creating a green economy – including the greater role that business can be supported to play, making better use of infrastructure and delivering more energy efficient homes.

Each of the recommendations in the review is intended to maximise economic investment, opportunities and jobs – all while working towards achieving legally binding targets to reach net zero carbon emissions by 2050.

Using infrastructure to unlock net zero

The review says that the implementation of the British Energy Security Strategy to update the mandate of Ofgem, creating the Future System Operator, needs to be accelerated. This is considered an important tool in speeding up the connection of cheaper renewables such as solar and onshore wind.

Skidmore says the government should develop a cross-sectoral infrastructure strategy by 2025 supporting the building and adaptation of infrastructure for electricity, hydrogen, other liquid and gaseous fuels and CO2 networks that support the green economy.

He also points out the need to reform planning, so that where locally supported, more solar and onshore wind can be developed more easily, helping communities reap the benefits of cheaper low-carbon electricity.

Creating sustainable governance structures for net zero

Another recommendation is the importance of developing an over-arching government financing strategy by the end of 2023. It’s important to provide both clarity and consistency in policy approaches, in order to ensure that companies and investors are being given the right market signals.

One of the ways in which this could be achieved could be the creation of an Office for Net Zero Delivery, responsible for placing net zero delivery at the heart of government thinking.

Chief Executive of Aviva (LSE:AVL), Amanda Blanc said: “The government should put in place its own ‘clear, consistent and stable transition plan’ setting out the detail of how the UK will meet its climate commitments. In turn, this will unlock the business actions and investment needed to make the transition a reality.”

Backing businesses to go green

Clarity and consistency are a necessary part of driving the market towards a net zero goal. That means that it will be necessary to review incentives for investment in decarbonisation, including via the tax system and capital allowances.

At the same time, the report accepts that protecting British industries from environmental undercutting will play an important part in the overall strategy. This can be achieved by progressing plans on carbon leakage measures and providing more detail on the UK’s new Emissions Trading Scheme (ETS).

As ever, skills and expertise will play a critical role in pushing the economy forward. The suggestion is that the skills needed for the net zero and energy transition can be developed by driving forward the Green Jobs Taskforce recommendations.

It’s equally important that smaller businesses are supported in building their own strategies and the report recommends the launch of a ‘Help to Grow Green’ campaign, offering information and support to SMEs to plan and invest in the transition.

Catalysing local action

Another aspect of the report is its emphasis on the importance of local action. A core recommendation is to reform the planning system at local and national levels to place net zero at its heart. It also suggests the creation of at least one Trailblazer Net Zero City, local authority and community, with the aim for these places to reach net zero by 2030.

Increasing transparency and engaging people

Transparency will play a key role in not only enabling effective risk analysis and the realignment of investment capital, but its important to ensure that the public understands the bigger picture. On this note, the report recommends expanding the government’s public reporting on net zero.

The recommendation includes ramping up public information through a new engagement plan, a new carbon calculator on the carbon cost of choices, and a standardised approach to ecolabelling on products. It also suggests the development of a Net Zero Charter mark, acknowledging ‘best in class’ among firms for their work in reaching net zero.

Delivering cleaner, cheaper, greener homes

The built environment, which contributes around 40% of global emissions every year, will need to be addressed. The report suggests implementing the Future Homes Standard, meaning no new homes will be built with a gas boiler from 2025, and all homes sold to be EPC C by 2033.

It also suggests adopting a 10-year mission to make heat pumps a widespread technology in the UK, as well as legislating for the end of new and replacement gas boilers by 2033 at the latest. Another recommendation is to reform the existing EPC ratings to create a clearer, more accessible Net Zero Performance Certificate (NZPC) for households.

Capitalising on international leadership

While the UK was one of the first countries to introduce a Climate Change Act, it became clear over time that the government is not meeting its responsibilities under the Act. Yet it has been a significant contributor to the perception of the UK’s leadership on climate action.

The report suggests conducting a strategic review of the UK’s international climate leadership and introducing environmental and climate protections in future free trade agreements, removing trade barriers to environmental goods and services.

Setting up the UK for 2050 and beyond

One of the biggest opportunities in the green economy lies in innovation. Skidmore recommends ramping up investment in research and development (R&D), with a new net zero R&D and technologies roadmap up to 2050, supporting up to three 10-year demonstrator projects.

There are obviously costs associated with the report’s recommendations but, after savings including needing less expensive fossil fuels, the cost of transition under the Climate Change Act has been predicted to be between 0.5-1% of GDP.

Given that government numbers suggest that 1% of GDP is considered to be at risk because of climate change itself, combining the trade-off in costs with future economic opportunities makes the transition seem like a sensible long term plan.

The recommendations could be implemented via the next budget, due in March, or even in the required update to the UK’s Net Zero Strategy. This is a court ordered action resulting from the 2022 High Court judgement, which found that the Strategy was unlawful because it failed to explain how the government planned on reaching its net zero targets. The Skidmore report might have done their work for them. Now we have to wait and see how the government responds.

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