The report on the Net Zero consultation, Mission Zero-Independent Review of Net Zero authored by Chris Skidmore, has been published. The consultation received about 1800 responses including a formal response from CCL UK and 31 responses from individual members. Possibly contrary to the expectations of the commissioners of the consultation, participants felt that moving to Net Zero would be a boost rather than a hindrance to the economy!
The Executive summary states that…..
The Net Zero Review travelled to all four nations of the UK, received over 1800 responses to the Call for Evidence, and held more than 50 roundtables, making it one of the largest engagement exercises on net zero in the UK. We heard a clear message from businesses, organisations, individuals, and local government across the country: net zero is creating a new era of opportunity, but government, industry, and individuals need to act to make the most of the opportunities, reduce costs, and ensure we deliver successfully.
The Review has heard loud and clear that net zero is the economic opportunity of the 21st century. The evidence presented to the Review has shown that the pace of recent change has created a rush of economic opportunity at a massive, global scale. With more than 90% of global GDP covered by a net zero target there is now huge global momentum to reach net zero and capture the economic opportunities. This is driven by businesses of all sizes who have recognised that net zero can help them grow.
We must act decisively to seize the opportunities in a global race. We are not alone in seeing the opportunity around the world. Countries and businesses have woken up. From the USA’s $369 billion investment in clean technology through the Inflation Reduction Act and the ‘France 2030’ investment plan in France to the EU’s ‘Fit for 55’ programme it is clear we are in an international race for capital, skills, and the industries of the future. We must act quickly, and in collaboration with our international partners, to cement the UK as a prime destination for international capital and unlock export opportunities for British businesses around the globe. Failing to do so will mean missed opportunities.
We must move quickly. We have heard from businesses that economic opportunities are being missed today because of weaknesses in the UK’s investment environment – whether that be skills shortages or inconsistent policy commitment. Moving quickly must include spending money. We know that investing in net zero today will be cheaper than delaying, as well as increasing the economic and climate benefits. Analysis suggests that delaying action by ten years could mean UK debt could be 23% of GDP higher in 2050, doubling the fiscal cost of achieving net zero and not capitalising on economies of scale. Oxford research has shown that a fast transition to net zero based on scaling up key green technologies will continue to drive their costs down, and transitioning to a decarbonised energy system based on green technologies by 2050 can save the world at least $12 trillion, compared to continuing our current levels of fossil fuel use.
Ultimately, the benefits of net zero will outweigh the costs. In some estimates, the UK would see approximately 2% additional growth in GDP, through the benefits from new jobs, increased economic activity, reduced fossil fuel imports and cost savings (for example cheaper household bills). These estimates do not reflect the risk and disruption of not acting, which would run so clearly counter to the prevailing expectations of business and global trends. For all that there are some risks to the public from the transition, considered in detail in this Review, for the individual the benefits of net zero will – particularly with the right interventions by government – outweigh the costs. This Review sets out recommendations to provide clarity and certainty to businesses and investors and offers a view on how to back up the UK’s ambitious net zero vision with clear delivery pathways.
It was emphasised that the government needed to be clearer and more consistent with long term policies….
The Review has listened and engaged with almost every sector to identify the barriers to future delivery, as well as the opportunities that could be seized in the future. Overwhelmingly, the common message has been the need for clarity, certainty, consistency, and continuity from government. Sectors have indicated that a long-term, stable investment plan is required. We have identified ten priority missions to harness public and private action out to 2035:
The ten priorities comprise:
- Improving the grid and infrastructure,
- Full scale deployment of solar, onshore wind and nuclear,
- A clear plan for industrial decarbonisation, using hydrogen and CCUS,
- Stimulating the move to a circular economy,
- Unblocking local planning to enable local communities to act on Net Zero,
- Working towards gas free homes by 2035 including implementing a ban on new boiler sales in 2033 and implementing a Net Zero Performance Certificate (the current EPC rewards gas heating),
- Working towards Net Zero nature and boosting R&D.
None of this will happen without a step change in the government’s approach to delivering net zero. For all the UK’s past success and future ambition, the Review has heard from many respondents frustrated by a lack of long-term thinking, siloed behaviour from government departments, and uncertainty over the length of funding commitments. Evidence suggests this is holding back deployment of green technologies, hampering investment across all sectors, and inhibiting the ability to create British jobs. To unlock this, and bring the clarity, certainty, and consistency desperately needed, the Review recommends:
- An over-arching government financing strategy by the end of 2023, giving long-term clarity to business and investors and ensuring we capitalise on our industrial strengths
- A long-term programmatic approach to net zero projects and considering longer-term funding certainty for major priorities for net zero – where we know that long-term policy commitment will be essential for success
- An Office for Net Zero Delivery, responsible for placing net zero delivery at the heart of government thinking, ensuring best practice for key delivery projects, and taking ownership of net zero priorities where they span multiple departments
Sadly the benefits from Climate Income – a consistent, predictable carbon price with the revenue returned to households to offset the rising costs of fossil fuels and retrofitting, has not been grasped. The report does acknowledge that there would be more public acceptance of carbon pricing if the revenue was hypothecated, citing an article in the respected Nature Climate Change journal “When carbon revenues go towards the general government budget, some studies have found that public acceptability is lower. If instead carbon revenues are earmarked for a specific purpose—notably as targeted green investments or transfers to particularly affected groups—citizens report greater acceptability of carbon pricing.” (Making Carbon pricing work for citizens, Nature Climate Change, 8, pp. 669–677 (2018)). The report therefore suggests that North Sea Transition plans should include tax revenue going to a Net Zero Fund.
The report does state that ETS should be reformed; it is not currently aligned to net Zero and only covers 18% of emissions. Hopefully reform should, at the very least, make the ETS more consistent, perhaps the government might follow the example of the Austrian Klimabonus and impose a Climate Income on the fossil fuels used in buildings and transport (sectors which the government removed from ETS expansion plans)?
This week we also learnt that Exxon knew about but downplayed the threat of fossil fuel induced climate change as early as the 1970s (The Clash got it wrong – the sun wasn’t zooming in and the Ice Age wasn’t coming!) and the CEO of the UAE state oil company was announced as President of COP28.
We must hope that current and future UK governments will acknowledge and act on the recommendations of this report and not betray the hopes of COP26; sending the clear message that the UK government meant what it said when Net Zero was enshrined in law and ideally going further with fiscal policies which will facilitate speedier, smoother decarbonisation – such as Climate Income!