A net-zero New Year? The 7 green policies UK businesses are still waiting for

December saw a flurry of green policy announcements, from the Energy White Paper to the decision to end finance to fossil fuels overseas. But several key policy gaps remain on the road to net-zero as we enter a new year - and will need to be closed ahead of COP26.

A net-zero New Year? The 7 green policies UK businesses are still waiting for

MPs are due to return from recess next Monday (11 January)

The start of a New Year is always a good time to take stock; to reflect on the successes and learnings of the 12 months’ past and to clarify priorities for the future. This will be no different in the sustainability space, especially given that there is now less than a year to go until the delayed COP26 in Glasgow. Just this week, BEIS Secretary Alok Sharma has reportedly asked to dedicate all of his working hours to preparations for the crucial climate conference.

With the run-up to the event now in full swing, the UK Government is facing mounting pressure to firm up its plans for meeting its legally binding 2050 net-zero target. While the target was the first of its kind from a developed nation, hurdles remain in addressing hard-to-abate sectors; ensuring a socially just transition and developing a joined-up green recovery approach.

Here, edie provides an update on the big green policy announcements we’re expecting in early 2021 – including several we had been hoping for in late 2020.

Heat and Buildings Strategy

Since edie last took a look at the policy gaps on the road to net-zero in October 2020, the Government has taken the decision to combine the Heat Strategy and Buildings Strategy. This seems to be a sensible choice, given that heat accounts for around one-third of the energy footprint of buildings.

BEIS Secretary Alok Sharma had promised both of these strategies in autumn 2020, but they have fallen victim to Covid and Brexit-related delays. Companies across the heating, built environment and heavy industrial sectors are waiting eagerly to find out which technologies they should prioritise investment in and which standards they will need to comply with.

On the heat side of the piece, this policy framework will confirm the Government’s plans for replacing the Renewable Heat Incentive (RHI), which closes for households in 2022 and businesses in 2021.  Organisations including the CCC, Renewable Energy Association (REA), Confederation of British Industries (CBI) and UK Energy Research Centre have all urged those developing the Strategy to make it broader in scope and longer-term than the RHI. There are also calls for the Government to firm up its vision for hydrogen in heating after the Ten-Point Plan earmarked a £500m pot for green hydrogen production.

As for buildings, we can expect more guidance on the Future Homes Standard and more details on some of the facets of the National Infrastructure Strategy. The facets detailed will replace the Construction Strategy and, if the advice of bodies like the UKGBC are taken into account, will mandate businesses to reduce embodied carbon as well as operational impacts.

Transport decarbonisation roadmaps

The Department for Transport pledged, before the 2019 general election, to publish roadmaps for aligning “every single mode of transport” with net-zero by the end of 2020. It provided an update to media representatives in spring, stating that it was striving to keep to this timeline despite the pandemic. But this did not come to fruition and businesses and local authorities are awaiting guidance.

The Ten-Point Plan brought the ban on new petrol and diesel car sales forward to 2030 and touted £5bn for active travel and low-carbon public transport – but the DfT was unable to confirm to edie whether this allocation overlapped with a previous £2bn commitment on walking and cycling.

Moreover, less direction has been provided for perhaps two of the hardest-to-abate modes for transport – aviation and shipping. On the former, the interests of members of the recently formed Jet-Zero council range from sustainable aviation fuel (SAF), to hydrogen aircraft, to electrification, to more efficient models. Some combination of these technologies is likely necessary and the CCC has also recommended a cap in growth post-Covid. As for shipping, the Clean Maritime Plan is under consultation and could require vessels to be designed with zero-emissions capable technologies by 2025. Yet the UK recently voted for an amendment to International Maritime Organisation requirements which allows emissions from the sector to grow through to 2030.

Environment Bill

The Environment Bill was making strong progress through Parliament pre-lockdown and key figures praised the new powers added at its second reading. It contains measures to maintain and improve environmental standards after the UK leaves the EU. edie’s Green Recovery Survey of 244 sustainability and energy professionals by edie found that this Bill is the top policy priority.

But after a brief return to Parliament in November following an absence of more than two months, the Bill was shelved once again in December. After 22 sittings in the House of Commons concerning the Bill, a report is due once Parliament returns from the winter recess, but a firm date has not yet been announced.

Nonetheless, a Chair has been appointed for the UK’s post-Brexit watchdog, the Office for Environmental Protection (OEP) – Dame Glenys Stacey. Stacey served as chief executive and chief regulator at Ofqual between 2012 and 2016 and had re-assumed this post in August 2020. MPs on the Environmental Audit Committee asked Stacey in December to detail her how she will demonstrate her independence and her plans for the watchdog.

Resources and Waste Strategy

The Resources and Waste Strategy was introduced in December 2018 and is the first major policy shake-up in this space in more than a decade. It outlines a national deposit return scheme, changes to extended producer responsibility requirements and measures to increase food waste collections.

The second stage of consultations on some of the Strategy’s key provisions, including what it will mean for plastic producers and recyclers, was due in the second half of 2020. August saw Defra confirm that these have been pushed back to 2021. With 45% of emissions globally coming from systems of consumption and production, the link to net-zero is clear. The coming months will be crucial for progress in this space.

Pensions Bill  

Green Finance was one of the most-discussed environmental topics of 2020, as the green recovery movement laid out the links between positive outcomes for people, planet and the economy. Several large businesses entered the green bonds market for the first time, along with some local authorities and nations including Germany, Sweden and the UK.

But, of course, green finance will need to become finance-as-usual if national net-zero targets are to be met. The Pensions Bill aims to transition the UK’s pension sector in this way – it includes a new mandate requiring large pension schemes to disclose the climate-related risks posed to assets in their portfolios by the end of 2022, in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).

The Bill has now finished progressing through Parliament, but Royal Assent has not yet been given. We can expect a sign-off in the first quarter of 2021.

A decision on the Sixth Carbon Budget Advice    

With the UK off track to meet its fifth carbon budget, all eyes in the sustainability space were on the CCC in early December as it published its advice for the sixth carbon budget. The recommendations have been dubbed the toughest yet and are designed to deliver a 78% reduction in emissions by 2035, against a 1990 baseline.

Facets detailed include an extension and expansion of the retrofitting approach taken through the Green Homes Grant and Public Sector Decarbonisation Fund; hugely increasing renewable electricity generation and growing and accelerating the CCUS and nuclear pipelines.  There are also several behaviour-change-based recommendations like reducing meat consumption and aviation.

As is the case with all formal CCC advice, the Government must now publish a response outlining which parts it will adopt and which it will not – and why.

Net-Zero Roadmap

In October 2020, the Government responded to the CCC’s latest progress report, which criticised a lack of joined-up policy thinking historically, by promising to publish a comprehensive net-zero roadmap ahead of COP26.

A date has not yet been confirmed but this will likely be the last item on this list to be finalised, as it will summarise the links between all other policy frameworks.

Sarah George

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