Failure to tackle cost-of-living crisis could derail UK’s net-zero transition, Institute for Government warns
The current cost-of-living crisis, largely driven by energy price hikes, is the "most immediate threat" to the UK's delivery of its long-term climate targets, according to a new policy briefing.
Published today (13 January) by the think-tank the Institute for Government (IfG), the warning forms part of a new policy briefing on laying the foundations for the UK’s transition to net-zero in the coming months.
Experts, including the Government’s own advisors at the Climate Change Committee (CCC), have warned that the longer the transition is delayed and the less it is organised, the higher the costs will be and the lower the chances will be of the UK meeting its legally-binding pledges to cut emissions.
The IfG’s new policy paper states that, unless the Government takes urgent action to manage the current cost-of-living crisis, the public and political momentum built up around COP26 will fizzle out. Millions of UK households are set to see their energy bills surpass £2,000 this year, largely due to the skyrocketing costs of gas imports. At the same time, food prices are rising and changes to income tax could leave many low and middle-income homes paying up to £3,000 extra annually.
The energy price crisis, in particular, has opened a fierce debate among MPs and businesses about how best to respond, with some arguing that we should produce more gas domestically and scrap green levies on bills, and others arguing that this approach is too short-sighted and ignores the root causes of the problem.
Short-term measures recommended in the IfG report include
“Alongside any short-term package on energy bills, the government should set out how its approach to energy bills now fits with its long-term net-zero vision,” the report states. “It has so far made a few comments suggesting that the current gas market crisis underlines the importance of reducing exposure to volatile global energy markets but has failed to address the concerns about the vulnerability of dependence on intermittent renewables.”
While planning rules for energy storage were relaxed in 2020, and a new nuclear funding model is in the pipeline, there have been increasing calls for longer-term and wider-reaching plans on ensuring energy security amid the transition electrification and to a fully “clean” electricity system by 2035.
According to the IfG, the Government must also – as a priority – dedicate resources to filling the gaps in its Net-Zero Strategy. Indeed, two court cases are being filed against the Government over the Strategy, with ClientEarth and Friends of the Earth arguing that it doesn’t comply with the UK’s legal commitments to tackle the climate crisis.
The Strategy was published in October 2021 in preparation for COP26 in Glasgow. At the time, the Government badged the Strategy as a pathway for “transforming every sector of the global economy” in a manner aligned with net-zero by 2050. However, green groups, trade bodies and MPs have all said that the Strategy left much to be desired.
The IfG is recommending that Ministers accelerate the delivery of a sector deal for agriculture and land use, which the CCC was first asked for advice on in 2020. This policy package would build on the Agriculture Strategy and, aside from net-zero, feed in to the Government’s commitment to leave nature in a better state for the next generation.
Also recommended are:
- The publication of time-bound, sector-specific emissions reductions goals. The think-tank, like many other influential bodies, has argued that the current net-zero target is not being supported by enough detailed information on delivery.
- The finalisation of in-depth action plan on green jobs, following the advice of the Green Jobs Taskforce.
- The launch of a consultation on a net-zero stress test for all public spending.
- The production of a net-zero-aligned tax strategy by the Treasury.
- The confirmation of net-zero-aligned principles to be included in all trade deals.
- Transforming the COP26 team, over time, into a net-zero unit within the Cabinet office.
- Better communication with the general public about the costs and benefits of the net-zero transition, and how they can contribute.
“In the run-up to COP26, the Prime Minister said that net-zero was one of his top priorities,” said IfG senior fellow and report author Jill Rutter.
“Now that the Glasgow conference is ‘done’, the Government needs to show that it can maintain that momentum and put in place the detailed changes needed to translate its strategy into action. But first, it needs to convince the public that it can manage the immediate energy bills crisis, without sacrificing its long-term net-zero objective.”
Johnson has stated that he has had several meetings with Chancellor Rishi Sunak and Energy Minister Kwasi Kwarteng in recent weeks over the energy price crisis, with several more in the pipeline. However, he is facing mounting pressure to resign over his handling of the Covid-19 pandemic and his repeated flouting of lockdown rules.
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