Green growth or greenwashing? Business leaders react to Rishi Sunak's 2021 Budget
After Chancellor Rishi Sunak opened his red Budget box to provide more detail on green bonds and net-zero innovation finance, there has been a mixed reaction from green economy leaders - as edie summarises in this article.
Taking place earlier this afternoon (3 March), the Budget speech provided Sunak with the opportunity to update the general public on the Treasury’s approach to delivering the UK’s economic recovery from Covid-19. The furlough scheme was extended as support grants for the self-employed were broadened.
But there were also several announcements that will directly affect the UK’s net-zero transition. On the one hand, Sunak announced plans to issue £15bn of green sovereign bonds this financial year; allocate £1bn of funding to net-zero innovations and create eight freeport regions where green business investment processes will be streamlined.
On the other hand, fuel duty was frozen for a twelfth consecutive year, while the Green Homes Grant and National Nature service went unmentioned.
Here, edie rounds up what key green economy leaders are making of the new funding pots and changes to fiscal policy frameworks.
2021 Budget: Green business reaction
The Aldersgate Group’s executive director Nick Molho:
"It is welcome to see the Budget acknowledge the importance of an investment-led recovery, which will be essential to supporting the UK’s economic growth and the development and deployment of low carbon technologies and services. Whilst today’s announcements set a useful framework towards economic recovery, there are a number of significant missed opportunities within key areas such as housing and transport that must be picked up in the Government’s upcoming net-zero strategy, which needs to provide a cross-economy roadmap to reach our net-zero target by 2050.”
Green New Deal UK’s co-executive director Fatima Ibrahim:
“Our response to the climate crisis should have been front and centre of the Budget, not a footnote. Last month, Boris Johnson told the UN Security Council that climate change is as big a threat to world peace as war. Yet today’s Budget shows a decided dip in both rhetoric and action.
“The failure to reform and extend the Green Homes grant shows that this Government is not at all serious about tackling climate change or fuel poverty. We have some of the leakiest homes in Europe and every year tens of thousands are left to die in freezing cold homes. We need an army of retrofitters to insulate every home in Britain and create hundreds of thousands of good jobs. Considering the scale of the challenge facing UK housing, this omission is an outright failure.
“Green investment in jobs is the most effective way of getting the UK economy moving. We don’t have time to waste in creating the low carbon economy of tomorrow - the furlough scheme won’t be able to carry the full weight of job losses and businesses closures, while the climate crisis continues to worsen. This is a budget built on sand: it does nothing to address the long term issues of inequality, joblessness and climate change facing this country - all of which have worsened due to the pandemic.”
Green Party MP Caroline Lucas:
"The Chancellor has again failed to rise to the climate and ecological emergency. We needed a transformational change but got a budget for business-as-usual. Sunak is stuck in the past but a new economy that puts people and nature first is within our reach."
"Four times Sunak said he was being honest with people. What would have been honest is acknowledging and addressing the climate and nature crises This isn’t leadership. We urgently needed a genuinely green budget - for jobs, economy, climate and the UK's reputation as COP26 hosts."
Environmental Audit Committee chairman Philip Dunne MP:
“Only two weeks ago, the EAC warned the Government that time is running out to limit the effects of climate change. Expanding the remit of the Bank of England is a globally significant step in the transition to zero carbon. But despite constraints on the Chancellor’s scope for manoeuvre from the economic consequences of covid-19, as this is the year when the UK hosts COP26 and the eyes of the world are on him, he has missed opportunities in other areas to put his stamp on efforts to grow back greener.”
Dunne cited recommendations including reducing VAT for green sectors including energy efficiency upgrades and investing more significantly in renewable and low-carbon energy.
RenewableUK’s chief executive Hugh McNeal:
“This is a big-bang moment for offshore wind manufacturing in the UK which will drive investment in a globally competitive domestic supply chain. The Government is putting its support squarely behind the kind of strategic approach to securing supply chain investment which the industry has been making the case for during our intensive work with Ministers to deliver the green economic recovery this country needs. This new funding to develop world-class offshore wind hubs in Teesside and Humber is a clear example of levelling-up in action.
“There is a huge opportunity for the UK's offshore wind industry not only to supply UK projects but also to export to rapidly growing global markets. Today’s new funding for port upgrades and the award of new freeports represent a huge boost to our export ambitions”.
“The next wave of renewable projects could inject £20bn of private investment into the economy and support over 12,000 jobs. Ramping up onshore and offshore wind, alongside hydrogen and other renewables, is the key to unlocking a rapid, low-cost transformation of the energy sector. We therefore welcome the new support for floating offshore wind and renewable hydrogen technologies announced today which will play a vital role in the UK’s net-zero transition”.
Scottish Greens co-leader and finance spokesperson Patrick Harvie:
“Rishi Sunak had no choice today but to invest in recovery, but there is no leadership when it comes to the climate emergency. Across the world, countries are investing serious public money into a green recovery, in things like renewable energy, public transport and warm homes. That’s not what we’ve seen today.
“While I welcome that furlough and the £20 universal credit uplift have been extended, a fair recovery depends on more permanent solutions. Keeping the corporation tax at the lowest rate in the G7 isn’t a good start.
“It would be unthinkable to return to an economy which relied on poor wages and insecure incomes, and that allowed far too many people to fall through the holes in the social security safety net.
“The Scottish Government has an opportunity to use any extra consequential coming to Scotland to invest in that fairer, greener economy. We have been clear that this must prioritise low wages and rising poverty.”
The UK Sustainable Investment and Finance Association’s (UKSIF) chief executive James Alexander:
“We welcome confirmation from the Chancellor on plans to set up the UK’s National Infrastructure Bank with the drive to net-zero at its core, responding directly to calls from UKSIF alongside other groups in the run-up to the Budget. UKSIF’s members invest in low and zero-carbon projects across the UK, and the new infrastructure bank can play a key role in crowding-in private capital to emerging green technologies and infrastructure.
“UKSIF has long called for action to more fully integrate net-zero into the activity of government and regulators. We welcome today’s announcement on the updating of the Monetary Policy Committee’s remit as a starting point for the UK's climate commitments being embedded across the UK’s regulatory system.”
UKGBC chief executive Julie Hirigoyen:
“In his speech today, the Chancellor insisted that this country needs a real commitment to green growth and to create jobs where people are. However, ‘build back business as usual’ would be a more fitting description for the Government’s plans to build back better.
“We are still none the wiser about the fate of the Green Homes Grant scheme, which just a few short months ago the Chancellor told us would support over 100,000 jobs in green construction up and down the country.
“Beyond the opportunities for green investment offered by the Infrastructure Bank and new green gilt and retail savings product, this Budget appears to ignore the huge part that greening our buildings can play in delivering our post-Covid economic recovery. Tackling carbon emissions from buildings – particularly the existing housing stock – is not easy, but we cannot afford to duck the challenge any longer.
“The chancellor’s emphasis on local growth is welcome, as we recognise that local authorities have a vital role to play in seizing local green growth opportunities. However, local authorities alone cannot deliver the change we need without central government leading from the front.”
UK100 director and the APPG on Sustainable Finance’s Secretariat Polly Billington:
"This Budget has been promoted as a way of spending government money to meet the Ten Point Plan for a Green Industrial Revolution. But by the government's own admission, the plan will not keep us on track to meet net-zero.
"All fiscal activity now needs to be judged not only on how the economy grows but how we meet Net Zero and get the country on a path to resilience and prosperity for all. The budget cannot be deemed a success unless the government can demonstrate it achieves that.
"The UK won't meet its net-zero target without locally-led climate action, so along with investment in places that desperately need good green jobs and growth, it is only by giving more devolved powers and capacity to local leaders can this opportunity really begin to become a reality."
CPRE’s chief executive Crispin Truman:
“The Chancellor’s Budget simply doesn’t add up – the government can’t claim to have a ‘real commitment to green growth’ while using funding models that systematically disadvantage rural communities and worsen the climate emergency.
“By levelling up between urban and rural investment, not just north and south, we could regenerate many rural towns and villages that have been long forgotten. It’s just not right that government spending per person on public infrastructure is 44% higher for urban areas than it is for rural areas with no major cities. We risk levelling up northern cities to the level of London and leaving rural areas stuck in disadvantage and decline.
“Today, the Chancellor has also missed a golden opportunity to prove that the government really means business when it talks about the UK being a genuine world leader in tackling the climate emergency. What we need is for the government to help create green and sustainable jobs up and down the country that help real people, while also making the UK economy greener. The Chancellor mentioned 'green growth', 'green industries' and 'green projects' nine times but there’s nothing green about the jobs created by a new coal mine in Cumbria. He should be stimulating jobs in areas like Cumbria with renewable energy and energy efficiency, rather than through a coal mine that will be disastrous for carbon emissions and disastrous for our international reputation on climate in equal measure. All in all, a disappointing Budget for climate, communities and the countryside.”
Wildlife and Countryside Link chief executive Richard Benwell:
“Today, the Chancellor has offered some green nuggets, but not the green recovery hoped for. He has not announced the investment or fiscal incentives needed to develop low-carbon and nature-positive sectors, which both have a huge potential for regional growth and long-term jobs.
“While a new green focus to the Bank of England’s remit is a positive move, we also need a sustained and substantial long-term investment plan from central Government for the natural environment. This must incorporate the recommendations of the Dasgupta Review commissioned by the Treasury, to meet climate and nature recovery commitments.
“Creating a legally binding target for nature’s recovery is also vital. This would drive private sector investment in natural infrastructure, create green jobs, and ensure that the natural assets our economy relies on are in good condition.”
REA chief executive Dr Nina Skorupska
“There were certainly a number of announcements in today’s Budget that we can be very positive about.
“However, I can’t help but feel that, despite the mitigating circumstances, this Budget was a missed opportunity for our country. It lacked the detail to provide a watershed moment for businesses in our sector and new ‘green’ projects are limited to only a few regions and countries of the UK.
“There are straightforward measures that could and should have been taken. The reduction of VAT on a range of renewable energy and clean technologies; clarity over the future of the Green Homes Grant; and a targeted extension of the Renewable Heat Incentive to boost bioenergy, geothermal and other renewable heat schemes."
Ramboll senior environmental economist James MacGregor:
“Today’s Budget feels light on the promised content to augment a sustainable recovery for the UK post-pandemic, particularly given the UK’s presidency of the COP26 later this year. There is a danger that the opportunity to firmly set the Covid recovery around green growth will be missed.
“While of course there are competing priorities and the announcements of investments aimed at levelling-up are to be applauded, overall the concern is that the UK will end up with a ‘green blush’ of embarrassment on the world stage as sustainability targets are missed, including net-zero targets, in the run-up to COP26.”
PwC UK’s environmental taxes leader Jayne Harold:
“There are no obvious developments to show the use of the tax system to drive the shift to net-zero. The Chancellor may be keeping his powder dry for the large global events coming later in the year to reaffirm the UK as leading the way in the ambition to drive the global economy to a net-zero future, to which the UK is already committed.
“Only last month, the NAO published a review of how HM Treasury and HMRC manage and administer the environmental taxes and made recommendations for the way in which environmental taxes should be better designed, monitored and evaluated to maximise their benefit in driving change of behaviour and achieving Government policy aims. The need for a clear and robust road map to use both public finances and the tax system together to accelerate the changes needed to deliver on the Ten Point Plan is becoming more obvious than ever.”
Green Alliance’s head of green renewal Sam Alivs:
“The Treasury is moving in a greener direction, but very slowly.
“There is good initial funding for the NIB with the potential for creating thousands of jobs, but it falls well short of transformational funding. Without a clear net-zero and nature mandate, the bank’s money could in theory go to roads, coal mines or incinerators rather than genuinely green jobs.
“The Green Homes Grant is the elephant in the room…. Pulling moderate spending packages like this is not a good sign. The chancellor can still choose to fund projects that fire the promised ‘green recovery’ across the country, but valuable time is being lost.”
IPPR Environmental Justices Commission lead Luke Murphy:
“What should have been the firing of the starting gun on a decade of decarbonisation was more of a false start in the race to net-zero. Despite the rhetoric, one of the biggest green decisions taken today was the decision not to roll over nearly £1.5 billion of funding for the government’s flagship green homes grant which was announced just last year by the Prime Minister.
“The government has blamed a lack of demand, but with 26 million homes that need upgrading across the UK, it’s clear there isn’t a shortage of need. The scheme didn’t need cutting, it needed fixing, with a home improvement plan to upgrade the nation’s homes.”
Ashden chief executive Harriet Lamb:
“Despite some welcome new initiatives, this was not the green growth budget that we need to counter climate change and create jobs.
“Where was the plan to retrofit our cold, old homes – or our public buildings such as schools where young people are crying out for climate action?
“This was the moment to score the twin goals of creating jobs and laying the foundations of the green economy – and the Chancellor missed.”
The ECIU’s head of analysis Dr Jonathan Marshall:
“Amid talk of green recoveries and commitment to green growth, the Budget contained an alarming lack of measures to cut emissions. Each passing fiscal event without required actions only accentuates the gap between current policies and those needed to get on track to net-zero.”
Delta EE’s director Andy Bradley:
“In the last budget before COP26, we hoped for evidence the green recovery rhetoric would be delivered on. Yet, despite hints of green policy such as the new investment bank, we lack the ambition needed to reach net-zero.
“We know cutting VAT is politically possible for hospitality, so why not for green home improvements – especially when the Green Homes Grant is as good as scrapped? We also know these moves would be popular. Some of our research revealed 46% of respondents are interested in low carbon heating, for example.
“Today’s budget could have been used to support households to make greener choices, and support jobs in the sector. Transport emissions are also falling too slowly – just a 1% drop last year on 2011 levels, as SUV sales are greater than EVs. No budget announcement will stop the shift to EVs, but we would have welcomed extra ambition from the chancellor by unfreezing fuel duty.”
Conservative Environment Network director Sam Hall:
“This Budget was understandably focused on supporting the economy through the final phase of lockdown and setting out a medium-term plan for the public finances. Nonetheless, the Chancellor made some welcome announcements on green finance and clean energy innovation.
"In particular, it was good to hear him confirm the new National Infrastructure Bank’s focus on delivering the green industrial revolution, which will drive investment into less established green industries and local green infrastructure projects. The new super-deduction tax break will also encourage the uptake of cleaner, more efficient equipment by businesses that will contribute to tackling climate change and air pollution.
“Building back better and greener is the central mission of the UK’s G7 presidency and COP26 presidency, so it is essential that, in the net zero-linked strategies and the Spending Review that are due later this year, the government sets out further measures to mobilise significant levels of private capital into projects that both create jobs and tackle environmental challenges like climate change and nature loss. Long-term government support for home energy improvements should be a priority given their potential to support job creation across the UK."
SUEZ recycling and recovery UK chief executive officer John Scanlon:
“Government has sent a clear signal that a post-pandemic economy has to square the circle of industrial regrowth combined with a reduction in carbon emissions - only a green recovery will secure much needed new jobs whilst helping the UK achieve our 2050 net-zero ambition.
“SUEZ and the wider recycling and waste management sector is ready to invest further in the infrastructure needed to tackle carbon emissions from managing the 200 million-plus tonnes of waste we produce in the UK each year and to achieve greater circularity.
“We look forward to the final details being agreed on the trio of policy reforms key to our sector - extended producer responsibility schemes, consistent collections and a deposit return scheme - that will both stimulate investment in infrastructure and allow far greater public participation in our collective transition from a make-use-dispose culture, to a more circular economy.”
HyNet North West director David Parkin:
“We are pleased to hear the Chancellor announce the financial backing to Government’s commitment to a green industrial revolution. These are important targets which the UK must work to achieve, not just announce. HyNet North West delivers on our national targets – it will deliver 80% of the Government’s target for hydrogen production; 100% of the target for carbon capture and storage and a hydrogen town, all by 2030.”
Protium chief executive Chris Jackson:
"Protium is disappointed to see that the Government has not reflected on the advice from industry, including groups like the UK Hydrogen & Fuel Cell Association, to use this year’s Budget to put the UK green hydrogen economy on a solid foundation for growth.
"Whilst we welcome the foundation of the UK Infrastructure bank in Leeds, this will not provide the scale of investment the UK needs to capitalise on the hydrogen opportunity. Despite industry efforts, the Government has chosen not to support industry as partners in delivering a Budget that can catalyse further investment and support for the green hydrogen sector.
“We hope that the Treasury will review their decision and engage with industry so that further opportunities to avoid the UK being left behind can be identified and delivered.”
Finder.com’s investment specialist Charlie Barton:
"Creating green savings products is a logical move and cleverly taps into the growing interest in ‘ethical investing’ that retail investors and the government share.
"However, consumers are a savvy bunch and the interest rate, which is yet to be revealed, will go a long way to determining the success of these schemes. Indeed, our new research showed that 28% of the population would only consider investing in ethical choices if they thought their investments could perform as well as, or better than, other investments."
LCP’s head of responsible investment Claire Jones:
"The government's announcement around green gilts and a green retail savings product is a signal that they are tapping into consumer demand for more sustainable and green saving products and investor interest in funding environmentally friendly projects.
"While this is an important step, the government must make sure this isn't a PR 'greenwashing' exercise for investors and consumers. On the consumer side, savers are savvy and are entitled to clear and robust commitments on how their money will be used. They will want to know that their money is going into new green projects, not just rebadging projects that were already planned. It will be interesting to see how the interest rate and terms that are offered impact take up and how attractive they are compared to other savings products. While some retail customers will want to invest regardless, the question remains around whether other investors will be willing to accept a trade-off between green credentials and financial returns.”
LCP investment partner Dan Mikulskis:
“The National Infrastructure Bank could be good news, acting as a cornerstone investor on key projects and helping to provide financing for newer technologies that at the moment are un-investible to institutional asset owners because of their risk and unproven nature. With the bank being a backer of bonds issued to finance projects it makes some of these projects eligible for the large-liability investing programs pursued by many DB pension schemes and which amounts to over £700bn in assets. The model is already there in the Network Rail bond issue, which is popular with many schemes.
"As ever the devil is in the detail and there could be some unintended consequences and missed opportunities if the bank isn't used in the right way.”
Ashurst’s global ESG partner Anna Marie Slot:
"The Chancellor is clearly signalling his commitment to sustainable finance and creating a place for the UK at the centre stage of its development in the coming years. Issuance of a Green Gilt to set the benchmark for green issuance in the UK is a good first step but delivering on the sustainable finance revolution will require transparency, accountability and persistence as well as collective action with other nations in standard-setting."
Ashurst energy partner Antony Skinner:
"The support being offered to offshore wind ports infrastructure, as well as the funding for the development of floating offshore wind, is good news for the industry, but, in the short-term, the next key announcement for the industry will be further details of the fourth Contracts for Difference allocation round, which is scheduled to take place later this year."
The ADE’s chief strategic officer Dr Joanne Wade:
“In December, the Government set out an ambitious vision for the UK's green recovery to both decarbonise our energy system and create jobs, which was both welcome and necessary.
“We are disappointed with the lack of clarity in today’s budget on how the Government plans to accelerate the uptake of retrofit measures at such a crucial time. Upcoming strategies will need to be strong on the detail if momentum is not to be lost from the rollout.
“We call on Ministers to urgently fix the administrative problems hampering the Green Homes Grant and also to commit to a long-term programme that supports supply chain growth and public confidence in-home energy refurbishment.
“The supply chain needs the opportunity to demonstrate how quickly it can scale and deliver measures to meet public demand, because, as the Chancellor has just said, for businesses, certainty matters.”
WSP’s head of economics Jim Coleman said:
“In December, the CCC’s Sixth Carbon Budget advice made it clear how important the role of every individual in the UK will be if we are to meet our 2050 net-zero target. There is much we can do in our day-to-day lives to make a difference but support from Government is welcome.
“As such, the introduction of the sovereign green savings bond is an exciting prospect and will allow people to take an active role in the UK’s transition to a net-zero economy, by investing in sectors that are directly contributing to our low carbon future. We must bring everyone on this journey and initiatives such as this will be helpful.
“One area where we still need clarity is on the skills which are needed to deliver a net-zero economy. The Prime Minister has announced previously that the Government will create and support up to 250,000 green jobs which is certainly promising, but we must identify exactly what skills are required in which industries quickly.”
Osborne Clarke’s head of decarbonisation James Watson said:
"From a decarbonisation perspective and bearing in mind our net-zero ambitions, it was disappointing. I get a sense there is not yet capacity in government to truly prioritise the environment despite declaring a climate emergency, mainly due to the pandemic and possibly because of issues around Brexit.
"We had announcements which have already been trailed in the last few months and some reheated policies. There were enough good initiatives to demonstrate that the UK is serious about fighting climate change and stimulating a green recovery but there was nothing really progressive and innovative. Perhaps they are saving the eye-catching ideas to announce in the run-up to COP26. "
What does the #BudgetSpeech2021 mean for the UK's green economy and net-zero transition?— edie (@edie) March 3, 2021
Read our full summary here: https://t.co/fkfBndm64Z#renewableenergy #greenfinance #BudgetDay pic.twitter.com/JhcppeSTCp