Road to net-zero: UK business giants team up to accelerate investment in low-carbon transport
Uber and Lloyds Banking Group are among the founding members of a new business coalition working to unlock investment into low-carbon road transport systems.
Convened by the UK’s Green Finance Institute, the coalition has been launched in recognition if the fact that some £150bn of additional gross capital investment will need to be funnelled into the sector’s low-carbon transition by 2030. This calculation comes from research from the Institute, with support from KPMG.
While acknowledging the exponential growth in the electric vehicle (EV) market in recent years, which only accelerated in 2020, the Green Finance Institute has identified three remaining hurdles in scaling up investment, which will be key focus areas for the new coalition.
Firstly, the Coalition will focus on the financial innovations needed to help domestic and business consumers to switch to EVs in the first instance, given that a common barrier to adoption is upfront costs. A particular focus will be on members in the financial sector supporting SMEs.
Collaboration to increase investment in EV charging infrastructure is the second priority. While the Government has scaled up funding in this space recently, the Green Finance Institute believes the private sector will be key to deliver the £20bn of infrastructure needed this decade. A recent Policy Exchange briefing revealed that current charging point installation rates will need to increase fivefold in the coming years.
Scaling up battery technologies will be the Coalition’s third and final initial focus. The Green Finance Institute claims that the UK will need to host three gigafactories by 2030 to meet its climate goals and its petrol and diesel car phase-out in a way that maximises economic benefits. At present, the race for the first site is on, with plans for gigafactories in locations including Wales and Coventry. Innovation priorities in the battery space include increasing range and lifespan, and improving recyclability.
Green Finance Institute chief executive Dr Rhian-Mari Thomas said the coalition will “bring together experts to co-design innovative financial solutions and promote the enabling conditions needed to channel capital towards net-zero goals.”
“Identifying the most effective interventions and public investments in order to catalyse private sector finance requires thorough, detailed analysis as well as creativity and ingenuity,” Thomas added.
Founding coalition members span the entirety of the transport value chain, from end-users such as Uber, to energy providers and finance providers such as Lloyds Banking Group and Triodos Bank. Academics and consultants are additionally participating.
The initiative also has the backing of the Department for Transport (DfT) and Transport for London (TfL). UK Transport Minister Rachel Maclean said she is “delighted that government and industry are coming together to encourage more people to make the switch to zero-emission vehicles”.
Have we got the drive?
Transport has been the UK’s most-emitting sector since 2016, when it overtook power generation – largely because more renewable energy was coming online as coal was coming offline. Pandemic aside, the sector’s emissions have been gradually and steadily increasing.
Additionally, it has promised a roadmap outlining how “all modes of transport” can reach net-zero. This was due out in 2020 but has been delayed amid Covid-19, and is now expected ahead of COP26, as part of a wider net-zero roadmap encompassing all major sectors. Clean Transport is notably a core theme for COP26.
However, groups across the green economy believe that more must be done to address other challenges, such as charging infrastructure availability, battery range and the range of vehicles available to fleet operators. The Government has also been accused of hypocrisy over transport plans in the past year, for decisions such as launching a £27bn roads building programme and changing the EV grant for individuals, cutting the sum available to each applicant.
Join the conversation at edie's Countdown to COP26
Readers interested in the UK's clean transport transition are encouraged to attend edie's flagship Countdown to COP26 event, which will include a panel discussion on the topic, featuring experts from The Climate Group, National Grid, Green Alliance and more.
The virtual event is taking place on Thursday 20 May, with the aim of informing and inspiring businesses to seize the opportunity of the crucial UN climate talks which are being held in Glasgow this November.
One of the keynote speakers for the event is notably Green Finance Institute chair Sir Roger Gifford, who will be speaking to the importance of ensuring a 'just' transition to net-zero.