Treasury’s net-zero minister: Climate action will be a ‘signature theme’ of next government

Clarke was quizzed on net-zero timeframes

Last Saturday, the Government announced its review into the economic impact of net-zero, outlining the terms of reference and how it plans to take forward the agenda ahead of the UN’s COP26 climate action conference next autumn in Glasglow.

The review has been welcomed by the Committee on Climate Change (CCC), who had written previously to HM Treasury minister Simon Clarke calling for such a review to take place.

Now Clarke, previously a backbencher who has campaigned for net-zero to become a government target, is in charge of this review, stating it is going to focus on “the ‘how’ and framing the debate”.

Clarke is clear on the nature of the review – and what it will deliver: “It’s not designed to say we will do ‘x, y and z’ specifically,” he says, “but what it is designed to do is to look at the big picture questions that underline what the government has got to do over the next 30 years.”

Costs of transition

Clarke is keen to stress that the government is the first Western finance ministry to commission such a study. But how does he feel about the costs – specifically ex-Chancellor of the Exchequer Philip Hammond’s comment that it would cost £70bn a year to transition to net-zero? Is this something the Treasury still agrees is the baseline figure?

He is candid about how it should be assessed: “When Philip Hammond made that intervention immediately prior to his departure, it wasn’t the most helpful phrasing. I don’t think this can be seen in costs terms in that way.

“Clearly, it is an expensive commitment to move to a net-zero economy, but there are huge opportunities that go with that. Some are extremely difficult to quantify in terms of potential.”

He says that the CCC and Treasury are ‘very wary’ of putting “bald figures” onto net-zero, and instead accepts there are up-front costs and to “not play games with the timetable for delivering it”.

2030 targets

The reference to timetables is an allusion to the headline stories about Labour committing to net-zero by 2030, the SNP planning to move forward to 75% of carbon reduction by 2030, and plans by the Liberal Democrats to move the final target to 2045 as part of their General Election strategies. 

“The only way we are going to reach net-zero by 2050 is to do a lot of the heavy lifting now,” he added. “But I personally think the approach we are taking is more sensible than in 2030. No scientific or economic analysis has suggested this is possible.

“We are not doing 2050 because we are lazy, we are doing it because there is no route – short of a major reduction in living standards and deindustrialisation – which gets you to that kind of shorter trajectory. 2030 would require jobs to go. There is no way that is going to command support.”

But wouldn’t the much-quoted Green New Deal put forward to Labour and the Green Party provide new jobs for those in carbon-intensive industries? Clarke doesn’t see it this way – and points to the issue of offshoring carbon.

He continues: “That’s cold comfort to those working in the oil industry and the steel industry and the cement industry. These are core jobs that the UK doesn’t want to lose and it would be the height of perversity if we ended up offshoring those industries; that’s what would happen: the carbon wouldn’t go, it would just be displaced elsewhere to other countries that weren’t enforcing net-zero.”

So does he believe that these jobs in carbon-intensive industries can be decarbonised, such as with the recent example of Liberty Steel, which is aiming to be carbon-neutral by 2030?

“Yes, I do,” he said, “and that’s where technologies like Carbon Capture and Storage (CCS) have such exciting potential, as these are industries which even if you were able to fully decarbonise your energy mix, would still be net-carbon emitters, because it is an inherent part of what they produce.

“But it takes time to change. And it is also worth saying 30 years is not that long, it really isn’t. It will be 2050 before we know it and in the scheme of what we want to do here. It is the blink of an eye.”

Carbon Capture funding

But even though he acknowledges the potential for CCS, the government cut £1bn in funding to the technology in 2015 – is this something which he feels the Treasury will be reviewing in the future?

He agrees: “Although I can’t make funding commitments, it is fair to say that the CCC describes CCS as ‘essential’ in the report earlier this year and I don’t disagree with that conclusion.

“What I think is exciting is that since 2015 the technology has moved on, it has gone from a blueprint that could happen to an implementable technology that could be applied. I think that really helps in giving investor confidence as a workable proposition.”

Clarke then touches on why the target is net-zero rather than gross-zero, and the importance of how this will be achieved.

“Realistically, he continues, “going to 0% carbon is next to impossible, save for unbelievable expense. So sequestration becomes a huge part of the mix – and this is something where the UK, by geography, is really well placed to benefit and take other people’s emissions, especially f you think of the low countries”.

On scaling up CCS, Clarke hinted that something could be on the horizon. “It seems a realistic ambition and we will hopefully be making announcements early in the new parliament,” he added.

Mitigation cost

One of the big shifts in policy in recent years has been from climate mitigation to positive climate action. Clarke emphasises this point specifically in terms of spending.

“It would be a mistake to think that in 2050 it will be ‘business as usual’ if we don’t act. All the available evidence is we would incur very substantial and increasing costs.

“You only need to look at the wilder weather we have seen in the past few years. That is a big factor. We don’t want to spend money tidying things up, we want to prevent them from happening in the first place.”

Just transition

In terms of the just transition and how businesses and households will accommodate net-zero, which “goes to the heart of the review”, Clarke says it needs to work “for all regions of the UK”.

“There are a lot of businesses there that are extremely exposed to some of the activities around decarbonisation. But what’s great it is often those very industries that are leading on the solutions that are required.

“But there is also a social dimension as well, and we are clear that there will need to be changes to our housing stock and how we set about protecting that, and we will need to look very carefully at how we support individual households in all sections of society. All sections of society will have to shoulder some responsibility.”

Clarke says that the “precise variable” between how businesses, government and households will shoulder the decarbonisation burden has not been decided yet. But he has a clear message to those that are concerned about the business costs.

“It is fair to say that the government will absorb some of this cost – it absolutely will. We recognise that this is a huge societal change. Particularly when it comes to supporting new technologies, government has a role to play in this.

“But equally businesses will need to adapt and homes will need to adapt and transport will need to adapt. But we are not going to say ‘you’re on your own on this’ we absolutely recognise that this is a systemic change that needs to be carefully planned and supported.”

Net-zero assessment

Looking at the climate strikes and Greta Thunberg: she said the UK and developed nations need to look at things like aviation, which are currently not assessed as part of international emissions data. Clarke agrees.

“She’s right, we do,” he said. “Aviation is a big challenge as we need to get the technology right there. Batteries probably for short-haul and biofuels for long-haul. But obviously there is huge scope there for someone to come up with a gamechanging innovation. Planes are markedly less polluting than they were a generation ago, but aviation is still a big issue.”

“Again, one of these dividing lines is: I do not believe it is right or fair to say to your average family you can’t have a summer holiday – that is not going to work. So we need to find solutions that allow ease of travel without the emissions.”

And what does he think of some of the more radical ideas like personal carbon budgets? Does he see that at some point we going to get to that stage in business and as consumers in the journey to net-zero?

“I don’t want it to sound draconian or scary or give the perception of Big Brother is watching you with the washing machine on.

“If we get this right, we make it easy for people to decarbonise. For example, one of the announcements I have made has been the charging infrastructure investment fund, which will enable a roll-out of rapid chargers – this is essential if you are going to persuade those to move to electric vehicles.

“That kind of thing is where the government does have a role. We are here to make it straightforward for people to transition.”

The future

Looking to a post-General Election landscape, Clarke highlights his excitement at the UK hosting COP26 and his hopes to work closely with Claire Perry, the former clean growth minister and now COP26 President.

“I view this as the UK’s chance to say to the rest of the world not only have we willed the end, we’ve created the means. So we can say ‘this is what we are doing’ to make it achievable. This summit needs to be an inflexion point in the global debate.”

And what about the spectre of Brexit? Clarke is dismissive of its impact on the net-zero agenda.

“We want to lead the entire developed world, not just Europe. Clearly we are wedded to multilateral action wherever it can be sensibly taken – that applies as much to net-zero as it does to NATO. We will challenge those countries that are less good – and there are clearly some countries in the EU that are still far too reliant on coal.

But equally, Clarke is keen to stress that although we may be leading the world in terms of targets, as the review illustrates, we have a journey to go in terms of delivering.

“We can only compare and contrast with other countries once we have done the hard yards ourselves. While we have made great progress, there is not an ounce of complacency in Whitehall about how far we still have to travel.

“What we will see is the world in 2030 will look very different to today – that should be an exciting prospect. We can be the generation that saves the world. It is nothing less than the truth. We are committed to doing so in a way that has the least cost to society and that is something we can be proud of.”

Net-zero minister

When quizzed on whether this core focus on net-zero will result on a specific net-zero minister for government, he is dismissive of the idea – and instead explains how net-zero will form the backbone of an entire government policy agenda.

“I think it is quite helpful that multiple people are engaged. The Prime Minister is setting up a net-zero subcommittee of ministers which will focus very strongly on the issue, and I think that is right. It is easier to name the departments that it doesn’t involve, and that’s because it is a whole societal change.

“We will make this a signature theme of the next government. There is no getting away from it. You cannot avoid the centrality of this anymore. And the word net-zero will go from being a specialist term to something akin to ‘the internet’ for most people in very short order or the ‘ozone layer’. It will become part of discourse, and means the public will then apply sensible pressure for us to live up to our promises.”

James Evison