Ofwat unveils £13bn climate package for UK water companies

Image: Yorkshire Water

Announced as part of the body’s price review for the next five years, the fund will finance a string of new projects aimed at making the UK’s water sector more resilient to climate change, biodiversity loss and population growth.

Among these projects are the installation of a new reservoir in Hampshire; the construction of a pipeline linking water supplies from North Lincolnshire to Essex and a £469m investigation into alternative water sources in case of drought.

The largest proportion of the package to be spent on a single initiative will be £4.8bn for the National Environment Programme (NEP) for Wales and Water Industry National Environment Programme (WINEP) for England. Launched in 2017, the Programmes aim to tackle some of the biggest environmental challenges facing the water sector on a national level, including chemical pollution, biodiversity loss, droughts and flooding.

In addition to providing funding itself, Ofwat is urging water utilities to outline further investment of their own into environmental initiatives through to 2025.

The body will require firms to cut leakage by 16% over the next five years and to reduce river and stream pollution by one-third. Moreover, it says it will keep encouraging companies to invest in nature-based climate solutions such as peatland restoration and tree planting, over man-made solutions. In August, the UK’s nine major water and sewerage providers, including Yorkshire Water, Anglian Water and United Utilities committed to planting 11 million trees in order to improve the natural environment across 6,000 hectares of English land.

Ofwat’s £13bn forms part of a wider £51bn spending package, which will also be used to boost efficiency, foster innovation and improve customer service.

Ofwat’s chief executive Rachel Fletcher said the wider package shows that the body is “firing the starting gun on the transformation of the water industry”.

“Now water companies need to crack on, turn this into a reality and transform their performance for everyone,” Fletcher said.

“They will be investing the equivalent of an extra £6 million each and every day to overhaul services, strengthen their infrastructure and improve our natural environment. And at the same time, customers’ bills will fall by an average of £50 before inflation.”

The review is the first to be published by Ofwat since the Environment Agency warned that England could run short of water within 25 years, without ambitious and rapid climate adaptation and mitigation actions. 

Sarah George

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