Policy wishlist: What does the UK’s green economy want from the coronavirus recovery package?

The plan's fundamentals will be revealed this week

When asked about the environmental aspects of his Government’s plans to recover from the biggest global economic contraction since the Great Depression, Johnson has repeatedly emphasised a commitment to deliver a “fairer, greener and more resilient global economy”.

But given that the UK is currently set to breach its fifth carbon budget and that emissions ultimately rebounded swiftly after the 2008-9 financial crash, scepticism is rife. Many businesses, green groups and thought leaders are urging more targeted, specific and ambitious action on decarbonisation. The deadline for these calls to action has now passed, with Johnson set to deliver a speech on the package’s fundamentals later today and the Treasury due to outline further specifics in the first half of July.

Here, edie rounds up eight of the key measures which numerous policy briefings have recommended in a bid to ensure that the UK’s Covid-19 recovery is truly green.

1) Net-zero stress-tests

In the days after the coronavirus crisis was officially declared a pandemic, it became obvious that many of the world’s most-emitting sectors would be heavily impacted. Oil prices plummeted as energy demands from utilities and the transport sector alike decreased rapidly. Airlines began putting out their feelers for bailouts.

As such, there have been persistent demands for all bail-outs to come with green strings attached – especially given the ire directed at policymakers over their handling of the automotive sector’s recovery from the 2008-9 financial crash. Organisations lobbying for this move include Greenpeace, Carbon Watch and Transport & Environment. Public support for strict bailout requirements seems high too; a survey of members of the UK Climate Assembly found that 79% want all finance provided through the plan to be aligned with the 2050 net-zero target.

More broadly, organisations including Green Alliance and The Climate Coalition want all facets of the package – bailouts or otherwise – to be subjected to net-zero stress-testing. This is because many of the infrastructure projects have long life-cycles, likely to extend to or beyond 2050.

2) SDG alignment

As well as stoking concerns that the environment would fall down the policy agenda, lockdown shone a light on existing social inequalities in the UK and beyond. Of the 600,000 people cut from payrolls through to 16 June, those on low incomes – typically younger workers – were over-represented. And of those diagnosed with Covid-19 and counted among the death toll, people from Black, Asian and Minority Ethnic (BAME) backgrounds were significantly over-represented.

Ensuring that the UK tackles its economic, environmental and social challenges at once would not require a new framework, because the UN’s Sustainable Development Goals (SDGs) already exist, a coalition of more than 100 leaders from across the business and public sector told Johnson earlier this month.

The coalition is coordinated by UKSSD. Previous research from the organisation concluded that, as of 2018, that the UK Government had made inadequate progress across 57% of the SDG agenda and poor progress across a further 15%. Getting the UK back on track could create a multi-billion-pound economic opportunity while improving health and wellbeing and accelerating the low-carbon transition, UKSSD argues.

3) An energy efficiency boom

Recent research from McKinsey concluded that for every $10m (£8m) invested by a Government in energy efficiency, 77 jobs could be created. For investment in renewable generation technologies, the figure stands at 75 jobs. In comparison, funnelling $10m into fossil fuels would create just 27 jobs.

It is unsurprising, then, that energy efficiency features prominently in many policy briefings around the green recovery. The built environment is of particular concern here, given that buildings account for around 40% of global emissions and one-third of energy use in the UK. The IEA’s special report on sustainable recovery encouraged fresh funding for retrofitting – a sector in which many jobs could be created quickly and projects rolled out at speed.

Elsewhere, the Sustainable Energy Association and Zero Carbon Commission are calling for progress on the Domestic Premises (Energy Performance) Bill to continue to time. The Bill will require all homes to reach energy performance (EPC) standard level C by 2035. Housing notably accounted for 14% of the UK’s emissions in 2016.

BEIS announced almost £80m of funding for innovative energy efficiency projects on Monday (29 June) – £30m to decarbonise the steel and automotive facilities, £25m for heat pumps and £24m for retrofitting social housing. 

4) Tougher carbon pricing

The Zero Carbon Commission’s other key ask is the Government increases its carbon charge to £55 per tonne (€60) by 2025 and £75 (€81) by 2030. This increase would put the UK on track to meeting its net-zero target by providing a financial incentive for businesses seeking to decarbonise, the Commission argues, while also creating funding to “cushion” households against cost increases in fields such as heat.

Between June 2018 and June 2019, the average carbon price in the EU was €27. Since then, the UK has negotiated plans for exiting the bloc’s emissions trading system (ETS). The deal will see the existing EU ETS cap reduced by 5% by 2021, with further reductions to be confirmed and the UK and EU approach their respective net-zero deadline.

Also supporting a higher carbon price is the Aldersgate Group. The Group noted that the current Carbon Price Support of £18, due to continue until 2022, is short of the current global average of £24, and argued that a lack of clarity on pricing through to 2030 is deterring investors.

5) A holistic approach to transport

Transport overtook energy generation as the UK’s most-emitting sector in 2016 and, until the pandemic, emissions from the sector had been steadily growing.

Almost all briefings crafted by green economy representatives have encouraged further funding pots and policy mechanisms for electric vehicle (EV) manufacturers and businesses and individuals seeking to make the switch. Related infrastructure, including charging networks, has also been high on the wishlist, and Johnson appears to be taking note.

But with air travel unlikely to return to normal levels until a vaccine is found; with the general public urged not to use public transport if possible and with levels of walking and cycling having increased during lockdown, Johnson is also being encouraged to consider the broader picture and encourage modal shift.

Several towns and cities have received extra funding for active travel infrastructure in recent months, including Brighton & Hove, Nottingham, Preston, Exeter, Portsmouth and Spalding. Moreover, the survey of UK Climate Assembly members found that 93% would like to be supported – be it by Government, their local authorities or businesses – to maintain a low-carbon lifestyle in the post-pandemic world.

6) Adaptation measures

When it comes to climate policy, mitigation tends to get far more attention than adaptation, despite the fact that certain levels of warming are widely regarded as “baked-in” among the scientific community. But after a damaged dam at Toddbrook reservoir in Derbyshire almost collapsed during flooding in August 2019, and subsequent storms across the UK throughout January, the need for adaptation has received increased media coverage.

The Environmental Audit Committee (EAC) this week began work to scrutinise how ‘green’ the UK’s recovery package can be considered. MPs will assess the package’s likely impact on adaptation with equal weighting to its likely impact on decarbonisation.

Recent reports from the Committee on Climate Change (CCC) and Institute for Public Policy Research (IPPR) concluded that the current UK policy framework has borne vulnerabilities to extreme weather events in the past and will leave the nation poorly prepared for shocks which are now inevitable but yet to be felt.

7) Measures to maximise the ‘COP opportunity’

The Committee on Climate Change recently told Ministers that producing a Covid-19 recovery plan which is fully aligned with the UK’s 2050 net-zero climate target is “absolutely necessary and entirely possible” with strong coordination across Whitehall.

The Committee published its annual progress report to Parliament last week (25 June) assessing progress made to reduce emissions over the past 12 months. The report also recommends policy timelines to spur progress towards the UK’s net-zero target while aligning to the needs of a national economic recovery from the pandemic.

The report argues that the delay to COP26 has created a “window to establish a credible and internationally-leading position” on climate change while also rebounding strongly from the economic impacts of the pandemic. “Act courageously, [a green recovery] is there for the taking,” the report urges, concluding that a full net-zero policy package with sector-specific roadmaps must be “in place and working effectively” by 2025. The key elements of the package should cover the UK’s most-emitting sectors – surface transport, heavy industry, the built environment, energy and agriculture.

8) A fossil fuel ban, at home and abroad

Ministers are reportedly considering moves to ban the UK Government’s direct lending facility from financing any new or existing fossil fuel projects overseas, following a series of high-profile exposés.

The UK has faced accusations of climate hypocrisy in recent times due to DFiD’s financing of fossil fuel projects in developing nations and BEIS’s support for a new deep coal mine in Cumbria. Global Witness this year published a report stating that UKEF’s recent financial packages include a £734m support fund for the Duqm oil refinery project in Oman, financing worth £248m for oil exploration in Brazil, £171m for an oil refinery in Kuwait, and several hundred million for power projects in Iraq. Similarly, The Guardian documented leaked UKEF plans to invest up to £1bn in major fracking projects in Argentina.

If the UK is to deliver a recovery package aligned to its net-zero target, these investment decisions will need to be consistent with the low-carbon transition. While the UK has made great strides in phasing out fossil fuels in the UK – apart from the Cumbria decision, it has historically ignored its climate impact abroad. The recovery package must lockout fossil fuels from all of its involvement.

9) A Just Transition framework

A commission of cross-party MPs recently added to the calls for the UK to prioritise and deliver a green recovery from the coronavirus pandemic, claiming that £30bn should be spent on a climate-focused recovery that also establishes a £5bn national Just Transition Fund.

The IPPR Environmental Justice Commission published recommendations earlier in the year, calling on the UK Government to “go faster, further and fairer” to deliver a green recovery from the coronavirus pandemic.

Doing so, the report claims, would lead to the creation of a “Net Zero and Just Transition” delivery body that would oversee how the net-zero transition would benefit all areas and locations covered by the UK economy. The body should be supported by £5bn in investment to support region, with the IPPR noting that two-thirds of the UK’s 460,000 green jobs are located outside London and the South East.

Sarah George and Matt Mace