What can we expect from the UK Government’s ‘Green Day’ this week?

We have known for some time that March 2023 was likely to be a big month for climate-related policy in the UK, as the Government was ordered by the High Court to update its Net-Zero Strategy within nine months last July. The Court ruled that the flagship Strategy did not include policies broad or ambitious enough to deliver its legally binding 2050 climate target.

Several sources within Parliament, as well as from green economy groups and businesses, have stated that the UK Government is likely to publish the updated Net-Zero Strategy alongside a string of other measures relating to environmental policy – and that it is calling the event ‘Green Day’.

The Department for Energy Security and Net-Zero has not confirmed which date the big day will fall on. However, a spokesperson said we can expect “the next steps in our plans to boost the UK’s energy security and independence, and to help bring down wholesale electricity prices in this country to amongst the lowest in Europe”. Whisperings are that Green Day is likely to be either this Wednesday (29 March) or Thursday (30 March).

Chris Skidmore MP told a Parliamentary reception hosted by UK100 on 22 March that “everything rests” on the day – including the UK’s delivery of its climate targets and whether it will maximise the potential social and economic benefits of doing so.

Here, we outline the key elements the Government is reportedly likely to announce.

Net-Zero Strategy update

As already mentioned, the Government legally has to update its Net-Zero Strategy by Friday (31 March).

The original Strategy was published in October 2021, as the UK geared up to host the UN climate summit in Glasgow weeks later. Early reaction was mixed. Some argued that it provided a solid foundation for further action, others lamented that the Strategy did not contain – as many expected it would – sector-specific decarbonisation targets aligned with forthcoming carbon budgets on the road to net-zero by 2050.

Among the critics of the Net-Zero Strategy were Friends of the Earth and ClientEarth, who brought the legal challenge to the High Court, stating that it amounted to “greenwashing and delay”.

The UK Government’s own advisors at the Climate Change Committee (CCC) have subsequently stated that current policy frameworks only detail credible plans to deliver one-third of the emissions reductions it is legally committed to.  Sectors with particularly concerning policy and implementation gaps, the CCC has warned, include agriculture and buildings.

Net-Zero Review response

edie understands that the Government is likely to publish a new Net-Zero Strategy alongside a formal response to Chris Skidmore’s ‘Mission Zero’ report – the culmination of his Net-Zero Review, published in January.

The review was commissioned by Liz Truss, who wanted to map out a “pro-growth, pro-business” pathway to a net-zero British economy by 2050. Skidmore and his team collected evidence from hundreds of individuals and organisations in developing this pathway.

The message from the new Review is clear – that the UK Government’s current approach is neither aligned with climate science, nor designed to maximise the economic and social opportunities of the transition. It details a cocktail of inconsistent policies, mismanaged reporting structures and a lack of detail against existing commitments that could cause “significant risks” in the form of delays and added costs.

Skidmore’s report detailed more than 120 recommendations for policy interventions. He has repeatedly stated that it is important to get them adopted in full, and CCC chairman Lord Deben has agreed.

However, when asked to pinpoint one key recommendation, Skidmore has repeatedly highlighted the need for an Office for Net-Zero Delivery – an arms-length body responsible for holding all Departments to account and ensuring that they work in a joined-up fashion.

There are doubtless some recommendations in the review that won’t sit well with some Conservative Ministers. These include reforming tax incentives, which could mean higher taxes on things like red meat and plane tickets; committing to 70GW of solar generation by 2035 and giving energy regulator Ofgem a net-zero remit.

Nonetheless, the fact that the review has been authored by a Tory MP and backed by organisations including the Conservative Environment Network and Confederation of British Industry (CBI) may have whetted the Government’s appetite for a strong response. Only time will tell.

Response to Net-Zero progress report

Last June, the UK Government’s official climate advisors at the Climate Change Committee (CCC) published their latest annual progress report on net-zero. The conclusion was that “credible” policymaking currently only exists to deliver one-third of the emissions reductions required by mid-century.

CCC representatives pointed to “scant progress” across the board and particularly poor effectiveness of policies relating to building energy efficiency, low-carbon heating and agriculture.

The UK Government is yet to publish its official response but this day of action presents an opportune moment. Time will tell whether a new land-use strategy, now more than a month overdue, is the official response to the CCC’ss conclusions on emissions from this space.

Green Finance Strategy? 

edie has seen some reports that the Government may publish its Green Finance Strategy, which was first promised at COP26 in 2021 and was originally due in December 2022, this week.

The strategy will set out proposals for the UK’s ‘green finance taxonomy’ – a categorisation of which kinds of investments can be classed as ‘green’ or not. There may also be a separate class for ‘transition’ investments. The Government has already confirmed that nuclear power generation will be classed as ‘green’, despite this classification in the EU’s taxonomy having caused much controversy.

With the UK vying to be the world’s first net-zero financial centre, the strategy will, of course, need more than just the taxonomy. We may well see some new moves to encourage blended finance and to change financial incentives and penalties, as recommended in the Skidmore review.

A rival to the Inflation Reduction Act?

Skidmore’s review emphasised that a strong net-zero plan is not only necessary to deliver levelling up within the UK’s economy, but to ensure that it remains competitive on a national stage. His team concluded that, while the UK has been an early leader in offshore wind, it risks losing its lead as other markets emerge – and losing market share in all manner of other clean technology sectors.

This is a particular concern when considering the US’s Inflation Reduction Act (IRA). Passed last year, the IRA sets aside $369bn of spending on climate adaptation and cutting emissions. It is expected to reduce the US’s domestic annual emissions by 40% by the mid-2030s, partly by accelerating the uptake of clean technologies by bringing them to maturity using subsidies.

The EU has responded to the IRA with a new Net-Zero Industry Act, which proposes an initial €250bn of public funding for clean technologies, to be scaled over time. The Act also includes changes to legislation and regulation to speed up green innovation funding.

The UK has been under pressure to respond to both Acts appropriately. While it did announce £20bn for carbon capture at the Budget this month, plus some new funds for nuclear, the general consensus is that the Budget’s measures were not broad nor long-term enough to properly rival the US or EU’s offerings. As an aside, the Treasury press office also called carbon capture a “clean energy” source, which is simply inaccurate.

‘Green Day’ could present an opportunity for a surprise funding package – or Chancellor Jeremy Hunt may choose to wait until the Autumn Statement. The CBI has warned of a £4.3bn missed opportunity by 2030 if the UK does not step up soon.

An Energy Security Strategy shake-up?

There are rumours that ‘Green Day’ may serve as a springboard to either announce changes to the Energy Security Strategy, or change it completely. While the Strategy is less than one year old (it was published in April 2022), there have been two changes in Prime Minister since it launched, and Sunak and Hunt may be keen to make their mark. Also, the Department originally responsible for the Strategy is in the process of being replaced. 

A key change may be the addition of a new target to cut energy efficiency. Hunt had originally touted a 15% reduction in energy demand from homes and businesses by 2035, but has seemingly pulled the deadline forward to 2030. An Energy Efficiency Taskforce has been formed to help formulate recommendations for policy and industry interventions to reach this goal, and to monitor progress. The original Energy Efficiency Strategy was widely criticised for focusing almost entirely on generation, with little in the way of detail on reducing energy demand, especially compared with similar policy in the EU.

Changes may also be made to reflect the Budget’s new spending on nuclear. The Skidmore review did call for a broader look at renewables, including solar and onshore wind, also. But the Conservative Party has consistently opposed the exponential growth of these sectors since David Cameron, favouring offshore wind and nuclear instead.

What do you want to see from the UK Government’s ‘Green Day’? Let us know in the comments. And sign up to edie’s newsletter for the latest on all the announcements as they happen.