Rishi Sunak’s reported plans to weaken climate policies spells damage for the economy and businesses

Image: 10 Downing Street. CC BY-NC-ND 2.0. https://www.flickr.com/photos/number10gov/53068264076/

In June this year, the UK Government was taken to court for the second time in less than two years over its climate strategies, with green groups labelling the updated Net-Zero Growth Plan a “feeble and inadequate” measure to respond to the climate crisis.

With the original Net-Zero Strategy deemed unlawful by the High Court last year, the Net-Zero Growth Plan acts as the Government’s official response to the Independent Review of the Net-Zero Strategy, which was led by Chris Skidmore. That Review detailed 129 recommendations across key sectors such as the built environment, renewable energy, green finance and nature.

The Government’s latest efforts of a coherent and legally sound net-zero plan are meant to “turbocharge delivery” of the Net-Zero Strategy. Only, that Plan has also been taken to court.

With this context, green groups may have read with intrigue late last night (19 September), when a news notification popped up from the BBC. The headline involved Prime Minister Rishi Sunak and green policies. Great, maybe the Government is finally going to back up its self-proclaimed mantra of being a climate leader as we look ahead to COP28 in December. When you get to the middle of the BBC’s headline though, it is clear that the UK has switched from action to rhetoric on net-zero.

Weakening. “Rishi Sunak is considering weakening green policies”, according to the BBC. While many members of the UK green economy were in New York for Climate Action Week, Sunak intends to water down the UK’s approach to reaching net-zero.

Moving backwards

The BBC reports that the UK would pivot to a “more proportionate way” of delivering its 2050 commitments, by rolling back on many Conservative policies that are viewed as essential to reaching net-zero.

The headline proposition being discussed by Sunak, who unsurprisingly is not in New York for Climate Action Week, and his peers is to push back the ban on the sale of new petrol and diesel cars to 2035. The 2035 deadline was originally in place under Boris Johnson, who moved it forward five years in 2020 in a bid to showcase climate leadership in the build-up to COP26 in Glasgow.

Reports also suggest that the Government plans to lessen the burden on the phase-out of gas boilers in buildings by 2035, aiming instead for an 80% completion rate that year. Sticking with buildings, the reports suggest that no new energy regulations would be imposed on homeowners and landlords. MPs had been considering penalties for a lack of compliance on landlords who fail to upgrade the energy efficiency of their building portfolios.

The Government is notably aiming for all homes to have EPC ratings of C or higher by 2035. Just last week, the Government ringfenced £1bn for a new home insulation scheme, which it hopes will provide financial support to more than 300,000 properties.

The band on off-grid oil boilers, scheduled for 2026, is likely to be moved back to 2035, with an 80% completion rate set for that timeframe.

The final announcement expected to come in Sunak’s green policy shake-up isn’t surprising but will still leave a sour taste for supporters of more stringent net-zero policies. There is not expected to be any taxation on flying – during Sunak’s time as Chancellor, he pushed back on such a tax as well as dismissing VAT breaks for energy-efficient and resource-efficient materials. No policies or campaigns are expected to tweak diets or encourage ride-sharing in a bid to reduce emissions.

The Government may also revamp proposed recycling initiatives. The BBC does reiterate that the net-zero target for 2050 will not be moved or abandoned.

Nonetheless, many believe that these weakened approaches to climate action would dent the UK economy, which is already suffering because of the fallout from Brexit and the Covid-19 pandemic.

The IPPR’s associate director Luke Murphy said: “Rolling back on net zero policies would put Rishi Sunak on the wrong side of the public, the economics, and history. It would be bad for consumers who will benefit from a faster transition to net zero – these proposals will make us all more reliant on volatile, expensive, imported fossil fuels. The last Conservative PM to ‘cut the green crap’ cost UK households billions in higher energy bills.

“It would be bad for our economy. The race to net zero is the economic opportunity of the 21st century and investors need stability and certainty. While other countries race ahead, the UK is going into reverse gear. What is the point of investing half a billion pounds of public money in an electric battery factory only to abandon the petrol and diesel phase-out?”

“It is bad for our environment. While briefings suggest that there is no intention to remove the headline net zero 2050 commitment, abandoning or delaying the key measures to get the UK there, will have the same effect.”

Global optics

Despite lessening the requirements across high-emitting sectors like buildings and transport, Sunak is likely to say that the UK has already delivered more than its fair share in combatting the climate crisis, choosing to move the goalposts and implore other nations to do more.

This isn’t exactly untrue. Since 2000 the UK has led the G20 in terms of decarbonisation. Not only has it recorded the highest level of decarbonisation in a single year -10.9% in 2014, but the nation also had the highest long-term level of decarbonisation, maintaining a decarbonisation rate of 3.7% over the duration of the 21st century.

However, new research from PwC warns that global decarbonisation levels need to be 12 times higher than the average recorded over the last 20 years if the world is to get on track to deliver the 1.5C target of the Paris Agreement.

A year-on-year decarbonisation rate of 17.2% is required to limit global warming to the 1.5C target. In comparison, the previous version of PwC’s Index from last showed that a 15.2% global decarbonisation rate was required.

Not only is the annual decarbonisation rate increasing, but it is also far higher than what has been achieved to date. The Index warns that global decarbonisation efforts need to grow seven times greater than what was recorded last year, and 12 times greater than the average decarbonisation level of 1.4% over the past two decades.

The rumours have already sparked furious concern amongst key green groups, with the Energy and Climate Intelligence Unit (ECIU) warning that it could “further tarnish” the UK’s international standing on climate change.

The ECIU’s head of energy Jess Ralston said: “If these rumours are true, the sheer number of u-turns would speak of chaos at the heart of government. Rowing back on energy efficiency leaves the poorest with higher bills. Delaying the transition to EVs means fewer, cheaper-to-run second-hand cars. The phase-out of gas boilers wasn’t due to kick-in for another 12 years and then only when boilers broke.

“All of this would leave us more dependent on foreign oil and gas, less energy independent and with investors spooked, putting jobs in the industries of the future in jeopardy. As the rest of the world is rushing to invest in net zero industries, any further rowing back by the UK would leave our international standing further tarnished.”

According to a Climate Action Tracker released this week, the UK is the only nation closing in on key requirements to transition from fossil fuels to renewable energy generation. However, the analysis stresses that currently no nation will actually achieve this goal based on current policies and actions.

From that research alone it is clear that if the UK pulls back from key climate policies then it is at risk of falling behind other nations.

Bad for business

Just a few months ago, the CCC itself said that the UK’s net-zero progress was “worryingly slow”. Indeed, the Committee is actually less confident that the UK will meet its emissions targets than it was last year.

This stalling progress has already dented business confidence, with many firms operating in the UK looking enviously over at the US Inflation Reduction Act, which included billions of dollars of subsidies for clean energy and will likely result in a 40% drop in energy-related emissions by 2035, as well as the EU’s conveyor belt of ambitious green packages.

Investors are already concerned by the lack of progress made by the UK in recent years, with James Alexander, chief executive of the UK Sustainable Finance and Investment Association warning that more backwards steps would “deter investment away from the UK and put at risk the jobs and growth that come with it”.

“Despite growing warnings from the investor community, the government continues to wobble on its climate commitments, damaging investor confidence and putting the UK’s economic future at risk,” Alexander said.

“Transitioning to net zero presents a huge economic opportunity, as leaders in the US, EU and elsewhere recognise, but ignoring investor invoices will only reduce the UK’s share of this global prize.”