Net Zero Blues

By Alex Tiley, Consultant

Following the Prime Minister’s announcement that the Net Zero transition will be approached in a “more proportionate way”, many within the environmental and renewable energy sector will be frustrated as the Government has been seen to scale back on its timelines, extending full electric vehicle transition and gas boiler transition deadlines to 2035. 

In the first instance, this is politics as we look towards a General Election of the highest order. Net Zero, and its associated costs, has become a target for deep criticism by the right of the Conservative Party. Accordingly, it became a high-risk policy area that the Government was increasingly likely to pull back on. Internally within the Conservative Party, this is a victory for the Conservative right and is a strong indication of the direction it will take in the forthcoming election campaign. 

Energy efficiency requirements, for owner occupiers and the private rental sector, have also been put on the chopping block. The Government’s position is that it is unfair for government decisions to mandate and force the public into spending potentially large sums of money through regulation, particularly at a time of a cost-of-living crisis. 

Candidly, the optics for this are mixed. The Prime Minister was clear to stress that the UK is leading the Net Zero transition, and that a scale back does not reflect an abandonment of the policy. However, for many in the sector, including the Climate Change Committee, the current plans were insufficient to deliver Net Zero and any reduction in activity puts the UK further off track for meeting its commitment. To the general public, however, abandoning policies that were likely to cost voters money may well be a popular line to take. Though YouGov’s issues tracker rates the environment fourth amongst the public’s ‘most important issues facing the country’, it sits far behind the economy out in first. 

Many of the policies that Sunak has pledged never to consider, such as changing the public’s diet, car-pool requirements, additional holiday and aviation taxes, and complex recycling schemes arguably were never serious policies that would have been taken up by the Government. Even giving mention to them is realistically a strawman, politics to rile up voters with the notion this was ever on the agenda or seriously lobbied for by anyone seen as credible by the Government or Whitehall. What is more interesting is the decision made to include pledges against these policies alongside the key areas scrapped today. By speaking to them all together, Sunak has sent a clear message: Conservative party policy will have no truck with stringent consumer and household regulations.

This move places the Labour Party in a difficult position. Shadow DEFRA secretary Steve Reed has said that Labour will hold the line on electric vehicles, but has not said the same for boilers. Reed said that Labour is not going to “put peoples bills up”, signalling the PM’s lines have resonated across the floor and there have been rumours for a number of months that Labour has been minded to scale back on Net Zero. Maintaining their current position, in line with Government commitments until this week, will now open them up to significant attack from the Conservative Party. The line of attack will be that Labour will come at high cost to the public, painting a picture that Labour supports the “radical” policies that Sunak has pledged against. It remains to be seen if Labour will hold firm on this issue and take the risk, or, if the announcement yesterday becomes a starting gun on a race to the bottom in the policy area with both the parties. 

One announcement from the Prime Minister that everyone can welcome however is that of grid readiness and connections. The reforms planned to the grid aim to speed up planning and end the first come first served process that has seen many organisations sit atop of grid contracts and not deliver them. This first mover and incumbent advantage has been one of the key obstacles that constrains the UK for scaling domestic energy production. This, coupled with the plans to overturn the ban on onshore wind and the Government’s long-standing commitment to nuclear power (Great British Nuclear), clearly show that the Government is acutely aware of UK reliance on foreign oil and gas and are committed to resolve it. The onshore wind policy, and government support for new offshore oil and gas licences, is a complete U-turn for Sunak. In fact, they are policies advocated by his predecessor Liz Truss, before she was deposed, and lend further credence to the recovering influence of the Conservative right. 

Much of the stakeholder response to this announcement has been scathing, and many companies that have substantially invested in electric vehicles feel wrong-footed by the Government and will be seeking reassurances. For the environment lobby, this announcement, if it is indeed the starting gun on a race to the bottom for the policy, is a harbinger of doom- spelling the unravelling of many years of advocacy and policy work on Net Zero. For Sunak, though business has reacted with stinging criticism and his party have divided on the move, the parlous state of the polls make this a gamble worth taking.

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