UK Energy Transition Targets Ahead of COP26By Elena Campbell
With the rescheduled 26th ‘Conference of the Parties’ climate summit (COP26) taking place in November, the year ahead represents a critical moment for global progress on climate change whilst presenting a significant opportunity for the UK to solidify its position as the global leader on this critical issue. The core goal of COP26 is to raise the ambition of countries’ climate change targets, and with countries expected to submit their Nationally Determined Contributions (NDCs) for intended emission reduction and adaptation strategies before the end of the year, the run-up to COP26 represents a crucial moment in efforts to raise global climate ambitions and reverse the trend of global warming. So how ambitious, and achievable, are the UK’s climate goals ahead of COP26?
UK Climate Targets and Progress
In 2019, the UK became the first major advanced economy to legislate for net-zero emissions by 2050. 2020 followed suit in seeing the UK set some of the most ambitious climate change targets in the world, outlining a ten-point plan for a green industrial revolution to mobilise £12 billion of government investment and support of 250,000 new green jobs in November 2020. On 4 December 2020, Prime Minister Boris Johnson announced a new target to reduce the UK’s emissions by at least 68% by 2030, compared to 1990 levels. This new NDC - under the Paris Climate Agreement – is now among the highest in the world, committing the UK to cut emissions at the fastest rate of any major economy. Significantly, it is the first target set by the UK following its departure from the EU, demonstrating a post-Brexit commitment to tackling climate change.
Financing the UK’s climate goals
The start of 2021 saw Chancellor Rishi Sunak deliver his second Budget as Chancellor of the Exchequer and last ahead of COP26. Sunak’s speech and Budget ‘red book’ gave much less attention to climate change and net-zero than the previous year, using the word ‘climate’ only nine times, compared to 31 the previous year. There were seven appearances for ‘net-zero’, down from 17. Nonetheless, the 2021 Budget still contained key climate and energy announcements.
The Budget 2021 document boasts that ‘the Budget lays the foundations for a strong recovery and greener economy, levelling up the country and spreading prosperity across every part of the UK’, with there being a number of big-ticket announcements. £15bn was allocated for ‘green gilts’, government bonds dedicated to supporting net-zero. Policy proposals for a new Infrastructure Bank were also outlined, ensuring the institution will receive £22 billion of ‘financial capacity to deliver on its objectives, namely supporting the transition to net-zero by 2050. The Infrastructure Bank represents an institutional replacement for the European Investment Bank (EIB) Group - another hint to post-Brexit financial institutions.
One explanation for the reduced mention of net-zero is how integral it is to the Budget’s focus on the jobs and livelihoods of the British people. In other words, the transition to net-zero has become part of the ‘government’s economic strategy’, placing the UK’s climate goals under the remit of the Bank of England’s monetary and financial policy committees. But what do these policy and economic commitments to net-zero mean for the UK’s role as host of COP26?
Taking strong UK climate governance to COP26
As COP26 host and incoming G7 president, the UK can have an important role in shaping the global energy transition opportunity. To do so it will need to demonstrate that climate change remains a key domestic and international policy priority and opportunity to coordinate a green global response to COVID-19. The UK’s own green recovery from the pandemic, discussed in part one of this series, and its focus on green jobs and levelling up of the economy is a good start. Moreover, the inclusion of the net-zero target into UK fiscal and monetary policies demonstrates a commitment to embed climate goals into the UK government’s overall policy agenda and future ambitions.
For now, we will have to wait and see how the UK’s Budget commitments and green financing initiatives translate into substantive contributions to the UK’s NDC and global efforts to tackle climate change. It is not an understatement to say that the world will be watching.
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