Hanover

17 Nov 2020

In a bid to reset his agenda, the PM is this week expected to deliver a speech outlining 10 steps the UK should take to reach net zero by 2050. Ahead of what may be a key moment in achieving a green recovery from COVID-19, Hanover Associate Director Sam Magnus-Stoll and Head of Energy and Infrastructure Larry Smith consider what the Government – and the rest of us – should do to make the net zero goal a reality. 

Power up the machinery of Government 

The PM made a good start in putting the net zero ambition at the heart of his Government when he set up a Cabinet Committee on Climate Change, in line with recommendations from the CCC. However, as the CCC pointed out in its most recent progress report, it took five months for the new Committee to have its first meeting. With the year of COP now upon us, the Cabinet Committee should meet on a monthly basis and report proactively on its goals, as recommended by the CCC. The Cabinet Committee must also meet more frequently with business leaders and trade organisationsworking with them to make the transition a reality.  

Increase investment in Carbon capture, utilisation and storage 

CCUS technology is essential if the Government is to reach net zero without compromising on employment. For the UK to maintain a healthy industrial sector, CCUS projects must be rolled out across the country, using industrial clusters to drive inward investment and demand for low carbon products in the regions. Without CCUS, the Government will likely be forced to choose between regional economic security and net zero – costing the country significant jobs and depriving the Conservatives of vital bricks in their ‘Blue Wall’. 

Get serious about domestic EV production 

In his first few days in office, the PM pledged to make the UK a ‘world leader’ in electric vehicles. There are signs the Government is now going to try and make good on this goal by bringing forward its proposed phaseout of diesel and petrol vehicles from 2035 to 2032 – or perhaps even earlier. There are mixed feelings about this within industry. The challenge with EVs so far has been the cost of their supply chains, which in turn has had to be passed on to the consumer. The Government has tried to address consumer cost through de facto subsidies. But for meaningful change, it must address the supply challenge. It should look to step up its ambition and develop domestic gigafactories that can manufacture EV batteries at home, rather than having to import them from abroad. That manufacturing capability will create jobs and lower costs for ordinary drivers  

Complete the renewables revolution 

The PM made the right decision earlier this year when he abandoned the more sceptical approach of his predecessors and agreed to reopen subsidy schemes to onshore wind and solar. As a recent Ernst and Young report found, a renewables-led recovery from COVID-19 has the potential to get the economy firing on all cylinders. 

To truly seize that potential, the Government should expand the ambition of the Contracts for Difference scheme, running auctions every six months rather than every one or two years. Raising the capacity cap in the next government power auction could also be the way to realise gains in renewable investment and jobs. 

Ingrain net zero into the economy 

For net zero to work, our economy needs to shift entirely – ingraining carbon neutrality into every aspect. This includes taxation – which could be used as an incentive to encourage businesses, households and individuals to reduce their carbon footprint. One option might be for business rates to incentivise carbon reduction in non-domestic properties. Another option might be to reduce stamp duty or capital gains tax in exchange for domestic property efficiency measures – which are otherwise costly and hard to convince households to take up. 

On a wider level, BEIS’s audit reform review should look at a requirement on all businesses of a certain size or turnover to publicise their carbon impact. This would build on the new requirement for large companies to disclose climate riskgiving businesses a publicly available ‘carbon rating’requiring them to publish annually whether the rating has improved and what efforts have been made to do so. This information could be stored in a publicly available database, as well as being required on a business’s website – as with gender pay gap reports. 

Be more ambitious and vocal on the smart meter rollout 

The Government introduced the smart meter rollout, and has seemingly tried to distance itself from it ever since. But the truth is that for the net zero goal to be achieved, smart meters will be essential. With every household using EVs and charging at similar times, smart meters will be vital to distributing electricity fairly – ensuring everyone gets a fully charged vehicle when they need it, while avoiding the risk of power outages. Similarly, smart meters are needed to help the grid handle the unpredictable nature of renewables – which unlike fossil fuels, are currently hard to store and control. The Government knows net zero won’t be possible without smart meters, but needs to do more to educate the public and to put its full weight behind the rollout. 

Help people make a difference 

For all the policy levers the Government can pull, it will ultimately take all of us – another great national effort – to get the UK to net zero. While Ministers will be naturally wary of taking a ‘nanny state’ approach, they should consider offering tools that can help people reduce their carbon footprint. One option might be to work with a respected third party to produce a new app that asks questions about users’ lifestyles and suggests – in simple English – achievable ways in which they can be more sustainable. We know from data that the public worries about climate change and wants to help – but doesn’t always know how. It is the Governments job to step in and show the public how to bridge that gap between concern and action.