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Will Sunak’s Net Zero strategy change derail progress?

By: Steve Atkins – Principal Consultant, Consultus International Group

Prime Minister Rishi Sunak made an announcement on Wednesday 20th September 2023 regarding a shift in the government’s green policies that could see a watering down of some key deadlines ahead of the 2050 Net Zero target. Ahead of the policy announcement, we take a look at what is being discussed and look at the implications for the wider UK economy of such large-scale changes.

The (potential) Proposals

Today’s announcement could see the government row back on several large-scale commitments and will herald a huge shift of message from the Conservative Party. Although the government remains firmly committed to the 2050 target (but surely it has to be, that is enshrined in UK law?), the road to get there now seems uncertain and divisive.

Reported big ticket strategy items, such as phasing out of combustion engine cars by 2030 and the replacement of gas-fired boilers by 2035, look set to be substantially watered down, whilst the requirement for green initiatives by landlords and for new-build housing are set to be scrapped entirely.

Significantly, a new tax on flying, aiming to disincentive air miles looks set to be completely removed, as does any form of incentive for car sharing or for improving people’s diets.

Controlling the narrative…and a political divide

Today’s announcement is an attempt by the government to bring the breaking of this news back under control, following a Whitehall leak that brought the news into the limelight yesterday evening. As such a major policy-piece, Sunak was reportedly upset that the story was broken as it was in an uncontrolled manner, with the initial plan to make the announcement later this week scuppered.

Commentators have been quick to speculate on the reasons why the government is now seeking to water down its green commitments, citing reasons both internal and external to the Conservative Party.

Firstly, it has become clear that some Tory MPs are in favour of delaying or postponing some measures, citing the current cost of living crisis and spiralling energy costs as a reason not to put any further burden on an electorate that continues to favour the Labour Party in opinion polls.

To that end there must be considered an element of electioneering in this decision, as the Conservative win in the recent Uxbridge bi-election – reportedly due to a backlash against the expansion of the London Ultra Low Emissions Zone – shows. Other Tory MPs are more sceptical, however, citing economic harm as a reason why this change of direction can be considered folly.

It is true that the green economy offers real opportunities for the UK to become a world leader, and with millions already invested in new products and services, it seems the government is providing uncertainty where it is least needed. Investment decisions need guaranteed return, and delays and policy shifts will undermine confidence in the future.

The Labour Party has distanced itself from the potential changes, setting green issues as a clear political issue ahead of next year’s General Election. Labour has already said it would reinstate the 2030 commitment to electric vehicles should it be changed later today.

Green lobby groups and charities are dismayed at the news, with many saying that the government is already behind in delivering its 2050 commitments and today’s announcement will only serve to delay things further.

Where there’s a will…

What is true, regardless of today’s announcement, is that the wider UK economy will continue to lead the way in green initiatives. Commitments from large corporations to achieve their own Net Zero targets will not go away or be silenced – with many having already publicly stated their targets – and their need for commercial advantage from green measures will overcome government inertia.

Whilst the government dithers and procrastinates, private enterprise once more will surely come to the rescue. The will of the green sector has surely gained enough momentum to be sustained.

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