Yesterday (21 September), the UK’s net zero prospects took a heavy hit as Prime Minister Rishi Sunak unleashed a flurry of delays to key targets in both the EV and heat industries.
As reported by Current±, Sunak revealed that the ban on the sale of fossil-fuel powered internal combustion engine (ICE) vehicles, a key driver of electric vehicle (EV) adoption in recent years, will be delayed from the originally proposed date of 2030 to 2035.
The Prime Minister also announced that households will no longer be required to replace their gas boilers with low-carbon alternatives. This will only be required after 2035 and depend on whether the boiler already needs to be switched, although there will be some exceptions to this rule.
According to Sunak, these changes were imposed to avoid “unacceptable costs to British families.”
The reaction to these major changes has been largely negative with many believing that these less ambitious targets will damage investment within both sectors and cause the UK to tumble down the rankings in terms of attractiveness for low-carbon technologies.
EV industry blasts ICE sale ban delay
Automotive giant Ford UK has led the condemnation of the ICE sale ban delay, citing the scale of investment the company has put into the UK electric vehicle (EV) industry since the 2030 ban was revealed three years ago.
“Three years ago, the government announced the UK’s transition to electric new car and van sales from 2030. The auto industry is investing to meet that challenge,” said Lisa Brankin, Ford UK Chair.
“Ford has announced a global $50 billion commitment to electrification, launching nine electric vehicles by 2025. The range is supported by £430 million invested in Ford’s UK development and manufacturing facilities, with further funding planned for the 2030 timeframe.
“This is the biggest industry transformation in over a century and the UK 2030 target is a vital catalyst to accelerate Ford into a cleaner future. Our business needs three things from the UK government: ambition, commitment and consistency. A relaxation of 2030 would undermine all three. We need the policy focus trained on bolstering the EV market in the short term and supporting consumers while headwinds are strong: infrastructure remains immature, tariffs loom and cost-of-living is high.”
Transport research group New Automotive echoed Ford’s disappointment and frustration at the announcement of the delay describing the enter speech as a “hammer blow to the UK’s leadership on climate change”.
“Pushing the ban on buying petrol and diesel cars back to 2035 is an abdication of leadership that motorists will pay the price for. It sets us back in the global race to develop green industries – a huge own goal by the UK,” said Ben Nelmes, CEO of New Automotive.
“It’s also a hammer blow to the UK’s leadership on climate change. Despite what the Prime Minister has claimed, it will be harder to meet our legally binding emissions targets.
“He is right to say that electric car prices are dropping and charging infrastructure is improving – but this is thanks to the industry investing billions of pounds working towards the 2030 target. Pushing the date back will raise costs for motorists by deterring future investment in the UK EV industry and supply chain.”
Holmes added: “It will restrict job creation, weaken energy security and lead to higher energy bills for longer for everyone. It removes a key pillar of the current government industrial policy of green growth, reversing the work of the last decade.”
It is worth noting that the move by Sunak has prompted New Automotive to start an “urgent petition” calling on the 2030 ban to be reinstated.
Stepping back from 2030 is totally the wrong call. It’s bad for motorists, the economy and the environment. Let’s tell Rishi Sunak to think again – add your name to our petition: https://t.co/4aXDSeThfL pic.twitter.com/H4PmplE4Ue— New AutoMotive (@New_AutoMotive) September 21, 2023
Jess Ralston, energy analyst at the Energy and Climate Intelligence Unit (ECIU) also highlighted the impact that instability in the EV industry could cause. Ralston said: “The last thing that the car industry wants to see is uncertainty and a lack of long term policy stability – but that’s what they’ve got with the pushing back of the phase out that they’ve been preparing for.”
Northern charging network Be.EV blasted the announcement of the ICE ban delay and publicly voiced its concerns, stating that it demonstrates a total lack of ambition and courage in their vision for the country’s green future.
Asif Ghafoor, CEO and co-founder of Be.EV, said: “Today’s announcement to push the ICE ban back to 2035 is the polar opposite to the ambition and bold strategy we need to see from the government right now.
“The cold reality is Sunak needed to face up to the challenge – and to do so with conviction. The world is going through a major industrial shift – no one ever said it was going to be easy. The government is no longer leading Britain’s net zero transition. Their internal squabbles and indecisiveness have created a total loss of faith in any new measures or goals they announce. It will now fall on the public to drive the changes they want to see and the market to respond to that demand.
“For the EV industry, we have to push on with business as usual. The EV transition is happening – that horse has well and truly bolted. Car manufacturers are already globally invested in the EV transition, many have already made commitments to completely transition their production to 100% EVs before 2030.”
Also of note is the impact this news could have on EV investment from abroad. Earlier this year, Fortescue Future Industries announced its intention to develop an additional “state of the art facility” for battery and electric powertrain production in Oxfordshire to support the EV industry.
Fortescue Future industries (FFI), which is the renewable arm of Australian iron ore giant Fortescue Metals Group, said it would develop a production facility in Banbury that, as the company stated, will “significantly expand its UK manufacturing capability, supplying advanced batteries and electric powertrains globally”. The facility would bring around 120 new jobs to the area.
However, speaking with Bloomberg News in July, Andrew Forest, Australian mining tycoon, investor and owner of Fortescue, threatened to pull the plug on investment if the government did not commit to net zero policies.
“I am a major investor here,” Forrest told Bloomberg News, as reported in The Guardian. “If I see this country steering itself over a cliff backing fossil fuel, I am going to start pulling out. I will push my investments over to North America… I must invest where I know I have proper leadership, not leadership which is on a clickbait cycle.”
The impact on the decarbonisation of heat
The government’s changes to the decarbonisation of heat have also raised questions from across the industry.
Notably, The Kensa Group, a manufacturer of ground-source heat pumps in the UK, stated that the announcement was “extremely concerning.”
Dr Matthew Trewhella, CEO of The Kensa Group, said: “At a time when we should be scaling up to reach our net zero commitments by injecting investment and stability into green businesses and proven sustainable solutions, our planet’s future is being cynically used as a political bargaining tool.
“British businesses have been innovating, investing, building supply chains and creating green jobs based on the UK’s net zero transition strategy.”
Henk van den Berg, residential sales manager at Daikin UK has real concerns for the heat industry following the moving back the deadline for banning oil/LPG boilers till 2035 and the full cancellation of the landlord’s efficiency targets.
Van den Berg said: “Heat pumps are now more affordable than ever. By increasing the Boiler Upgrade Scheme (BUS) support to £7,500, the government has made renewable heating more accessible. However, the overall funding hasn’t been increased which means that there will be fewer installations overall for the remainder of the BUS scheme.
“Continuing to exclude hybrid heat pump systems – the cheapest and fastest way to decarbonise home heating – from the Scheme is a real misstep.
“Moving back the deadline for banning oil/LPG boilers till 2035 and the full cancellation of the landlord’s efficiency targets will have a severe impact in the midterm. This is only going to make hitting the 2050 net zero target harder and, most likely, more expensive for households. Especially as our PM failed to address the electricity levy once again, still favouring fossil fuels from a tax perspective.
“The government has clearly given-up on its commitment to see up to 600,000 heap pumps being installed a year by 2028. This is going to undermine confidence, foreign investments and will have a significant impact on the growth in green jobs.”
This topic was also touched upon by Ralston from the ECIU, who said: “Quite the opposite of an honest debate, the implication that any of these policies were going to affect the cost of living here and now is untrue. In fact, the PM has sided with landlords over renters, putting their energy bills and cost of living up by ducking the improvement of rules on energy efficiency.
“That doesn’t make any sense when excess cold in homes costs the NHS £1.2 billion per year and renters are amongst those with the lowest incomes. As the North Sea declines, if the UK fails to shift to heat pumps, we’ll end up reliant on importing ever larger quantities of foreign gas.
Announcements could jeopardise private investment, says energy industry
The energy industry has also thrown its weight into the debate, with many referencing the impact this could have on the investment that is required to support net zero. The Energy Networks Association (ENA) believes that the political instability could have a detrimental effect on private investment in the net zero space.
Lawrence Slade, chief executive of ENA, said: “Delivering world-class energy infrastructure and ensuring our energy networks remain fit for the future requires policy and regulatory clarity. The UK has an historically stable regulatory regime, which makes it so attractive to infrastructure investors. This needs to be matched by stability from policy makers on their long-term objectives, if the UK is to continue having a leading role.
“We are working with the government and regulator to improve and accelerate grid connections, to support economic growth and decarbonisation. The connections queue is moving – we will connect 78,000 customer projects to the distribution network this year and nearly 34GW to the transmission system in the next two years.
“The networks are reforming the way projects connect to the grid, but success also relies on planning reforms, as the Electricity Networks Commissioner identified in his recent report. We have set out the changes we’d like to see on planning and hope to see progress here in the coming months as the government sets out further details on the announcement made today.”
Trade association RenewableUK has also highlighted the impact this could have on investor confidence in the UK’s net zero sector – particularly in comparison to attractive markets such as the US, Europe and China. Dan McGrail, chief executive of RenewableUK, said: “The announcements will undoubtedly knock investor confidence, as many green technology leaders are now nervous about the increasing uncertainty around net zero policies in the UK.
“The government is going to have to outline clear measures to restore market confidence in the Autumn Statement, not least to ensure that we can compete against the USA, Europe and China for investment at a time when the global race to build new renewable energy projects has never been more intense.
“The financial incentives being offered elsewhere risk draining private investment from the UK, so we need to see capital allowances which will bring developers back to the table here and stop vital energy infrastructure projects being put on hold. We also need to see new incentives focused on investment in manufacturing.”
These thoughts are echoed by Sam Hollister, head of economics and finance at LCP Delta, who described the announcements as “another nail in the coffin”.
“The government is paying no regard to the investment needed to meet net zero, with the latest announcements another nail in the coffin that could see investors take flight to other markets. Weeks after a CfD auction which failed to attract investment in offshore wind, and still no answer to the US’s Inflation Reduction Act, today’s rumours will act as another signal to investors that the UK’s commitments and plans for net zero are not guaranteed,” Hollister said.
Current± publisher Solar Media is hosting its EV World Congress event in London this 10-11 October. The conference will focus on some of the key discussion points from across the EV sector including delivering coherent EV charging strategies, whether the UK is on course for its 2030 charging target, vehicle-to-grid (V2G) technology and more. More information, including how to attend, can be read here.