The Aldersgate Group has launched a policy briefing highlighting low carbon projects could help address economic challenges following COVID-19, as the Energy Efficiency Infrastructure Group joins calls for a green recovery.
An economic recovery that was focused on stimulating low carbon and nature restoration projects could deliver a number of key benefits, according to the group, including addressing regional inequality and unemployment and building a more resilient financial system.
A recovery with these projects at its heart would help strengthen the UK government’s influence ahead of the G7 and COP26 summits, the latter of which has been delayed to 2021, and enable UK businesses to be competitive providers of low carbon goods and services.
The UK’s economic competitiveness and productivity would also be strengthened through investment in what the group describes as “the sectors and technologies of the future”.
Tackling the challenges of a recovery from COVID-19
The Aldersgate Group has a number of specific recommendations for the government, including that it should work with the Bank of England to implement key lessons from the stress testing exercise for financial institutions, which then-governor of the Bank of England Mark Carney announced in a speech in February. He emphasised the importance of private finance in the transition to net zero and stated that it could be “the greatest commercial opportunity of our time”.
The stress testing was designed to reveal the financial firms - and by extension the companies - preparing for the transition, as well as those that are not.
The Aldersgate Group also recommended the introduction of mandatory Taskforce for Climate-related Finance Disclosures (TFCD). Currently companies report to the taskforce on a voluntary basis, but the group recommends that all companies reporting to the Streamlined Energy and Carbon Reporting regime should have to align their climate risk disclosure and report it to the TFCD by 2022.
This was also something Carney touched upon in his February speech, stating the Bank of England would be working with authorities “to commit to pathways” to make the reporting of climate-related risk mandatory.
The Aldersgate Group also recommended that the government works closely with the Green Finance Institute (GFI) and the recently launched Clean Growth Fund to identify “key market barriers and gaps to investment in emerging green infrastructure and technologies”.
It pointed to the recent partnership between Triodos Bank, Tesco and Pod Point which saw Triodos provide a debt facility to support the rollout of EV chargers, with TLT advising on this.
This was a collaboration that saw Aldersgate Group members collaborate to develop new solutions for funding EV chargers, the group said, with the original partnership between Pod Point, Tesco and Volkswagen creating “a new, sponsorship-based business model for EV charging”.
Gary Roscoe, partner at TLT, said that historically the funding for the EV charger rollout has been largely from public and private investment, but that “this innovative approach adopted by Triodos sets a precedent for debt funding, and paves the way for developers and retailers looking to explore other funding avenues and adopt a similar model”.
The Aldersgate Group made a number of recommendations relating to EVs, including bringing forward the phaseout of internal combustion engine vehicles – including hybrids – to 2030 or sooner, a call made by the Aldersgate Group previously and something the government is consulting on.
This, it said, would have the potential to create 200,000 permanent jobs, 57% of which would be involved in the installation, operation and maintenance of charging points.
Commitments to accelerate the switch to EVs, as well as increasing active travel and improving bus and rail services, will be “essential” for decarbonising the transport sector. The group pointed to a £7.5 million project to ramp up EV charge points in Scotland, which is set to provide a model that can guide developments across the UK.
"A historic opportunity"
The Aldersgate Group's report touches on many different aspects of decarbonisation, describing the recovery from COVID-19 as a "historic opportunity to address key public interest concerns and accelerate the transition to a low carbon and environmentally resilient economy".
Carbon capture and storage and hydrogen were two of these areas looked at, with the Aldersgate Group recommending that the government accelerates innovation and emission cuts by supporting at-scale trials for the technologies.
Nick Molho, executive director of the Aldersgate Group, said: "There has rarely been a time when the economic, social and environmental agendas have been so closely aligned.
"It is clear from the case studies in our report that incentivising low carbon and nature restoration projects as part of the UK’s recovery plan could do much to tackle economic and social concerns around jobs, regional inequality, long-term competitiveness and resilience.”
The Aldersgate Group is not the only organisation to be turning up the heat on the government when it comes to a green recovery, however.
Also released this week was a report from the Energy Efficiency Infrastructure Group (EEIG), which is also calling for a green recovery. However, the EEIG focused on the energy efficiency measures that could be taken to support this, describing buildings as the "litmus test for a net zero recovery".
It outlines a proposed two-year stimulus package, including measures such as bringing forward to now the £0.1 billion ear-marked for Clean Heat Grants from 2022 and fully committing to the £9.2 billion worth of commitments to energy efficiency investment made in the government’s 2019 manifesto. These include the Social Housing Decarbonisation Fund, Home Upgrade Grants and Public Sector Decarbonisation Scheme.
Direct investment in homes from public and private sources in the proposed stimulus package comes in at £4 billion over two years and would support 500,000 renovations and 34,000 full-time equivalent jobs across the supply chain.
Energy UK's interim chief executive, Audrey Gallacher, said the recommendations are "exactly the sort of ambitious infrastructure plan that could help kickstart our economic recovery by creating thousands of skilled jobs and new opportunities for businesses".
Elsewhere, a number of organisations have recommended a green recovery, including the Committee on Climate Change, the Confederation of British Industry, the International Renewable Energy Agency and a letter signed by a group of 200 business leaders, with the Aldersgate Group having themselves signed.
The government has made a step towards a green recovery, announcing energy secretary Alok Sharma is to chair a roundtable on the subject.