The government’s series policy announcements released this week are high in ambition with strong signaling, but questions remain over financing.
In general, the ambition of the Net Zero Strategy in particular was praised, with areas like the strengthened focus on wind and detail on transport and heat and buildings welcomed.
“We should not ignore the fact this is actually a real step change in terms of having a strategy,” said Jill Rutter, senior fellow at the Institute for Government.
“It’s great to have a strategy, it’s great it’s got some deadlines in it, it’s great it’s got some numbers and targets attached,” she said, but added that the key thing is whether the government keeps up the “hard graft” once the focus goes away following COP26.
This was somewhat echoed by other panelists, with Paul Massara, chair, NED and member of the Fuel Poverty Committee, BEIS, stating that the strategy is “high in ambition, high on signaling, but there’s a delivery gap and an execution gap unless we have more detailed plans, and more detailed financing”.
The Treasury’s Net Zero Review – designed to look at what some of the costs of reaching net zero might be – was released this week, however it highlighted the difficulty in forecasting those costs when the pathway to net zero, and the technologies that may form part of the transition, are still unclear.
“The Treasury has taken refuge behind various things, the technological uncertainty and the fact that how exposed – in the Treasury’s words – you are in the transition depends very much on your household characteristics to avoid anything more than a very generic level of modelling of the impacts on households,” Rutter said.
“But what it does express is a clear preference to offsetting any costs that households face and can’t afford through what they call targeted grants rather than more general changes to the overall tax and welfare system,” she added.
She highlighted some further key points in the Net Zero Review, including the government tentatively indicating that carbon prices will rise in the future, although not through a carbon tax but through a more comprehensive emissions trading scheme (ETS).
Additionally, the strategy “very tentatively” starts to lay the groundwork for rebalancing the tax system away from “loading loads of charges on electricity and letting gas get off free”.
Overall, Phil MacDonald, chief operating officer, Ember, said it feels like the government has “grasped this crucial point” in the Net Zero Strategy, which is that once a clean power sector has been achieved, it unlocks decarbonisation of the rest of the economy.
It unlocks transport, heat and industry decarbonisation, with all of these having electrical roots to getting out of fossil fuels. This is very important, MacDonald said, adding he’s very pleased to see this sort of signaling.
However, he also made reference to the push for nuclear within the strategy, stating that the technology “isn’t going to solve some of our problems in the next decade” with most of the UK’s nuclear fleet reaching the end of its life, and Hinkley to not be operational within the next few years.
“The focus in the short term really needs to be building out wind and solar,” he said.