IIGCC welcomes the establishment of a department dedicated to energy security and net zero, led by Grant Shapps MP. The Department of Business, Energy and Industrial Strategy (BEIS) has been disbanded as part of this reorganisation.
It is one of four new departments announced by Prime Minister, Rishi Sunak, and will be tasked with ‘delivering security of energy supply, ensuring properly functioning markets, greater energy efficiency and seizing the opportunities of net zero to lead the world in new green industries.’
Notably, this announcement did not mention the UK’s legally binding net zero target or place much emphasis on continuing the climate change work led by its predecessor, BEIS.
Net zero itself is referenced as a longer-term objective, but for investors short and medium-term milestones are as important.
However, with its established hub for green finance and ambitions to be the world’sfirst net zero aligned financial centre, along with experience as COP26 President, the UK should continue to be well-positioned to act as a global climate leader.
The review delivered 129 recommendations to government, stressing the positive relationship between economic growth and net zero policies, as well as the need for a clear and consistent policy environment.
Growth potential was central to our own response to the mission zero ‘call for evidence’. We highlighted that investors are ready to allocate capital to climate solutions at speed if supportive policies that underpin wider ambition are implemented.
Net zero is energy security
Like many European nations, inflation is a key focus for Sunak’s government. Russia’s invasion of Ukraine has highlighted supply chain risks and exacerbated the current cost of living crisis, perhaps most acutely felt in rising domestic energy bills.
Under this public pressure the Prime Minister is eager to improve energy independence: but it is vital that this is done in a way that simultaneously protects the UK’s longer-term net zero commitment.
The light at the end of this tunnel must be green.
Though tempting to view as a quick fix, a U-turn to fossil fuels risks undoing the hard work delivered on the clean energy transition so far. It could also prolong the UK’s reliance on a volatile energy market which is vulnerable to geopolitical shocks.
Instead, focusing investment and expertise on green energy will provide a more reliable, secure, and affordable energy supply for decades to come, while also keeping the Paris Agreement climate goals within reach.
Currently 40% of the UK’s energy mix comes from renewables, and there is scope for this to increase significantly. A government department dedicated to seizing the opportunities of net zero and leading the world in new green industries is encouraging to see.
THE LIGHT AT THE END OF THIS TUNNEL MUST BE GREEN.
Signals into outcomes
In September 2022, the CEOs of leading investor groups including IIGCC highlighted that an ambitious net zero transition could attract£10 billion per year of investmentinto the UK and create 600,000 new, green, high-quality jobs by 2030.
The US’s recent Inflation Reduction Act, which earmarks almost $400 billion for green projects, is another global declaration of intent which policymakers cannot ignore.
Clearly, now is the time to act.
Emily Murrell, IIGCC Climate Policy Programme Directorsaid: “The establishment of a dedicated department for energy security is very welcome, with net zero prioritisation another important and much needed signal.
“However, signals must become outcomes. And most importantly, energy security at an affordable price must not be viewed as an open invitation for fossil fuel expansion. In our view, the current energy and cost of living crisis serves as another reason to accelerate the transition towards green energy and continue to reduce societies’ reliance on fossil fuels.
“That’s why we hope this new department strikes the right balance across the energy trilemma. Investors especially need to see clarity of ambition and the policy specifics in order to deploy capital at the speed and scale required to unlock the opportunities of net zero for the UK.
“On a personal note, as a past employee of the Department of Energy and Climate Change which was disbanded in 2016, I am delighted to see a dedicated energy and net zero focus back in Whitehall.”
“ENERGY SECURITY AT AN AFFORDABLE PRICE MUST NOT BE VIEWED AS AN OPEN INVITATION FOR FOSSIL FUEL EXPANSION.”
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