UK’s biggest ever net zero review highlights need for pro-investment policy
The independent review led by former UK Energy Minister, Chris Skidmore delivered 129 recommendations to the UK government with an emphasis on investor needs throughout.
IIGCC’s response to the report’s ‘Call for Evidence’ was one of more than 1,800 across the UK, where we stressed the positive relationship between growth and net zero, supported by a clear and consistent policy environment.
This came shortly after our joint letter to then Prime Minister, Liz Truss, in which we highlighted that an ambitious net zero transition could attract £10 billion per year of investment into the UK and create 600,000 new, green and high-quality jobs by 2030.
This potential is well-known in the responsible investing community, but does the Net Zero Review, officially titled ‘Mission Zero’, go far enough to catalyse the policy shifts needed to achieve it?
A call for consistency
Split into two parts, the review first sets out the opportunities and benefits of net zero for individuals and the economy before outlining recommendations on how to achieve them.
Its overriding message is that the UK needs to provide greater certainty and clarity across net zero policies to unlock “the wall of capital” ready to invest in net zero. And that this investment is essential to reaching the target.
“Unlock the wall of capital.”
It also emphasises that the costs of delaying net zero action, including in relation to the UK’s international competitiveness, are high.
Importantly, many investors will note that these ideas are not new – there has long been a demand for coherent and concise policy frameworks.
IIGCC’s member briefing summarises the standout recommendations that most affect investors. Notable points include calls for the streamlining of planning and permitting process for new renewable power generation, as well as asking how the Treasury could better incentivise decarbonisation through the tax system and capital allowances.
The report also calls for more ambition in climate disclosures and the scaling up of green finance, including a call for updates to the UK’s Green Finance Strategy and the development of transition plan disclosures.
This validates ongoing IIGCC work underway with the Transition Plan Taskforce and UK Green Technical Advisory Group, which advises on a UK green taxonomy.
Decisive policies here can also support the UK’s ambition to become the world’s first net zero-aligned financial centre. This opportunity to become a leading hub for green finance was highlighted by Stephanie Pfeifer, IIGCC CEO, in July 2022.
Stephanie stressed that as well as the need for a “robust, science-based taxonomy”, the UK must “promote interoperability of regulatory frameworks” with standard-setting bodies such as the International Sustainability Standards Board (ISSB).
“A robust, science-based taxonomy.”
The Net Zero Review reiterates this stance; encouraging the UK to endorse and implement the upcoming ISSB Sustainability Disclosure Standards “as quickly as possible.”
Powering net zero
The report goes on to explores the energy sector and how best to facilitate a speedy transition to cheaper, greener, fuels.
This includes recommendations for solar and onshore wind taskforces supported by deployment roadmaps, to begin in 2023. This extra focus is vital if the UK is to meet its ambition for a net zero electricity grid by 2035.
Much like the ban on gas boilers or minimum energy efficiency standards for buildings, incentivised policies in this space could quickly divert capital into new economic opportunities, all while benefiting the UK’s net zero transition.
There are many more recommendations on topics including the Emissions Trading Scheme and the creation of a new Land Use Framework to consider agriculture and nature.
Each is compelling: but the eyes of investors, businesses and the public will now be on the government to take forward and implement these suggestions.
An update to the UK’s Net Zero Strategy, expected in March this year, will be a critical opportunity to do this, as well as updates to its Green Finance Strategy.
IIGCC will keep a close watch on proceedings as 2023 unfolds, participating in working groups with our members and ready to offer our expertise to support policymakers.
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