Sunak clouds UK’s leadership in net-zero race
The UK was the first large economy in the world to commit to a 2050 goal for reaching net-zero greenhouse gas emissions in legally binding terms. Now, however, Prime Minister Rishi Sunak is seeking to reassess how the country gets there.
Last week, Sunak called an unscheduled emergency Cabinet meeting while Parliament was in recess. This followed the prime minister’s North Sea oil announcement in July, which granted hundreds of new licenses for oil and gas production and started to shatter the UK’s two-decade-long climate consensus.
Sunak’s big claim in a speech he made following last week’s Cabinet meeting was that the UK had “stumbled into a (net zero) consensus about the future of the country that no one seems to be happy with.” So, the starting point for his speech was that, given this perceived unhappiness and with the UK so far ahead of its competitor economies on reaching net zero — in the prime minister’s assessment — now is the time for the country to take a different pathway to the 2050 goal.
Sunak therefore announced a number of key measures, including delaying a ban on the sale of new petrol and diesel cars from 2030 to 2035. This announcement was probably the biggest single measure and it triggered criticism from the auto industry, as it disrupts their investment assumptions about 2030. Meanwhile, the opposition Labour Party, which opinion polls indicate will probably form the next government, reemphasized that it is committed to retaining the 2030 ban on the sale of new petrol and diesel cars.
A growing backlash against environmental policies means the political consensus around the energy transition is breaking down
The prime minister also announced that he would allow “far more time” for people to transition from gas boilers to heat pumps. On this front, a boiler upgrade scheme, which gives people cash grants, will be increased by 50 percent to £7,500 ($9,100) per household and there will be an exemption for the homes that will most struggle to switch to heat pumps. And plans to force landlords to upgrade the energy efficiency of properties have been scrapped.
Sunak has received support following his speech from some (but not all) Conservative politicians. However, a significant number of thinkers have highlighted that, if this was really intended to be such a big speech on the future of the country, it looked very rushed. For instance, Jess Ralston of the Energy and Climate Intelligence Unit said “this looks chaotic and not the way long-term policy should be made around important issues, with emergency Cabinet meetings and investors spooked.” Moreover, Simon Evans of the Carbon Brief website said that Sunak’s announcements may put the UK’s legally binding 2050 net-zero targets at risk.
While Sunak’s speech has received significant criticism, it is, however, clear that it reflects his considered thinking, building from his North Sea announcements. The prime minister is aware of a growing backlash against environmental policies, which means the political consensus around the energy transition is breaking down, particularly as the UK economy is stuck in what Chancellor Jeremy Hunt has called a “low-growth trap.”
Opposition to net zero is growing, particularly on the right of the political spectrum and quite often among the leaders of the Brexit movement. For instance, Nigel Farage has called for a public referendum on what he calls “ruinous” policies. Farage argues net zero is “net stupid” and that green subsidies are an excessive burden on UK energy users. While there is no prospect of such a referendum any time soon, it cannot be ruled out in the future. What is perhaps more likely is that Farage’s influence could well see a future Conservative leader adopt an even more skeptical stance on net zero.
Farage’s influence could well see a future Conservative leader adopt an even more skeptical stance on net zero
So, a clear political dividing line is opening up in UK politics. Labour has said that, if it comes into power, it will introduce a Green New Deal amid criticism that the UK needs a bigger policy response to powers such as the US and its Inflation Reduction Act. While Sunak’s government ministers are aware of these criticisms, they argue that the UK has much greater green policy stability than the US, providing greater certainty for investors. They argue that, should a Republican win the 2024 presidential election, the Inflation Reduction Act regime could be cut back.
However, one example of a policy area that the UK government clearly needs to look closely at is offshore wind energy. Offshore wind is key to government climate targets. The UK is committed to decarbonizing its electricity system by 2035, in part thanks to a near-quadrupling of offshore wind by 2030.
A number of senior energy industry figures have warned that a swathe of projects could become economically unviable under the current regime. While the industry has been hit by huge inflationary pressures, greatly increasing its construction costs, it warns the government has failed to adjust the scheme that guarantees the price it is paid for energy.
One of the few parts of Sunak’s previous announcement that did get approval from across the political divide was the confirmation that carbon capture, usage and storage projects in northeast Scotland and the Humber had been chosen as the UK’s third and fourth clusters. The government had already committed to deploying such technology in two industrial clusters by the mid-2020s.
Nevertheless, the UK government now needs to raise its game further. If it does not, it will not just be letting the British public down, but also much of the rest of the globe, for which UK leadership could help encourage a faster delivery of the energy transition.
- Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.