UK’s shift in net-zero policy raises red flag: Is this a godsend for people’s pockets or wishful thinking?

The dust has yet to settle after the UK’s Prime Minister laid out changes in net-zero policies with the aim of lessening the alleged burden imposed on British people by costly vehicle and home upgrades. The amended approach to net-zero and incoming reactions to it open up a whole new can of worms. Did Britain take a series of U-turns on what is perceived to be key climate pledges? Can the country still reach net-zero aspirations with these changes in place? Is the overwhelming backlash, which pegged the pivot as a costly mistake, justified? Will the scrapping of these policies delay the inevitable or enable people to save money for a rainy day?

Things are certainly heating up on the global energy policy horizon lately. The incoming 2024 presidential run in the U.S. shows all the signs of turning into a referendum of sorts on clean energy and net-zero aspirations, as most of the Democratic Party and their Republican counterparts have drawn a clear line on this issue. While Democrats’ stance indicates a further push for green energy, the majority of Republicans are seeking to bring forth more fossil fuels, with very few, if any, clean energy initiatives included in their energy agendas. The new energy plan, presented by the governor of Florida and Republican presidential contender, Ron DeSantis, is a case in point.

Aside from the vow to unleash “American energy dominance as a way to stop inflation and achieve $2 gas in 2025,″ DeSantis’ energy plans also entail preventing “California and faceless bureaucrats from setting America’s environmental standards” along with his pledge to make sure plaintiffs will be required to pay compensation when they bring “spurious” litigation against energy projects.

On the other hand, the energy views and policies advocated by California Governor, Gavin Newsom, embody the Democrats’ attempts to fight climate change with clean energy and end the era marked by the burning of fossil fuels. This is illustrated by Newsom’s support for a lawsuit that was filed in San Francisco County Superior Court against ExxonMobil, Shell, Chevron, ConocoPhillips, BP, and the American Petroleum Institute (API) for their alleged role in watering down the potential risks fossil fuels pose for climate and the environment while creating “statewide climate change-related harms in California.”

This dichotomy between the left and right wings in politics is rearing its head throughout the world, and the UK has not managed to escape the reach of its tentacles either. As the 2024 general election comes closer, the differences in energy policies, which are coming from the designated right spectrum, such as the Conservative Party and UKIP, and those from the left side of the equation, like the Labour Party and Green Party, are primarily evidenced in the zest for commitments towards addressing climate change and protecting nature.

Both sides are heavily criticized for their energy agendas, as illustrated by the barrage of criticism the Labour Party got over its plans to ban all new oil and gas developments in the North Sea. The Conservative Party’s recent net-zero policy adjustments have also come under fire, as they are perceived to water down the country’s established net-zero agendas and plans. As this sparked outrage from environmental activists, climate experts, and businesses seeking green and low-carbon investment certainty, those with skin in the game warn that the delay in some of the previously established climate targets will be bad not just for climate but also for Britain’s economy.

Those sympathetic to the recent change in policy put forward a conundrum for others to ponder by asking them to think whether people should pick between feeding their families and upgrading their homes to meet decarbonization requirements, or whether countries need to make net-zero policies more affordable for their citizens. However, Rishi Sunak, UK Prime Minister, is adamant that the country will still reach net-zero by 2050, albeit following a “fairer” path towards this target to ease the financial burden on British families, as the “over-delivery” on reducing emissions provides space to take “a more pragmatic, proportionate, and realistic approach” to reaching net-zero, while maintaining all international commitments.

“What is our new approach to achieving net-zero? First, we need to change the debate. We’re stuck between two extremes. Those who want to abandon net-zero altogether – because the costs are too high, the burdens too great or in some cases, they don’t accept the overwhelming evidence for climate change at all. And then there are others who argue with an ideological zeal: we must move even faster, and go even further no matter the cost or disruption to people’s lives and regardless of how much quicker we’re already moving than any other country. Both extremes are wrong. Both fail to reckon with the reality of the situation. Yes, net-zero is going to be hard and will require us to change,” outlined the UK’s PM.

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What has Sunak set out to do in a bid to strike the right balance between the two so-called extremes and enable a just transition to a more sustainable future? According to the UK’s Prime Minister, the ban on the sale of petrol and diesel cars will be moved back to 2035 and new policies forcing landlords to upgrade the energy efficiency of their properties will be scrapped. The ban on new fossil fuel boilers for certain households will be delayed while cash grants for boiler upgrade schemes will increase by 50% to £7,500 for those who want to transition now. In addition, Sunak assures people that worrying proposals such as seven recycling bins and taxes on meat and flying will never happen on his watch.

Britain is working not only on reducing carbon emissions by 68% by 2030 compared to 1990 levels but also on reaching 77% emission cuts by 2035. The Prime Minister claims that the UK cut its emissions faster than any other G7 country, having already slashed emissions by 48%, compared to 41% in Germany, 23% in France, and no change at all in the United States. To further hammer home the progress made, the government underscores that the country even surpassed the targets most other countries have set for 2030, such as Australia, Canada, Japan, and the United States.

This has a nice ring to it and Sunak certainly thought so too, when he came to the conclusion that some net-zero measures that were planned are no longer needed, but is this the right way forward? The answer to this controversial question is certainly open to debate, however, the Prime Minister is convinced that reaching the UK’s 2030 and 2035 targets does not have to come at the expense of British citizens who are continuing to face higher costs of living, especially as Britain’s share of global emissions is touted to be less than 1%.

“We’ve seen rapid technological advances which have made things like renewables far cheaper: Just consider offshore wind, where costs have fallen by 70% more than we projected in 2016. And people are increasingly choosing to go green – look at how demand for electric vehicles has consistently outstripped forecasts. Given these things, I’m confident that we can adopt a more pragmatic, proportionate, and realistic approach to meeting net-zero that eases the burdens on working people,” emphasized Sunak.

The Prime Minister has also revealed a raft of measures that are expected to enable the UK to keep its spot at the top of the decarbonization pyramid even after these net-zero changes are made. To this end, Britain intends to establish its spatial plan for energy infrastructure and fast-track eligible transmission projects, through the nationally significant infrastructure project planning regime, to ensure they are prioritized, helping businesses and households connect to the grid sooner.

“We’ll set out the UK’s first ever spatial plan for that infrastructure to give industry certainty and every community a say. We’ll speed up planning for the most nationally significant projects. And we’ll end the first-come, first-served approach to grid connections by raising the bar to enter the queue and make sure those ready first, will connect first. So, from offshore wind, to nuclear, to a revolution in our energy infrastructure investors should have absolute confidence that we’re getting on with the job and the UK will remain the best place in the world to invest in the green industries of the future,” elaborated Sunak.

Therefore, a new approach to grid connections is in the wings, thus, energy projects that are ready first will connect first and ultimately get online quicker. These new measures also cover a new Green Futures Fellowship, backed by a £150 million (nearly $184 million) endowment, to support at least 50 scientists and engineers to develop practical, breakthrough green technologies and climate change solutions over five years, building on the £1 billion invested into the Net Zero Innovation Portfolio. 

“One of our biggest constraints to reaching net-zero and improving our energy security, is this: We’re investing billions in new energy projects, yet we don’t have the grid infrastructure to bring that power to households and businesses. And when energy security is national security – that’s unacceptable. Right now, it can take fourteen years to build new grid infrastructure. There are enough projects waiting to be connected to generate over half of our future electricity needs,” explained Sunak.

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The Chancellor and Energy Security Secretary are expected to bring forward comprehensive new reforms in due course. The government believes that these changes will not force the UK to change or abandon its upcoming emissions targets and the Prime Minister is unequivocal that the country will meet its international agreements, including the critical promises in Paris and Glasgow to limit global warming to 1.5 degrees Celsius.

“And nor will we ban new oil and gas in the North Sea which would simply leave us reliant on expensive, imported energy from foreign dictators like Putin. We will never impose these unnecessary and heavy-handed measures on you, the British people but we will still meet our international commitments and hit net-zero by 2050,” added the UK’s PM.

Sunak, who says that net-zero ambitions are underpinned by the commitment to boosting energy security and protecting nature, also pledges to ensure that Parliament gives full scrutiny to all future measures that might be needed to fulfill the Carbon Budget, leading to more accountability from elected representatives and more transparency for the British public on plans to reach net-zero.

The UK’s Prime Minister underlined: “This country is proud to be a world leader in reaching net-zero by 2050. But we simply won’t achieve it unless we change. We’ll now have a more pragmatic, proportionate, and realistic approach that eases the burdens on families. All while doubling down on the new green industries of the future.

“In a democracy, that’s the only realistic path to net-zero. We are going to change the way our politics works. We are going to make different decisions. We will not take the easy way out. There will be resistance – and we will meet it. Because I am determined to change our country and build a better future for our children. Nothing less is acceptable.”

Following Sunak’s speech, the representative body for the sector, Offshore Energies UK (OEUK), has pointed out that homegrown energy needs to be a “big part” of the answer to national challenges, as Britain’s offshore energy industry reinforces the key role it can play to help the country boost jobs, grow the economy, cut emissions and provide energy security. 

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While deducing that the focus in the new policies, for the most part, remains centered on consumer measures, OEUK highlights that an enduring consensus is needed across parties to unlock £200 billion, currently almost $245 billion, of investment in oil, gas, wind, hydrogen, and carbon capture and storage over the next decade.

Moreover, Offshore Energies UK’s recent Economic Report found that with the right support, the UK sector could commit up to £80 billion (nearly $98 billion) of offshore wind investment, of which OEUK members are helping to develop 13 GW of the offshore wind pipeline capacity by 2030. These projects alone require almost £30 billion (close to $37 billion) of private investment.

Additionally, members of Offshore Energies UK are also developing the UK’s first wave of carbon capture and hydrogen cluster projects with a possible spend of up to £20 billion (nearly $24.5 billion). OEUK also has in its sights approximately £35 billion (around $43 billion) of potential oil and gas capital investment over the next ten years, of which about half will go on projects in existing fields and half on new fields. This is part of a wider oil and gas expenditure that could be £90 billion (almost $110.2 billion) through 2030.

Mike Tholen, OEUK Sustainability and Policy Director, commented:  “In recent months we have felt the direct impact of underinvestment in homegrown energy on job security for our workers, the competitiveness of our firms internationally, and our future energy bills. We know this sector can and must be a big part of the answer to the challenges the country faces on the cost of living, energy security, economic growth and tackling climate change.

“The Prime Minister is right that we need to take people with us and that includes the 200,000 people working in this industry, as well as the industries and consumers which need an enduring consensus and collaboration if we are to continue building energy security as well as the low-carbon energy system in the UK, for the UK. With the right frameworks in place, this industry can make long-term investments to help the UK tackle these challenges head-on. The UK mustn’t just become a good place to do energy business, it must become irresistible.

“Our Economic Report shows that as the global race for energy investment accelerates, the UK must compete by making the most of its diverse homegrown industry, from oil and gas to offshore wind, hydrogen and carbon capture. Globally, this is the lesson other countries have learned.”

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As could be expected, everyone was not happy with the new changes. The Association for Decentralized Energy (ADE) and its members are among those said to be “deeply concerned” by delays in the implementation of – what they see as – crucial green and net-zero policies by the government.

Joanne Wade, Chief Strategic Advisor at the ADE, remarked: “This delay not only jeopardizes our commitments to tackle climate change head-on but undermines the UK’s economic prosperity and imposes unwarranted financial burdens on consumers during a cost-of-living crisis. While the Conservative Party boasts a distinguished legacy of decisive climate action, the reported proposals to delay net-zero policies, attributed to the Prime Minister threaten to derail this tradition.

“These delays not only risk destabilizing our commitment to addressing climate change but would also lead to lost jobs and the erosion of business confidence in investing in the UK. This comes at a time when other nations are actively courting such investments, making it even more vital that we demonstrate unwavering resolve in our deployment of energy efficiency measures, heat networks, flexibility upgrades and industrial decarbonization.”

The ADE notes not only that the Independent Review of Net Zero, published earlier this year, found the net-zero transition would be worth £1 trillion ($1.2 trillion) to British businesses by the end of the decade but also that the government itself estimates £100 billion ($122.3 billion) of private investment can be leveraged by 2030 if the UK adheres to its net-zero strategy, creating a total of 900,000 jobs.

Commenting on the changes in policy, Sarah Honan, the ADE’s Flexibility Policy Manager, stated: “It marks a significant blow for both the UK’s energy security and for households’ chances to start paying affordable bills and rise up out of the cost-of-living crisis. Decarbonizing heat and transport are not ‘nice to haves’ but the only way to reach net-zero in an affordable way.

“Through the flexible electricity use of heat pumps and electric vehicles, the UK will make the best use of renewable generation and prevent unnecessary investments in expensive grid infrastructure. Delaying the deployment of smart and clean technologies will have a negative impact on investor confidence in the short term and hinder the affordability of these solutions for millions of households.”

The ADE went a step further and conducted a poll about the UK’s diluted net-zero policies at its annual Decentralized Energy Conference, hosted at the Barbican Centre in London. The results show that 75% of decentralized energy sector professionals and businesses have voiced a significant erosion of confidence in the wake of the Prime Minister’s announcement. In contrast, only 20% of the 250-strong audience reported that the announcement had not affected their business confidence, while 5% said the speech had actually strengthened their outlook. 

The ADE underscores that this marks “a dramatic shift” in a sector that is making meaningful headway in modernizing and strengthening the UK’s energy system, with 74% of attendees reporting that they felt either medium or high levels of confidence in the government’s ability to introduce vital policies to support their businesses prior to the announcement.

When asked about how the sector should respond to the UK government’s new approach to net-zero, 89% of the audience said they wanted to raise the stakes and step up action to ensure that progress is not allowed to falter, while just 6% said the sector should maintain the status quo and 7% said it should ‘keep under the radar’. 

Caroline Bragg, ADE CEO, said: “It’s been an extremely interesting couple of days. We need to have a serious discussion about where this is going to push policy and how we’re going to make up the shortfall the government already knew it had in the Sixth Carbon Budget, because we simply have to. There are positives to take from this – we should welcome more public engagement and debate about where this is going, to strive towards delivering net-zero even more effectively than before and repair the damage done by the Prime Minister.” 

In an open letter, over 400 NGOs and businesses including UKSIF, Nestle, IKEA, Brunel, Aviva Investors, and EON have written to the UK’s Prime Minister to express their concerns about any attempts to water down Britain’s net-zero policies, as this is expected to do lasting damage to the country’s economy. The letter also goes on to say that the move will undermine the UK’s international climate leadership at a time when the disastrous impacts of climate change are impacting the UK and the rest of the world, including the recent flooding in Libya and forest fires in Greece.

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As the Office for Budget Responsibility recently highlighted the economic benefits of rapid action on net-zero along with the increased fiscal and debt risks associated with delay, these NGOs claim that policies to boost clean technologies like electric vehicles and efficient, low-carbon heating will lower the cost of living while sticking with petrol cars and gas boilers increases it.

The NGOs believe that slowing down the development of clean tech leaves households exposed to volatile fossil fuel markets for longer and puts jobs at risk while being costly for the public purse, which spent £40 billion (close to $49 billion) last winter subsidizing household energy bills. As a result, the letter emphasized that weakening climate policies would be the historic mistake of Rishi Sunak’s premiership, leaving a lasting impact on the UK economy, climate, and his legacy.

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Laura Clarke, ClientEarth CEO, underlined: “As countries everywhere are battered by floods, heatwaves and wildfires, and as high-level discussions on climate take place at the annual UN General Assembly, the UK government has signaled that it is abandoning any vestiges of climate leadership. We know that climate action has broad public support, will reduce reliance on expensive fossil fuels, and secure a better future for our children. Further weakening climate policy is bad economics, bad politics, and legally high-risk too.”

Extinction Rebellion claims that as long as oil, gas, and coal are funded, mined, and burnt, no carbon footprint count, net-zero commitment, or government promises will achieve anything. Along these same lines, Mike Childs, Head of Policy, Friends of the Earth said that the new plans would further undermine the UK government’s response to the climate crisis.

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