Prime Minister Rishi Sunak has defended his decision to overhaul the UK’s net zero policies by declaring concern for the long term and to protect vulnerable groups in society. But the policies he is implementing belie this rhetoric. By changing course to a robust green industrial strategy, the Government could achieve these aims and take advantage of the economic opportunities a just green transition offers, argues Brendan Curran.
It is equally fascinating and concerning to observe how this current Conservative Government is adjusting its messaging on net zero delivery. In September, the Environment Secretary informed us that giving the go-ahead to the Rosebank oil field development in the North Sea was, in fact, all part of a plan for “a just transition to net zero”: fascinating, in that this terminology of “justice” has long been ignored by Conservative ministers when discussing net zero, but also concerning in that what it really means is a further delay to our progress towards the target.
A “just transition” is about greening the economy in a way that is as deep and inclusive as possible, creating opportunity and leaving nobody behind. It certainly does not mean new oil and gas developments. To achieve a just transition, what the UK really needs is committed green industrial policy planning that can bring about transformative social and environmental impacts for workers, communities and consumers.
Putting the dishonesty of linking Rosebank to the UK’s “energy security” aside (for a moment), the Conservatives have alighted on an aspect of our energy transition that does need to be given prominence: net zero has to be delivered while maintaining societal buy-in. In Rishi Sunak’s now infamous speech, in which he diverged from net zero commitments, he asked “Do we have the fairest credible path to net zero by 2050, in a way that brings people with us?” This is a perfectly reasonable question and one that policymakers across the globe should be asking when designing climate policies. The transition to net zero is doomed to fail if it exacerbates inequalities and puts the cost of the transition on those least able to afford it. However, while the prognosis of Sunak’s government is correct (the transition must be fair and just), their medicine is once again misaligned with their message.
While the prognosis of Sunak’s government is correct (the transition must be fair and just), their medicine is misaligned with their message.
Even when this government was outwardly supportive of net zero, it failed to put in place necessary policy to support that pathway. The policy graveyard of energy efficiency (see the Green Homes Grant) illustrates this. Now with its change of tack towards a supposed “just transition to net zero”, the delivery is similarly misaligned. For example, Rosebank’s oil and gas will be sold on international markets and an estimated 80 per cent or so will be exported. So the supply from the field will have little impact on the UK’s energy security or people’s bills. It may support a fair pathway for Norway, which owns Rosebank’s operator, Equinor, but the benefits to UK consumers are less clear (whatever the company’s website may say about delivering a “just transition”).
A more “just” policy response could include ramping up energy efficiency measures and reducing consumer demand for energy – for which there is a pressing need. The UK has some of the oldest, least affordable homes, and in the poorest condition, in the developed world. The increased grant support for heat pumps was a welcome announcement in the Prime Minister’s speech but it was coupled with plans to ditch tougher energy efficiency rules for rented accommodation. This will favour landlords but won’t help tenants, who need support during the cost-of-living crisis. If Rishi Sunak was serious about a fair path to net zero, he would be ensuring that rented accommodation had a high standard of energy efficiency to reduce bills and improve the quality of people’s homes (not to mention the aesthetic of the communities we live in).
A green industrial strategy is the way forward
For a fair and just transition, the Government should be focusing efforts on designing a proper green industrial strategy for the UK. Those regions characterised by low productivity and growth historically could particularly benefit from such a strategy and planning, not least Derbyshire, Nottinghamshire, Cornwall and Lincolnshire, as shown by our research at LSE.
In the United States, President Biden has shown he understands that the green industrial revolution means jobs and investment into the economy, making that central to his landmark Inflation Reduction Act (IRA). More recently, his administration announced a $15.5 billion package of funding and loans to support existing car manufacturing factories to transition to electric vehicles. This announcement emphasised that conversion projects should “retain high-quality jobs in communities”.
Closer to home, the European Union’s Green Deal represents an ambitious policy effort to ensure the EU avails of the investment and growth opportunity that the green transition offers. EU policy is also mindful of how the Green Deal should support vulnerable communities through the transition, shown through the Just Transition Mechanism and Social Climate Fund. The Just Transition Mechanism is providing targeted support to regions and industries to alleviate the socioeconomic impacts of the transition, while the Social Climate Fund was designed to front-run by a couple of years the extension of the EU Emissions Trading System and provide funding to “vulnerable citizens and micro-enterprises” in energy efficiency measures. This coupling of green investment programmes with consideration of social equity is very necessary and, while difficult to implement perfectly, can be influential in maintaining social consensus for the net zero transition and the Green Deal across EU member states.
The mixed policy signals from the Government are creating dismay among private investors, who recognise that net zero can be an opportunity but that we are currently falling behind
Conversely, in the UK the “just and fair transition” is amounting to investment into foreign state-owned energy companies, a small number of jobs, and continued chronic productivity failings and underinvestment in infrastructure (green or otherwise). The Government seems committed to investing in road improvements only (which are indeed necessary) – but not in our public transport systems or climate mitigation technologies. The National Infrastructure Commission has called for a sharp increase in infrastructure investment in the UK following decades of underinvestment, suggesting that more than half should come from the private sector. However, the mixed policy signals from the Government are creating dismay among private investors, who recognise that net zero can be an opportunity but that we are currently falling behind – as demonstrated by this letter to the Prime Minister from CEOs, investors and financial institutions.
While the rest of the world races to the top on green industrial policy, the UK is floundering. This could be a grave mistake and a missed opportunity for turning around the country’s fortunes.
This commentary has been co-published with the Grantham Research Institute on Climate Change and the Environment
All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.
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