It’s hard to imagine a period when there was more uncertainty about the UK’s path to net zero.
The politics surrounding the country’s approach to the green transition have been febrile since the Uxbridge byelection earlier in the summer.
The Prime Minister used the King’s Speech last week to double down on the consensus breaking address he made to the country on 20 September.
Part of his pitch for a 'new approach' to net zero included a five-year delay to the 2030 ban of new petrol and diesel cars. Stellantis which runs the Ellesmere Port EV production line, were quick to re-affirm their commitment to the Cheshire factory in the wake of the speech.
But other planned sites could be in doubt if the political and policy uncertainty continues. Stellantis are on record with concerns about the unpredictable nature of UK policy making.
Uncertainty about UK industrial and climate policy has long been a bugbear for businesses considering whether to invest here.
The Prime Minister also scrapped plans requiring landlords to meet new energy efficiency regulations, a move that risks entrenching families’ energy insecurity as we enter a second winter of inflated prices. On the upside, Sunak used his speech to announce an increase to the heat pump subsidy grant from £5k to £7.5k. However, he also announced a delay in phasing out gas boilers.
It’s rare that business leaders break cover to publicly criticise government policy, yet many joined civil society groups in denouncing Sunak’s speech in a joint letter that cited ‘deep concerns’ at the direction of UK climate policy. The speech was also met with criticism by business groups including the Northern Powerhouse Partnership and Net Zero North West.
It’s worth remembering that in the days before Sunak announced his “new approach” it emerged the Government had failed to secure bids for new offshore wind licenses, despite industry warnings that the round was about to fail.
The impact of the failed auction is real. An immediate casualty of the debacle was Wales’ first floating windfarm, which promised to create 10,000 jobs.
Sunak’s speech came amidst an already uncertain economic context. The rising cost of borrowing is driving nervousness in Westminster, including over Labour's green investment plan - originally proposed by IPPR - to invest £28bn a year in the green transition.
Yet as recently as 2021 the Office for Budget Responsibility argued that the savings from investing in net zero outweighed the costs. In July, OBR research found that the UK’s outsized dependence on gas will end up being as expensive as completing the transition to net zero.
Our own research shows that up to 1.6 million jobs could be created in the transition to a green economy. Key green growth opportunities such as electric vehicles, heating and insulation could deliver between £37 and £57bn of annual UK GDP by 2030, representing 1.6–2.4 per cent of growth.
This is an enormous opportunity and could be pivotal in efforts to rebalance the economy.
But, as we argued in a report last month, for this to happen, we need coordinated, long-term public policy, substantive public investment, and dedication to working in partnership with industry, workers, trade unions, and local communities, something that’s sadly lacking from Sunak’s recent track record on climate policy.
A clear-eyed, long-term industrial strategy for meeting net zero could bring significant benefits to the north, helping to rebalance our economy.
For example, the need to decarbonise existing industries such as steel production provides an opportunity for the northern steel industry to become world leading in low-carbon production. Not only would this help preserve the many jobs that steel brings to the north, it would also create new demand for UK steel and allow the industry to grow and create new jobs.
There is also significant potential in the north to build on existing green industries, including green hydrogen on Teesside, the Humber, Merseyside and elsewhere, but long-term government focus and commitment is necessary.
Committing to a programme for decarbonising the North’s housing stock, meanwhile, would bring in skilled jobs and boost the economy, while bringing the benefits of warmer, healthier homes to many.
Rishi Sunak is right that politicians must bring the public along when it comes to policies aimed at achieving our net zero goals. Yet, far from wanting to regress on these issues, the public are supportive of policy action aimed at reaching net zero. Additionally, our research with communities shows that many have a positive vision for their places and the role that they can play on the route to net zero.
Local authorities, like businesses and civil society more generally, need policy certainty amidst this challenging context. Yet there is a real danger that Mr Sunak’s 'new approach' leaves us further away from consensus than we have been for some time.
Ryan Swift is a research fellow, Institute for Public Policy Research (North)
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