On 30 March, the UK government’s so-called ‘Green Day,’ 44 separate documents all related to bringing the UK towards a net-zero economy were released. These publications were a mix of strategy, policy, consultations and consultation responses.
Key documents briefly summarised below are:
- Powering up Britain
- Green Finance Strategy
- International Climate Finance Strategy
- National Planning Policy
- Pro-innovation Regulation of Technologies Review Green Industries (Vallance review)
- Government response to the Chris Skidmore review
Certain important pieces were also absent from this release date – one being the consultation on Energy market reform, which is expected later this Autumn.
In our first UK policy update, we dive into the details of this package, and provide an initial analysis on its potential impact for clean technologies.
1. Powering Up Britain
After the government’s previous net zero strategy was found by the High Court to breach the Climate Change Act 2008 because it didn’t provide enough detail on how emissions cuts could be delivered – the government was ordered to inform parliament how it would deliver its proposed emissions reductions. Along with the other documents published on 30 March, the Powering Up Britain plan makes up the compliance with that court order.
This new plan outlines the government’s vision for the future of energy in the UK and details its plans for both energy security and net zero growth. It also includes a response to recommendations from the independent review carried out by Chris Skidmore, as well as the recommendations from the Committee on Climate Change.
The plan sets out the ambition to leverage around £100 billion of private investment over the period to 2030. The plan highlights the expected government investment of approximately £4.2 billion in net zero R&I over the period from 2022-25. This includes £1.5 billion specifically allocated to net zero innovation and announced in the Net Zero Strategy, as well as net zero research and innovation delivered through other departmental programmes and through UK Research and Innovation.
Powering Up Britain also launches Great British Nuclear (GBN), a new government agency which will be responsible for driving delivery of new nuclear projects, backed with the funding it needs. The first priority of GBN is to launch a competitive process to select the best Small Modular Reactor technologies.
The plan also highlights the Launch of the Floating Offshore Wind Manufacturing Investment Scheme which will provide up to £160 million investment in port infrastructure projects.
Also announced within the scope of the Powering Up Britain announcement were:
- Electricity Networks Commissioner, Nick Winser, has been tasked to advise government on what more can be done to accelerate grid delivery, and will present recommendations to Ministers in June.
- The Energy Company Obligation scheme, renamed the Great British Insulation Scheme, is being extended to help a wider group of households. Back-to-back with this, the government also released the reply to the consultation on the same scheme.
- A consultation is launched on the long-term trajectory for Sustainable Aviation Fuel uptake in the UK through a mandate to be introduced from 2025.
- Government will take legislative powers when parliamentary time allows to bring forward hydrogen transport and storage infrastructure business models.
- Publication of action plans in the summer on accelerating investment in the grid and reducing development times for transmission network projects and on accelerating electricity network connections.
- The negotiation project list for CCUS and successful applicants of the hydrogen fund.
- Consultation on potential policy measures to address future carbon leakage risk, including a UK Carbon Border Adjustment Mechanism and product standards, which could be deployed from the mid-2020s onwards.
- Net Zero and Nature Workforce Action Plan to be published in 2024.
- Autumn consultation on the review of the electricity market arrangements.
- Launch of a regulatory framework for heat networks; beginning the implementation of heat network zoning by 2025.
2. Green Finance Strategy
This strategy includes several notable announcements. For example, the promise to implement Solvency UK, which claims to create the potential for £100 billion of productive investments from private insurers in the next ten years and a promise to publish net zero investment roadmaps by sector. The strategy also promises action to align the global financial system by supporting equal ambition from other countries and ensuring interoperable approaches between countries.
- Industry-led review on how the UK can enhance its position and become the best place in the world for raising transition capital.
- Commitment to consult on the introduction of requirements for the UK’s largest companies to disclose their transition plans if they have them, to ensure parity between listed and private companies.
- Launch of a call for evidence on Scope 3 greenhouse gas (GHG) emissions reporting.
- Consultation on UK taxonomy in Autumn, which was originally due to be published first in 2021.
- Publication of a consultation on regulating ESG ratings providers to seek views on how regulation could help ensure better outcomes for these products.
- Publication of a series of net zero roadmaps throughout 2023, articulating investment needs by sector alongside summarising the relevant government policy and funding to make the sector investable.
- Government will hold the Global Investment Summit in September 2023, which will aim to raise billions of pounds of high value investment to create thousands of jobs across the UK, with a special focus on high tech sectors such as innovation, research and development.
3. International Climate Finance Strategy
This publication announces that the government will work with financial institutions to develop the frontiers of climate financing, developing innovative market mechanisms which can be replicated, adapted and amplified by other financial institutions to achieve scaleup of cleantech through supporting broad market adoption. The government also promised to tackle the barriers to private investment in climate resilient infrastructure by piloting tools to more efficiently and effectively price physical climate risk so that the cost of capital is not needlessly inflated.
4. National Planning Policy
The government published its proposed revisions to the National policy statements on energy, gas power, renewable energy, gas and oil pipelines and electricity grids. It declared that offshore wind is to be made a critical national priority and stated explicitly the criticality of network infrastructure in achieving net zero.
5. Pro-innovation Regulation of Technologies Review Green Industries (Vallance review)
The government published the Pro-innovation Regulation of Technologies Review Green Industries and the government response to the review.
Key recommendations accepted by the government include:
- A rapid review of relevant regulators such as the Environment Agency and the North Sea Transition Authority to ensure they are sufficiently resourced with the right technical capabilities.
- Work with Ofgem and network companies to reduce the time taken to get a grid connection. The government should work with international partners to remove barriers to cross border movement of CO2.
6. Response to the Chris Skidmore Net Zero review
Mission Zero, the Chris Skidmore review of the government’s progress on achieving net zero set out 129 recommendations the government must take to achieve its net zero goals. The government response sets out which of the recommendations it will take forward, which it believes it has already completed and which ones they are not going to take forward.
New Forums and Groups announced as part of the review
As part of the recommendations taken forward, the government announced the launch of several new groups and forums:
- Energy Efficiency Taskforce - will advise and work with ministers on delivery of the government's ambition to reduce total UK energy demand by 15%.
- Expanded Regulator Forum to clearly communicate with businesses and investors about the net zero transition.
- Department of Energy Security and Net Zero select Committee responsible for scrutinising the work of the department.
- Net Zero Business and Investment Group will advise government on their data needs in relation to net zero.
- Great British Nuclear, a government agency set up to will support the UK's nuclear industry by providing better opportunities to build and invest.
Government says recommendation made in review is already complete:
The government noted that some of the recommendations made in the review had already been addressed by government action either through existing policy or through new action announced on green day, for example:
- Long term financing already there through CfDs, UK Infrastructure bank, £20billion of CCUS funding, national infrastructure and construction pipeline.
- Response to the regulation review.
- Publication of Green Finance Strategy.
Recommendations to be actioned in the future
The announcements also included promises of things to come:
The government flagged its intention to explore the design of new funding schemes and noted its commitment to consult on the introduction of requirements for UK’s largest companies to disclose their transition plans – if they have such plans. Furthermore, the government is considering ways of facilitating low-cost finance from retail lenders to drive rooftop solar deployment and assessing the role of low-cost finance options for households and small businesses.
Additionally, the UK taxonomy consultation is promised to be released in the upcoming Autumn. After that, at the end of the year – or early next – the government will publish its outline of a clear approach to gas vs electricity rebalancing.
We also await the Biomass strategy due later in 2023.
Furthermore, government will engage with business on their data needs for net zero through the Net Zero Business and Investment Group. Lastly, in response to the recommendation to analyse UK competitiveness – the government sets out its £56 billion investment since 2021 and commits to continue to assess UK competitiveness.
Recommendations which were made in the review but not accepted by government
- No further expansion of public reporting on net zero is unveiled – though the government will consider increasing reporting frequency
- No dedicated office, or associated funding delivery body for Net Zero was announced, as the Department for Energy Security and Net Zero already exists
- No formal analysis is presented with regards to supply chains, as the government regularly analyses net zero infrastructure and technology critical supply chains, as well as takes appropriate action to meet the UK’s net zero and economic growth ambitions.
- No Net zero target for Ofgem was established
- The government refrained from launching a taskforce for Onshore wind
- The government did not accelerate the end to routine flaring of unwanted petroleum gas from oil fields from 2030 to 2025
- No hypothecated net zero fund from the long-term tax treatment of the North Sea.
- No net zero charter mark, which would acknowledge ‘best in class’ among firms in terms of their role in the transition to net zero
Impact on cleantech:
Green Day came with several positive announcements for UK cleantech. The launch of the Floating Offshore Wind Manufacturing Investment Scheme, the negotiation project list for CCUS and the announcement of the successful applicants for the hydrogen fund are all great milestones. The promise of the sector roadmaps to be released throughout 2023 is also positive as they will be a useful tool for understanding what is needed in each sector.
The announcements on Green Day certainly show the ambition of the UK Government and it is clear that many milestones have been achieved, or are on their way. However, the general sense from the documents was one of ‘if we build it, they will come,’ and the belief that expressed ambition equals realised potential. Bold claims are made, but the lack of impact assessments make the claims somewhat difficult to assess. The UK could be further strengthened by a clearer strategy on how it will continue to attract green investment.
With US Congress having passed the Inflation Reduction Act last August and the EU moving ahead with a series of measures under the umbrella of its Green Deal Industrial Plan – key, continent-sized markets are ramping up their direct support for innovative cleantech. It’s vital for the cleantech community that the UK matches such efforts.
As our initial research has shown, the UK is already a powerhouse of cleantech investment but, with the US and Europe accelerating public support to scale clean technologies, the UK risks falling behind.