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Purpose on Payday

Green & Good (ESG and Impact)

SEC Newgate's View

By Tim Le Couilliard

Planes have just about touched back down from Davos – an emission-heavy trip that’s all too often billed as just another talking shop for climate matters. This time, however, there almost seems to have been a bit of action too – at least on the part of the US and Europe. With a huge bundle of measures announced in the confusingly named “Inflation Reduction Act” (although perhaps that is just to get it through the House), the US pledged a $369bn package that includes subsidies aimed at encouraging companies to invest in technologies that help cut greenhouse gas emissions. Plaudits were aplenty for the US’s leadership on the climate response, particularly from the finance and investment community who now see the US as having “leapfrogged” its European partners.

Not so fast, says Europe which announced at Davos the development of a new “net-zero industry act”, which would provide state and private funding to rival the US Inflation Reduction Act. EU Commission president Ursula von der Leyen pledged to make “Europe the home of cleantech and industrial innovation on the road to net-zero”. A welcome pledge indeed, and hopefully something possible ahead of the rather far-away 2050 target.

So, how about the UK? Well… Not such a good month. The UK’s flagship net-zero related project, the battery start-up Britishvolt, collapsed into administration. Despite various reports that either Indonesian or Australian investors may purchase the remains, that will be another unfortunate blow to the UK’s climate leadership. Meanwhile, the DfT’s latest statistics found that the UK is set to miss its target of installing 300,000 car chargers by 2030 by a mere 20 years. But it’s not just been EVs as this week figures have been published on the slow death and decline of the wider car industry too – with the UK making the same number of cars in 2022 as in 1956. And that’s not all - the CBI professed this month that the UK is “squandering” its £4.3bn opportunity to lead on green technologies due to “complacency”, calling for a UK counter in the green “arms race”.

To add fuel to the fire, this has been the month that the UK’s long-awaited net zero review was published. Nicknamed the “Skidmore Review” after the MP and former minister who wrote it, the review found that the UK is “falling behind” on many of its net zero targets, calling for a “new approach”. Laying out (just) the 129 actions for the government to act upon within the next two years, the review stated that the UK’s leadership on the climate had been too “stop-start” and needed a more consistent and ambitious approach. Quite where the government goes from here is yet to be seen, but it is worth noting that a few of the immediate actions that the review called for have not been publicly responded to by the government (such as the establishment of the Office for Net Zero Delivery or the new net zero select committees).

The Road to COP28 has begun, and the next few months will be telling for which direction the UK and the world takes to get there.

The Road Ahead

By Imogen Shaw

A month into 2023, Westminster is seeing a huge amount of legislative and consultative activity focused on green energy. The government’s wide-ranging Energy Bill, which started in the House of Lords, will soon be making its way into the Commons – and possibly into the headlines. Conservative backbenchers have proved themselves more than willing to pressure the government to change course on its energy policy platform, as the recent concession on onshore wind in England proved.

Speaking of wind, the government has opened its consultation on measures to reform planning in the Levelling Up and Regeneration Bill, which contains an entire chapter focused on changes to planning policy for onshore wind farms. This comes alongside other high profile consultations with big implications for our renewable energy landscape – two on reforms to the government’s Contracts for Difference revenue support scheme for renewable energy, and one on reforming the Electricity Capacity Market.

Amidst all this activity, however, there has yet to be much sign that the government is speeding ahead in adopting many of the recommendations of the Skidmore Review. The coming months will tell how much impact the report is likely to have – or not – on government policy.

Ultimately, the report's success or failure will be determined by whether Cabinet comes together around the proposals. We will get an indication as to whether this is likely to happen by whether the recommendations about reforming the governance of net zero are met. If in the coming weeks or months, an Office for Net Zero Delivery is established, or new Net Zero Select Committees are set up to scrutinise government policy, then it will be much more likely that the report is having an impact on policymaking in SW1.