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Purpose on Payday February 2024

Purpose on Payday ESG
Green & Good (ESG and Impact)
SEC Newgate's View

Navigating the Climate Crisis: A Look at Recent Developments in the UK and EU

This last month has been a mammoth one for climate issues, protests and policies. But it’s likely that 2024 climate issues will be a footnote in history, given the current state of flux in the world. In this month’s Purpose-on-Payday, we wanted to share a run-through of the stories that are playing out at the moment, that in any other age would be front page news, but are currently confined to the later pages.

Agriculture protests have been widespread in the UK and across Europe since the start of the year. In the sector, tensions have risen with farmers staging protests against climate policies that they fear will harm their livelihoods. As is the scale of the issues, even Rishi Sunak, the Prime Minister, was seen standing in solidarity outside the Welsh Senedd - and he’s not one to usually protest – as farmers accused the Labour-run government of betraying farming communities.

Similarly, across the EU, farmers have voiced discontent, upset over the removal of diesel subsidies and protests have erupted in various countries against policies perceived as detrimental to their interests. Most dramatic protests were seen at the border crossing between Poland and Germany which was blocked by tractors. Agricultural ministers from across the EU have since pledged to do more to cut red tape and help farmers as they convened in Brussels to discuss the crisis in the sector after weeks of angry protests (where bottles were thrown at police outside the European Parliament whilst debates went on).

Hopefully better times are ahead for the sector that keeps us all fed – but one that climate change will ultimately impact.

The energy sector, the industry that keeps all our lights on, has had a mixed month. Sir John Armitt, chair of the National Infrastructure Commission, wrote a letter to Jeremy Hunt, the Chancellor, stating that Whitehall was taking “too long” to decide on measures to support private investment to help decarbonise important parts of the electricity sector. Numbers were also published that the UK has spent £85bn on gas over the last 2.5 years. This is some £25bn more than it would have spent on gas in the 2.5-year period before the energy price crisis began. The vast majority of this money was spent on imports does not remain within the British economy.

There were glimmers of hope, however, in figures that the UK has halved domestic emissions since 1990, mainly due to a shift towards renewables, whilst within the same timeframe the national economy has grown by almost 80%.

That said, there were also stark warnings that now is not the time to rest on laurels. The UK's Committee on Climate Change issued a statement warning against complacency, urging sustained efforts to meet ambitious emissions reduction targets. The need for continued momentum is underscored by the CCC's caution against carrying forward surplus emissions in carbon budgets, emphasizing the importance of maintaining a rigorous trajectory towards net-zero emissions.

But would things be better under Labour – the jury is out this month as Sir Keir Starmer rowed back on pledges on insulation and £28bn green fund. That one certainly did grab the headlines… 

Don’t go thinking that the UK is alone in its challenges, with neighbours across Europe also seeking to balance economic interests with environmental sustainability. Green shoots were spouted as the EU Parliament passed landmark legislation aimed at restoring nature, setting binding targets for ecosystem restoration, and signalling a commitment to biodiversity conservation and climate resilience. It was not unanimous, however, with the Bill receiving fierce and last-minute objections from right-wing lawmakers against the backdrop of farming protests.

What also played out this month is the UK's divergence from EU policies, with debates in Westminster over the effectiveness of different approaches to climate action. The UK's energy secretary, Claire Coutinho, emphasized the importance of policies that command public support, contrasting them with what she describes as "clumsy" measures that have led to social unrest elsewhere in Europe. It’s fair to say that the EU rebutted that claim, hard, and was helped by an independent report by Polish economists which found that several European countries hit some of their sustainable energy targets for 2030 a decade early.

Despite divergence between the UK and the EU (and who would have seen that coming…), international cooperation will continue to be crucial in addressing the climate crisis. The UN called this month for no less than $2.4 trillion to be raised in climate finance globally, demonstrating the scale of the challenge and the need for concerted global action. As nations prepare for COP 29, hosted by Azerbaijan, the key focus will be on climate finance and the urgency of mobilizing resources to accelerate the transition to a sustainable future.

In the UK, the net zero economy grew by 9% in 2023. When compared to the 0.1% of growth seen in the economy as a whole, perhaps brighter days are ahead, driven by the net zero industry. Thousands of new green companies were founded in 2023 and overall, the sector was responsible for the production of £74bn in goods and services and 765,000 jobs, according to the Confederation of British Industry. What’s doubly good news is that hotspots of net zero businesses and the well-paid jobs they provide occur across the country, rather than being concentrated in London and the south-east.

Still, green jobs are one thing, but without food and energy – two sectors plagued with issues at the moment – there may not be the people to work in those jobs. Let’s see what Spring has to say!