A summary of everything ICE has so far submitted to government on achieving net zero.
During the first few weeks of the year, ICE’s policy and public affairs team have made a number of submissions to parliamentary committees, government and to external calls for evidence.
These responses all had a common theme, and one that will continue to rise in prominence – the 2050 net-zero emissions target.
Responses were made to the Public Accounts Committee (PAC) into government preparedness for achieving net zero, and to the Treasury’s interim Net Zero Review, which considers the wholesale changes needed across the economy on the transition to net zero. The final review is due later this year.
In addition, ICE submitted evidence to the think tank Onward as part of its Getting to Zero campaign.
Is the government ready for the scale of change?
ICE’s response to the PAC inquiry noted that achieving net zero will require extensive coordination across government departments, arms-length bodies, local government, regulators, and more.
The question facing government is whether to integrate net zero into everything, or to see it as a national challenge that requires centralised leadership.
While the former option might seem an obvious pick, different departments have different responsibilities and there’s a risk that no single body would be centrally accountable.
ICE has therefore recommended that PAC should explore who is ultimately accountable in government for ensuring relevant policy aligns with net-zero ambitions.
A shift in narrative
ICE’s response also highlights that the narrative around the net-zero target needs to change.
At the moment, it’s presented by government almost solely as a significant challenge, but little is communicated about the additional benefits beyond halting global temperature rises.
For example, in the long term, net-zero infrastructure is cheaper to both deliver and operate. It uses fewer natural resources so is more efficient than at present, while there are a myriad of additional health and social benefits.
For this reason, ICE has recommended that PAC explore where government departments have evidence on net-zero benefits beyond climate change targets. This can ensure the public are brought along on the net-zero transition, rather than have it imposed on them.
The Net Zero Review
As recently as 18 months ago, then-chancellor Philip Hammond was questioning whether the costs of reaching net zero were truly worth the outcome. It’s encouraging, then, to see how seriously the Treasury is now taking the need to avert a climate emergency.
In fact, the opening words in the interim review – “reaching net zero is essential for long term prosperity” – go some way to demonstrate how the Treasury is no longer separating the need to prevent dangerous climate change with economic growth.
There are crucial policy decisions to be made across whole swathes of the economy and society to enable the transition to net zero, and many of them have infrastructure at their heart.
ICE’s response to the interim review draws heavily on the State of the Nation 2020: Infrastructure and the 2050 net-zero target report, recommending that a Net Zero Infrastructure Plan is put in place. This will provide industry with policy certainty and a stable framework within which it can invest in net-zero infrastructure.
The carbon fuel crunch – where will future revenue come from?
One of the major headaches facing the Treasury is the anticipated fall in revenue from taxes on fossil fuels and their associated industries, with up to £36 billion per year at risk of being lost.
It’s clear that new and replacement sources of revenue are needed, one of which could be the introduction of ‘pay as you go’ (PAYG) road pricing to replace Fuel Duty as the country shifts to electric vehicles.
PAYG roads is an area ICE has explored in detail, setting out the principles that must be adhered to if any model is to be adopted. For example, the model shouldn’t raise more than what is currently collected from Fuel Duty and VED, and it shouldn’t place an additional financial burden on people in low socio-economic groups. ICE has also submitted a response to the Transport Committee on the subject of road pricing, which will be published soon.
Building on existing models
While road pricing would be a novel policy for the UK to adopt, not everything has to be reinvented. In fact, for the most part, the funding and financing mechanisms required to support infrastructure’s transition to net zero already exist.
The UK has seen great success over the past decade in renewable energy deployment through the Contracts for Difference model, and there’s no reason why this scheme can’t be extended to cover technologies like energy storage.
Alongside this, the upcoming infrastructure bank will invest in projects that have risk profiles otherwise incompatible with private markets. The fact that the bank will prioritise investments in net-zero technology and projects is welcome, and ICE looks forward to seeing more detail on the infrastructure bank in this week’s Budget.
The interim review also chimes with the PAC inquiry in highlighting the significance of engaging with the public in the net-zero transition. The importance of this cannot be overstated – behavioural change and getting public buy-in on the journey to net zero should be central to future strategies.
Read ICE’s response to the Public Accounts Committee.
Read ICE’s submission to the interim Net Zero Review.