'The public has to make changes for us to hit net zero - but needs government support'

In a speech yesterday, the UK prime minister said he wants to be honest with the public about the "costs and trade-offs" of tackling climate change.

One of the most important parts of the speech was Rishi Sunak confirming there will be no changes to current emissions targets.

The 2050 net zero target remains in place, as do the interim targets set through five-year carbon budgets.

But with existing policies on transport, heat and energy efficiency being delayed, watered down, or scrapped, it’s difficult to see how these updated plans deliver on those targets.

Here are three takeaways from the speech:

1. Rolling back previous commitments

It was less than six months ago that the government published its carbon budget delivery plan, setting out what policies would enable a net zero transition.

The Climate Change Committee (CCC) reviewed this in June, warning that the UK was slightly off track to meet the sixth Carbon Budget, covering the period 2033-37.

Cutting less carbon now means faster, deeper emission reductions will be needed in the future.

Electric vehicles

In his speech, the prime minister confirmed that the deadline for ending the sale of new petrol and diesel cars will shift from 2030 to 2035.

This brings it in line with the EU timeframe but comes only weeks after a number of companies made commitments to manufacture electric vehicles in the UK based on the previous 2030 goal.

In its 2023 progress report, the CCC said that the risks of not reducing emissions from surface transport were increasing, predominantly due to delays in developing the zero-emissions vehicle mandate.

Yesterday’s delay will increase that risk further.

Energy efficiency

The prime minister also announced that landlords would no longer be required to meet energy efficiency targets on rented properties, while the gas boiler phase-out target for 2035 has been reduced from 100% to 80%.

Rolling back on energy efficiency measures, which help lower energy usage, and therefore, bills, is a short-sighted move, particularly after a winter when the government was forced to subsidise consumer energy bills by £10 billion.

It would cost much less in the long run – both for consumers and HM Treasury – to move faster on energy efficiency.

Indeed, energy efficiency has been highlighted by the CCC as one of the most prominent gaps in the UK’s net zero ambitions.

In more positive news, the PM announced that the grant from the boiler upgrade scheme, which has had low uptake to date, will increase to £7,500 – a 50% uplift.

2. Easing the burden on the public in the short term, could potentially raise the cost in the long term

Much of Sunak’s speech boiled down to easing the cost of the net zero transition on the public.

Until now, most of the UK's decarbonisation efforts have been largely behind-the-scenes, such as decarbonisation of energy generation, with little action needed from the public.

This is no longer the case, and is something the ICE has been asking about for some time: where are the government’s plans for net zero and public engagement?

More specifically, how will the government support the public’s move towards net zero?

Achieving net zero won’t be cost-neutral, though the benefits could be substantial.

Falling behind competitors in the global decarbonisation shift would present its own risks, while not tackling climate change would result in a much bigger hit to GDP.

That’s according to the Treasury’s own calculations.

Delaying action will cost more

In a 2021 report on fiscal risk, the Office for Budget Responsibility (OBR) concluded that taking early action to achieve net zero would add 21% of GDP to public sector net debt by 2050.

That’s a smaller amount than that added by the Covid-19 pandemic.

Spread across three decades of the net zero transition, this represents an average of just 0.4% of GDP a year.

This amount comes from increased spending on net zero investment, the loss of tax revenues (such as fuel duty), revenues from tax on carbon and other costs such as increased debt interest payments.

In the OBR’s scenario for “late action”, which assumes steps to cut emissions are delayed until 2030 or later, then introduced abruptly to deliver reductions in a shorter period, GDP settles around 3% lower than in the early action scenario.

Debt would be 23% of GDP higher compared to the early action scenario.

In other words, it will cost far less in the long term if action is taken sooner.

It will be interesting to see whether the OBR’s analysis at the Autumn Statement explains how yesterday’s decisions affect the long-term fiscal picture.

3. Grid connectivity holding back decarbonisation progress

Sunak spoke of the need to improve the electricity grid, stating that more details would be announced in the coming weeks.

What we do know is that changes will include speeding up planning for nationally significant energy infrastructure projects, removing the ‘first come, first served’ policy for grid connections with a ‘first ready, first connected’ approach, and even a spatial plan for energy infrastructure.

Grid connectivity and capacity are absolutely vital to the net zero transition as transport and heating homes will require more electricity.

But, to date, the government has been slow to introduce electric vehicle charging points, while transmission infrastructure upgrades have faced public opposition.

Separately, the PM also announced that Parliament would vote on future carbon budgets at the same time as the policy measures needed to deliver these budgets.

This may bring more certainty as carbon budgets can then be linked with changes in fiscal policy and will bring greater accountability.

Read the thoughts of Andrew Jones MP, chair of the All-Party Parliamentary Group on Infrastructure, following on from a debate on net zero and public behaviour in July.