There is a clear roadmap ahead for the UK government on greenhouse gas emissions, says Ian Simm, chief executive and founder of Impax Asset Management
The UK is leading the way in the international community with its legally binding commitment to “net zero greenhouse gas emissions by 2050.” To be credible and effective, the new Government’s plan should focus on five priorities:
- Establish clear, long-term sector roadmaps: The Government has committed to phase out coal from power generation by 2025 as well as ban the sale of new diesel/petrol cars by 2040. This is certainly progress, however we now need to see more ambitious targets for other sectors, particularly a timeline by which new buildings should be “zero carbon” and credible targets for refitting UK homes to make them more energy efficient. Decarbonisation of heat is particularly challenging as it will involve the replacement of natural gas with hydrogen (from a low carbon source), electrification or a combination of the two.
- Update strategic interventions to support the transition. To seize the huge opportunities for growth, employment, exports and earnings within a zero-carbon economy, the Government should plan to update the Industrial Strategy and the Clean Growth Strategy, linking these directly to the sector roadmaps. Areas of established UK expertise, such as advanced manufacturing, vehicle manufacturing and services have enormous potential to anchor economic transformation. With a clear 30 year target we have an opportunity to “back solve” what’s possible.
- Retool Government departments and stress test policy priorities: Many civil servants need to expand their skills to develop detailed policies in this area, so Whitehall must be prepared to invest in specific training programmes and in the development of knowledge-based resources. New cross-departmental structures will be required to ensure policies are joined up. Historical commitments to large-scale infrastructure policies such as Heathrow expansion, HS2 and Crossrail2 should be tested against net-zero roadmaps and modified, substituted or even cancelled as appropriate.
- Stimulate greater public engagement: Despite growing public support for climate action, mobilising large scale changes in consumption habits that will have a meaningful impact is challenging. Yet when offered attractive, better and/or more convenient alternatives at a sensible price, such as stylish, zero-emission cars (to buy or rent), a home insulation programme, or nutritious, low-carbon food, consumers are likely to change their behaviour. Government focus on education through public channels and school curricula can make a significant difference.
- Encourage greater participation by financial markets: At a time when interest rates globally have never been lower, we have a major opportunity to mobilise capital markets to finance the economic transitions embedded within the sector roadmaps. Green finance isn’t really the answer, as minor adjustments to taxes, eco-labelling or peer pressure won’t significantly improve the supply of capital. What we need is greater participation by financial institutions in shaping the demand for capital by ensuring that zero-carbon markets are financeable.
With the right approach, we should find that thirty years is ample time to reshape our economy to achieve “net zero” and to harvest the associated benefits that come from being an early mover at a time when other wealthy nations will be seeking to follow a similar path. But we need to start today!
Ian Simm, chief executive and founder of Impax Asset Management