Chris Skidmore’s review has made a powerful intervention in the conservative debate on net zero. Although some initially feared the net zero review could provide cover for weakening climate ambition, the opposite has happened - unsurprisingly, given Liz Truss’ choice of chair. The review instead calls for the government to go further and faster on decarbonisation to maximise the economic benefits and reduce policy risks, which are inflating the overall costs of the transition by deterring businesses from investment.
The review presents a comprehensive economic case for net zero, seeking to allay some conservatives’ concerns about the affordability of our climate targets. The review argues that net zero will be one of the main sources of global growth in the coming decades, reduce energy bill volatility, and help us avoid much more expensive impacts of climate change. But while the review cites an estimate that net zero could be worth £1 trillion to UK firms up to 2030, it also warns that we could miss out on this business without stronger policies to lure green jobs here rather than to the EU or US which have more generous subsidy schemes.
It was heartening to see many policy campaigns championed by CEN members among Chris Skidmore’s recommendations: John Stevenson’s push for all new homes to have rooftop solar panels as standard; Alexander Stafford’s call for all financial institutions to have net zero transition plans; Jerome Mayhew’s campaign for carbon border adjustment mechanism; Stephen Metcalfe’s call for equalising VAT on public EV charge points; Siobhan Baillie on a green skills strategy; or Stephen Crabb and Selaine Saxby's call for more investment in grid infrastructure. Ministers should waste little time in adopting these ideas given the preexisting support across the party.
But the review also provides some important frames for conservatives developing a distinct centre-right approach to climate. One of the central recommendations was that the Treasury publish a plan for financing net zero. With Labour heading into the next election committing to borrow an additional £28bn a year to finance green projects, the Conservatives need to show that they have clear policies to leverage private capital into the net zero transition instead. Financial institutions are waiting to deploy capital, but lack the regulatory frameworks to do so and will not invest, or at least charge higher interest rates, while the policy uncertainty persists. The government should look closely at this recommendation, as it could dull Labour’s inevitable attack line at the next election and provide a distinctly conservative alternative approach.
The review contains ways for individuals to take more control of their impact on the climate. While some conservatives are anxious about telling people what they can and cannot do in the name of saving the planet, few would oppose giving people better information so they can take personal responsibility for their environmental footprint. The review puts forward practical measures such as improving the system of Energy Performance Certificates for homes, creating a carbon calculator, or establishing ecolabels for goods. These ideas would boost people’s engagement with net zero and give them ways to make a difference.
One major challenge the review faces is that some of the ways it has identified to make net zero cheaper also risk a political backlash. The call for more carbon pricing through strengthening the UK Emissions Trading Scheme would incentivise more businesses to find the cheapest route to net zero. While this would be cheaper than a pure subsidy approach, it would also be more controversial as it would visibly put up the costs of goods. Similarly, the call to set a clear 2033 deadline for phasing out new boiler installations would stimulate investment in heat pump manufacturing and installation, helping to bring down costs to consumers. But it will worry people who still need to be sold on the technology or lack the upfront capital. This is an ongoing tension in the debate about the cost of net zero.
Chris Skidmore deserves enormous credit for the breadth and depth of his engagement as he’s gathered evidence and formulated his ideas. The review has produced a very strong case for net zero and some bold recommendations. Whether they’re looking for ways to fine tune the Net Zero Strategy or develop a distinct conservative climate policy at the 2024 general election, ministers have an excellent resource to draw on.
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