Aldersgate Group Manifesto: Government urged to double down on net zero to tackle energy crisis

Business group argues ambitious climate and environmental policies could solve energy crisis, drive investment, and help the UK lead the net zero transition

The new UK government should double down on its net zero strategy through increased investment in energy efficiency programmes, the accelerated deployment of renewables, and energy market reforms that decouple wholesale power prices from the volatile fossil gas market in order to tackle the energy security crisis afflicting the country and drive sustainable economic growth.

These are the headline recommendations from the Aldersgate Group’s new manifesto – The green line: a route out of crisis and towards prosperity – which has been released today ahead of tomorrow’s much-anticipated mini-Budget from the new government.

Published on the same day as the government announced the brief for its new review of the UK’s Net Zero Strategy and confirmed controversial plans to lift the moratorium on fracking, the new manifesto argues the government needs to deliver a much wider policy programme to bolster eneryg security and help businesses and households cope with high energy costs. 

Prime Minister Liz Truss yesterday announced a new support package to effectively freeze energy bills for businesses for the next six month, but the Aldersgate Group – which represents scores of leading UK businesses and NGOs – argued a longer term plan was required that centres on the government’s existing Net Zero Strategy.

The new manifesto calls on the government to pursue a “twin track” approach of reducing dependence on fossil fuels through accelerated investment in low cost, clean and homegrown renewables, and lowering energy demand across the economy through a nationwide energy efficiency retrofit programme, most urgently in homes and commercial buildings. 

The government is today expected to confirm that its new review of the UK’s Net Zero Strategy, which is to be led by Conservative MP Chris Skidmore, will focus on whether current decarbonisation plans are sufficiently pro-growth and do not compromise the UK’s competitiveness.

But the Aldersgate Group today argues that the economic benefits of pursuing an accelerated net zero strategy are clear.

According to figures from the Department of Business, Energy and Industrial Strategy’s Energy Trends report released in June this year, in 2021 renewables generated just under 40 per cent of the electricity in the UK, with 29 per cent coming from wind and solar. As such, renewables displaced around £6.1bn worth of gas, which according to figures from think tank UK Onward saved the equivalent of £221 of gas per household per year. With the cost of renewables falling with greater levels of deployment, renewables projects provide the UK with a key opportunity to bolster energy security in a cost-effective way, the report argues.

In terms of accelerating progress on energy efficiency, figures from DIY retailer Kingfisher showed that households living in homes rated below the government’s target Energy Performance Certificate (EPC) C rating are set to pay £748 more on average per year for their energy than the 10 million living in homes at or above the threshold.

In addition, homes with poorer insulation also tend to be clustered in areas such as Wales, Yorkshire and the Humber, and the West Midlands, where levels of poverty are higher than the UK average, which the report states “clearly” shows the economic and levelling up benefits that a mass home insulation programme can bring.

The report also highlights the business and economic benefits of the net zero transition. According to research from ONS, in 2020 businesses in low carbon sectors generated £41.2bn in turnover, as well as directly employing 207,800 full-time employees, a figure which rises to half a million when people employed in associated supply chains are included.

Low carbon investment is also helping to “level up” the country, the report says, with jobs in sectors like offshore wind, low carbon hydrogen, EV chargepoint installation, and home insulation distributed right across the UK.

By continuing to develop supportive low carbon policies across key industrial sectors under the Net Zero Strategy, the manifesto suggests the government could “significantly increase” these economic benefits and deliver growth across the economy.

Citing the low carbon hydrogen sector in the North-West as an example, the report highlights that carbon capture and storage (CCS) projects could deliver as many as 5,500 jobs in the Teesside by 2025, and as many as 18,000 jobs nationally by 2030.

Additionally, the transition to EVs is estimated to create 200,000 permanent jobs across the UK, with 57 per cent coming from the installation, operation, and maintenance of chargepoints.

The report also stated that recent extreme weather events have demonstrated that investment in natural capital restoration should be a key priority for the new government to mitigate the impact of droughts and floods, and safeguard food security by incentivising more sustainable agricultural practices.

According to government statistics, the value provided by coastal wetlands in terms of buffering the effects of storms and flood control has been estimated at £1.5bn annually and research from Cranfield University has estimated that reversing soil degradation could save £1.2bn per year in England and Wales. As such, the manifesto urges the government to continue with the implementation of the Environment Act and develop an ambitious Environmental Improvement Plan that can mobilise investment in natural capital projects.

“There is clear business consensus that ambitious climate and environmental policies are a key part of the answer when it comes to providing durable solutions to the cost of living and energy security crises and tackling low levels of investment in infrastructure,” said Nick Molho, executive director of the Aldersgate Group.

 “All these agendas are mutually reinforcing. By introducing policies that will genuinely put the UK on track for its legally binding net zero and nature restoration targets, Liz Truss and her government can unlock significant business investment in low carbon innovation, infrastructure and job creation across the country and across multiple sectors of the economy from renewables, insulation and grid infrastructure through to heavy industry and nature restoration projects.” 

 In order to achieve these ambitions, the report makes a raft of policy recommendations covering energy, buildings, transport, heavy industry, resource efficiency, nature restoration, skills, green finance, trade, and global climate diplomacy.

To address the energy crisis, the report recommends making energy efficiency in homes and infrastructure a priority for the new government, highlighting how it can slash bills, improve energy security, and create jobs.

In addition, it recommends building on progress to date to enable an even faster roll out of low carbon power generation projects and backs proposals for the government’s Energy Bill and Review of Electricity Market Arrangements (REMA) to be used to decouple gas and electricity prices and allow UK renewables to deliver lower bills for industry and households.

To promote further investment and innovation, the report recommends accelerating the implementation of the Net Zero Strategy, which it suggests should be done through key policy interventions in areas such as power, buildings, transport, and heavy industry in order to provide the right market signals to businesses and boost investor certainty.

It also recommends supplementing the implementation of sectoral strategies with targeted interventions through the UK Infrastructure Bank (UKIB) to ‘crowd in’ private investment into key sectors, which in turn could rectify market failures in areas like energy efficiency and help de-risk investment in emerging technologies like hydrogen and CCS.

There should also be a comprehensive, practical and ambitious green finance reporting and disclosure regime to improve the quality and consistency of information available to investors and support the private sector to grow capital flows towards low carbon infrastructure, goods and services.

The report advises that this should include implementing the new Sustainability Disclosures Regime, completing ongoing work to introduce sustainable investment definitions under a UK Green Taxonomy and supporting the effective implementation of corporate net zero transition plans.

In addition, the report advises that the new system of Environmental Land Management Schemes (ELMS) should be maintained and fully implemented in order to incentivise more sustainable agricultural practices, expand natural carbon sinks, improve crop yields, and boost domestic food security.

Britain should also be promoted as a global centre for green investment, the manifesto argues. The report suggests that greater policy flexibility provided by the UK’s departure from the EU should be used to put in place regulations that can maximise investment in low carbon goods, services, and technologies, and could make the UK one of the most attractive places globally to invest in the low carbon economy.

Trade and climate objectives should also be aligned, which the report suggests should be done by taking steps to maximise low carbon export opportunities, prevent carbon leakage, protect the UK’s right to regulate, and foster international cooperation on decarbonisation and nature restoration.

The manifesto has so far received widespread support from a number of leading businesses and investors including Kingfisher, WSP, the Energy Saving Trust, Bellona, Ramboll UK, and Wessex Water among others.

Nick Lakin, group director of corporate affairs at Kingfisher, argued that businesses need “the right enabling framework to re-energise and transform our economy so that we stay on track for net zero”.

 “A long-term energy efficiency programme for homes with good financing and tax incentives, more support to help everyone switch to electric vehicles, alongside actions such as the recent decision to ban the sale of peat for gardeners are all vital steps in ensuring that the UK meets its net zero objectives,” he added.

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