Build Back Bet…?
5 minute read
Picture credit: @GreenNewDealUK
Three weeks ago, the Climate Coalition sent the Prime Minister a letter. Countersigned by 59 charitable organisations it laid out seven priority action areas of a “Plan for a Green, Fair and Healthy Recovery”. These were to:
Create over 100,000 clean energy jobs in the areas of greatest need.
Set up a Climate Infrastructure Bank, increase financial powers for local authorities and develop a Climate Finance Plan.
Get us on track to net zero and 1.5°C & ensure all bailouts for business are conditional on plans and actions to do the same.
Prioritise investment in the transition to a UK land use and farming system that delivers for nature, climate and human health.
Align all UK public finance abroad with a just energy transition, ending fossil fuel finance.
Support debt relief to enable developing countries to tackle both the COVID and climate crises.
Engage with the international community to halt and rapidly reverse the decline of biodiversity and nature globally.
This was just one of many groups of business leaders, investors, charities and NGOs to make similar calls. No doubt they were all watching with bated breath on 30th June when Boris announced his ‘New Deal’ recovery package.
They must have been underwhelmed. The £5bn plan largely focused on infrastructure spending to ‘level up’ the UK regions. A lot of it was old news simply being re-announced.
In his half hour speech, Boris used the word ‘Green’ just 6 times, and didn’t mention ‘Environment’ or ‘Climate’ at all. The New Deal makes no mention of carbon pricing, the Sustainable Development Goals or a holistic approach to transport.
The New Deal did cover some environmental topics – a commitment to reforest 75k acres per year by 2025 (let’s hope our efforts are more successful those in Turkey) and a £40m fund for local conservation projects.
The plan failed to convincingly address the need to retrofit our inefficient building stock, provide a credible strategy to decarbonise the energy sector or how the government plans to re-skill people to fill the ‘green-collar’ jobs that are so desperately needed. On top of all that it continues to invest in high-carbon sectors, namely all the infrastructure spending.
The reaction from the Green Community to Boris’ announcement has been pretty limp. Tanya Steele, WWF’s CEO described it as “lukewarm” and “another missed opportunity”, while the Climate think tank Green Alliance called it a “false start”. The general consensus was that the New Deal is not aligned with the UK’s net zero ambitions.
Enter Rishi Sunak.
Yesterday (6th July) a statement from the Chancellor revealed his Summer Economic Update, due to be formally announced on Wednesday (8th). An additional £3bn will be ring-fenced for environmental initiatives. The most significant portion of which is set to be a £2bn grant scheme for homeowners to make energy-saving home improvements, namely insulation (with the poorest households set to benefit the most) which is claimed will support 1,000 jobs. Also announced was £1bn to decarbonise public sector buildings (including schools, hospitals and public housing) through retrofitting.
Great I hear you say, but let’s think about this for a moment.
Setting money aside specifically for green initiatives is sensible economically. Research from McKinsey suggests that $10m invested in energy efficiency can create 77 jobs whereas the same investment into fossil fuels creates just 27 jobs. But the Conservative Party’s 2019 manifesto promised £9.2bn for retrofitting buildings. Let’s hope there is more to hear on this in the Autumn Budget and in the run up to COP26.
This spending will barely touch the sides. For a little context, the EU has ring fenced €188bn (25%) of its recovery plan specifically for measures that mitigate the climate crisis. Rosie Rogers, Greenpeace’s Head of Recovery highlighted that Germany and France have set aside considerably more – €40bn and €15bn respectively. A report from the Green Alliance suggests that £14bn of green investment is needed every year for the UK to meet its climate commitments (based on the government’s own data) and think tank E3G say that £18bn is needed over the next decade for energy efficiency building upgrades. Read more reactions to the Chancellor’s announcement on the BBC, in the FT and The Guardian.
We should also keep in mind that since the government enshrined the UKs net zero 2050 commitment in law, the £28bn previously announced for building more roads may face a legal challenge as it is not in line with the emissions reductions the country has committed to. Similar challenges are being made against the £100bn HS2 project. The New Deal has set aside £100bn for road building.
Grants and subsidies are of course welcome, but we are still waiting for meaningful policy change that will ensure the flow of private capital to fuel a green recovery and a decarbonise the economy for the long term.
Despite the net zero commitment, the UK currently has an estimated gap of 313 megatonnes of CO2e and is set to breach its carbon budget for the fifth time. This New Deal offers little hope of any significant change to this trajectory.