Energy Partner, Clare King, Senior Associate, Liam O’Flynn, and Associate Meryon Roderick, at Freeths LLP, guide us through the Climate Change Committee’s annual progress report.
On 29 June 2022, the Climate Change Committee (“CCC”) laid its annual progress report before Parliament. Whilst the CCC’s annual progress report makes for vital reading every year for anyone interested in the UK’s progress in tackling climate change, this year’s report is of extra significance for a couple of key reasons:
- Firstly, this report represents a significant shift in the CCC’s focus, moving from reviewing how Government policies will help achieve net zero, to reporting on progress made to implement those policies. This reflects the growing urgency in tackling the climate crisis and the need to move from discussing solutions to enacting them.
- Secondly, this report comes in the same year as the UK’s presidency of COP26 and so, with the CCC’s new focus on implementation, gives a realistic view of whether the aspirations of UK climate leadership arising from COP26 have translated into concrete action.
Whilst the CCC’s report is weighty and, at times, ungainly, its findings have a real impact on the direction of UK climate policy, and so it’s an important document to get to grips with; it can give a strong indicator not only of the UK’s current position on tackling the climate crisis but also what could change in the future.
This introductory article sets out the key themes and cross-cutting issues which affect large parts of the UK economy. Over the coming weeks, we will examine the CCC’s findings for a range of sectors, considering the key issues and how they impact stakeholders in those sectors.
Assessment of the current position and general themes
The CCC’s overall opinion is that whilst the UK has set itself world-leading targets to reduce emissions, in many areas it is failing in their implementation. The view of the CCC is that the UK’s international leadership in commitments can only be effective to the extent that it is seen to deliver on those commitments.
The key messages of the report which support this view are:
- UK climate policy is strong, but there are notable gaps: the Government has a solid net zero strategy in place, including emissions targets that are internationally recognised as being compliant with the Paris Agreement. However, important gaps remain including in relation to land use, energy efficiency of buildings, waste management, and achieving full electricity grid decarbonisation. In addition, the “Net Zero Strategy” (published in 2021) is over-reliant on engineered CO2removals and does not focus enough on reducing consumer demand for high-carbon activities. This criticism of the “Net Zero Strategy” is supported by the High Court’s decision that the strategy is unlawful, and lacks detail of how we get to net zero in 2050.
- Despite a strong policy position, there has been a lack of actual progress:outside of a few specific bright spots (e.g. electric car proliferation), there is a general lack of progress against the UK’s stated emissions policy objectives. This lack of progress is particularly pronounced for sectors such as construction and aviation but also applies to several cross-sector issues. For example, it remains unclear how central, devolved, and local government will operate coherently towards the goal of net zero by 2050. The Government also needs to take a proactive approach to tackling bottlenecks, such as the skills gaps for green jobs and planning consents for infrastructure.
- It is important to capitalise on current momentum: the combination of the UK’s presidency of COP26 and the current cost-of-living crisis means that there is a groundswell of support for reducing our reliance on fossil fuels. However, the British Energy Security Strategy(published in April 2022) is almost entirely supply-focused and many of its commitments may not be delivered until after the immediate cost-of-living crisis is resolved. There are quicker routes to reduce our demand for fossil fuels, which would also reduce energy bills (e.g., energy efficiency improvements in the buildings sector). Additionally, COP26 successfully strengthened long-term global ambition and introduced new mechanisms to support delivery. It is vital that the UK maintains its credibility by taking effective action at home.
Cross-cutting issues
As well as reviewing progress in specific sectors, the report identifies several cross-cutting issues that will impact the UK economy and need to be addressed to enable progress, including:
- Governance:Government needs to set out who is responsible for which parts of delivering net zero and how delivery will be coordinated, particularly between central, devolved, and local government. These roles should be backed up with accountability mechanisms, overarching policies, and funding models.
- Public engagement:while support for climate action remains high, people often do not have a clear view of what actions are needed, what their roles are, and how they can get involved. Government needs to set out an overall strategy for public and business engagement. In particular, the promised energy advice service, and the supply chains and skills needed to allow their advice to be followed, is a clear priority given the cost-of-living crisis and continued slow progress in improving the energy efficiency of buildings.
- Fair funding and affordability:Government has put forward policies that will support households with rising fossil fuel costs in the short term. The Treasury must make decisions that address how funding of net zero will impact households and the Exchequer in the long-term, and how the distribution of both costs and opportunities will be made fair.
- Workers and skills:whilst Government has put in place a series of policies to identify skills needed for net zero and to support both the existing workforce and new entrants through reskilling and training, there is currently no strategic framework for this. This will be needed to support those most at risk of a sudden and localised transition away from high-carbon sectors, but also to maximise economic opportunities for high quality domestic job creation.
- Business and investment:to capitalise on the flurry of ambitious commitments from private sector coalitions at COP26, Government needs to develop policies for the Sustainability Disclosure Requirement (SDR), publish a comprehensive Green Finance Strategy, and hold businesses to account for their net zero commitments.
- Infrastructure:the path to net zero requires major upgrades and investments in the UK’s existing infrastructure (e.g., power grid) as well as development of vital new infrastructures (e.g., for carbon capture, use, and storage). This new and upgraded infrastructure must be designed with high levels of climate resilience from the outset, to avoid locking in future climate impacts or additional costs due to changes in the UK’s climate over its lifetime.
Conclusion
It is clear from the CCC’s report that, whilst the UK is currently pointing in the right direction on some issues, many areas still require a great deal of thought and planning.
There is a hard road ahead to reach net zero and getting there will require significant investment. It is vital that the cost is spread equitably to avoid creating winners and losers where all parts of the economy and society should be pulling in the same direction.
Please look out for our sector specific articles, which will be released over the coming weeks, providing analysis and insight into how the findings of the CCC’s report will impact a range of key sectors.
