“The debate about how we get to Net Zero has thrown up a range of worrying proposals and today I want to confirm that under this government, they’ll never happen.”
Rishi Sunak’s speech in September marked a break from over a decade of political consensus on the importance of Net Zero policy. As the costs become apparent policymakers across Europe have woken up to the challenge of maintaining voter support for Net Zero. Where once there was nothing but optimism and tech-led growth, we now see leaders being frank about the trade-offs and costs involved in what is still a source of great economic opportunity.
Across Europe, we have made progress on greening our power generation, but the next frontiers of decarbonisation are forcing policymakers to make tough but critical policy choices. Decisions on how we heat our homes, move off petrol and diesel cars and where we go on holiday. Decisions that will have real implications for people that are already struggling with cost-of-living pressures.
We’ve seen how poor policy design or clumsy marketing attempts can trigger a public backlash and political opportunism. Whether it’s the Ultra-Low Emission Zone in London, banning gas boilers in Germany or EU proposals to retrofit green homes there are obvious pitfalls for policymakers with well-intentioned ideas to draw the ire of the public.
On the surface, calls in recent months by leaders including Prime Minister Sunak or President Macron for policy pragmatism appear sensible and chime with public opinion. A recent poll of 4,000 voters by Public First for Onward shows that the target of reaching net zero by 2050 is overwhelmingly popular with voters. Yet they are also cautious of costs – 53% of those polled were willing to accept costs to tackle climate change, 40% were not.
While it is right to take stock, it’s important policymakers learn and apply the right lessons from recent months. Yes absolutely, we should ensure the poorest are not disproportionately affected by the transition. But equally, we should not let a poorly designed ULEZ be a blanket rationale for delaying the transition. There is a difference between pragmatism and opportunism. The bottom line is the transition to a net zero economy is going to happen, regardless of whether certain politicians seek to frame it as a “wedge issue” or not.
The key question is whether the transition will be orderly or disorderly – and the degree to which the country can make it an economic success or not. As the Prime Minister attempts to draw a “pragmatic and proportionate” political dividing line on net zero, how best should Labour respond? With an election on the horizon, Labour is right to pledge to, “speed ahead”, not retreat, from net zero.
First, own the narrative on costs. Whether it’s the Committee on Climate Change (CCC), the Office for Budget Responsibility or the IMF, the evidence is clear there is a price to pay for the transition. There will be short-term costs.
Of course, as the CCC has highlighted, there are also long-term savings from the net zero transition to the tune of £1.1 trillion, resulting in a net cost of £0.3 trillion overall. And this does not count the potential tax revenues from the net-zero economy. This brushes up against longstanding issues with how the treasury accounts for the benefits, as well as the costs of investment but is much more than a technocratic exercise. We need a proper public debate about costs and benefits, where people feel safe to raise their concerns.
Given costs are front-loaded compared to eventual benefits and savings, politicians must be clear and upfront on who pays for future investment. As the CCC have shown, significant investments to the tune of £1.4 trn are required for the UK to transition to net zero. Who should foot the bill? Pledging to deliver a “pain-free, supply-side green transition” in the current inflationary context is not credible, and neither is asking households struggling with the cost of living and recent energy crisis to stump up.
Secondly, goals and strategies are meaningless without practical implementation plans. Net zero is the most significant economic transformation of our generation, it will not happen without deep and structured policy thinking and action. Policymakers should use strategic tools in broadly two areas. On the supply side, this means evolving the regulatory framework and the UK ETS, to give stability and predictability to attract investment into clean technologies and carbon capture. While there is some good policy thinking in Labour’s pledge to “rewire Britain”, this needs to be extended to other areas of the energy system. For instance, moving people off the gas grid to heat pumps will require work to ensure there is a heat pump supply chain and trained workforce available. New planning regulations will be required to make heat pump installations quick and easy alongside investment in a distribution grid to handle the additional electricity load.
On the demand side, it is crucial we drive innovation in clean products and services to make them more attractive than fossil alternatives, for instance through using energy data as a competitive asset to support innovation in products and services or the introduction of time of use tariffs to allow consumers with low carbon systems the choice of taking advantage of lower cost energy. Even with this investment, in the short term consumers will likely need targeted government support and funding to make the cost acceptable. The truth is that you cannot ban without a plan.
Thirdly, take the public with you. Don’t lead with talk of ‘green revolution’, banning things or emphasising restrictions on daily life, as most opinion polling shows that voters have an aversion to this method of messaging. It is ineffective and it is untrue. Contrary to the rhetoric of recent months, our lives post-transition will likely be broadly similar to those we live today. But delivering this transition in a sustainable and orderly fashion will require a mission-oriented Labour government working hand in glove with all parts of society, from trade unions to local leaders to businesses of all sizes across the economy. With clear and honest communication to the public about what changes are required, by when, and how policies being put in place, Labour can make change an attractive and affordable option.
The path to a cleaner, more secure and affordable energy future is narrowing, but the route is still open. With an election on the horizon, a key choice facing voters is this; will we have national renewal or national decline? Labour has an opportunity to give Britain its future back – by speeding ahead and owning the narrative on how Britain leads the transition to net zero.
If you enjoyed this blog, check out The Net Zero debate: Early wins make mission zero possible.