‘Delay is a significant risk’: UK’s Net-Zero Review calls for accelerated climate action from Government

The new report details 129 recommendations across key sectors such as the built environment, renewable energy, green finance and nature

The Mission Zero report was published on Friday by MP Chris Skidmore, based on the 1,800 responses from businesses and climate experts, making it one of the largest engagement exercises on net-zero in the UK.

It acts as a comprehensive review of the UK’s approach to its net-zero target for 2050, which was deemed unlawful last year following a legal challenge with Friends of the Earth and ClientEarth.

The Review analyses the Government’s current approach to economy-wide decarbonisation and finds that while progress has “exceeded expectations” since the formation of the net-zero target, inconsistent policies, mismanaged reporting structures and a lack of detail against existing commitments could cause “significant risks” in the form of delays to decarbonisation.

The new report details 129 recommendations across key sectors such as the built environment, renewable energy, green finance and nature. Upon releasing the report, Chris Skidmore claimed that ministers needed to grasp the “historic opportunity” opportunity that decarbonisation would bring, warning that a “high emission future” that contributes to the climate crisis would cause severe disruptions to the point that “normal economic activity will become very challenging” in the UK.

The report cites a lack of policy clarity, insufficient capital for investible propositions, infrastructure bottlenecks and delays in the planning system as the main risks to the net-zero approach. Elsewhere, businesses that responded to the review cited skills shortages as one of the main barriers to accelerating decarbonisation efforts.

Chair of the Net Zero Review, Chris Skidmore MP, said: “We should be proud of the lead the UK has taken in tackling climate change, having exceeded expectations so far in our race to net zero emissions by 2050. As essential as that is environmentally, it also puts us at an economic advantage globally.

“We lead in areas including clean technologies, science, manufacturing and green finance – areas that, if managed right, can lead to new jobs and strong economic growth. In developing this report, we have engaged with communities, economists and climate experts from across the country through more than 50 roundtables and 1800 submissions – all of which have led to the Mission Zero findings.

“My recommendations are designed to make the most of this historic opportunity, covering the length and breadth of our economy, so that people in every part of the country can reap the benefits of this both in their communities, and in their pockets.”

A key message was delivered by businesses – net-zero is the “economic opportunity of the 21st century”. With more than 90% of global GDP covered by a net-zero target, UK plc stated that net-zero strategies can help them grow competitively and deliver new economic opportunities.

What is the Net-Zero Review?

July 2022 saw the High Court ruling that the UK Government’s Net-Zero Strategy, published in late 2021 in the run-up to COP26 in Glasgow, is unlawful. The Court sided with Friends of the Earth and ClientEarth as they argued that the Strategy does not contain the level of funding or detail needed to be aligned with net-zero by 2050, nor with the UK’s interim carbon budgets.

The Court gave the UK Government nine months to amend the Strategy, and the review forms part of this amendment.

The UK Government promised a review of the UK’s plans to reach its 2050 net-zero emissions, with the Department for Business, Energy and Industrial Strategy (BEIS) launching the first stage of a three-month review in September 2022. The public and businesses were given the opportunity to provide evidence and views on how the green transition can be shaped.

The review was spearheaded by Chris Skidmore MP. Skidmore served as a Minster of State at the BEIS from December 2018 to July 2019, then again from September 2019 to February 2020. He has played an important role in opposing the so-called Net-Zero Scrutiny group of Conservative MPs who argue that the cost of the transition will be too high. The Climate Change Committee (CCC) previously priced the transition at 1-2% of GDP, before amending this to 0.5%-1% of GDP in light of falling cleantech costs.

What are the key recommendations?

With previous research from McKinsey finding that British businesses have a global market opportunity of £1trn by 2030 if the net-zero transition can be improved, it is clear that new policies need to be introduced.

While the report notes that the UK “enjoys a comparative advantage over other advanced economies” in relation to sectors like offshore wind, carbon capture and storage (CCS) and green finance, the report makes recommendations across all key sectors.

Highlight recommendations include:

MARKET REFORMS

• Reforming financial incentives for decarbonisation, including via the tax system
• Reform the planning system to ensure net-zero becomes a local action point, including backing at least one “Trailblazer Net Zero City”, local authority and community that can work towards reaching net zero by 2030
• Deliver an over-arching Government financing strategy by the end of 2023
• Establish an Office for Net Zero Delivery, responsible for placing net zero delivery at the heart of government thinking
• Review how HMT incentivises investment in decarbonisation, including via the tax system and capital allowances
• Progress with a consultation on carbon leakage to enable Government to implement carbon leakage mitigation measures from 2026
• Work with the UK Emissions Trading Scheme Authority to develop a full pathway for the UK ETS market up to 2040
• Deliver the Green Jobs Taskforce recommendations
• Embed nature and restoration into net-zero plans

ENERGY

• Deliver up to 70GW of UK solar generation by 2035
• Accelerating the implementation of the British Energy Security Strategy, including updating the mandate of Ofgem
• Create a Future System Operator to explore the connection of renewable generation and outline how a multi-fuel energy system would operate
• Onshore wind to reach required deployment levels for the 2035 net-zero grid
• Publish an offshore industries integrated strategy by the end of 2024
• Implement reforms set out in the British Energy Security Strategy to achieve the UK’s nuclear baseload requirement
• Expedite the set-up of Great British Nuclear in early 2023, ensuring required funding and skills are in place

REGULATORY REQUIREMENTS

• Create a major expansion of the government’s public reporting on net-zero
• Report regularly on the commitments from the Net Zero Strategy, starting by mid-2023
• Kickstart a transition to a circular economy through a “joint taskforce on circular business models”
• Publishing a public engagement strategy tied to net-zero
• Create a Carbon Calculator to provide consumers with the information they need
• Deliver a standardised approach to ecolabelling for as many products as possible by 2025.
• Introduce eco-labelling on foods to stop the share of emissions from agriculture growing from 12% to 30%. No ban or tax on foods like red meats was suggested.
• Review options for a Net Zero Charter mark as a gold standard for sustainability
• Conduct a strategic review on the UK’s international climate leadership by 2023
• Establish a baseline for environmental and climate protections in future free trade agreements
• BEIS and HMT should review how to incentivise greater R&D for net zero

BUILT ENVIRONMENT

• Provide certainty by 2024 on the new and replacement gas boiler phase out date, bringing the proposed date of 2035 forward and legislating for 2033.
• Set a legislative target for gas free homes and appliances by 2033, to contribute to a gas free grid in future
• Legislate by 2025 the minimum energy efficiency rating to EPC B for all non-domestic buildings, both rented and owned, by 2030.
• Legislate for EPC B rating for all new non-domestic buildings from 2025.
• Legislating for the Future Homes Standard so that by 2025, no new homes will be built with a gas boiler
• Adopt a “10-year missions” to make heat pumps a widespread technology in the UK

TRANSPORT AND INDUSTRY

• Deliver the Zero Emissions Vehicle (ZEV) mandate to apply from 2024 while maintaining regulations and funding to support EV/ZEV uptake
• Publish a Land Use framework as soon as possible, and by mid-2023.
• Develop a cross-sector infrastructure strategy by 2025 to help outline how technologies like hydrogen and CCS can be adopted
• Launching a Help to Grow Green campaign offering information and advice to small businesses to decarbonisation

Delivering these recommendations, the report argues, would enable the UK to transition to net-zero emissions in a cost-effective way. Analysis suggests that delaying climate action by just 10 years could mean UK debt is 23% of GDP higher in 2050, essentially doubling the cost of achieving net-zero.

Additional research from Oxford University has shown that an accelerate net-zero transition can save the world at least $12 trillion, compared to continuing our current levels of fossil fuel use.