The UK has presented a strong track record and solid legal framework on green issues according to the report, being ranked 2nd in Yale University’s Environmental Performance Index and reducing GHG emissions by 46% compared to 1990 levels. However, the scale of the challenges ahead should not be underestimated, argue the BCC, efforts to decarbonise need to be implemented across all sectors of the economy and will require behavioural change from consumers and businesses.
The Climate Change Committee (CCC) has recently reported on policy gaps in decarbonising industry and agriculture, the lack of efforts to improve building energy efficiency and mixed messaging on government policy. From the BCC’s perspective, the report states that clarity and consistency are needed on climate policies for the business community and have subsequently produced the following recommendations:
- Long-Term Policies– Create a new public institution to ensure cross-party work and long-term commitments on the climate and in turn help drive investment, with inspiration to be taken from the Covid-19 Vaccine Taskforce.
- Deeper Business and Government Relationships– Broaden the scope and ambition for engagement between the government and businesses to develop a multi-sector approach and take inspiration from the Danish ‘Climate Partnerships’ model where 14 sectors have clear strategies to reduce GHG emissions by 2030.
- Introduce a Robust Green Industrial Strategy– Governments around the world have become more interventionist on the climate to attract investment in green industries, with the United States Inflation Reduction Act being the biggest example. However, the UK government has argued that they cannot match the fiscal firepower of the US. Instead, opting for a sector-based policy approach. Improvements can be made to the following according to the BCC:
- Solar Power: The government should encourage solar manufacturing in the UK and enhance its international collaboration to secure supplies.
- Contracts for Difference (CfDs): The government should ensure that CfDs can bring in private investment by accounting for external economic conditions, rewarding renewable developers, addressing skills shortages and ensuring that any reviews do not undermine confidence in the scheme.
- Carbon Capture Usage and Storage: Fully developing a strategy with industry cooperation and as a national priority.
- Sustainable Aviation Fuel (SAF) Mandate: Producing a price mechanism for the SAF mandate is a vital step and the government should draw lessons on the CfDs scheme.
The report also states that a Green Industrial Strategy should be based on the following principles:
- Ensuring strong fiscal incentives and tax frameworks for investment.
- Identifying sectors of strength where the UK has comparative advantage to capitalise, such as Carbon Capture Storage and Usage.
- Maximising strengths in the UK supply chain and addressing any weaknesses.
- Enabling the development of the right skills within the economy.
- Providing clarity, predictability and stability on regulations and policy incentives.
- Aligning trade agreements around green growth and net-zero.
- Evolving funding models and rewarding the progression of low-carbon innovation.
Ultimately, the BCC argues that the transition to net-zero is a race that everyone must win and that the UK should facilitate global green innovation. A link to the full report can be found here: Green-Innovation-Building-Sustainable-Futures-for-UK-Businesses.pdf (britishchambers.org.uk)