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E-scooters at a crossroads
E-scooters at a crossroads

Posts Tagged ‘Net Zero’

Resetting net zero: the implications for business?

One of the key questions on the minds of business representatives attending Conservative Party Conference in Manchester this week will be just what the implications of the Prime Minister’s reset on net zero are. Industry will be looking for reassurance from ministers over the coming days that the broad net zero agenda remains in place and for confidence on other policy measures.

Last week, WA hosted a webinar with Nathalie Thomas, former Energy Correspondent and writer of the FT’S LEX column and Sam Hall, Director of the Conservative Environment Network to explore whether the political consensus on net zero is broken, and if it is, what that means for business.

These are our key takeaways:

1. There may have been limited substantial policy changes, but it has still caused uncertainty

The Prime Minister’s speech gathered significant interest, but on the substance, it arguably moved the dial less. While the phase-out date for petrol and diesel vehicles has shifted back five years, the ZEV mandate proposals announced by the government in recent days showed there will still be a very significant increase in EVs as a proportion of the market by 2030.

There are large swathes of the net zero agenda – particularly on industrial and power decarbonisation – that have not been impacted by these specific proposals. However, Sunak’s speech still caused concern and disruption to many of these businesses. For businesses and investors the sense that long-term policy frameworks could change so suddenly, has cast doubt over the certainty and stability of other policy areas.

2. It’s all about the politics

As we enter a critical general election campaign businesses need to recognise that politics is ruling the day. Ideas may stand up on pure policy and technical terms, but if they don’t fit into the government’s political agenda they’re unlikely to be taken seriously, and policy already in train that doesn’t meet this test could be under threat.

This means it is essential for business to fully understand the different factions and priorities within government, and knowing who’s influencing No10 and key departments. Messaging and policy asks from businesses need to be aligned with these political trends to succeed.

3. But how effective was the political trap the government tried to set for Labour?

The motivating factor within government was to force Labour into having to defend policies presented by government as expensive and disruptive to consumers. No10 wanted to create a ‘wedge’ between the parties. The Labour Party appear to have avoided this with a pragmatic commitment to reinstate the 2030 ICE phase-out date and by suggesting they will review the approach to domestic heating if they enter government.

The Conservative Party’s position in the polls has stabilised, and in some cases improved since the speech, but it is still to be seen whether it changes the fundamentals ahead of the general election. Currently, that doesn’t appear to be the case.

4. Businesses can do more to communicate the benefits of the green transition

Businesses are understandably frustrated at the policy instability. However, it also places the spotlight on the responsibility that businesses have to make the case for net zero and the green transition. The Prime Minister’s renewed focus on consumer affordability makes it even more critical for businesses to show that the agenda – and specific policies that will fit within it – will reduce costs for consumers and offer the best value for taxpayers and consumers.

Equally, the promise of ‘green jobs’ is made regularly, but there’s a renewed opportunity in the run-up to the next general election for businesses to be more specific and tangible about this – where are these jobs, what will they look like, how can they show they are ‘real’ and not just numbers from a spreadsheet?

This will make it much harder for policymakers to row back on the wider agenda in future, with clearer acceptance of the benefits and value, with net zero not just perceived as a cost.

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Sunak draws battle lines over environment

The Prime Minister has moved to put clear blue water between himself and his predecessors in Number 10 and has broken the political consensus on how to reach net zero.

By delaying deadlines for phasing out new petrol and diesel cars until 2035 as well as scaling back requirements on phasing out new gas boilers, Rishi Sunak is seeking to give voters a clear choice between Tory and Labour environmental policy.

His decision generated favourable headlines in right-of-centre media but has alienated powerful voices in the business lobby.

Marc Woolfson, WA’s head of Public Affairs, draws eight early conclusions from the announcement.

  1. This is a highly political move to create clear dividing lines with the Labour Party on net zero policy – as well as who should pay and when. The government is betting that voters will welcome the removal of costly and inconvenient interventions on home heating and insulation.

The political strategy behind this was to force Labour to take contentious positions and make financial commitments that could damage its economic credibility. At a political level, Number 10 will feel happy that the PM’s statement has landed well with the audiences it was intended for. It has been lauded by right-leaning media. But there are questions over how effective it has been in damaging Labour.

  1. At first blush, Labour appears to have managed to avoid the ‘bear traps’ that have been set for the party, taking a nuanced approach to the various measures announced in Sunak’s speech. It has vowed to reverse the PM’s decision to kick the ban on new petrol and diesel cars down the road. In contrast, it has committed to assessing measures designed to decarbonise heating more fully if it wins the election.
  1. Many of the reasons Sunak gave for implementing the delay echo concerns that many in industry as well as would-be drivers of electric vehicles have already raised – notably on EV charging infrastructure, lack of access to grid connections and an underdeveloped UK battery industrial supply chain. Interesting, then, that powerful voices such as the Ford motor giant and the SMMT industry body have been among the loudest voices protesting against the announcement.
  1. As ever, the devil will be in the detail. Across the economy – particularly in the power sector – reforming grid infrastructure has been the number one concern of businesses for some time. The rhetoric from the Prime Minister gives industry confidence, but there will be a need to see exactly what this means in practice and whether it can bring forward the time it takes to build new infrastructure.
  1. Massive investment is needed to overcome these challenges, which requires confidence and a stable policy framework. Sunak’s announcements, whilst framed as pro-consumer and (at least partly) in line with the concerns of business, are likely to weaken the UK’s attractiveness as a destination for global investors. The potential future economic gains and jobs that have underpinned the political consensus up to now may also be under threat.
  1. Beyond the specific measures, the general mood music will leave a lingering concern amongst businesses that as the election gets closer, Number 10 may feel that it is politically convenient to scale back other elements of net zero policy. Those parts of power or industrial decarbonisation that are seen as particularly costly or disruptive to the public, such as critical electricity pylons to connect new renewables projects, or essential low carbon technologies that come with significant price tags may be particularly vulnerable. Recent scrutiny of a consumer levy to fund new hydrogen projects may offer a glimpse of what is to come.
  1. It’s a useful reminder to business of the importance of looking at new proposals through the lens of consumer affordability. In the run-up to the election, clear evidence of how specific projects and policy ideas deliver best value for money for taxpayers or billpayers will be crucial.
  1. Significant details still need to be fleshed out, following the headline announcement. Labour also has to decide whether to hold onto positions which opponents in Parliament and in the media will portray as anti-consumer. The party must hope that its Industrial Strategy can convince a sceptical public that there are major gains to be made. Whether this will resonate on the doorstep in the heat of an election campaign remains to be seen.

Our analysis of the media coverage of Sunak’s announcement shows that he has won the staunch backing of the popular press and right-wing commentators. While he generated huge media interest (14,000 mentions across traditional media), coverage has been broadly neutral.

The same could not be said for social media, where the great majority of posts are critical.

 

Join our webinar on Wednesday 27th September, to explore what these recent Net Zero policy changes mean for transport and energy businesses — Chaired by WA Director Angus Hill, with insights from Nathalie Thomas, writer of the FT’s Lex investment column and the paper’s former energy correspondent, and Sam Hall, Director of the Conservative Environment Network.

Please RSVP to events.rsvp@wacomms.co.uk

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Will consumer scepticism and the cost-of-living crisis remain a roadblock to rolling out electric vehicles?

With just over six years to go until the UK government’s ban on new petrol and diesel vehicles comes into force, decarbonisation policies, EV charging strategies, and infrastructure plans abound – but consumers still need to be convinced that electric vehicles are cost-effective and practical.

Electric vehicles are the cornerstone of the UK’s transport decarbonisation agenda, exemplified in the government’s ambitious deadline for ‘all vehicles to be able to drive a significant distance with zero emissions’ from 2030.

The debate on the practicalities of the ban and the impact it will have on consumers is dominating political debate and it means understanding the challenges facing motorists and their experiences is essential.

With 83% of new vehicles registered in 2022 still fuelled by petrol or diesel, WA polled 1000 members of the public to find out their views on EVs and the potential barriers to adoption. Explore our findings below.

Will consumer scepticism and the cost-of-living crisis remain
a roadblock to rolling out electric vehicles? [PDF]

To find out more about WA’s work supporting high-profile organisations on sustainable travel, net zero, and energy issues, please contact Jamie Capp – by email jamiecapp@wacomms.co.uk or on 07910 004 035.

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What does a government restructure mean for the energy sector?

You’d be forgiven for having a sense of déjà vu with the announcement of a new separate Energy department, with a return to the structure of the Brown and Coalition governments. With Rishi Sunak committing to this change in his summer leadership campaigns, and recent reports from Chris Skidmore and Andrea Leadsom both recommending this, it felt inevitable. It is however unusual to make such a radical change so close to the next election.

So what does this mean for the energy industry, currently seeking to deliver a transformational shift to a low carbon economy?

Major machinery of government changes take time, effort and focus, particularly from senior officials. Establishing a new department creates short-term uncertainty amongst officials and risks urgent policy priorities being deprioritised.

The retention of the current political team – Shapps, Stuart and their advisers – maintains policy leadership and largely ensures a continuation in approach.

One school of thought is that a singular focus from the new department on energy will deliver better results, without the distraction of other business issues and with the whole department aiming in the same direction.

This may well be true, but a new department – even with a competent and respected Secretary of State – is on its own not going to move the dial on key sector agendas, such as planning reform and changes to the grid to speed up offshore wind deployment or establishing a hydrogen market in the UK. Achieving these requires a more radical and ambitious approach to policy delivery, which ultimately needs the support of the political centre, namely No10 and the Treasury.

As the next General Election gets closer, there’s a clear risk for the sector that the singular narrative focus from government on the Prime Minister’s ‘five key priorities’ pushes aside the detailed policy action required for the UK to stand any chance of achieving its 2035 power decarbonisation target. The industry’s priority has to be to frame its case in terms of helping achieve these goals, specifically on driving economic growth and halving inflation.

Government messaging on energy has been shifting to focus on energy security for the last year, with an even greater focus post the Johnson government. The unveiling of the new department does highlight this shift in government focus very starkly: energy security is specifically mentioned in the name, and prioritised over Net Zero; and the absence of any reference to low carbon power or green growth in the government’s overview of the department, focusing purely on security and affordability.

The industry has made a strong case that low carbon power and energy independence are two sides of the same coin, and there needs to be no choice between them. However, there will be a need to double down on this case, and to shift messaging to emphasise the benefits to security of supply when seeking government support.

Climate advocates within the Conservative Party have long sought to frame the case for action on Net Zero through the lens of green growth and jobs. The location of major projects, be that the renewables sector, hydrogen projects or new nuclear sites are in traditionally economically left behind areas of the country. The Net Zero transition is one of the clearest routes to delivering levelling up.

The combination of energy and business policy within one department made it easier to make this case, and for the government to recognise it. That now may become harder. Tying energy to jobs, skills and growth (particularly in the right, electorally important areas) is still the clearest route to securing government backing, particularly from the Treasury. It will be incumbent on industry to make this compelling argument even more effectively, bringing data and human stories to the fore to show why government needs to quickly push the right policy levers that support industry.

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Financing the future of Net Zero

Earlier this week I was delighted to attend UKSIF’s Autumn Conference, where speakers from across the financial services sector discussed key topics such as the impact of the political environment on the green agenda (spoiler – it’s big); recent changes in the regulatory landscape; and the critical role of biodiversity. Green Party MP for Brighton, Pavilion, Caroline Lucas also took centre stage to provide a no-holds barred view on the “fundamental mismanagement” of the economy and what we need to turn this ship around and hit our Net Zero ambitions. 

The discussions were wide-ranging and incredibly thought-provoking, but my top take-aways around how we are going to reach Net Zero were: 

1. The UK needs a robust regulatory framework 

Regulation, clearly designed for Net Zero and nature, which provides the right signals to finance to invest, will unleash capital where it’s needed most. If people can trust that Government regulations are here to stay, it will incentivise huge investment in sustainability – enabling the UK to re-position itself as a global climate leader and simultaneously help to solve the climate crisis. Essentially, Government support and signalling is our Golden Ticket to a sustainable future (Rishi, please take note). 

2. Biodiversity isn’t just a “nice to have” 

As Caroline Lucas so aptly put it, “nature fundamentally underpins human wellbeing.” If we continue to eradicate biodiversity, all other climate goals will be missed. While the UK has signed up to the 10 Point Plan to bridge the global nature finance gap, we still have some way to go to successfully funnel finance into this crucial area. The good news here is that the data around biodiversity is becoming increasingly accessible and with COP15 (the biodiversity COP) kicking off in less than a month – action is going in the right direction. 

3. Consumer education is critical 

Industry conversations around taxonomies (of which there are 30, globally), ESG transaction flow and ensuring a Just Transition are, of course, essential. However, what we need to remember is how to communicate this to the end investor – the general public. So much of what needs to be done comes down to behaviour change – with investors voting with their feet, asking probing questions of their fund managers and making sustainability part of the growth agenda. Consumer understanding and awareness around what Net Zero really means is low and, as WA’s recent research highlighted, confusion reigns when consumers are asked what they are actually investing in. 

While it’s brilliant to hear the financial industry unite in its desire to hit Net Zero and show that solutions really are at hand, let’s not forget that we need to bring the main audience – the end consumer – along with us. Clear communication and time spent educating the public on what the industry is doing, and why, has a crucial role to play in achieving our sustainability goals and delivering a future to be proud of. 

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