BLOG | Karen Turner, Jamie Speirs, Christian Calvillo | Sep 2023
Very few people in the UK with access to a screen or a newspaper can have missed the recent announcement that the UK government is resetting some key interim target dates on the road while restating commitment to the overarching legislated 2050 net zero climate target. Specifically, the Prime Minister, Rishi Sunak, has reset the timing of two central commitments to 2035: to end the sale of new petrol and diesel vehicles, and to phase out domestic gas boilers. Many, including industrial stakeholders, politicians and experts, have been explicit in calling this policy shift a mistake, while others have been more supportive in terms of ensuring the deliverability and affordability of such central elements of the transition. The main question that we are asking at CEP is one many of us in the university community may ask of our students: just how are you going to use your extension, Mr Sunak?
Of course, the main challenge around yet another shift in policy is the inevitable uncertainty it brings to the investors, businesses and households who need to take action in delivering the net zero transition. This raises the question of whether the right targets were set in the first place. Ambitious targets can help incentivise the investment required and allow the UK – and the devolved nations therein - to secure and retain a position as a global leader on net zero. However, if these targets are not achievable or likely to slip down the line, this is not good in either regard. It also has implications in terms of our ability to seize the wide range of opportunities that can come with being an early mover in transitioning our economy.
Thus, perhaps the key lesson emerging from the range of reactions to Mr Sunak’s announcement is the need to better investigate and agree what we can and should commit to doing, when setting targets on the road to the core 2050 net zero target. It is one that the incoming government, whoever they may be, must be on top of coming out of the 2024 general election, and which all potential candidates must focus on in the period running up to that likely crucial fork in the net zero road.
There was some hint in Mr Sunak’s announcement that the current government may already be thinking about our exam question, not least in the stated aim to focus on affordability for households and businesses, but also in terms of the need to ensure that a greener economy can be a more prosperous one. Here, our own research at CEP shows that investing in the transition could deliver substantial and sustained wider economy benefits, through both obvious winners (e.g., energy efficiency) and newer developments (e.g., carbon capture and storage, CCS, to help decarbonise the UK’s regional industry clusters).
For example, we recently published a policy brief showing how investing in the deployment and uptake of heat pumps as a low carbon residential heat solution could deliver benefits in the form of both transitory and sustained boosts to GDP and supporting employment in many sectors of the economy, and help offset the economic damage associated with currently high energy prices.
However, our findings also point to a challenge in realising these opportunities if the uptake of heat pumps is significantly slowed by a delay in the ban on new gas boilers. The question is whether boosting the grant available under the Boiler Upgrade scheme by 50% (from £5,000 to £7,500) will be enough to maintain or possibly boost the rate of uptake in the wake of the shift in the target date on the ban on new gas boilers.
Here, the wider question is what shifting key target dates does in terms of exacerbating or alleviating key constraints in the economy. Our research focusses on the challenges associated with multiple and often interacting Net Zero activities (e.g., expanding and upgrading the electricity network to support electrification of heat and transport alongside installing low carbon heat solutions and delivering EV charging infrastructure) which must compete for resources and workers with a range of required skills. Here delaying action will concentrate economic activity in a shorter timeframe, (between now and 2050) and exacerbate the cost and price impacts of competition over resources.
Thus, the crucial point is that even if interim target dates are pushed back, action to support the net zero transition must not be. This doesn’t just include decarbonisation actions. One main concern identified by businesses and policy actors alike, and in our own research, is the shortage of skills and workers in developing industries and supply chains to support new net zero activities and to transition existing fossil fuel supply chains. Thus, a key upfront investment, that will ease the costs associated with all others, is to act now to ease those labour supply constraints.
Thus, perhaps now is an opportune time to take stock and identify what we need to understand and do, and when. The university research community isn’t only good at setting ‘exam questions’. We can also help identify and enact the answers. The EV and gas boiler targets that headlined Mr Sunak’s announcement, and the target date pushbacks, are both associated with the demand-side challenge of net zero. Here, the UK Government, through the publicly funded research councils (under the umbrella of UK Research and Innovation, UKRI) have recently invested in the Energy Demand Research Centre (EDRC), where CEP is leading work focussing on affordability and equity challenges.
Thus, our question of ‘how are you going to use your extension, Mr Sunak?’ is set in the context of a plea to ensure that government effectively draws on the expertise and experience of not only the research community but a wide range of policy, industry and civic stakeholder communities who can help not only answer the question but deliver a sustainable plan around which confidence and consensus can build.