Last Friday saw the publication of the long-awaited Independent Review of Net Zero, titled “Mission Zero: Independent review of net zero.” Originally commissioned by Liz Truss near the beginning of her short-lived premiership, the aim of the 340-page review is to try and establish how to direct the government’s climate change aim of net zero into generating economic growth.
Led by former energy minister Chris Skidmore MP, the final recommendations within the review (of which there are 129 in total) seek to develop, rather than overhaul, the Government’s existing net zero policy. For example, Mission Zero does not advocate for an end to North Sea oil and gas extraction but focuses on a series of proposals aimed at improving investment into net zero, by creating a stable and attractive space for international investors as well as encouraging local economic growth. It also makes several project ideas aimed at delivering onshore solar and wind power; Carbon Capture and Storage; Hydrogen and net zero-aligned R&D.
Energy Efficiency
A notable break from current policy is the emphasis placed on energy efficiency, with a raft of measures aimed at improving the energy performance of domestic and non-domestic buildings. This is an area the Government is steadily more interested in, as noted in the most recent autumn statement, when they announced increased energy efficiency investments and the establishment of an energy efficient taskforce.
In addition to policy recommendations, the review advocates several measures aimed at more effectively directing decision making towards net zero. This includes setting up Lords and Commons net zero select committees and establishing an office for net zero delivery; as well as proposals for creating a statutory duty for local authorities to take account of net zero.
What does this mean for Business?
Mission Zero rightly emphasises that the net zero target is a major pro-business and pro-investment opportunity for the UK and that immediate action needs to be taken to prevent the country and its business on missing out on significant economic opportunities.
On a global level the recommendations contained within the net zero review are intended to create a stable and attractive space for international investors, which have been described as ‘right on the money'. On a national level Mission Zero places emphasise on the fact that the transition to a low-carbon economy is “the industrial revolution of our time” with opportunities for companies which need more government certainty.
State of the economic and social environment
The UK currently faces a challenging economic and social environment with the review stating that currently, businesses are losing out on economic opportunities because of weaknesses in the UK’s investment environment. Multiple factors could be to blame such as skills shortages, inconsistent policy commitments or a lack of coherence across Government in implementation. The recent ‘U-turns’ in onshore wind planning are a prime example of the government creating an uncertain business environment, with investors and businesses holding out until on moving forward until they are confident that they will be operating in a stable policy environment.
As Mission Zero highlights, a rapid shift towards net zero can only be achieved through building a resource efficient economy across key areas such as carbon capture usage and storage. This presents the nation with a unique opportunity to capitalise on export opportunities as UK plc spearheads the transition to net-zero. In addition to this, the review emphasises the need for tackling the elements of economic growth that will affect the success of all sectors of the economy. This will be achieved by creating an open investment environment, delivering projects via a highly skilled workforce, using reliable and well-connected infrastructure and empowering participation throughout supply chains and small businesses.
Support for SME’s
An important dimension of the report’s proposals for business, is the need for support to offered to businesses of all size, with a view that SMEs be supported through a UK Business Climate Hub, a “Help to grow green” campaign, SME role model programmes and a task force focused on cutting energy use in rented premises. This, coupled with rising energy prices this will make an attractive business environment for green focused SME’s.
Of significant interest to the business world are recommendations for an increase in the reporting and monitoring of carbon emissions. For example, it calls 50% of all the UK food and drink businesses to report their scope three emissions with acute monitoring of carbon made available across a broad range of ecosystems, by 2025.
While environmental campaigners will welcome such a progressive change, it remains to be seen how it will be received on a micro level. For smaller businesses, who are already battling rising energy costs, inflation and supply chain issues, the cost of this intervention may be a step to far.
Next Steps
While the review is not a statement of government policy, rather a set of recommendations that aims to guide government on how best to accelerate the transition to net zero in a way that is fiscally responsible and pro-growth, it’s significance cannot be underestimated. Despite being colloquially known as the “Skidmore Review” the review itself is based on over 1800 written submissions, over 50 evidence roundtables and conversations with over a thousand participants in engagement sessions, making it unique from the usual scope of a parliamentary report.
Time will tell how much influence it holds in terms of the government’s approach to net zero, and crucially how it will be received by Labour, whose manifesto team will likely be working hard to establish how and if the review can be compatible with the parties existing environmental policy. For now, it appears that the recommendations within the review have been received largely positively by industry, with commentators calling it ‘rigorous, robust, and inclusive.’
With a noticeable lack of criticism coming out of opposition parties, it could be argued that the review has found cross party consensus. During the process, Skidmore made effort to bring Labour into the conversation acknowledging their increasing role in the future of the debate and means that their response will be just as important as the government’s. Skidmore’s retirement from politics and increased impartiality also lends more weight to his recommendations. For some though, it does not go far enough and there is bubbling criticism that it fails to introduce any new hard hitting policy recommendations.
The Government is due to publish an updated net zero policy by March this year, and that will likely be the earliest indications of how well the review has been received across Whitehall. Looking ahead to spring, the budget will be an important milestone, setting out government's intentions for the next period. Furthermore, future amendments to the Energy Security Bill are also ones to watch.
by Harvey Tebay, Associate, Dentons Global Advisors