The Climate Change Committee (CCC) have published the world's first blueprint for a fully decarbonised nation.
As the UK comes to the end of the Brexit Transition Period and prepares to host the UN summit in Glasgow, it is vital we continue to be seen as a leading financial market. This past year has seen Japan, China, South Korea join the Net Zero mission, as well as the USA's intention to reaffirm its pledge. As these leading markets of the world develop low-carbon technologies and strategies, it will be essential that the UK mutually advances in these sectors.
The CCC report highlights that the UK needs to secure a competitive position in the global markets for low-carbon goods and services. It is estimated the net costs of meeting the Net Zero carbon budget by 2050 are the equivalent of less than 1% GDP – a much cheaper estimate than previously thought. Legislating the budget recommended by the CCC analysis will send a clear signal that the UK is open for low-carbon investment. This will actively encourage private investment at low costs, assisting the UK economy to recover post COVID-19.
Boris Johnson, the Bank of England, the Financial Conduct Authority and the Chancellor of the Exchequer have already made clear the UK will build back post COVID-19 with a huge 'green' focus. We also see a vast investor-driven push towards sustainability that will require close collaboration between regulators and the financial services industry. High carbon sectors will shrink as investment in greener alternatives expand. The CCC have stated that low-carbon investment must scale up to £50 billion each year to meet the budget. This investment will generate substantial fuel savings as fossil fuels are replaced with cleaner, more efficient technologies. Over 30 years, these savings will cancel out the investment costs in their entirety. The new insight has found, for example, it will be cheaper to transition to electric cars and vans rather than continuing with petrol and diesel vehicles. If the Government accepts the CCC analysis, a major nationwide investment programme will be required to hit the recommended budget. It will need to be largely funded and delivered by private companies and individuals through all new investments being in zero-carbon solutions.
The CCC hope to see sales of most high-carbon goods phased out altogether by the early 2030's. This will open up the playing field for an array of renewable energy alternatives to enter the market on a larger scale than ever before. Barriers to entry will be lowered to create new industrial opportunities for these sectors. We are seeing rapid improvements in the cost and productivity of low-carbon technologies, such as renewable energy and electric car batteries. This transition from manufacturing jobs to areas such as hydrogen, carbon capture and storage and wind energy is only going to rapidly speed up.
We are equipped at Howard Kennedy to advise on all areas of clean energy projects and can help navigate the changing policy landscape from a commercial and financial perspective.
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