Recommendations & Conclusions
32 items
1
Conclusion
First Report - The financial sector and…
Not Addressed
We have heard that vast numbers of fossil fuel assets are at risk of devaluing before they are extracted due to changes in energy consumption and therefore becoming ‘stranded assets’. This is a particular risk in the City of London, as one of the top four financial centres where this …
Government response. The government reiterates its stance on the importance of domestic oil and gas for energy security and describes OPRED's existing role in regulating decommissioning liabilities, without directly addressing the committee's conclusion on the specific risks of stranded assets in the …
2
Recommendation
First Report - The financial sector and…
Acknowledged
We recommend that to mitigate against the risk of stranded assets from North Sea extraction, the North Sea Transition Authority should calculate what the impact to the UK taxpayer and company profitability would be of requiring the cost of decommissioning to be absorbed for new oil and gas licences through …
Government response. The government highlights the importance of domestic oil and gas and existing decommissioning regulations, stating that OPRED reviews the risk of stranded assets. OPRED offers to engage further with the Committee to understand their policy suggestion regarding calculating the impact …
3
Conclusion
First Report - The financial sector and…
Accepted
We have heard during our inquiry that despite the pledges set out and agreed upon by global governments in the Paris Agreement, private banks have financed trillions of US dollars into fossil fuels. New UK fossil fuel Initial Public Offerings are still being approved, and the UK Government is pressing …
Government response. The government reiterates its commitment to net zero and energy security, stating its mission to replace fossil fuels with renewables and nuclear energy. It highlights its strong track record in attracting green investment, citing specific programmes, funding, and action plans …
4
Conclusion
First Report - The financial sector and…
Rejected
We absolutely agree with the Minister for Energy Efficiency and Green Finance that energy security and net zero are two sides of the same coin. However, we are concerned that many believe that the Government is sending mixed signals to the market which in turn affects investment decisions in the …
Government response. The government rejects the premise of sending mixed signals, strongly affirming its commitment to achieving net zero and energy security by replacing fossil fuels with renewables and nuclear. It details significant public and private investments, funding programmes, and action plans …
5
Conclusion
First Report - The financial sector and…
Rejected
We have previously concluded in our report ‘Accelerating the transition from fossil fuels and securing energy supplies’ that there is not a consensus on the speed of transition from fossil fuels as the Government endeavours to reach net zero by 2050. While the scientific consensus is clear that planned production …
Government response. The government rejects the committee's concern regarding the balance of North Sea assets and renewables, asserting that the domestic oil and gas industry remains vital for energy security. It states that new licensing, supported by existing and new legislation, ensures …
6
Recommendation
First Report - The financial sector and…
Accepted
We recommend that the Government publish quarterly reports to show how the UK is moving towards greater energy independence while staying on track to meet its net zero target, including an assessment of the effect of scope three emissions on global efforts to limit global temperature rise to 1.5°C. The …
Government response. The government does not commit to publishing new quarterly reports, stating it already provides extensive detail on net zero and energy security progress through various annual and biennial reporting mechanisms, including updates on climate targets and net carbon accounts.
7
Recommendation
First Report - The financial sector and…
Rejected
We reiterate the recommendation of our earlier report that the Government set a clear date for ending new oil and gas licensing rounds in the North Sea: this date should fall well before 2050. (Paragraph 57) Plans for transition: reporting requirements
Government response. The government rejects setting an end date for new oil and gas licensing rounds, arguing that the domestic industry is vital for energy security and the Offshore Petroleum Licensing Bill will ensure regular annual licensing.
8
Recommendation
First Report - The financial sector and…
Deferred
We welcome the Government’s intention to consult on requiring companies to disclose transition plans. However, the current “comply or explain” basis should be for an interim period only: a company can disclose by simply not having a transition plan, defeating the point of the policy.
Government response. The government is supporting the Transition Plan Taskforce (TPT) and will hold an upcoming consultation to consider the UK's approach to transition plans and the role of the TPT's Disclosure Framework, without committing to ending 'comply or explain'.
9
Recommendation
First Report - The financial sector and…
Deferred
We agree with the Government that the operating environment will become increasingly difficult for those firms that do not set out their plans for contributing to net zero. However, we do not think it is enough to leave the issue of transition planning to the market. The UK led the …
Government response. The government established the Transition Plan Taskforce (TPT) to create a gold standard for private sector climate transition plans and will hold an upcoming consultation to consider the UK’s approach, including the TPT’s Disclosure Framework.
10
Recommendation
First Report - The financial sector and…
Deferred
The Government’s consultation on requiring companies to disclose transition plans should include consideration of making it compulsory to have and to disclose a transition plan—not just if a company happens to have one—and the most suitable timetable for doing so. Beyond this consultation, mandatory reporting of transition plans should remain …
Government response. The government details existing work by the Transition Plan Taskforce and the FCA on transition plan disclosures. They state an upcoming consultation will consider the UK’s approach to transition plans, including the TPT Disclosure Framework and endorsement of ISSB standards, …
11
Recommendation
First Report - The financial sector and…
Deferred
We welcome the publication of the Transition Plan Taskforce’s disclosure framework for transition plans, and the steps taken to achieve international alignment of that framework. We believe that those who publish transition plans should follow a compulsory framework, to ensure comparability and to mitigate the risk of greenwashing. While investors …
Government response. The government established the Transition Plan Taskforce (TPT) and will hold an upcoming consultation to consider the UK’s approach to transition plans and the role of the TPT’s Disclosure Framework, without committing to introducing regulations for compliance.
12
Recommendation
First Report - The financial sector and…
Deferred
A plan is only effective if it delivers its contents. The Government should set out simple, consistent regulatory expectations for net zero transition plans and establish an independent mechanism for monitoring and evaluating and verifying organisations’ net zero transition plans, to ensure that they are aligned with Paris Agreement compliant …
Government response. The government established the Transition Plan Taskforce (TPT) and will hold an upcoming consultation to consider the UK’s approach to transition plans and the role of the TPT’s Disclosure Framework, without committing to specific regulatory expectations or an independent monitoring …
13
Conclusion
First Report - The financial sector and…
Acknowledged
We welcome the Government’s commitment to just transition principles in its Green Finance Strategy and the inclusion of specific workstreams in the creation of the transition plan disclosure framework and implementation guidance. While the Transition Plan Taskforce acknowledges the inclusion of just transition principles within its working group and includes …
Government response. The government acknowledges the concern, stating the Transition Plan Taskforce (TPT) has launched working groups, including one on just transition, to advise on appropriate integration of these topics into its outputs.
14
Recommendation
First Report - The financial sector and…
Not Addressed
We recommend that the Government publish further guidance to stakeholders to advise explicitly how just transition principles should be considered within the transition plan framework, to ensure that companies are able to provide better outcomes for all people, including workers and their communities.
Government response. The government notes the Transition Plan Taskforce (TPT) has a Just Transition Working Group to advise on integrating these principles into TPT outputs but does not commit to publishing its own further guidance for stakeholders as recommended.
15
Recommendation
First Report - The financial sector and…
Not Addressed
We welcome the references to nature in the Transition Plan Taskforce’s framework; however, we consider that the framework could go further on nature. We recommend that the Government should take steps to incorporate into the framework the contribution by a company towards halting and reversing nature loss within the overall …
Government response. The government states the Transition Plan Taskforce (TPT) has launched a Nature Working Group to advise on appropriate integration of nature-related topics into TPT outputs, but does not commit to taking specific steps to incorporate nature loss into the transition …
16
Conclusion
First Report - The financial sector and…
Acknowledged
We welcome the Government’s intentions for Sustainability Disclosure Requirements (SDR). As part of that framework, we welcome the Government’s intention to incorporate International Sustainability Standards Board (ISSB) standards and make them mandatory, its consultation on reporting scope 3 greenhouse gas emissions, and its intention to adopt the Taskforce on Nature-related …
Government response. The government reaffirms its commitment to implementing Sustainability Disclosure Requirements (SDR) and highlights its support for the Taskforce on Nature-related Financial Disclosures (TNFD), stating it will consider how best to incorporate TNFD recommendations into UK policy.
17
Recommendation
First Report - The financial sector and…
Deferred
To maintain the UK’s global leadership in green finance reporting, the Government must keep up the momentum. We recommend that Ministers set out an overarching implementation timetable for the SDR, including for TNFD reporting, and commit to making TNFD reporting mandatory, continuing the trail the UK blazed for TCFD. The …
Government response. The government reiterates its commitment to Sustainability Disclosure Requirements (SDR) and confirms it will consider how best to incorporate the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations into UK policy, deferring a commitment to a specific timetable or mandatory TNFD …
18
Conclusion
First Report - The financial sector and…
Acknowledged
While we welcome the Government’s intention to introduce a UK green taxonomy, we are concerned to note the delays to its introduction. As with transition plan frameworks and disclosures, we support the principle of a mandatory taxonomy to ensure comparability. (Paragraph 111) The financial sector and the UK’s net ero …
Government response. The government acknowledges the committee's concerns about delays and confirms it is working at pace to publish a consultation on the Green Taxonomy shortly. It plans a testing period of voluntary disclosures for at least two reporting years before considering …
19
Recommendation
First Report - The financial sector and…
Deferred
We recommend that the Government seek to introduce the UK green taxonomy as soon as possible. That taxonomy should include a spectrum of definitions—‘fifty shades of green’, as one of our witnesses put it. During the period of voluntary reporting against the green taxonomy, the Government should monitor and report …
Government response. The government commits to publishing a consultation on the UK Green Taxonomy shortly and will implement a voluntary disclosure period for at least two reporting years before considering mandatory obligations. It does not explicitly address the recommendation for a "spectrum …
20
Recommendation
First Report - The financial sector and…
Deferred
It is unfortunate that, due to the delays to the introduction of the green taxonomy, the remit of the Green Technical Advisory Group expired before the testing period of voluntary disclosures could begin. We urge Ministers to heed the group’s calls for a long-term institutional home for the UK green …
Government response. The government acknowledges the Green Taxonomy Advisory Group's advice and states it will consider what external advice is required going forward, following a forthcoming consultation. It does not commit to establishing a long-term institutional home for the UK green taxonomy …
21
Conclusion
First Report - The financial sector and…
Accepted
We welcome the Government’s progress in developing blended finance models for net zero projects, in particular the work of the UK Infrastructure Bank (UKIB) which, according to the evidence given to us by the Minister, has created around £4 of private capital for every £1 of public funding invested. Such …
Government response. The government highlights the recently announced Net Zero Blended Finance Project (November 2023), which aims to improve government capacity and explore innovative blended finance approaches to mobilise private sector investment for net zero technologies, working with the UK Infrastructure Bank.
22
Recommendation
First Report - The financial sector and…
Deferred
The Government must keep to its ambition of setting out its future plans for net zero blended finance solutions by the next spending review, and should include nature recovery projects within this suite of solutions. The Government should set out in one document all its different blended finance models, cross-checking …
Government response. The government announced the Net Zero Blended Finance Project in November 2023, which aims to improve its capacity to explore innovative blended finance approaches and mobilise private investment for net zero technologies. However, the response does not explicitly commit to …
23
Recommendation
First Report - The financial sector and…
Accepted
We welcome the many net zero sector roadmaps that the Government has published and plans to publish, which should provide investors with the detail they require to help their investments align with the Government’s net zero target. We particularly welcome the fact that nature is included among these investment roadmaps, …
Government response. The government confirms the publication of several net zero investment roadmaps, including civil nuclear in January 2024 and the Advanced Manufacturing Plan in November, and commits to publishing a hydrogen investor roadmap update in February 2024 and a nature roadmap …
24
Conclusion
First Report - The financial sector and…
Accepted
Understanding levels of investment across the economy is vital for knowing whether the UK is on track to meet its climate and nature targets. That is why we welcome the work underway by the Government to explore methodologies for tracking both net zero-related financial flows and nature-related financial flows.
Government response. The government recognises the importance of tracking investment flows and details ongoing efforts, including the concluded scoping phase of the UK Landscape of Climate Finance (LCF) research and research into tracking private finance for nature's recovery. It states it will …
25
Recommendation
First Report - The financial sector and…
Deferred
We recommend that the Government go further and turn this research into a formal tracking mechanism by a date no later than the end of the current Parliament. The Government should task either an existing independent body, or create a new 62 The financial sector and the UK’s net ero …
Government response. The government acknowledges the need for tracking investment flows and states that the scoping phase for a UK Landscape of Climate Finance (LCF) model has concluded. It is now considering next steps, including the potential role of an independent body, …
26
Recommendation
First Report - The financial sector and…
Accepted
We applaud the UK Government and civil society for leading the way in building a global voluntary carbon market. We appreciate the difficulty of achieving a global price for carbon, but it is ultimately needed to prevent a race to the bottom where industries flock to headquarter in jurisdictions with …
Government response. The government accepts the recommendation and states its intention to publish a consultation on voluntary carbon markets in early 2024. This consultation will seek views on government and regulatory interventions to enable market growth, endorse IC-VCM and VCMI outputs, and …
27
Recommendation
First Report - The financial sector and…
Accepted
Having been a long-standing leader in climate finance, the UK now risks falling behind by failing to install mechanisms to mitigate carbon leakage. The EU has already launched its carbon border adjustment mechanism (CBAM). It is now over a year and a half since we called on the Government to …
Government response. The government accepts the recommendation, stating it will implement a carbon border adjustment mechanism (CBAM) by 2027 to mitigate carbon leakage. A further consultation on the delivery of the CBAM will be conducted in 2024.
28
Recommendation
First Report - The financial sector and…
Accepted
The UK Government should be proud of its world-leading track record in supporting green finance initiatives. At the same time, it must neither be complacent nor lose momentum. The UK must continue to use its leadership position to bring other countries on board and create policy alignment across jurisdictions. For …
Government response. The government reiterates its commitment to net zero, highlighting its strong track record with significant investment in low-carbon energy sectors and a halving of emissions. They detail current actions like the Green Finance Strategy, £960m Green Industries Growth Accelerator, a …
29
Conclusion
First Report - The financial sector and…
Accepted
Local authorities have a significant role to play in green finance, from delivering grants at the household level, to collaborating with financial institutions on local net zero projects, and crowding in private capital for large scale projects. However, they are hindered by a fragmented funding landscape and limits on technical …
Government response. The government agrees on the importance of local authorities and outlines several initiatives to support them, including a £19m Local Net Zero Accelerator, Local Net Zero Hubs, UK Infrastructure Bank lending, and a commitment to simplify and consolidate funding, backed …
30
Recommendation
First Report - The financial sector and…
Accepted
We welcome the 50% increase permitted for individual grants under the Boiler Upgrade Scheme, and we would wish to see the overall envelope of funding increased subject to sufficient uptake. (Paragraph 162) The financial sector and the UK’s net ero transition 63
Government response. The government confirms the increase in Boiler Upgrade Scheme grants to £7,500 and announces an additional £1.5 billion in funding for the scheme's extension from 2025-2028, directly addressing the call for an increased funding envelope.
31
Recommendation
First Report - The financial sector and…
Accepted in Part
We welcome the work that the Government has done so far to provide a “one stop shop” of information on net zero grants to which local authorities can submit competitive bids. The Government appears to have streamlined the number of competitions for English local authorities somewhat, apparently taking the total …
Government response. The government acknowledges the role of local authorities and is providing £19m for a Local Net Zero Accelerator programme with pilots in three areas, alongside existing programmes. It is exploring how to simplify and consolidate local net zero funds and …
32
Recommendation
First Report - The financial sector and…
Accepted
We welcome the ongoing work to provide technical support and advice to local authorities, including through the Local Net Zero Hubs, UKIB, Net Zero Go, and the Local Net Zero Forum. We also welcome the Government’s intention to work with the Green Finance Institute to provide assistance to local authorities …
Government response. The government acknowledges variable capacity among local authorities but states existing support already considers technical assistance needs and Local Net Zero Hubs apportion resources based on regional priorities. They assert local authorities are best placed to assess their own needs, …