Recommendations & Conclusions
11 items
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 …
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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 ahead with new fossil fuel investment opportunities. We have been told that, while the current ratio of investment capital in low carbon energy compared to fossil fuels is 0.9:1, this needs to quadruple to 4:1 by the end of the next decade. While there are examples of financial institutions moving away quickly from fossil fuel investments, the engagement policies enacted by many organisations could be clearer about the extent to which they are still financing companies not aligned with the Paris Agreement.
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Government response AI summary
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 aimed at accelerating the clean …
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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 …
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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 notion of “energy security” should increasingly shift towards renewable energy, which can support greater energy independence and reduce reliance on fossil fuels.
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Government response AI summary
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.
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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 …
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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 models are valuable for de-risking and stimulating investments in emerging technologies that may help the UK achieve its net zero target. We therefore welcome the Government’s continued work with the Green Finance Institute in this area and its timely goal of drawing conclusions in advance of the next spending review.
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Government response AI summary
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.
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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, …
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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, and urge the Government to publish the next round of roadmaps, promised this autumn, without delay. While we received limited calls for an economy-wide net zero investment roadmap, we did not receive enough evidence to arrive at a conclusion on whether this is needed. This makes tracking green financial flows across the economy all the more important.
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Government response AI summary
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 by the end of 2024.
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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.
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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.
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Government response AI summary
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 begin gathering data this year …
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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 …
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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 the lowest penalties for polluting the planet and derailing the Paris Agreement to limit global warming to 1.5°C. A global price for carbon would also help to remove the perverse incentives in individual nations’ carbon pricing schemes such as the UK emissions trading scheme, where high-emitting industries may be inadvertently subsidised to prevent capital flight. We recommend that the Government launch its promised consultation on voluntary carbon markets without delay.
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Government response AI summary
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 explore a new labelling scheme …
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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 …
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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 begin work immediately to develop a UK CBAM. We welcome the Government’s consultation on addressing carbon leakage risk, but are concerned to note the Minister’s view that it is better to encourage other countries to develop their own carbon pricing than to introduce our own CBAM. As we have argued before, the UK should be doing both. The Government must get on with it and plug the leaks that the UK’s emissions trading scheme risks causing, by developing a carbon border adjustment mechanism. (Paragraph 142) The effect of UK government policy on global and local investment
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Government response AI summary
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.
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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 …
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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 its influence to continue, the UK cannot be perceived to be watering down its own net zero policies.
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Government response AI summary
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 £300m HALEU nuclear fuel program, …
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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 …
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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 capacity.
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Government response AI summary
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 by the Funding Simplification Plan.
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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
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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
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Government response AI summary
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.
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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 …
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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 to develop commercially attractive net zero investments. We suggest that the Government conduct a mapping exercise to ensure that local authorities most in need of technical support receive it. (Paragraph 164) 64 The financial sector and the UK’s net ero transition
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Government response AI summary
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, implying a rejection of a …
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