Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Although the Strategy relies on private investment, government does not have a good track record...
Conclusion
Although the Strategy relies on private investment, government does not have a good track record of providing investor confidence in climate policy.18 For example, government set out plans for zero carbon homes in 2006, but cancelled these in 2015.19 Even today, on the back of Net Zero and COP 26 commitments, the UK continues to build over 200,000 new homes per year, the overwhelming majority use fossil fuel heating systems and traditional building methods with insufficient insulation. This is incoherent. The previous Committee reported in 2017 that the decision to cancel support for the construction of the UK’s first large-scale carbon capture and storage project had a negative impact on investor confidence, and this decision was at the time the latest in a series of decisions on energy 8 Department for Transport, Decarbonising Transport: A Better, Greener Britain, July 2021; Department for Business, Energy & Industrial Strategy, Industrial Decarbonisation Strategy, March 2021 9 Net Zero Strategy, Chapter 2, page 77, Figure 13; Committee on Climate Change, Sixth Carbon Budget: The UK’s path to Net Zero, December 2020 10 Net Zero Strategy, chapter 2, pages 70–73 11 Net Zero Strategy, chapter 1, page 42, paras 8–9; page 43, para 12; page 44, paras 17–18 12 Net Zero Strategy, chapter 1, page 43, para 15; page 49, paras 19, 22; chapter 3, page 143 13 Net Zero Strategy, chapter 4, page 254, para 30 14 Net Zero Strategy, page 49 para 19 15 Net Zero Strategy, page 49 para 22 16 Q 24; Net Zero Strategy, page 145 para 24 17 Q 27 18 Qq 99–101; Net Zero Strategy, page 49 para 19 19 Q 25, 100; House of Commons Library, Zero Carbon Homes, Number 6678, 27 April 2016 Achieving Net Zero: Follow up 11 policies that had potentially impacted investor confidence.20 Most recently, we reported that the Green Homes Grant Voucher Scheme damaged investor confidence by being cancelled at short notice and when it was only partially complete: government announced this Scheme in July 2020 and
Government Response
Not Addressed
HM Government
Not Addressed
3.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 3.2 The department welcomes the recommendation to develop our monitoring levels of private investment associated with technology maturity being attracted into Net Zero sectors, taking appropriate and proportionate action to address failures. This includes interventions to provide certainty to investors through the net zero sector roadmaps that sets out the United 31 Kingdom’s policy position and attractiveness of the United Kingdom’s business environment, as announced by the Prime Minister. In March and April 2022 government published Automotive , CCUS and Hydrogen Investor Roadmaps as part of a sequence of roadmaps over the course of the year. 3.3 The department estimates that additional capital investment must grow from present levels to an average of £50-60 billion per year through the late 2020s and 2030s. Most of this investment will come from the private sector, meaning it is crucial government builds investor confidence into net zero technologies and infrastructure. 3.4 The policies and spending brought forward in the Net Zero Strategy mean that since the Ten Point Plan, the government has mobilised £26 billion of government capital investment for the green industrial revolution. Through the Ten Point Plan, Net Zero Strategy and the British Energy Security Strategy the government has set out a strong framework for investment with a clear signal to investors in our commitment to net zero by 2050. These strategies will drive an unprecedented £100 billion of private sector investment by 2030 into new British industries including offshore wind and support around 480,000 clean jobs by the end of the decade. Already Bloomberg New Energy Finance (BNEF) estimate around £22.5 billion of new investment was committed in the United Kingdom in 2021 across low carbon sectors (including renewables, hydrogen, carbon capture and storage, nuclear, sustainable materials, energy storage and electrified transport and heat). The 2021 Global Investment Summit saw 18 deals worth £9.7 billion supporting green growth announced, with 2022 seeing a range of investments announced across electric vehicle manufacturing and gigafactories. More recently, the Prime Minister hosted UK-Australia investment roundtable led to investment of £28.5 billion by top Australian investors for clean energy, technology and infrastructure projects across the United Kingdom. 3.5 The government continues to make steps to mobilise private investment, including establishing a new Office for Investment and UK Infrastructure Bank.