The U.K. Chancellor of the Exchequer, Rishi Sunak, delivered the annual Budget to a country wracked by the economic harms of Covid-19 coupled with uncertainty over Brexit. In recent months, the government has repeatedly claimed it is committed to “building back better,” investing in a low-carbon transition in order to stimulate the economy while steering the country towards net-zero carbon emissions to mitigate an even larger existential crisis: climate change.
For that reason, many climate researchers, campaigners and low-carbon industry leaders were looking to Sunak’s announcement today for specific measures geared towards just such a transition.
So how did the 2021 budget go down with climate experts?
Net Zero Hero?
In terms of its overall green credibility, experts found Sunak’s Budget a mixed bag. Ajay Gambhir, senior research fellow at the Grantham Institute—Climate Change and the Environment, Imperial College London, was not impressed by the announcement, finding little to connect the budgetary measures to the U.K.’s legally-binding net zero emissions target. “The Budget was poor on specific green measures and felt almost like there was no net zero target or declared climate emergency in the U.K.,” he said. “This didn’t feel like a Budget that was fit-for-purpose in driving acceleration towards net-zero in any way.”
In comments to Forbes.com, Laurence Wainwright, departmental lecturer and a course director at the University of Oxford’s Smith School of Enterprise and the Environment, welcomed some of the chancellor’s measures, including £12 billion ($16.7 billion) for a new National Infrastructure Bank and a new Net Zero Innovation Fund of £1 billion ($1.4 billion). But, he said, “one has to ask whether Mr Sunak has gone far enough. The track record of the Conservative Party on matters of environment is not strong. As such, perhaps today’s package could be framed as a pre-emptive defence strategy so as to ensure the legitimacy and ‘social license to operate’ of the government going forward.” Ministers had, Wainwright said, identified that failing to act on climate change could harm the government’s credibility, and suggested “today’s announcements are in part an attempt to signal to environmentally conscious voters—and nations closely watching the U.K. in the leadup to hosting COP26 this year—that the U.K. is moving in the right direction.”
James MacGregor, senior environmental economist at environmental consultancy Ramboll, wondered what had become of the government’s pledge last year to effect a “green recovery” from the pandemic. “Today’s Budget feels light on the promised content to augment a sustainable recovery for the U.K. post-pandemic, particularly given the U.K.’s presidency of the COP26 later this year,” MacGregor said. “Overall the concern is that the U.K. will end up with a ‘green blush’ of embarrassment on the world stage as sustainability targets are missed, including net-zero targets, in the run-up to COP26.”
On the other hand, said John Rhys, visiting senior research fellow at the Environmental Change Institute, University of Oxford, “the Budget is not really the ideal vehicle for major energy policy initiatives, so not too much needs to be read into this.” Rhys told Forbes.com that some specific schemes, such as a hydrogen hub in North Wales and targeted support for offshore wind should all be welcomed, “but none of them individually look like major game changers.”
“At the most general level, I would have liked to see much more recognition of the impact that climate related policies are likely to have on public spending imperatives in the future,” Rhys said. “If climate change is a war [an analogy Sunak himself used], then the pandemic has just been a moderate-sized skirmish. A general warning to the public might have been timely.”
In a statement characteristic of the overall response from the environmental charity and campaigning sector, Friends of the Earth’s head of policy Mike Childs said: “The chancellor’s Budget is a drop in the ocean of what’s required to confront the climate emergency.” Childs pointed in particular to a lack of measures to promote green transport, with the chancellor’s announced freeze on vehicle fuel duties. “No wonder passenger cars’ contribution to the climate crisis has barely fallen in the past decade, he said. “The sale of gas-guzzling SUVs are a particular concern, as they have helped drive a rise in average emissions from new cars in the last five years. Rishi Sunak should be doing more to discourage the purchase of these polluting vehicles—such as slapping a significant increase in road tax on them.”
“It’s time for a green transport revolution, with cleaner cars and better alternatives to driving such as efficient and affordable public transport and safer cycling facilities,” Childs said.
Building Back, Or Building Backwards?
Experts found that there was little in the Budget to support the decarbonization of homes and the U.K.’s built environment—existing infrastructure that accounts for up to 40% of emissions. There was particular criticism levelled at the Green Homes Grant, an initiative intended to fund energy efficiency renovations but which has caused confusion among both the construction industry and homeowners, and which the government has since said will be slashed by as much as £1.5 of the £2 billion that had been earmarked for the scheme.
“This Budget uses the term build back better but, despite using the term green in various places, it really feels focused on building back,” said Alyssa Gilbert, director of policy and translation at the Grantham Institute—Climate Change and the Environment, Imperial College London. “The investment and jobs focus of this Budget is vital, but if the government is really serious about achieving a net-zero resilient future, these investments should all be explicitly aligned with our climate emergency goals.” Gilbert suggested one way to achieve this would be for the government to bolster the housing market by stipulating green retrofitting and efficiency requirements for homes.
New homes in the U.K. will need to produce 31% less carbon from 2021—but many experts believe this … [+]
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“What should have been the firing of the starting gun on a decade of decarbonisation was more of a false start in the race to net zero,” said Luke Murphy, head of the Environmental Justice Commission for IPPR, a policy think tank. “Despite the rhetoric, one of the biggest green decisions taken today was the decision not to roll over nearly £1.5 billion of funding for the government’s flagship Green Homes Grant which was announced just last year by the Prime Minister,” he added. “The government has blamed a lack of demand, but with 26 million homes that need upgrading across the U.K., it’s clear there isn’t a shortage of need … As the host of COP26, the government needs to do better if it wants to claim the mantle of a global climate leader.”
“With the U.K. hosting the UN climate change summit in November, it’s essential that we get our own house in order,” said Neil Jennings, partnership development manager at The Grantham Institute for Climate Change, Imperial College London. The failure to boost the Green Homes Grant was “leaving homeowners and building contractors with no clarity on the future of a scheme that could play a key role in kickstarting the retrofit of homes across the U.K.”
Meanwhile, Rebecca Newsom, head of politics for Greenpeace U.K., said: “For all the talk of a green recovery, this Budget suggests the chancellor has failed to clock the urgency of the climate emergency.” Newsom said the government’s handling of the Green Homes Grant was “shambolic,” and that such schemes were “leaving the U.K. with weakened authority on the world stage ahead of November’s climate conference. Successive Budgets that approach the climate and nature emergency in a half-hearted manner have left us running out of time and credibility.”
All About The Green
When it came to green finance, a number of academics and industry insiders welcomed the chancellor’s announcement of £15 billion ($20.9 billion) in green bonds, along with the setting up of the U.K.’s first National Infrastructure Bank, to be headquartered in the northern English city of Leeds. But overall, they said, more detail and more specific measures were needed in order to show that the measures would have a real-world impact on promoting low-carbon growth.
“While the focus of this Budget is on supporting the return to growth in the short term, the measures announced today do not go far enough,” said Colin Elkins, vice president of manufacturing industries at enterprise software firm IFS. “The new ‘green investment bonds’ announced today lack sufficient clarity and the government should be doing much more to encourage the private sector, as well as retail customers, to invest in cleaner and greener ways of living and working. The chancellor should be thinking about how to incentivize that transition for existing businesses and encourage new market entrants to plan for a more circular resources model,” he said.
Sanjay Neogi, head of U.K. and Europe for business consultants Enzen Group, said the establishment of a National Infrastructure Bank indicated “a real desire to stimulate an investment-led recovery.” Nevertheless, Neogi added, “the scale of the infrastructure projects in question should not be underestimated. Whether it’s to accelerate the adoption of electric vehicles or to bring more clean energy sources onto the grid, the amplification requirements for infrastructure are vast. Communities and stakeholders must align on these projects in order to keep sustainability at the centre.”
Alyssa Gilbert at Imperial College London said: “The government knows that it needs to make investments to meet the U.K.’s legally-binding targets to reduce greenhouse gas emissions … The £15 billion of green gilts and the green savings bonds are important pieces of this puzzle—and an attempt for the U.K.’s finance sector to also play a role in the green finance world.” Gilbert said such bonds could help to facilitate private sector investment to complement public funds, but added: “The detail of what qualifies as green or climate action for these initiatives will define whether or not they deliver the rapid scaling up of investment and implementation of net-zero and a greener future that the U.K. is legally committed to.”