The UK’s Net Zero Review is open. What comes next for business?


Is net zero at risk under the new Conservative leadership? The government’s Net Zero Review launched this month. Ultimately, it will provide answers.

Politically, it’s hard to see net zero top level targets lessening.

More palatable for government might be a softening of pace on net zero, based on an argument surrounding its costs given massive energy bailouts and fluctuations in the value of the pound. Geopolitical flux is another reason to shift emphasis off net zero.

As things stand, some wider signals aren’t good.

The mini budget

Kwarteng’s budget, released around the same time the Net Zero Review kicked off, attracted non-stop coverage. We won’t revoice the obvious here on financial markets and the mini meltdown.

Of deeper interest is the fact only renewables and wind got traction in a mini-budget that promised an estimated £60bn over the next six months to the UK’s energy companies, to protect consumers against higher bills, and rewarded North Sea oil and gas producers with the prospect of 100 new licences.

This Guardian analysis says the latter would do nothing to improve the current energy crisis, and threatens the UK’s net zero greenhouse gas emissions target in years to come. Hardly a positive stance.

A bill of secrecy

Additionally, The Guardian writes that hundreds of Britain’s environmental laws covering water quality, sewage pollution, clean air, habitat protections and the use of pesticides are lined up for removal from UK law under a government bill.

Environmentalists accused Liz Truss’ government of reneging on a commitment made after Brexit to halt the decline of nature by 2030, with the revoking of 570 environmental laws that were rolled over from EU law.

The retained EU law revocation and reform bill was laid before parliament at the end of September. Its purpose is to “revoke certain retained EU law; to make provision relating to the interpretation of retained EU law and to its relationship with other law; to make provision relating to powers to modify retained EU law to enable the restatement, replacement or updating of certain retained EU law; to enable the updating of restatements and replacement provision.”

Laying the bill before parliament, the business secretary, Jacob Rees-Mogg, said: “Retained EU law was never intended to sit on the statute book indefinitely.”

The concern is there simply isn’t time to rewrite, debate, discuss and pass new effective environmental laws before December 2023, when the old EU law expires. Something of a void may appear, supposedly filled with net zero positive new regulation.

The review itself

The Net Zero Review is open here. It promises to deliver maximum economic growth and investment, driving opportunities for private investment, jobs, innovation, exports, and growth right across the UK.

It promises to support UK energy security and affordability for consumers and business and the need to rapidly increase and strengthen UK energy production and supply. It will, say Ministers, minimise costs borne by businesses and consumers, particularly in the short-term.

And it will assess the economic co-benefits associated with different policies and how we can drive down the cost curve for net zero technologies.

Much of this is open to wide interpretation. Strengthening UK energy production, for now, seems to mean opening new fossil fuel fields, a direct contradiction of net zero policy.

Then again Chris Skidmore, the man behind the review, told BusinessGreen’s Net Zero Festival that the review was not a moment to recoil from our climate commitments.

“So I make this pledge to you; there will be no undoing of any of the existing Net Zero Strategy,” he told the audience. “There will be no rowing back on any of the targets that have been set out by government.

“Instead, there is an opportunity to reframe them not as a challenge or a burden to people but to make the positive case for change through creating new incentives to achieve that change.”

That’s a pretty definitive statement and one that isn’t easy to climb down from.

What are they asking?

The review asks what challenges and obstacles have businesses identified to decarbonisation, and what opportunities are there for new/amended measures to stimulate or facilitate the transition to net zero?

It also asks what more could government do to support businesses, consumers and other actors to decarbonise.

The clincher though could be this; where and in what areas of policy focus could net zero be achieved in a more economically efficient manner? How should we balance our priorities to maintaining energy security with our commitments to delivering net zero by 2050?

These questions are framed in a way which suggests answers have already been found. Is balancing energy security and committing to net zero possible? Well, yes it is, but the same question also offers up scope to weaken net zero intentions using energy costs as an excuse. Can net zero be economically efficient? Of course it can, but at what palatable upfront price on diminished coffers?

The endgame

Right now, this is a game of speculation. The government isn’t covered in glory on environment, but our net zero laws remain strong and steadfast.

The man running the review promises no watering down is coming. The questions within it, tacitly at least, open up lines of financial attack on net zero.

What comes next will be fascinating indeed.