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Prime Minister: Want a Net Zero that is proportionate & pragmatic? Double down, go further, faster.

Dan McGrail, CEO, RenewableUK

The weekend before last I went to a festival in Warwickshire called Also Festival, where I listened to Professor Sander van der Linden, a professor of Social Psychology in Society at Cambridge University, talk about his research into misinformation and in particular how we are often posed false dilemmas as a means to influence our judgements. There are many false choices in our cultural references. The one he reminded us of was from Star Wars where Anaken tells Obi-Wan, “You’re either with me, or you’re my enemy”. This is, of course, absurd. The notion that you can’t disagree with someone or you’re their sworn enemy is ridiculous. But in essence this is the archetypal false dilemma: the idea that you have only two choices, which are polar opposites.

Yet this type of false dichotomy is becoming all too commonplace. We often see the media or commentators asking the reader to conclude that a strike in the NHS would be a choice between “saving lives or saving jobs”. Brexit was painted at times as a choice between “sovereignty or control from unelected officials”. These are all false dilemmas and the choices are usually way more nuanced and complicated.

I’m sure it won’t be long before the political reaction to the result of the Uxbridge and South Ruislip by-election last week makes it into the lecture slides of psychologists across the country. Somehow a local reaction to a public health policy has become conflated into a national referendum on all Net Zero policies.

Although we’ve yet to see any significant changes in policy, there’s briefing coming from both Labour and the Conservatives that suggests that both are reviewing their party’s stance on decarbonisation. Rishi Sunak said that “We’re going to make progress towards net zero but we’re going to do that in a proportionate and pragmatic a way that doesn’t unnecessarily give people more hassle and more costs in their lives – that’s not what I’m interested in and prepared to do”.

The implication is that net zero is hassle and more cost in people’s lives and that abandoning it or going slower is the proportionate and pragmatic solution. This is a false dilemma. The choice is not between net zero or no net zero, but about how to implement a transition which is fair and underpinned by policies which support people during it and ensure they capture all of the benefits.

How we do that is clear as day to anyone who cares to look. Last week, backed by a mix of government subsidies and proactive Ministerial engagement, Jaguar Land Rover selected the UK for their giga-factory. This is big win for Government, at a time when good news stories have been harder to find. Onshoring battery production has been the goal of many western governments for some time, and attracting this important investment is an anchor for the future of automotive manufacturing in the UK. This is a triumph born from commitment to the net zero transition and proactive industrial strategy backed by targeted fiscal measures, and that should be the lesson we take forward in developing the UK’s response to the Inflation Reduction Act in the Autumn Budget.

What’s more, it is green industries which are providing the new tax revenues which can given the Chancellor the fiscal room to put in place tax adjustments and incentives which will make the UK a more competitive place for green manufacturing. Just last week Treasury announced it is changing the funding formula for the Monarchy due to record profits in The Crown Estate, driven by huge lease fees being paid by developers for the right to develop wind farms in UK waters. The Treasury is now keeping 87.5% of the Crown Estate’s profits, rather than 75% - which should, in total, give the Chancellor around £1bn of tax revenue this year. £1bn made in renting the seabed to offshore wind farms alone. Before you consider the sectors contribution in business rates, National Insurance, and other taxes.

The distraction of the ULEZ has also taken our attention away from much more significant developments in net zero. The big news in renewable energy last week, on Thursday, was the delay to Vattenfall’s 1,400MW Boreas project, which the company has been forced to pause due to rising costs in the supply chain and interest rates, as well as receiving a historically low price for the electricity, driven in large part by the government’s mindset to use auctions to drive down costs. Ironically prices of renewable electricity have been driven so low by government policy, that we are now having to delay it, and consumers will be left to pick up the tab for expensive fossil fuels for longer.

The irony is that these topics are all linked and there do not need to be false choices, and everyone can win. For example:

  • The fastest way to reduce the price of electricity is to build out renewables and take advantage of all the projects out there which are ready to go ahead. There are about 13GW ready to be built, which would reduce the UK’s electricity bill by billions of pounds.

  • The price of renewables probably needs to go up from the levels set before the Ukraine war, but it will still be an order of magnitude lower than fossils fuels or nuclear and reduce bills, making EVs and further electrification of the economy a more attractive choice.

  • The government could use some of the huge £1 billion per annum windfall from wind farm leases to introduce policies to unlock development of the offshore wind manufacturing industry – the same type of industrial intervention which landed JLR’s giga-factory. Or alternatively, if we want to make the wider transition easier, why not ease the higher upfront costs of EVs, either using capital grants or interest free loans.

  • A bigger renewables industry in the UK would grow supply chain and create more jobs in another industry for the future.

This may be an oversimplification, but it is right to call out the lack of logic in some of policy decisions. The news of Vattenfall’s decision is a huge disappointment for everyone in the industry. But it is not unexpected. The sector has been warning of this risk for years. Too often we hear ministers say, “we are the world leader in offshore wind”, but this has led to a complacency and an assumption that these mega infrastructure projects will just happen, whilst hundreds of millions of taxpayer funding is dedicated to other parts of the energy sector which, whilst necessary, will not deliver results for consumers for years, if not decades.

Just a month ago, we gathered parliamentarians together for UK Wind Energy Week. Four years on from Net Zero being enacted into law, we welcomed Chris Skidmore and Ed Miliband to comment on the progress towards that target, and both talked of the importance of political consensus. This week’s media commentary reinforces that need to hold steadfast in face of challenge, and not waiver for political gain. When it comes to deciphering what to do next to make sure there are no repeats of the Vattenfall delay, Ministers must act, whichever political party they belong to, to ensure that the world leading conditions are restored for offshore wind, and the UK is once again heralded as a premier destination for renewables investment. This will deliver for consumers, communities, industry and create over 100,000 jobs by 2030.

The takeaway from all this is that the PM does not need to signal that pragmatic and proportionate is slower or more cautious. Parliamentarians are in possession of all the facts about the costs of the energy transition and that accelerating electrification and the transition from fossil fuels is the fastest and most sustainable pathway to lower bills. Net Zero should not be relaxed as result of the cost-of-living crisis, it should be seen as the solution to it, or one of them, and politicians should double down. To do otherwise is to make a false choice.

By Dan McGrail, Chief Executive Officer, RenewableUK



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