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With Kemi Badenoch's pledge to repeal net zero legislation, and Reform UK's long-term opposition to the climate goals, is net zero facing an existential threat?
City AM editor-in-chief Christian May tackles the question in this instalment of Week in Business.
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Produced by: Christian May, Scarlett Wild, Matt Kenyon
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0:00
Once upon a time, the promise of net
0:02
zero enjoyed such universal support that
0:04
a Tory government signed the UK's net
0:06
zero pledge into law. Today, the Tories
0:09
say they'd scrap it while alarm bells
0:12
are ringing at the costs of the policy.
0:14
Welcome to the week in business with me,
0:16
Christian May.
0:20
In June 2019, Prime Minister Theresa May
0:23
passed a law with near unanimous
0:25
parliamentary backing and very little
0:27
debate committing the UK to achieve net
0:29
zero by 2050. She hailed the move as a
0:32
historic step that would make the UK the
0:34
first major economy in the world to set
0:36
such a legally binding target. Now is
0:39
the time to go further and faster, she
0:40
said, for our children. Obviously, it
0:43
was framed as a moral issue, a moment to
0:45
be on the right side of history. And
0:47
while everyone was patting themselves on
0:49
the back and as the lofty ambition was
0:51
turned into legal text, the UK
0:53
accelerated down a path that is only now
0:56
being fully understood. If Theresa May
0:58
hadn't signed the 2050 target into law,
1:00
somebody else would have. Such was the
1:02
consensus and such was the sense of
1:04
inevitability whipped up in those heady
1:06
precoid pre-war days. And where has it
1:09
taken us? Well, we'll explore that in a
1:12
moment. But first, allow me a quick
1:13
aside to ask if you fancy some VIP
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1:20
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1:23
restaurant. At the end of this episode,
1:24
I'm going to tell you how you can win
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those prizes. So, don't miss it. Now,
1:28
back to business. The UK has the highest
1:31
cost of energy in the developed world
1:33
for households and businesses. And we've
1:34
been putting wind farms up faster than
1:36
our energy infrastructure can handle
1:38
them. Leading to a situation where we
1:40
taxpayers, bill payers will pay a
1:43
billion pounds this year, a billion
1:44
pounds to wind farm operators to turn
1:47
off those wind farms when it's too
1:49
windy. Vast sums are then spent on
1:51
replacement gas power to keep the lights
1:53
on. And that's almost certainly imported
1:55
gas, by the way, as we've rather gone
1:57
off producing much of our own. It's a
1:59
problem known as curtailment. Too much
2:01
wind produces too much power and it
2:03
would overwhelm the congested network
2:05
and so they're simply switched off. The
2:07
National Energy System operator which
2:09
runs the grid says the cost of this the
2:11
constraint cost will surge to about8
2:14
billion pounds a year by the end of this
2:16
decade. We've put the cart before the
2:18
horse. Wind farms were the great visible
2:20
manifestation of our net zero drive. But
2:23
we haven't built the pylons and the
2:24
cables to make them worthwhile.
2:26
something that will take years and cost
2:28
further billions. Now, there's no
2:30
problem with ultimately attaining a
2:32
state of net zero emissions. The
2:34
problems lie in the law, the target
2:36
date, and the consequences of an
2:38
ill-thought through rush. High energy
2:41
costs are forcing chemicals, cement, and
2:43
manufacturing plants to close. Energy
2:45
investment and associated manufacturing
2:47
are heading for the US. The North Sea is
2:50
viewed as an awkward relic rather than a
2:52
natural asset. and the combination of
2:54
green levies, subsidies, and taxes are
2:56
making a mess of the entire system.
2:58
Today, the Conservatives, the moral and
3:00
political architects of the 2050 target,
3:02
say they would scrap their law. They've
3:04
seen the light. The Institute of
3:06
Economic Affairs says the Tories
3:07
announcement is the first step back to
3:09
sanity, pointing out that the Climate
3:12
Change Act of 2008, amended by the
3:14
Tories in 2019, was the biggest central
3:16
planning mistake since the Soviet
3:18
Union's five-year economic plans. Chem
3:20
Baiten says, "Climate change is real,
3:22
but Labour's laws tied us in red tape,
3:25
loaded us with costs, and did nothing to
3:27
cut global emissions. Previous
3:29
Conservative governments tried to make
3:30
Labour's climate laws work, and they
3:32
don't." She said that the Conservatives
3:34
would make the North Sea the cornerstone
3:36
of UK energy policy by ending a ban on
3:39
new oil and gas exploration, and that as
3:41
prime minister, her priorities would be
3:43
growth, cheaper energy, and a renewed
3:45
commitment to protecting our
3:47
environment. Even Labour, whose climate
3:49
change secretary Ed Milliband is a
3:51
full-blown high priest of net zero
3:53
zealatry, is considering rowing back
3:55
from some of its bolder commitments.
3:57
Well, that would certainly please the
3:59
trade unions who have been shouting at
4:00
the de-industrialization unleashed by
4:03
the net zero sprint. Sharon Graham, boss
4:05
of the Unite Union, has called for
4:07
Milliban to be sacked, labeling his net
4:10
zero plan a disaster and accusing him of
4:12
being completely irresponsible with the
4:14
UK's energy security and jobs in the oil
4:16
and gas sector. And she's right. Oil
4:19
refineries are closing, chemical plants
4:21
are closing, and the promised green jobs
4:23
boom is felt more in consultancy in the
4:25
civil service than in any factory. Ahead
4:28
of the budget, the British Chambers of
4:29
Commerce has called on the government to
4:31
remove the windfall taxes imposed on oil
4:34
and gas producers in the North Sea,
4:35
saying the policy puts the UK at a huge
4:38
competitive disadvantage. And meanwhile,
4:40
our energy demands are going to
4:42
skyrocket, not least given all the
4:44
hungry new data centers unveiled in
4:46
recent weeks. It seems that when it
4:48
comes to energy, the best approach is to
4:50
do everything everywhere, but not
4:52
necessarily all at once. We need nuclear
4:56
and we're getting more of it which is
4:57
good. We need the North Sea but we're
4:59
somewhat ashamed of it. We need
5:01
renewables but only when a network can
5:03
actually take the power and we shouldn't
5:05
be spending vast sums to subsidize
5:07
biomass energy that burns wood shipped
5:09
in from South America that is somehow
5:11
supposedly green. And we do need to look
5:14
again at the law of the land. The
5:16
feel-good commitment to be net zero by
5:18
2050. The Tories and reform have woken
5:21
up to this. It seems many in Labor have
5:23
too, particularly those at the sharp
5:25
end. Though it's likely that Ed Milliban
5:28
will barricade himself in his office
5:29
with hostages before recognizing the
5:31
political and economic reality that's
5:33
coming into focus. Policies can change.
5:36
They do evolve. They adapt to meet
5:38
circumstances. They encounter problems
5:40
and breakthroughs at unexpected moments.
5:42
They do not always conform with
5:44
political aspirations, timelines, and
5:46
badly written laws. And it seems that
5:48
that penny is beginning to drop. Now,
5:52
time to cheer up a bit because I want to
5:53
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5:57
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6:16
Go and check it out. And that is it from
6:18
me this week. Stay up tod date and in
6:20
the know with the city app and on
6:22
city.com. And I will see you next week.
6:29
[Music]
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