Boris Johnson’s UK government had been scrambling to put to together an eye-catching climate plan ever since it became obvious who would be the next incumbent of the White House. In mid-November, Johnson duly obliged with his ten-point-plan for a green industrial revolution.

The plan is to ‘mobilise’ £12bn ($15.8bn) of government spending to leverage three times as much private sector cash, as well as create a claimed quarter of a million jobs. It will be spread between offshore wind; hydrogen; nuclear; electric vehicles; public transport; cycling and walking; ‘Jet Zero’ and greener maritime; homes and public buildings; carbon capture and storage (CCS); nature; and innovation and finance. While all laudable, it means the pot is being spread across many areas.

The plan is also clearly designed to influence the agenda of Cop26. Delegations will fly from all over the world to discuss cutting emissions in Glasgow during the first two weeks of November 2021, with the meeting having been postponed by a year due to the pandemic. Johnson described it as a “global template for delivering net-zero emissions”.

Detail had been lacking on exactly how the country would achieve net-zero 2050, which was enshrined in law by former prime minister Theresa May’s government last June. The plan only goes some way to explaining how it could be done. It offers “a welcome signal of what the UK’s path towards net-zero will look like” says Martyn Link, chief strategy officer of Aberdeen-based solutions provider Wood, but “more details will be required”.

Rob Gross, director of the UK Energy Research Centre, says getting to net-zero will cost hundreds of billions, so the plan is just the start. He acknowledges its significance in political terms, though, and says “it would be churlish not to welcome the plan”.

The European Commission estimates that €1tn will need to be spent on decarbonsiation in the remaining 27 EU countries, supported by €503bn from the EU budget, €114bn from national budget and the remainder from the private sector. Most commentators claim even these vast sums are unrealistically small.

Budget deficit

The £12bn plan also seems rather small in the context of the £394bn budget deficit that the UK Office for Budget Responsibility (OBR) forecasts for 2020-21, a record proportion of GDP since the post-war years. The OBR predicts that the government will need to implement £27bn of spending cuts or tax increases by 2024.

While it is entirely understandable that the public finances are in disarray during the pandemic, which has been especially tough on the UK’s service-sector heavy economy, after a decade of post-financial crisis austerity savings will not be easy to find. Chancellor Rishi Sunak already set out in his annual spending review on 25 November plans to cut the foreign aid budget from 0.7pc to 0.5pc of GDP—which does not bode well for non-essential spending. Many in the industry will remember the previous chancellor cancelling £1bn in support for CCS in 2015, in the last austerity drive.

The £12bn green plan budget will be thinly spread, which will impact some of the ten ambitions more than others. Some of the more ambitious measures will not require substantial investment—at least from the government. The ban on sales of petrol and diesel cars and vans has been brought forward to 2030 from 2035. The UK is Europe's third-biggest oil consumer after Germany and France, with half ultimately consumed as road fuels—c.35mn t/yr—according to S&P Global Platts. From an electric vehicle (EV) sales base of less than 10pc, the onus is squarely on private and company vehicle buyers—as well as the energy industry via the creation the charging infrastructure—to carry the cost. Wood Mackenzie principal analyst Tom Heggarty says it “will require a huge effort across the entire supply chain”. The government will contribute £1.3bn to accelerate the rollout, £582mn in EV grants.

BP backed the planned phase-out “despite the impact on our fuels business”, says CEO Bernard Looney. The UK major already had advanced plans to build out what is already the UK’s largest EV charging network, BP Chargemaster. Despite the pace and scale of the change, it is a target that has among the most realistic chance of being hit.

The construction industry was less impressed by the measures related to green homes, which will receive £1bn. Julie Hirigoyen, chief executive at UKGBC, a building industry group pushing sustainability, says “cash alone will not fix this” and “we also need structural incentives to boost consumer demand for green homes”. She also questioned how much new money was actually available. “We urgently need clarity on how much of the £9.2bn Conservative manifesto energy efficiency commitment is actually being brought forward to support this,” she says.

The £12bn commitment for the entire ‘revolution’ includes up to £500mn for hydrogen, including £240mn for new hydrogen production facilities. By contrast, Germany committed €9bn ($10.6bn) to its hydrogen strategy, announced in June.

The UK plan also sets the goal of the UK to becoming a “world leader” in CCS, with a target to remove 10mn t of CO₂ by 2030. This is equivalent to 3mn British homes, or 2pc of total emissions, based on calculations from Net Zero Teesside, which is set to become the UK’s first decarbonised industrial cluster mid-decade. The UK’s total investment in CCS, not just in the new plan, will be £1bn, according to government figures.

Stacey Collins of law firm Pinsent Masons neatly summed up the views of many. "The high-level financial commitments on CCS and hydrogen are important, but they need to be swiftly followed by the detail of exactly how they will be realised. Only then can business and industry start to fully embrace the net-zero pathways that the government is laying out".

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Author: Alastair O’Dell<BR>Senior Editor