By Tony Hughes, Chairman, Platinum Assets Ltd.
Still following in the footsteps of its neighbours in the European Union as it prepares to exit the bloc, the UK’s government and private sector are both going green in 2020.
In the public sector, the Conservative government began the financial year by announcing the first steps to begin decarbonising the heaviest polluting sectors the British economy in the 2020 national budget.
Meanwhile ahead of the 26th Conference of the Parties (Cop26) in November (which the UK is co-chairing with Italy) so-called “coalitions of the willing”, consisting of countries, regions and corporations, are coming together to research so-called “unicorn” technologies; these are technologies can reduce at least 1 billion tonnes of carbon emissions a year and (in combination) unleash so-called “energy ecosystems”. The result is a delicate mixture of tax incentives, research and development, and policy shifts which will see the UK economic model join its European neighbours in shifting to a “climate-neutral” one by the middle of the 21st century.
Launching a sustainable, 21st century ‘Green Economy’
The public side of the effort to launch a 21st century sustainable green economy is dovetailed neatly with the government’s decision ahead of the UK’s 2020 budget to increase spending in the face of declining global growth caused by the COVID-19 Coronavirus (which was declared to be a global pandemic by the World Health Organisation on March 11th).
Indeed, in a bid to reduce air pollution in cities the UK’s chancellor, Rishi Sunak, scrapped the tax break for red diesel, the fuel traditionally used to operate things such as off-road vehicles and heavy machinery when he announced the 2020 budget (co-incidentally also announced on March 11th).
The chancellor also reduced the tax on electricity, which is increasingly being generated by renewable energy sources, and announced a doubling of the government’s research and development funding for energy research to £1bn.
What else does the National Budget 2020 hold in store?
Other Treasury pledges included £100m grant for homes to adopt low-carbon heating, a £200-a-tonne tax on plastic packaging on companies which use more than 10 tonnes of plastic with a recycled content of less than 30%, and plans to support electric vehicles and create a green heat network fund. All of which suggests that the transport and building sectors of the the UK economy are due to be radically overhauled in the years between now and 2030.
However, the most ambitious target is probably the plan backed the Treasury in its budget to decarbonise at least two (perhaps more) “heavy-industry clusters”, one by 2025 and the second by 2030. This could create up to 6,000 skilled green jobs in former industrial parts of the UK, many of whose voters which switched their support from Labour to the Conservative party at the last election in December 2019 (and whose support the party is keen to keep).
As well as boosting jobs and the economy during a global slowdown, the government’s roll-out of its green agenda neatly co-incidents with the aims of the upcoming the latest UN climate talks in the Scottish city of Glasgow in November 2020. The Cop26 conference is aiming to reap the benefit of earlier decades of research into green technologies (such as cheap renewable energy) which are now almost ready to be scaled-up for mass deployment across multiple sectors of the global economy.
Rather than representing new discoveries the hunt is on for ways to use moderate investment in research and development to unlock and interlink near-future technologies which are already present in today’s world to some degree. These are the unicorn technologies (referred to earlier in the article) which the globe needs to invest in if it is going to first shift to a carbon-neutral economic model by 2050, and later to reverse the process of carbon pollution caused by decades of fossil fuel use.
Often one breakthrough can also be used in conjunction with another to unlock multiple benefits, in a so-called so-energy ecosystem. One example of these which the conference is envisaging include converting cheap renewable wind or solar power into hydrogen or ammonia to power the shipping, heavy goods vehicles or aircraft which today rely on hydrocarbon fuels. Another involves re-planting deforested or arid areas of land with exceptionally water-efficient plants (such as pineapple plants).
This aims to lock carbon back into the soil while reducing the chances of flooding and other natural disasters caused by the weakening of the soil once plants are removed. Creating coalitions of parties willing to work around vested interests such as petro-states or the traditional oil and gas supermajors, the Cop26 conference will allow the UK’s private sector to showcase its latest ideals for tackling climate change.
It will also enable the private and public sectors in Britain to look at the best practices of other international parties and find areas where the UK is still lacking in vision or organisation.