Policy Exchange and the PM’s 10-Point Plan
The Prime Minister’s green announcement reflects several policies that we’ve championed over more than a decade.
After some key personnel changes at the top, the Prime Minister has begun his administration’s ‘reset’ with a long-awaited 10-Point Plan for a Green Industrial Revolution. The Plan has been broadly praised for its breadth and welcomed as a major statement of intent across multiple technologies. He combined knotty, unglamorous issues such as home heating with big, visionary technologies like CCS and hydrogen.
There’s still a lot to do, of course. Critics of the PM noted that he only announced £4billion of new spending and has dedicated far less to green recovery funding than Germany and France. Yet the Prime Minister was the first to admit this and his government has an extraordinarily busy pipeline of policy announcements to come. You can see a summary of its policy intentions, packed with plans, strategies and consultations galore, on our Energy and Environment Policy Tracker.
For Policy Exchange, it’s been a satisfying set of announcements as it echoes recommendations and in some places directly adopts policies that we have championed over more than a decade. Let’s take those one by one.
On offshore wind, our recent report on The Future of the North Sea called for better coordination of offshore development to enable new wind capacity at the massive scale targeted by the PM. We set out several policies which would help the UK to capture the economic benefits of this development, helping to meet the government’s plan for 60% of spending on offshore wind staying in the UK. The report also makes recommendations about the networks that support these wind farms, which echoes previous PX reports over the years (such as Power 2.0) which have called for market reforms to support far more renewables. We’ll be publishing more research in the next few weeks with policies to help the PM and his successors hit that 40GW target and then go much further.
Policy Exchange was a leading voice for hydrogen in 2018, with our report Fuelling the Future. The paper made the case for hydrogen as an important component of a zero-carbon economy, saying that it could play a key role in decarbonising industry. It argued strongly for the use of industrial hubs and increasingly ambitious pilot projects to help develop the technologies and deploy them commercially – all of which has been adopted. We also argued in our recent Future of the North Sea paper for business models and revenue mechanisms to be set out before the end of 2021, which is also now government policy.
To hit Net Zero, we need to massively scale up our use of electricity. That is one reason the government needs to back nuclear power. But to make nuclear affordable, it needs to achieve economies of scale – we need not just one nuclear power station but several, learning to do things more efficiently as we go. One excellent way to do this is with Small Modular Reactors, which the PM included in his new funding announcements. Policy Exchange championed SMRs in an eponymous 2018 paper, calling for their inclusion as a key component in UK decarbonisation and industrial strategy. It’s also a huge export opportunity.
Shifting to Electric Vehicles
Last Summer, in a paper called Modernising the UK, we called for the government to bring forward its phase-out of petrol and diesel cars by 10 years to 2030. Two months later, the Transport Secretary Grant Shapps said he was exploring doing just that and this week the PM announced the plan to make it so. We were also delighted to see gigafactories receiving funding as per our recommendation. Of course, a target is not a plan, as Ed Birkett has pointed out. Our 2020 paper Route ’35 argues for the UK to adopt a California-style ZEV Mandate to ensure that the phase-out starts now and is cost-effective. We’ve got more to come on this topic later in the year.
The Prime Minister has set out plans for a significant shift to public and active transport (e.g. cycling and walking) through investments in pilots and infrastructure. In our 2017 report, Driving Down Emissions, Policy Exchange called for exactly this. The paper said London’s ‘Cycling Design Standard’ should be rolled out across the UK, Oyster card-style tech and ‘Mobility as a Service’ (like CityMapper) should be promoted by Metro Mayors and local authorities should also be given more power over rail, allowing development of light rail networks. Before that, in 2016, we recommendedupgrades to bus fleets to address London’s air quality issues.
Earlier this year, former Shipping Minister Nusrat Ghani MP authored a Policy Exchange paper on the UK’s future as a global maritime power. She recommended the UK invest in green shipping port infrastructure to get ahead on zero-carbon shipping, such as ammonia and hydrogen fuelling facilities. We were therefore pleased to see the government investing £20million into a Clean Maritime Demonstration Project and acknowledging the importance of green fuelling facilities in his announcements.
In our 2016 paper, Energy Efficient Policy and Too Hot to Handle, we called for lenders to consider energy efficiency within their mortgage agreements and for energy efficiency in the private rented sector to be significantly tightened. After the PM’s announcements, private landlords will now face stronger requirements on energy efficiency and the government will consult on lenders having to disclose and set improvement targets on energy efficiency standards across their loan books, creating pressure for them to factor this into mortgages.
Carbon Capture and Storage
To end our contribution to climate change, we can’t simply reduce emissions down to near-zero. We actually have to remove carbon dioxide from the atmosphere, to make up for some activities that will be extremely hard to decarbonise by 2050 (e.g. steel or cement production). Hence the ‘net’ in ‘Net Zero’. A range of technologies called Carbon Capture, Utilisation and Storage (CCS or CCUS) can deliver this and Policy Exchange has been a long-term champion of them. In 2008, Policy Exchange published a paper saying that CCS should become a central part of the UK’s strategy. We repeated that call in 2011, and then in 2018 we said that it should be achieved through industrial clusters alongside hydrogen production, inter alia. Echoing those calls, the Prime Minister has now committed the UK to creating four such CCS clusters by 2030 and upped funding to £1billion.
Protecting Our Environment
In 2019, our Modernising the UK report called for the creation of a ‘Rural Skills Transition Fund’ to help rural areas lead the way in moving to a Net Zero future through conservation skills development. Now the Prime Minister has created a ‘Green Recovery Challenge Fund’ to do exactly that and has doubled it to £80million. His announcement also repeated a commitment to 30,000 new hectares of trees to be planted each year from 2025. That won’t be easy, but our Bigger, Better Forests paper from 2019 sets out multiple policies for making it happen.
Green Finance and Innovation
This final section of the 10-Point Plan included a range of investments for developing clean tech and green finance. Clearly it should have been two sections, but that would make for a less marketable ‘eleven-point plan’. Either way, it includes exactly the blue-sky-thinking, mission-oriented approach to research funding that we argued for in our Visions of ARPA paper earlier in 2020. It also includes promises for hydrogen transport pilots, which we called for in our 2018 Fuelling the Future and 2020 Future of the North Sea papers. Finally, the Chancellor followed the PM’s 10-Point Plan with the announcement of a ‘UK Infrastructure Bank’, which Policy Exchange called for as far back as 2009, with a paper on Delivering a 21st Century Infrastructure for Britain and echoed this year with papers on public spending on capital. There’ll also be more on green finance from Policy Exchange soon.
Finally, and only mentioned by the Prime Minister tangentially, is the important topic of carbon pricing. The UK has been a leader on carbon pricing over the past decade, going beyond the EU’s ETS to add a UK-only carbon price support mechanism. Policy Exchange’s 2018 paper on The Future of Carbon Pricing argues for a carbon tax to replace the EU ETS after the end of the Brexit transition period. We reiterated that call in our more recent paper on The Future of UK-EU Energy Cooperation. We know that the functional differences between an ETS and a carbon emissions tax are small, but the political differences are huge. Therefore we’re backing a carbon tax – but either way, a clear, stable and upwardly mobile carbon price is what’s needed. It’s good to know that the PM has it in his sights.