UK’s energy security plan ‘needs to be bolder’

March 31, 2023|Written by Todd Phillips|Bank of England

The UK government has laid out an energy security plan that it says will “scale up affordable, clean, homegrown power” in Britain. However, the plan lacks the additional funding that climate advocates claim is needed for the UK to maintain its status as a global climate leader. Chancellor Jeremy Hunt explained that new funding is expected to be announced in the autumn.

The plan contains 12 prongs that include expanding a home energy efficiency program to insulate houses, encouraging the use of carbon capture usage and storage (CCUS), and opening bidding for renewable power development, among others. The plan also updates the UK’s green finance strategy by opening consultations on net-zero transition plans for the nation’s largest financial firms and for regulations on ESG rating providers. Also announced were a series of investment roadmap opportunities around renewable energy and CCUS.

The government’s announcement comes as the Bank of England is limiting its own climate-related efforts. Recently, the BoE announced its plan to cut funding for climate research and former senior staff have said the bank’s climate goals are a distraction from its core mandate.

Critics claim that the plan jeopardises the UK’s climate ambitions. Ed Matthew, campaigns director for climate thinktank E3G, said: “The commitment to set out sectoral investment roadmaps is a step forward, but this is not the full UK-wide net-zero investment plan, or commitment to independent financial flow tracking, that has been called for by leaders across the UK investment industry. If the Government wants to compete internationally on net zero investment, it needs to be bolder.”

Similarly, Lukasz Krebel, economist at the New Economics Foundation, said that the plan “ignores the fossil fuel finance elephant in the room” and that the UK’s strategy “cannot simply rely on markets self-adjusting when given more guidance and information on climate risks”.

Krebel also expressed concerns that the energy security plan “doesn’t do nearly enough to steer finance away from risky fossil fuel projects and towards vital green investments”. He explained that “instead of offering incentives for more fossil fuel production which will inevitably result in stranded assets, the government and the Bank of England must address high risks of those projects with adequate capital requirements, and support essential green projects with cheaper borrowing costs through a dedicated green lending scheme.”

The plan also comes just days after the Climate Change Committee, an independent body established under the Climate Change Act 2008 to advise the UK government, warned that the country is “strikingly unprepared” to address climate change. In a new report, the committee said that the government had established “fully credible” planning for only five of the 45 metrics necessary for long-term success.

This page was last updated March 31, 2023

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