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Fit for Revolution? Key Considerations for the UK Government's Net Zero by 2050 Strategy 

by Scott McCallum, Dylan Webster, Scott Rodger

Published: May, 2021

Submission: May, 2021

 



As the UK makes progress towards a ‘Green Industrial Revolution’, Shepherd and Wedderburn is committed, through our Green Recovery Strategy and enhanced Sustainability Policy, to working with clients operating in a wide variety of sectors to contribute to a green recovery from the recession caused by the COVID-19 pandemic.


As part our engagement with clients, we recently held a webinar considering how our existing institutions, including government, regulators and industry bodies, need to think differently in order to achieve an ambitious net zero future. In this article, we examine their key insights and consider what has to come next from our institutions as we navigate the path to net zero.


The webinar panel was chaired by Liz McRobb, a Partner from our energy and natural resources team. Panellists included Dermot Nolan, Director at Fingleton and former CEO at Ofgem; Nick Fincham, Director at Skylight Consulting and Chair of the Regulatory Policy Institute; and Gordon Downie, a Partner from our regulation and markets team. The panel recognised the government’s ambition, and the significant targets that have been set out.


Government policy, including through the Energy White Paper, shows ambition and initiative – both of which are essential for achieving net zero by 2050. Ambition in itself, however, is not enough to mobilise the private sector to deliver the net zero future that the world demands. The economy needs certainty over proposed solutions and a clear understanding of the government and regulatory mechanisms designed to facilitate the Green Industrial Revolution. The next, and perhaps the most critical, step in achieving a carbon neutral future is a clear substantive framework from the government. This should identify the actions and decisions that need to be taken centrally by government, and distinguishing those from the mechanisms that should be implemented by the private sector or industry regulators. In other words, the bold ambitions in the White Paper now need to be translated into a concrete plan of action.


In developing a substantive framework towards a net zero economy, there are a number of key concerns that the government will need to address:


  • Accountability.It is essential that elected government officials and politicians remain accountable for the implementation of the net zero strategy. The accountability cannot simply be passed to regulators and industry participants. Net zero touches almost every aspect of the economy and society. Everyone has a role to play, and there is a risk of fragmentation in roles, particularly in government. A central government body (such as the Treasury) needs to have net zero oversight across all areas of industry and the economy to effectively facilitate the government’s response to the transition. There is currently a missing link between government departments and industry regulators. Government must also decide the extent to which industry regulators, such as Ofgem, currently have the necessary powers or statutory mandates to facilitate net zero.
  • Balance and Inaction.In drafting the framework for achieving net zero, politicians face the difficult challenge of striking a balance between providing enough certainty and stability to encourage investment, while also maintaining sufficient flexibility to allow for future innovative solutions, technologies and strategies to develop. The government, regulators and the private sector have to overcome the fear of “getting it wrong” and not allow this to stymie progress towards net zero. The government’s “ban” on future combustion vehicles is a prime example of the type of government action that is necessary to facilitate the green economy. While such a policy clearly comes with daunting challenges, and raises many questions, it nevertheless sends a very clear signal of intent.
  • Role of the Consumer.Active participants in decarbonisation must avoid becoming complacent when considering the role of the consumer. Particular care is needed when considering the willingness and enthusiasm of the average consumer to contribute towards net zero as the economic effects of COVID-19 take hold. There is additional risk of intrusion on the part of government as it seeks to decarbonise the heat sector, and all industries should be concerned with ensuring that a push to net zero protects the most vulnerable and does not encourage inequality. At the same time, policy makers must carefully consider socio-economic and inter-generational fairness when it comes to the question of who must pay for transforming the economy.

The lessons learned from the response to the Coronavirus pandemic also cannot be overestimated. There are positive lessons, such as the speed and efficiency of the vaccine rollout, which we should learn from, and a similar enthusiasm and pace should be applied to the climate crisis. As we emerge from the worst of the pandemic, the green recovery presents a once in a lifetime opportunity to reshape the economy. We now have the necessary ambition and an unprecedented starting point for building a carbon neutral society.


Dylan Webster is a solicitor in Shepherd and Wedderburn’s energy and natural resources team and Scott Rodger is a solicitor in the firm’s regulation and markets team.


 


 


Footnotes:

You can join the next webinar in our Green Recovery series by following this link. If you would like to view other webinars in our series (including Growing Greener) or for more information generally, please visit our Green Recovery web page.


Should you require any support or advice in relation to the topics set out in this article, or wish to participate in any of our upcoming webinars, please get in touch with Gordon DownieLiz McRobb, or your usual Shepherd and Wedderburn contact.


 

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