We need urgent action to unlock investment in clean growth

The run up to the COP26 climate change conference in Glasgow in November 2020 provides an important focal point for tackling the climate emergency, said CBI Director General Carolyn Fairbairn.

Speaking at the CBI's Low-Carbon 2020s conference - and launching a new CBI report - she outlined three actions firms need from the government to unlock business investment to reach the UK's target of net-zero greenhouse gas emissions by 2050.

“To tackle the climate emergency in the time we have, we need to go faster, and further, than ever before. The next ten years will be crucial. With the tech advancing so rapidly and costs falling, the goal of a net-zero future is achievable," she said.

“But the truth is that nobody has done anything like this, on this scale before. Business can’t do it alone. It must be done in partnership with government every step of the way.

"It needs a tangible vision, and measurable plan to work to, and with."

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Transcript

Good morning, and it is wonderful to be here with you this morning. And I can think of no better venue for our conversation today than right here in one of the UK’s most sustainable office buildings. Complete I understand with industrious bee hotels on the roof, setting the productivity benchmark if not for the whole UK, then most certainly for our conference today.

And just one example of the many ways Schroders is integrating sustainability into every area of its organisation. So thank you so much, Peter and Schroders for hosting us in your beautiful offices.

A focus on what unites us

We meet today at the start of campaigning for Britain’s first December election since 1923. Much of the next six weeks is likely to be focused on Brexit and how the stifling deadlock gets broken. We all know just how divisive this is and will continue to be.

But I am also hopeful that more of the debate can start to turn towards the challenges that unite us, that connect us, not just nationally but globally. And one of the most important of these is our changing climate.

Ambitious to lead

Politically, we know the UK is ambitious to lead. The 2008 Climate Change Act was a world first, committing to cut emissions by 80%. And, this year, the UK became the first major economy to go even further, legislating for net-zero emissions by 2050.

I am proud that business has been in the vanguard of this ambition rather than being dragged unwilling to the party. For a public increasingly concerned about climate change, it’s become a question of trust. And, with politics so uncertain right now, people are looking for business to provide the leadership and direction they feel is missing.

An overwhelming majority of people, more than nine in ten told us, in our recent CBI Reputation of Business tracker, that they expect businesses to speak out on the biggest issues of our day, including climate change.[1]

That is good news. We have a lot to say, and even more to do.

A responsibility and opportunity

Firms across the UK are rising to the challenge. They recognise both opportunity and the responsibility the UK has as an economy that built its past success on the use of fossil fuels. And many are using low carbon as a disruptor to reshape their business models – often in radical ways.

Take transport, where car manufacturers, such as Nissan and Jaguar Land Rover, are switching to electric vehicles.

Or oil and gas. Where BP and Shell are investing in technology and natural solutions to capture carbon.

Big energy providers are another example. EDF Energy, the UK’s largest low-carbon electricity provider, are ambitious to double their renewables business and expand nuclear.

Smaller companies too are a vital part of the story, like Cory Riverside Energy, turning London’s non-recyclable waste into energy.

While, working across industry, the Association of Project Management is challenging its professionals to embed a low-carbon focus in their work.

And, last but not least, universities are playing a vital role.

For example, the University of Birmingham and the Energy Research Accelerator collaborating with industry to decarbonise the Midland’s economy and stimulate growth.

Meeting the challenge

And the results are plain to see. Since the 1990s, working together, the UK has cut carbon emissions by 40%, including aviation and shipping, while our economy grew by 75%.[2] That’s faster than any other G7 country.

And 2019 is on course to be the first year where low-carbon generated electricity in the UK overtakes supply from fossil fuels.[3]

Faster, further, greener

We’ve made incredible progress. But, to tackle the climate emergency in the time left, we need to go faster and further than ever before.[4]

The next ten years will be crucial. With the technology advancing so rapidly and costs falling so fast the goal of a net-zero future is achievable.

But the truth is that nobody has done anything like this, on this scale before. And business can’t do it alone.

It must be done in partnership with government. Firms need a tangible vision and measurable plan to invest behind and work with. They need milestones. Stability where possible. And above all, they need action.

Ensuring a decade of delivery

So, today, we are launching our new CBI report The low carbon 2020s – a decade of delivery. It sets out the actions our members see as essential to the UK’s low-carbon success in the next ten years.

We have the fantastic deadline of hosting the UN COP26 climate change conference in Glasgow next November. So let’s use it.

Let’s use it to kick-start the UK’s net-zero plans and see how much we can achieve in the next 12 months. We can make this our climate change Olympics, reinforcing the UK’s position as a global climate leader. As well as showing people at home and abroad the sheer scale of the UK’s low-carbon ingenuity and expertise

So yes, this a ten-year plan. But it’s more urgent than that. We are asking the government to turn 2020 into a year of action. With three top priorities.

Build on what works

First, we need government to build on what works. That starts with the way government works. The UK will not reach its target without every part of government working together. Without every policy being a net-zero policy.

Here’s just one example: if you are an environmentally conscious business keen to improve the energy efficiency of your premises say through solar panels or new energy efficient lightbulbs, your business rates bill will go up.

That just doesn’t make sense. It sends all the wrong messages and deters the right kind of investment.

So it’s time for joined-up policy and for every part of government to align behind our climate goals as part of our long-term industrial strategy. And then we can build from our strengths.

And they are considerable.

The UK has huge experience in using a competitive, regulated market to support business in delivering low-carbon technologies. Competitive Contract for Difference auctions for offshore wind projects have been a particular success, creating investor certainty which has in turn led to lower project costs and cheaper low-carbon electricity.

And the UK is now a world leader in offshore wind. We now urgently need to replicate this success in onshore wind. We know that more onshore wind power could save the average UK household £50 on their energy bills each year. So we recommend that this sector is now brought within this successful auction framework.

The lessons learned should also be applied to other technologies, including action to scale-up the deployment of emerging decarbonisation technologies, such as carbon capture, use and storage, and hydrogen-based solutions.

Several promising pilot projects are underway. For example, Orsted is contributing to a six-month study on the potential delivery of bulk, low-cost, zero-carbon hydrogen. While Drax is working with carbon capture use and storage technology that could make its plant in North Yorkshire the world’s first negative emissions power station.

Similarly, with over half of the UK’s nuclear capacity set to be retired this decade, government needs to get on with the financing for new nuclear.

Construction is powering ahead at Hinkley Point C. This must be replicated at other sites to secure the biggest benefits for consumers and make the most of the jobs this industry supports.

At the CBI, we believe a Regulated Asset Base approach could be the answer both reducing risks and costs for investors and delivering better value to consumers and taxpayers.

So that’s our first call to government for this year of action – joined up policy to build on what we know works, fast.

Turn our transport and heating green

Then the going gets tougher. We must turn our attention to the harder areas of transport and heat.

Transport still generates over a quarter of the UK emissions, and heating 30%. Business is pushing forward. Whether it is car manufacturers rolling out electric vehicles from their production lines onto our roads every day. Or energy companies and networks testing new technologies such as biofuels, heat pumps and green gas, to help 26 million UK homes shift to low carbon by 2050.

But everyone needs to pick up the pace.

As our second priority, I’m today asking government to set out its plans to turn the UK’s transport networks and heating green, sooner rather than later.

The current government’s £400 million charging infrastructure fund was a step forward. But business now needs a comprehensive strategy to help it target investment, where needed, and deliver a national network.

This must include government action to ensure our rural and most remote areas don’t get left behind.

And, across government, we need more ambitious targets, focused policy action and tighter building standards to help us improve the energy efficiency of new and existing buildings.

Let’s have an honest conversation

Finally, as part of this year of action, let’s have an honest conversation about how we make this transition a global success and what needs to get counted.

The UK has a strong story to tell on reducing the emissions we generate here at home. But that’s not the whole picture. We are consumers as well as producers.

What about the impact of the TVs, mobile phones, clothes and goods we buy that are manufactured in China, India and other countries overseas, but not currently counted? We can’t solve the climate emergency by simply making it someone else’s problem.

At the CBI, we believe it’s time for government to include both production and consumption emission rates in its official greenhouse gas figures. And to publish these metrics alongside the UK’s regular GDP and productivity statistics.

It would be a radically new way to measure growth and focus minds on our net-zero goal — with the fullest, clearest picture of our emissions footprint possible.

Two big risks

So, those are the three important steps the next government could take from day one. But what about the risks we need to manage?

There are two I really worry about. Though with the right partnerships and conversations I believe they can be overcome.

Secure cross-party agreement

The first is about our politics. In the heat of this election campaign and beyond it’s vital we recognise that the UK’s success in cutting emissions over the last thirty years has been only possible because of cross-party support.

No matter what shape of government emerges in 6 weeks from now, we must ensure that this hard-won and indispensable political consensus on low-carbon holds.

So, we are asking the next government to bring forward a realistic, long-term national plan. And then by all means have a robust debate. This is a good thing. But then all parties need to back it. And then avoid the trap of superficially appealing policy changes that could derail it.

It means an end to the perpetual shifting of incentives and the rules of the game that deter investment. And it especially means avoiding the massive roadblock to progress that renationalisation of our energy networks would bring.

It is hard to imagine a bigger or more badly timed distraction from achieving our climate goals than this would be.

Ensure a progressive, inclusive approach

The second risk I worry about is more about how people feel.

As the recent clashes between climate activists and London commuters showed all too clearly, we need to work carefully not to alienate the very people we are trying to inspire to act.

This means matching the scale and urgency of our ambition,  with plans to support people whose livelihoods and jobs are affected. This must include retraining people to move seamlessly into low-carbon sectors, and finding ways to cut energy bills for struggling families.

We must not let climate change be yet another source of deep division in our country. But instead make it a rallying call across civil society, young and old, all parts of the country, employer and employee, government, unions and academia.

I firmly believe it can be done, and that business is ready to play its full part.

Rising to the challenge

So, here we are over ten years on from the CBI’s landmark report, Climate change: everyone’s business. It was a ground-breaking step that helped transform the way business thinks and acts. It was a catalyst for action. And that is exactly what we need again today.

As a planet, we’ve got some catching up to do. To coin a phrase, the clock is ticking and people won’t tolerate delay and prevarication.

They are counting on us as leaders in all walks of life to work together and act.

And with clear answers to the urgent calls to action we’re setting out today I believe we can reaffirm public trust in both government and business.

We can secure the UK’s global leadership in a low-carbon, post-Brexit world.

And most importantly, we can generate clean, sustainable growth for generations to come.

Thank you.

[1] https://www.cbi.org.uk/articles/everyones-business-tracker/

[2] https://www.theccc.org.uk/publication/reducing-uk-emissions-2019-progress-report-to-parliament/

[3] https://www.nationalgrid.com/group/news/britains-clean-energy-system-achieves-historic-milestone-2019

[4] https://www.theccc.org.uk/publication/reducing-uk-emissions-2019-progress-report-to-parliament/, p.12