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The next prime minister needs to grab Britain’s net zero plans “by the scruff of the neck” to boost investor confidence, an influential House of Lords committee has said.
The economic affairs committee, which counts former Bank of England governor Lord King among its members, has warned Britain is at risk of a “disorderly transition” away from fossil fuels and has urged the government to set out a detailed plan including deadlines for investment decisions.
The committee said the invasion of Ukraine had provided a “wake-up call” on the vulnerability of energy supplies and said there was a gap between the government’s low-carbon power generation ambitions and “practical plans for delivery”.
In a report, entitled Investing in energy: price, security, and the transition to net zero, the committee made a series of recommendations.
These include: a drive to improve home insulation; developing financing models for new technologies including carbon capture and storage; blue and green hydrogen; and re-examining the onshore wind sector.
The peers want to see energy security objectives set alongside climate change goals in a National Planning Policy Framework and enabling short-term investment in North Sea oil and gas that will pay back quickly “to limit the risk of stranded assets”.
The committee also called for the UK Infrastructure Bank to focus on “financing innovative and potentially riskier projects” and for the Treasury to definitively rule out a windfall tax on power generators.
Lord Bridges of Headley, the chair of the committee, said: “I hope the next prime minister understands the needs for an operational delivery plan for net zero because we have a government that has increased ambition but now needs to join the dots between different policies to make sure that we don’t fall into a gap between ambition and delivery. The next PM needs to take this issue by the scruff of its neck and really come up with a plan to deliver.”
The report comes days after the high court ordered the government to outline exactly how its net zero policies will achieve emissions targets, after a legal challenge from environmental groups.
The committee hopes the government can allay concerns among businesses and investors over returns made from large-scale energy infrastructure projects.
Construction of the Hinkley Point C nuclear power plant has been delayed and is billions of pounds over budget, while questions remain over the financing of its sister plant, Sizewell C, which has been proposed in Suffolk.
Bridges said the UK needed to make sure that in the transition away from fossil fuels it did not become reliant on minerals that are used in renewable power technology such as solar panels, wind turbines and electric vehicles.
He said: “We need to be very focused on ensuring we don’t swap one form of dependency in terms of sources of oil and gas for another source of dependency, which is on countries that own rare earth minerals, supply chains and rare and low-carbon technology, processing and manufacturing, notably China.”
In compiling the report, the committee received evidence from experts across the industry including representatives of power station operator EDF, regulator Ofgem supplier SSE, consultancy KPMG and Rolls-Royce, which hopes to build a fleet of mini nuclear power stations.
Next PM must get a grip on net zero plans or deter investment, warn Lords
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