Despite there being no hard hat or high viz jacket in sight, the Chancellor George Osborne repeated the word “build” no fewer than 25 times during his speech at the Conservative Party Conference last month.
With the Comprehensive Spending Review just one day away, we ask: will the Chancellor be building low carbon infrastructure fit for the 21st Century?
To build a globally competitive, sustainable and resilient economy, we need to see around £750bn in new low carbon infrastructure and supply chain investment in the next 10 years. However, recent policy changes have seen investor confidence in the UK green economy dip to an all time low. The Energy and Climate Change Secretary’s ‘energy policy reset’ speech last week confirmed that this policy uncertainty in the sector is set to continue as key decisions are delayed into next year.
Against this backdrop, how can we assess whether the Chancellor will do enough to build Britain’s low carbon future? E3G sets out four crucial tests.
Test 1: Policy and investment security – is future funding for the GIB secure?
The Green Investment Bank is not only Britain’s only infrastructure bank. It is also one of the country’s most successful vehicles for leveraging the much needed private capital required to build Britain’s future. It has succeeded in leveraging an additional £3 of private capital for every £1 of public capital invested.
Widely copied around the world it has invested £2 billion of public money in 50 projects leveraging an additional £6 billion in private capital and generating a return on investment of 9%. The Bank has played a key role in getting transformational projects off the ground that would have either been too complex or perceived as too risky to attract private investors alone.
Will the Chancellor continue public investment in the GIB to deliver the low carbon infrastructure essential for Britain’s future prosperity?
Test 2: Public investment – is energy efficiency a fully-funded infrastructure priority?
The greatest opportunity to cut energy bills is investment in an energy efficiency infrastructure programme for our nation’s leaky homes. Recent research from Frontier Economics, using the Government’s own figures, shows this would bring an £8.7 billion net economic benefit to the country – comparable to HS2 Phase 1 and Crossrail.
This would boost GDP growth, reduce UK reliance on gas imports and help deliver a significant increase in employment across the country. It would also help keep energy bills down, reduce health costs and warm up homes.
Will the Government designate home energy efficiency as an infrastructure priority and allocate infrastructure funds to a locally-led infrastructure programme, upgrading all low income homes to C on an Energy Performance Certificate?
Test 3: The global race – is British low carbon energy infrastructure fit for the future?
British competitiveness in a rapidly decarbonising global economy requires the timely closure of high carbon generation coupled with secure investment in low-carbon resources. The intention to close coal fired generation within a decade has been widely welcomed, but the UK faces a high risk of overinvesting in a gas-heavy electricity system leading to stranded assets that increase costs and undermine investment in renewable technologies.
Will the Government announce a low carbon energy infrastructure pipeline fit for the future? Will it be compatible with the recommendations of the independent Committee on Climate Change to decarbonise at the lowest cost to consumers and taxpayers?
Test 4: Carbon budgets – has the cost of meeting the 4th Carbon Budget (2023-27) gone up or down?
Department of Energy and Climate Change figures show that the emissions gap between Government plans and the 4th Carbon Budget, set by the independent Committee on Climate Change, has increased from 7% to 10%. This gap undermines investment security and increases costs. Clarity of Government targets and support for transport, electricity generation and domestic heating is required to secure investment today in the infrastructure needed to deliver the 4th Carbon Budget.
Will the Government clarify what investment will be made to bridge the 4th Carbon Budget emissions gap and ensure that policy uncertainty does not destroy the investment security that the Budget is designed to provide?