Some government reviews disappear into the machine; others land with a thud. Chris Skidmore’s 340-page report on the UK’s net zero strategy is heavy enough to leave a dent wherever it lands. And while its major concern is the gap between good intentions and delivery, its greatest political impact could be that it makes its argument in a language Conservatives understand.
A former Tory energy minister, Skidmore was the man who signed the UK’s net zero pledges into law. And while not resiling from the primary, environmental case for green transformation, his report confronts Tories with a further compelling argument. The developed nations are now in an economic race to lead in clean energy technology, and the UK is not winning.
The world is facing two industrial revolutions, one powered by artificial intelligence, the other by clean energy. Their shape and terms will be set by the world’s three power blocs, the US, China and the EU. Joe Biden’s Inflation Reduction Act with its $369bn of subsidies for green technologies has fundamentally altered the net zero landscape. The EU is set to respond, initially with an easing of tax credit rules.
For all its previous lead on green tech, Britain cannot compete on subsidies and it is not setting the rules. The UK’s only option is to be as decisive, nimble and cutting edge as Brexit was supposed to make it. Instead, the report warns that poor delivery and conflicting signals mean it is losing ground.
No one can accuse the government of inactivity. There are numerous initiatives and substantial investment. Business lobbies will always ratchet up demands for extra subsidies. Even so, the review’s argument is irresistible.
Skidmore’s report is important enough as a warning. But it also comes at a crucial moment in the political debate. A vocal caucus on the populist right is agitating against the net zero agenda. While hostile MPs are a minority, their arguments are amplified in the Tory press and by outriders like Nigel Farage who have, in the past, exerted a powerful pull on the party. The appeal of their stance is that it rests on a view that the climate agenda has been seized by the left as a vehicle for higher taxes and state intervention.
What Skidmore offers, as well as a jeremiad on complacency, is a call for Tories to understand that the clean energy drive is vital to prosperity. The party of capitalism cannot allow the UK to sit back in an inescapable industrial race that will define the next century. The technology is coming, the only question is whether the jobs and income accrue only to others.
Many red-wall Conservatives already see this as part of the levelling-up agenda. But the message from business is that lack of momentum is deterring investment and sending opportunities abroad. “Government”, the report argues, “has too often pursued stop-start strategies which undermine confidence for business, investors and consumers in committing to measures which would reduce carbon emissions.”
The report makes numerous recommendations, including on solar power and phasing out gas boilers, but at its core is a simple point. Where the UK entertains hopes of a leadership role on newer technologies, be it on carbon capture use and storage, small modular nuclear reactors, hydrogen or recycling critical minerals, it must back that ambition with credible road maps and stable funding. There are too many annual funding rounds; a 10-year commitment would bring more private money to the table. “The money is going to be spent either way,” argues Skidmore.
Those in government push back on some of this criticism, pointing to subsidies, funding models and legislation to advance new technologies. Senior figures argue that Rishi Sunak may lack Boris Johnson’s often-empty evangelism, but will commit methodically to backing sectors which offer the UK an international advantage.
Jeremy Hunt, the chancellor, has asked Skidmore to take on a role examining regulatory obstacles to emerging technology and he has been visiting Downing Street to sell his ideas to senior policy officials. His prescriptions include an Office for Net Zero to drive policy, a proper push on energy efficient homes, longer-range funding commitments on hydrogen and carbon capture, and a clear route map to building small modular nuclear reactors.
The worry is that the Tories have a history of stepping back from what David Cameron once called the “green crap” as other financial challenges mounted. Net zero has looked like a subset of Sunak’s economic agenda and doesn’t feature in his five core missions. Even less encouraging was his opposition to onshore wind farms, one of the easier steps in the clean energy transformation.
The report, then, throws down two challenges for Sunak. The first and most crucial is to up the UK’s game on delivery. If one accepts Skidmore’s overarching argument (and it is hard to refute), then this cannot be an afterthought to any growth strategy.
The second is to demonstrate leadership to the Conservative movement and show the UK cannot sit this out. Labour has an expansive (and expensive) green strategy. If Tories do not like it, they need to offer a viable alternative.
Failure now leaves the UK in danger of missing not only its net zero targets but also the economic benefits of being a pioneer in an industrial revolution which cannot be avoided.