“How can the UK cut carbon emissions?” That was the question I heard most from our stakeholders, until Covid-19 emerged.
Now personal finances and investor cashflows have taken a huge hit. Economic recovery is a priority, but the imperative to reduce carbon emissions and combat climate change hasn’t gone away. The silver lining is that tackling climate change and transitioning to net zero can generate economic opportunities across the UK and be at the heart of a green recovery.
I strongly believe that we can’t wait to have greener, cleaner networks. Infrastructure investment can support new and existing skills and jobs across all regions and create a healthier environment, but this can only be achieved if they are funded and supported effectively through the right policy and regulatory frameworks. Whether I’m an equity investor or working for a listed utility, I know the importance of financially resilient networks to both large institutional and small individual retail investors. Therefore, an attractive, low risk equity proposition is required to ensure networks remain resilient to shocks, both now and in the future. Ultimately this will benefit consumers today and over the longer term.
We heard during our recent roundtable that the cost to consumers of moving too slowly on net zero is much greater than the cost of investing slightly ahead of need. There was agreement that investment in energy systems and infrastructure will be key to the green recovery. If we are all in agreement, how do we translate that into identifying the right frameworks, policies and infrastructure projects to help boost the economy whilst also tackling the climate crisis? And in identifying the right policies and frameworks should we be responding with the same vigour as the response we are seeing to the Covid crisis?
From a regulatory and policy perspective, investors and our industry need clarity on the funding for anticipatory investment to support net-zero opportunities this decade, whether in electricity, gas, transport, heat or hydrogen. At the moment, however, there are still questions on how more foundational reinforcement projects, such as those to increase power capacity between Scotland and England, are going to be funded. Only with this clarity can we move quickly and only then can we consider whether the cost of capital is optimised.
We must not lose sight of the needs of consumers and the affordability in delivering net zero during economic recovery. We must ensure that the costs of meeting our energy needs are balanced fairly across society and between current and future consumers.
We’re talking about a huge amount of investment that is going to be needed over the next few years if we are to achieve the UK’s goals. There is a cost that comes with this, and we need to be transparent about that, but we must also recognise the opportunities that infrastructure investment can support.
We believe economic recovery and decarbonisation go hand in hand and we’re committed as an industry to achieving the net zero target, but decisions and action are required now so that we don’t risk increasing the cost of meeting net zero in the long term.