Policy & regulation

Upcoming emissions reduction plan should be "embedded" into new industrial strategy

Sticking to the fifth carbon budget and getting the most out of the low-carbon transition will require a “new mindset”, the Confederation of British Industry has said.

The government’s upcoming emissions reduction plan should be pursued across government and “embedded” into its new industrial strategy, according to a new report by the business lobby group.

“To fully maximise the opportunities of the low-carbon transition, we need not just a shift in policy, but a shift in mind-set – among government, business and consumers,” said CBI deputy director-general Josh Hardie. “The low-carbon transition must not be considered in isolation, but should be a core thread running through government, with buy-in and ownership across departments and regional and local authorities.

“In particular, embedding the government’s plan for a low-carbon transition within the long-term industrial strategy will be key to successfully translating business investment into sustained growth and competitive advantage for the UK.”

The fifth carbon budget, which was agreed by the government in June, commits the UK to reducing carbon emissions by an average of 57 per cent over the 1990 level during the period 2028 to 2032. A new emissions reduction plan, which outlines how the government intends to stick to the budget, is due to be published later this year.

Conservative MP and former member of the Energy and Climate Change Committee James Heappey recently revealed this plan has been delayed from April to June and will be renamed the “clean growth plan”, reflecting an increased focus on economic growth.

Hardie said that a whole system approach to emissions reduction will be “crucial” given the “interconnectivity and complexity of the world we live in.

“We must ensure that interdependencies across the economy are understood, synergies exploited and innovative cross-cutting technologies developed.”

He called for the plan to give “a clear and long-term framework” so businesses can invest. “While 2030 might seem some way off, for many of the businesses that will drive the low-carbon transition, it is just two investment cycles away.”

The report explained that this increased clarity must include more visibility over the contracts for difference and capacity market auctions, a long-term trajectory for the price of carbon and clarity over the UK’s future participation in the EU Emissions Trading System.

It also called for “a meaningful and long-lasting partnership between government and business to deliver the plan, potentially in the form of a steering board”. It said there should be “a more honest dialogue” between government, businesses and consumers, in particular on the costs of decarbonisation, through the publication of an annual report.

The government pledged to outline a “long-term road map to minimise business energy costs” in a green paper on the new industrial strategy published last month. Responding to the Committee on Climate Change’s annual progress report in October, it admitted that it needs to do more to ensure that the UK meets its fourth carbon budget covering the years 2023 to 2027. 

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