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The UK is not on track to deliver its energy and climate objectives at the pace required due to the lack of a consistent government strategy, which risks undermining private investor confidence in country’s clean energy transition, the UK Energy Research Centre (UKERC) has warned.
A new study by the government-funded research organisation stresses the importance of mobilising and tracking private investment for clean energy infrastructure and climate actions across departments on Whitehall in order to deliver and progress an “investment-grade delivery plan” for the UK’s net zero transition.
However, it said it had found “substantial gaps in infrastructure, inadequate pace, and concern about a looming investment gap” which indicated that government processes to steer a successful strategy for drumming up private investment in the clean energy transition were “not working”.
Published yesterday by UKERC, the report examines how government departments can better work together to boost investor confidence in clean energy for both policymakers and the public.
It follows mounting concerns that the UK risks being left behind in the rapidly escalating global clean tech race, with the US having fired the starting gun for attracting global green investment through the Inflation Reduction Act last year, and the EU following suit this year with plans for its own major clean tech investment policy package.
Concerns have also been raised about the government’s broader approach to net zero – including from the Climate Change Committee (CCC) – amid reports that several key green policies are at risk of being ditched or diluted by the Conservative leadership, despite repeated calls from business groups that the UK should look to go further and faster on net zero in order to boost the economy and job opportunities.
Yesterday’s UKERC report therefore echoes many of these concerns, arguing that investor confidence in the UK’s clean energy transition is needed to provide both policymakers and the public with assurance that existing green policy and clean energy market plans and models can deliver.
Some of the main areas of concern highlighted in the report include “substantial gaps” in the level of investment expertise between different in-house government teams and a lack of clarity on the co-ordination and coherence between departmental approaches to investment as well as plans to attract investment.
It also highlights concerns surrounding the transparency of investment plans, which the report warns also “appear inconsistent” or are limited on assumptions, processes, and risk assessments, including insights from investor or sector taskforces.
Moreover, it argues insufficient tracking measures have been put in place to ensure that the appropriate government departments can be warned when investment is not arising as hoped nor with the relevant level of detail, so that these issues can be course corrected.
UKERC’s report therefore calls for the government to draw up and deliver an investment grade delivery plan, backed by a new practitioner-focused panel on Whitehall tasked with reviewing the factors and tools needed to build investment confidence, reduce delivery risk and increase transparency.
The government should also establish a forward-focused, risk-based tracking which should be used to identify investment-related barriers to implementation in advance to ensure they are delivered securely, the report added.
The delivery plan should focus not on volumes of capital, but instead where existing or new policy models which assume private investment will arise, as well as ensuring that conditions are in place to ensure that these are working successfully, it said.
But crucially, UKERC said driving the UK’s net zero transition requires more leadership from the government.
“Increased urgency around implementation, notable gaps in energy infrastructure and a context of greater competition for capital for the needed transition is focusing attention on getting this right,” the report states. “This requires both leadership and the tools for the job.”
The Department for Energy Security and Net Zero (DESNZ) was considering a request for comment at the time of going to press.
However, it continues to face significant pressure from businesses, investors and green groups to rapidly come up with a domestic response to the IRA in the US, or risk the UK falling behind in the race for green investment towards the net zero transition.
Emma Pinchbeck, chief executive of trade association Energy UK, said yesterday that the IRA had been a “gamechanger” for the green investment landscape, and that without rapid and concerted action the UK was at risk of struggling to drum up the investment required to drive the net zero transition.
“The UK’s world-leading role in the development of clean energy has given us strengths in terms of expertise and experience – but we have no divine right to this position,” she said.
“With growing global competition for private investment that can choose its location, a failure to respond will see us quickly fall behind and jeopardise ambitious targets for increasing our own sources of clean energy and decarbonising our whole economy. While we can’t necessarily replicate what the US has done, resting on our laurels and successes so far would be a very serious mistake.”
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