- Rishi Sunak’s reluctance to attend the COP27 summit was met by scepticism
- At the event, Sunak announced the UK will triple the funding for the climate transition to £1.5bn, but a lack of clear plans took some of the shine off the gesture
- This week’s fiscal statement will reveal just how serious Sunak is about the green agenda.
- Climate advocates will be hoping for confirmation that planning zones will remain firmly in place, windfall tax reform, and an overhaul of the stamp duty tax that will link breaks to efficiency improvements.
Laura Hoy, ESG Analyst at Hargreaves Lansdown:
“Rishi Sunak was reluctant to make the trip to Egypt to attend COP27 while turmoil at home rages. But his attendance was a comforting sign for climate activists, who were let down by his predecessor’s policies. While the Prime Minister talked a big game at the summit – pledging to triple funding for climate adaption – there was very little detail to back up exactly where that pot of money will come from.
Sunak’s facing a gaping black hole in the budget back home, and Britons are bracing for a painful Autumn Statement at the end of the week. The big question is where this pain will be administered, and whether Sunak will be able uphold his promises to keep the UK firmly on track toward net zero.
There are a few key budget items that will offer a better picture of Sunak’s priorities. Many are hoping he’ll revamp the existing windfall tax to create a longer-term solution to the energy crisis that doesn’t rely so heavily on new oil and gas projects.
The current system allows many of the industry’s largest players to avoid the tax by offsetting it with new investment leaving very little income to address the root cause of the problem – poor energy efficiency.
Unseasonably warm weather saved the UK Treasury £260m in October as less need for heating meant natural gas demand was down 19%. Efficiency improvements could have a similar impact during the colder months, as it would lower demand. This underscores the growing need for efficiency improvements in the UK.
Sunak could use the funds from an expanded windfall tax programme to help households improve efficiency, a long-term solution to higher energy bills that would also help move the UK closer to net zero. Linking stamp-duty relief to efficiency improvements is another way the PM can encourage retrofits and tackle the energy crisis from a climate-friendly angle.
Rolling back former PM Liz Truss’ paired down planning rules is another signal of Sunak’s commitment to environmental issues. Her plans for investment zones with relaxed planning rules sparked concerns that environmental protections could be abandoned. That’s something Michael Gove, who’s tasked with creating a plan to tackle the housing shortage, has ruled out – but it remains to be seen exactly how he plans to massage planning rules in order to spark growth.”