The UK’s Net Zero strategy risks entrenching inequality

Last week, the government released 3000 pages worth of documents to bolster its claim that it’s acting on the climate emergency. They were also responding to the high court, which pronounced the government’s net zero strategy as inadequate for its own legally binding obligations. The impressive number of pages hides the fact that there was very little new policy and no additional funding. Instead we got the same old approach which gambles on nascent technology to hit net zero and risks entrenching societal inequalities.

These documents came at a time when the country is going through an acute cost of living crisis. The economy remains the biggest issue for the public, while environmental concern has dropped to its lowest level in four years. The last 15 months has seen a relentless attack on net zero by right wing pundits and media outlets, capitalising on higher energy bills as an opportunity to ridicule the government’s net zero plans. We’re already seeing the impact on the public: only 10% believe the government will likely meet its net zero target. In this context, it is critical that the government takes a more active role in communicating the scale of the challenge and also the opportunity to the public, whilst ensuring a fair transition through effective policy. We got neither last week.

Local people always have a veto on net zero plans, as we’ve seen with the rejection of onshore renewables or the more recent hydrogen village in Whitby. This is one of the reasons why government is consulting on ways to incentivise communities to accept new infrastructure (eg. via reduced energy bills). But such bespoke measures detract from the fact that existing policies to reach net zero will entrench inequality and burden disadvantaged communities. For instance, right now the government is aggressively pursuing hydrogen to power our industries and homes but expects consumers to foot the bill. The retail costs of hydrogen are expected to be 50 – 100% higher than gas and the government is currently legislating to pay for that difference via new levies on household bills. With at least 5 GW of new capacity aimed to be built by 2030, this could unfairly add to the already high burden on energy bills and impact those on the lowest incomes the most.

But it’s not just hydrogen; there’s new renewable energy projects, electricity network reinforcements, multi billion carbon capture and storage units, and new nuclear plants. All of this infrastructure, which this government is currently betting heavily on to decarbonise the economy, is likely to be paid for via consumer energy bills. While consumers will certainly benefit from building more cheap renewables, locking in our reliance on fossil fuels for decades to come, will have a devastating impact on households and continue to expose them to severe energy market volatility.

The solution isn’t to press pause on our net zero ambitions but to accelerate towards it while redistributing the costs and benefits more fairly. There are three things this government should do in the short term. The first is to protect all consumers from extreme price volatility, as we’ve had over the last 15 months, by radically reforming our energy tariff structure and ensuring every household has access to free or highly subsidised energy that can sustain their essential needs. This will ensure nobody, irrespective of income or circumstance, will ever have to face disconnection or make choices between heating or eating.

The second is to move the ever increasing ​‘fixed’ costs of the energy system (eg. building and maintaining the electricity grid) on to a more progressive tax system. With over 3m heat pumps expected to be installed by 2030, many wealthier households are expected to get off the gas grid, thereby pushing the costs of maintaining the current grid onto the remaining households, many of whom are already poor. This is a perverse outcome of the transition which needs to be nipped in the bud before it becomes a huge political issue. We could have a similar outcome where significant investments in network reinforcement are needed to meet the demands of heat pumps and electric vehicles, and the costs are placed on all consumers.

The third is regulating and funding energy efficiency measures in the private rented and able-to-pay sectors. The government’s indecision is leading to tenants continuing to live in some of the worst conditions in Britain while paying exorbitant energy bills. Similarly, if we are to encourage wealthier, high-energy usage households to improve their home’s energy efficiency, we need to offer them trusted information, low cost finance and high quality delivery.

If we do not urgently change the way we pay for the net zero transition, both today and in the future, there is a big risk the public consensus on the need for climate action will fall apart.

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