UK Government's Ten Point Plan for a Green Industrial Revolution
Earlier this week, the UK Government published its Policy Paper on the Ten Point Plan for a Green Industrial Revolution. The policy paper reiterates the commitment the Government made last week to turn the UK into the world’s number one centre for green technology and finance. The Prime Minister also announced his intention to establish Task Force Net Zero to progress the UK's commitment to achieve net zero carbon emissions by 2050 (the UK was the first major economy to legally commit to such a target). Through next year’s COP26 Summit the UK will urge countries and companies to engage in five priority areas – Adaptation and Resilience, Zero Emission Vehicles, Energy Transition, Nature, and Finance.
Key points highlighted in the UK Government's policy paper include:
Investing and financing R&D in new technologies: The policy paper highlights the important of investing in and financing R&D in new technologies for net zero. The Government's plans include:
- the launch of a £1 billion Net Zero Innovation Portfolio (which will focus on ten priority areas that correspond with this Ten Point Plan, including: floating offshore wind; nuclear advanced modular reactors; energy storage and flexibility; bioenergy; hydrogen; homes; direct air capture and advanced CCUS; industrial fuel switching; and disruptive technologies such as artificial intelligence for energy), £100 million investment in brand-new Greenhouse Gas Removals including Direct Air Capture and £100 million investment in Energy Storage and Flexibility innovation challenge.
- progression of the UK's ambition to be the first country in the world to commercialise fusion energy technology, enabling low carbon and continuous power generation. The policy paper confirms that £222 million has already been provided for the STEP programme (Spherical Tokamak for Energy Production), which aims to build the world’s first commercially viable fusion power plant in the UK by 2040, and £184 million has been provided for new fusion facilities, infrastructure and apprenticeships to lay the foundations of a global hub for fusion innovation in the UK.
- announcing the decision to invest in transport innovation to trial and deploy new technologies, invest £3 million in the Tees Valley Hydrogen Transport Hub, invest £20 million across trials of zero emission heavy goods vehicles, testing technologies at scale and continue to support climate ambition internationally and grow global markets for clean technologies through the International Climate Finance programmes (£170 million committed since June 2020 to support green recovery across Latin America, Africa and Asia).
Green Finance: The policy paper includes a wide range of green-finance related measures which it intends to implement and builds upon the announcements made last week. These proposed measures include:
- a plan to kickstart the green home finance market by consulting on introducing mandatory disclosure requirements for lenders on the energy performance of homes on which they lend and setting voluntary improvement targets.
- the issuance of the UK’s first Sovereign Green Bond in 2021 subject to market conditions and the intention to follow up with a series of further issuances to meet growing investor demand for these instruments. The bonds will help finance sustainable projects, infrastructure investment and create green jobs across the country.
- taking steps to encourage private investment into supporting innovation and manage climate financial risk by introducing mandatory reporting of climate-related financial information (in line with recommendations of the recommendations of the Taskforce on Climate-related Financial Disclosures) across the economy by 2025, with a significant portion of mandatory requirements in place by 2023.
- positioning the UK, and the City of London, as a leader in the global voluntary carbon markets, including in response to the recommendations of the independent Taskforce on Scaling Voluntary Carbon Markets.
- implementing a green taxonomy that defines which economic activities tackle climate change and environmental degradation.
- conducting HMT’s Net Zero Review which will consider the choices across tax, spend, regulatory and other levers to maximise growth opportunities and ensure an equitable balance of contributions across society.
- the Green Jobs Taskforce - working in partnership with business, skills providers and unions to develop plans for new long-term good quality, green jobs by 2030 and advising on what support is needed for people in transitioning industries. The taskforce will conclude its work in spring 2021, with the actions feeding into the Net Zero Strategy to be published later in the year.
Commenting on the Ten Point Plan, Energy partner Alex Harrison said: "This announcement re-iterates the UK's commitment to decarbonisation and sustainability and builds on the UK’s commitment to achieve net zero emissions by 2050. It places offshore wind, green hydrogen, nuclear, carbon capture and low emission transport at the centre of the UK's strategy to become the world’s number one centre for green technology and finance and comes at a key time given the UK’s presidency of the G7 from January 2021 and the UN Climate Change Conference COP26 in Glasgow in November next year. It reflects wider priorities in government to create jobs in industry, particularly outside of London and the South East, to attract inbound investment post Brexit and to boost the UK’s standing for investment in tech and clean energy."
Andrew Carey, Co-Head of Hogan Lovells Impact Finance & Investing group added: “It builds on the Chancellor's recent announcement on green finance-related measures, and the Bank of England’s new climate change stress test and signals the UK’s intention to play a leading role in climate change alongside the EU whilst providing plenty of ground for the UK government to pursue joint initiatives with the new U.S. administration."
Authored by Andrew Carey, Sukhvir Basran and Rachel Pleming.