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Today's R&D funding announced by the Prime Minister rightly targeted at hard to treat sectors

22nd July 2020

Reacting to the Prime Minister’s funding announcement of £350 million to cut emissions in heavy industry, construction and transport and fuel green economic recovery from the COVID-19 crisis, Ana Musat, Policy Manager at the Aldersgate Group, said: “Today’s R&D funding announcements are rightly targeted at sectors where making progress to cut emissions is both difficult but also essential if the UK is to have an economic recovery with an ambitious climate programme at its core. Investment in decarbonising transport, heavy industry and construction is not only essential for reaching the UK’s net zero target, it will also be key in creating jobs and increasing the competitiveness of industries that tend to be regionally spread out and are important to the UK’s long-term levelling up agenda.”
We particularly welcome the announcement related to cutting emissions in the aviation sector, where the pathway for getting to net zero is less clear. Urgently starting trials for key technologies like hydrogen, electrification or sustainable fuels is essential to provide government and businesses more clarity on potential pathways to cut emissions and the technologies and business models that future policies will need to support.”
Ana Musat added: “Beyond R&D funding, decarbonising hard to treat sectors like heavy industry or aviation will need to be achieved by and large through private investment, which itself will require clear policy signals before it is committed. An increasing carbon price trajectory from 2020 onwards is essential to incentivise low carbon innovation and measures like product standards could play a key role in driving down embedded carbon emissions in industrial goods as steel and cement and growing the market for ultra-low carbon industrial goods.”


Ambitious Environment and Agriculture Bills key to “putting nature at heart of recovery”

20th July 2020

The Aldersgate Group welcomed the commitment by Environment Secretary George Eustice today to put nature at the heart of the recovery but said that including nature restoration projects in stimulus investments and making rapid progress on ambitious Environment and Agriculture Bills was essential to put this commitment into practice.

Reacting to the Environment Secretary’s speech today, Nick Molho, Executive Director of the Aldersgate Group said: “A healthy natural environment is essential to the wellbeing of the economy and society.It is heartening to hear the Environment Secretary’s commitments to “redouble efforts” to improve the state of the environment and ensure that decisions relating to or impacting on the environment must be guided by sound scientific evidence.

Putting nature at the heart of the recovery requires the government to take a three-pronged approach. First, any changes to environmental impact assessments must result in a planning system that is predictable, science-based and focused on delivering environmental improvements. Second, nature restoration projects such as wetland or peatland restoration projects must be included in future public stimulus investments. Third, rapid progress will need to be made in the Autumn to finalise the Environmental and Agriculture Bills and develop a system of ambitious targets, all of which are essential to drive long-term private investment towards environmental improvement projects.”


Rebuilding to last: UK must not go back to the old normal

15th July 2020

Today, the Aldersgate Group launches a new report, Rebuilding to Last [1], commissioned to James Rydge and Dimitri Zenghelis at the Grantham Research Institute, London School of Economics and Political Science. This report provides one of the most in-depth economic analyses to date on the current economic situation facing the UK and the investment and policy decisions the government needs to take in the run up to the Autumn Budget if it is to deliver an inclusive, resilient and sustainable recovery after COVID-19.

The report, which comes days after the initial stimulus measures outlined by the Chancellor of the Exchequer in the Summer Economic Update, sets out compelling economic evidence showing that a durable economic recovery needs to be closely aligned with the UK’s climate, environmental and clean growth ambitions. Building on last week’s public stimulus announcements, the authors argue that key institutional changes and major policy commitments will be needed to deliver a transformative and long-term recovery and urge the government to consider these carefully in the run up to the Autumn Budget.    

Reacting to the publication of the report, Nick Molho, Executive Director of the Aldersgate Group, said: “The UK did not seize the opportunity to transform its economy for the better when it responded to the 2008 Global Financial Crisis. Twelve years on, there is mounting economic evidence that a recovery plan based on investment in low carbon infrastructure and industries is one of the most effective ways of creating jobs in the near term and driving greater productivity, innovation and resilience in the long-term. The Government has rightly committed some of its early stimulus spending in areas such as energy efficiency but it must now move to make key policy commitments in areas such as carbon pricing, clean transport, low carbon heating and industrial decarbonisation if it is to deliver lasting and positive change.”

The report argues that stimulating greater investment in low carbon infrastructure, goods and services delivers higher short run economic growth multipliers compared to alternative stimulus investments. The government must avoid returning the UK economy to the short-sighted and unproductive ‘cut public spending’ policies of the past that led to more inequality, historically low productivity growth, and failed to support the UK’s climate targets, with high levels of public sector debt to GDP remaining a decade on. There can be no going back to the old normal.

Dimitri Zenghelis, Senior Visiting Fellow at the London School of Economics and co-author of the report, said: “This is a rare moment in history where the UK has an opportunity to rebuild on a path of clean, resilient and inclusive growth, aligned with the UK’s long term objectives while generating skilled jobs today. The government has made a good start with the summer statement and early stimulus measures will help shore up a more resilient economy over the next two years.

But the government must now turn its rhetoric on green recovery into predictable and credible commitments to build a sustainable economy over next decade and beyond. A clear strategic plan is necessary to develop the skills for the coming decades and leverage private investment. Restoring confidence requires a clear macroeconomic vision to rebuild an economy for everyone, designed to last, creating jobs and generating wealth of real value out of the post-COVID recession.”

Dimitri Zenghelis added: “Sustainable investment creates durable competitive jobs where they are needed most, while also helping to achieve long term objectives around net zero, resilience, productivity and levelling up. It’s time to end unproductive investment in the old, dirty, divided economy and rebuild to last after COVID-19. The government’s strategy needs to expand beyond retrofitting to invest in clean innovation, the roll out of smart systems to manage energy demand, upgrade the electricity grid, replace gas, expand EV facilities, encourage pedestrianisation and cycling in cities as well as manage natural capital.”

The report puts forward a four-point plan of action for government to ensure an inclusive, resilient and sustainable recovery from the COVID-19 crisis and calls for:

  • A programme of near-term public investments that will deliver net job creation across the regions, targeted in particular at energy efficiency retrofits, natural improvement projects such as tree planting and wetland restoration, while rolling out networks of the future based on fast broadband and smart connectivity, electric vehicle charging infrastructure and expanding public transport connections to low-income regions;
  • The creation of new institutions, including a new National Investment Bank with £20bn in paid capital. This Bank would work closely with the National Infrastructure Commission to establish a clean infrastructure pipeline. It would focus on crowding in private sector investment towards complex low carbon projects, such as CCS and hydrogen and attracting investment towards regions in need of economic regeneration. The response to COVID-19 has also highlighted the need to devolve power from Whitehall to the regions, where decision-makers are closer to their citizens both physically and socially, building on the Cities and Local Government Devolution Act 2016;
  • A ‘low carbon skills and levelling up strategy’ to avoid workers falling into long-run unemployment or underemployment after the crisis, including through job guarantees, reskilling support and human capital tax credits for employers. To ensure existing and future workers are fully equipped for the low-carbon transition, measures should be taken to embed sustainability across the educational curriculum, reform apprenticeship standards and T-levels and set up sustainability metrics for tertiary level education courses;     
  • Bold and comprehensive policies to drive long-term private sector investment towards low carbon infrastructure, goods and services. This includes setting up a rising carbon price starting at £40 per tonne to align a future UK Emissions Trading Scheme with the net zero target, and rapidly introducing binding regulatory standards to drive emission cuts in areas such as buildings and vehicles. Public procurement, fiscal and monetary policies must all be made wholly consistent with climate and environmental goals, and the government should bring forward its 2027 target of 2.4% of GDP spend on R&D to support large scale demonstration projects in sectors that are hard to decarbonise such as heavy industry.

James Rydge, Policy Fellow at the Grantham Research Institute and co-author of the report, said: “It is important that institutional reforms are undertaken to expand capacity, rebuild the economy for the long term, create new opportunities for all and manage long-run risks. This requires building a credible industrial strategy to drive the investment forward, rolling out efficient networks on energy, communications and transport and ensuring that all this investment is compatible with a low-carbon economy.”

James Rydge added: “The private sector can drive much of the investment that is needed but it is seeking clarity and certainty from government to start investing again. If adopted, the recovery package this paper sets out will plug important institutional and policy gaps and provide the private sector with the clarity and confidence it needs to invest in productive assets that improve labour productivity and grow jobs now and over the long term.”


[1] The Aldersgate Group launches a new report today, Rebuilding to Last: designing an inclusive and resilient growth strategy after COVID-19, commissioned to Dimitri Zenghelis and James Rydge at the Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science. 

Treasury takes important first steps toward a resilient recovery, must be followed up by policy commitments in Budget

8th July 2020

Reacting to the Chancellor of the Exchequer’s Summer Economic Update today, Signe Norberg, Public Affairs Manager of the Aldersgate Group, said: “The Government faces a significant challenge to the get the economy and employment going again, and in the words of the Chancellor, the UK must have “a green recovery with concern for the environment at its heart”. The UK has a huge opportunity to put the economy on track for a resilient and long-term recovery by aligning it with the UK’s climate and environmental goals [1]. The £3bn investment package focused on energy efficiency spending in 2020/2021 can support rapid and regionally spread out job creation, as well as deliver important social and environmental benefits by having better homes and driving cost-effective emission cuts. These benefits could be significantly amplified if similar support continues to be provided in the years ahead.”
Signe Norberg added: “Building on today’s positive first steps, long-term policy commitments now need to be made by the time of the Spending Review and the Autumn Budget in order to genuinely deliver long-term and transformative change. This needs to include fiscal incentives, clear regulatory standards to mandate high levels of energy efficiency performance in buildings, a phase out of petrol and diesel vehicle sales around 2030, a UK Emissions Trading Scheme with a carbon price in line with the UK’s net zero target and product standards to drive down the embedded carbon in industrial goods. [2]”


[1] On 12 June 2020, the Aldersgate Group published a policy briefing, Seize the Moment, setting out a wide range of nature restoration and low carbon projects which could deliver rapid job creation across multiple regions of the UK whilst also improving the resilience of the economy and putting the UK on track for its climate and environmental goals. The report is available here.
[2] The Aldersgate Group will be releasing on 15 July economic analysis commissioned from the Grantham Research Institute at the London School of Economics. The report will highlight the key lessons learnt from recoveries from past financial crises, set out what a successful recovery plan should look like and examine what should be the role of environmental and climate issues within that.


Chancellor’s energy efficiency stimulus is a good start but must form part of broader low carbon package

7th July 2020

Reacting to the £3bn energy efficiency stimulus package expected to be unveiled on Wednesday by the Chancellor of the Exchequer, Nick Molho, Executive Director of the Aldersgate Group, said: “It is positive that the Chancellor wants to align the recovery effort with the UK’s climate, environmental and clean growth objectives. The £3bn package to support energy efficiency investments in 2020/2021 is a good start and could deliver meaningful emission cuts, better buildings and net job creation if similar support is provided in the years ahead, in line with Conservative Party’s manifesto commitments. The £1bn focused on improving energy efficiency in public buildings, such as education institutions and hospitals, is a welcome move as it is high time for the public sector to lead by example. 

But kickstarting the economy and putting the UK on a credible pathway for its net zero target also require targeted public spending in areas such as electric vehicle charging infrastructure, energy networks, broadband and nature restoration projects, so it is important that this week’s announcements be followed by further stimulus measures ahead of the Autumn Budget. [1]” 

Nick Molho added: “Beyond public investment to support shovel ready projects and low carbon innovation trials, it is critical that the government puts forward a comprehensive policy plan in the autumn to drive private sector investment towards the low carbon and environmentally resilient infrastructure needed to put the UK on track for its net zero and nature restoration targets. Clear regulatory standards and fiscal incentives in areas such as energy efficiency, clean transport and industrial decarbonisation will be vital if the private sector is to do a lot of the heavy lifting to build a competitive, jobs rich, low carbon economy. [2]”

[1] On 12 June 2020, the Aldersgate Group published a policy briefing, Seize the Moment, setting out a wide range of nature restoration and low carbon projects which could deliver rapid job creation across multiple regions of the UK whilst also improving the resilience of the economy and putting the UK on track for its climate and environmental goals. The report is available here.

[2] The Aldersgate Group will soon be releasing a commissioned report, authored by economists at the London School of Economics, on what a successful recovery plan should look like and the role of environmental and climate considerations within that. It will set out criteria for public investment and how to encourage private sector investment in areas of public interest, such as the natural environment.