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COP26 moves the dial towards 1.5C but momentum must increase in 2022

13th November 2021

Following the conclusion of the COP26 climate summit, the Aldersgate Group welcomes the important pledges made over the last two weeks in areas such as deforestation, methane, finance and innovation, the progress made on agreeing rules for international carbon markets, the clear next steps that have been identified in the Glasgow Climate Pact for all countries to increase their emission reduction pledges in 2022, and the commitment for countries to move away from the use of unabated coal and fossil fuel subsidies.
 
Recognising that much remains to be done to put the world economy on track for 1.5C, the Group calls on world leaders to accelerate momentum, by significantly increasing national emission reduction pledges in 2022, updating low carbon development plans, providing clearer commitments on full coal phase out and end of fossil fuel subsidies, and reaching a solution to deliver the minimum $100bn of climate finance pledged to developing countries.
 
The UK Government – which deserves praise for its efforts during the negotiations and which will retain the COP Presidency for another 12 months – must continue to drive progress in these critical areas of climate negotiations, whilst at the same time developing the policies needed to accelerate the UK economy’s own transition to net zero emissions.


The COP26 summit saw an unprecedented degree of business support for achieving a rapid shift to net zero emissions, with a growing number of sectors and businesses taking on new climate targets and some of the world’s largest financial institutions committing to align their investment portfolios with the 1.5C target under the Paris Agreement [1].
 
The summit also delivered some important pledges, with China and the United States agreeing close collaboration on climate action [2] and over 100 countries agreeing to end deforestation by 2030 [3] and cut methane emissions by 30% by 2030 [4]. Critically, the Glasgow Breakthroughs – which are supported by over 40 countries and aim to accelerate cost reductions and market deployment in renewable power, clean transport, hydrogen, green steel and sustainable agriculture – could have a significant impact on driving global private investment towards low carbon technologies [5].
 
The formal negotiations have delivered progress in some areas, most notably by introducing a requirement for all countries to submit more ambitious emission reduction pledges in 2022 to keep the 1.5C target alive, explicitly acknowledging for the first time the importance of national economies moving away from their dependence on fossil fuels and progressing rules on international carbon trading, despite some concerns remaining on the risk of double counting of credits. The Glasgow Climate Pact is also clear that developing economies urgently need to deliver the $100bn of annual climate finance pledged to developing economies and that this level of financial support will need to be increased.
 
However, whilst it has shifted the dial forward, the COP26 summit does not at this stage put the world on track for 1.5C, with many actions required in 2022 to close the emissions gap. Progress is urgently needed in areas such as the delivery of climate finance for developing countries, increasing investment in nature restoration and climate adaptation, the development of more ambitious national emission reduction pledges and low carbon strategies, and on a clear pathway to move away from fossil fuels, including a full phase-out from coal. 

Rt Hon Theresa May MP, Chair of the Aldersgate Group, said: “Despite many challenges, COP26 has delivered important progress, both in terms of the negotiations themselves but also through the meaningful pledges that governments, businesses and financial institutions have made over the summit. But we must recognise that much work remains to be done to put the world on track for the 1.5C target. Time is of the essence. Governments across the world must continue to work together to close the remaining gaps in ambition and with its Presidency of COP over the next 12 months, the UK Government has a vital role to play.”
 
Nick Molho, Executive Director of the Aldersgate Group said: “The business community – including many British businesses - turned up in force at COP26 and made clear its support for the 1.5C target and its intention to deliver a thriving, net zero emissions economy on the ground. Beyond its vital role on the global stage, the UK Government should build on this momentum by implementing its net zero strategy and driving much needed business investment in low carbon power, buildings, transport, industry and agriculture.”

Henrik Pedersen, CEO, ABP, said: “ABP welcomes the progress that has been made at COP26 in Glasgow. It is now essential that governments around the world - including here in the UK - maintain this momentum and accelerate the pace of policy development in the months ahead. The Clydebank Declaration on Green Shipping Corridors is a positive example of the collaboration between nations that will be required to drive decarbonisation in maritime and global trade. Around the world, maritime ports have a critical role to play in facilitating the decarbonisation of transport, industry and energy generation. In the UK, ABP’s ports stand ready to play their part in delivering these shared objectives.”

Peter Simpson, Chief Executive, Anglian Water and Co-Chair of the Corporate Leaders Group, said: “Since Paris the world has changed, in the severity of climate impacts we’ve seen but also in how loudly progressive businesses and society want governments to step up. It was obvious during my time in Glasgow that private enterprise is already deeply engaged in transformative climate action, and a wealth of green finance is there to be exploited. The water industry’s sector-wide commitment to net zero by 2030, 20 years ahead of the UK’s legally-binding target, is just one example of businesses leading the way. But we need governments to go further and faster more urgently, given what’s at stake.” 

Sue Riddlestone OBE, CEO & Co-founder, Bioregional, said: “Buildings are responsible for 40% of our carbon emissions, so it was significant to see more governments than ever before committing to cut emissions from the built environment in their Nationally Determined Contributions. And the fact that two-thirds of financial institutions have signed up to the Glasgow Financial Alliance for Net Zero will no doubt help much needed capital investment flow into sustainable buildings.
 
With COP drawing to a close, it is now crucial that we get on with delivery - working with Government to create a viable plan for the energy efficient retrofit of our homes, and to ensure that only net-zero carbon buildings are developed in the future.”

Gabrielle Ginér, Head of Environmental Sustainability, BT, said: “Despite COP26 coming to an end, the need for urgent climate action continues. While we welcome the launch of the Declaration on zero emission cars and vans which signals that we are turning a corner on road transport emissions, we need Governments and businesses across the world to do more. It’s time to commit to net zero, align to 1.5 degree Celsius science-based targets and set out clear and transparent implementation plans.”

Iain Patton, CEO, EAUC said: “It is exciting and a relief to see 1050 universities and colleges across the world committing to net-zero through the Race to Zero campaign of which EAUC is the global Secretariat. We also welcomed the draft strategy on sustainability and climate change from the Department of Education to support all education providers to be net-zero, to improve biodiversity and to obtain clear data on GHG emissions.

“We are delighted that Education Ministers from around the world were finally invited to COP26, but we still have much more to do. We need ALL universities and colleges around the world to commit to net-zero targets, and we need to get our own house in order to fully integrate climate education in the curriculum in the UK – it is clearly just not good enough to have a few hours in Geography or Science.

“Students and other young people are looking at us for leadership and we need to take bold steps to provide the skills and knowledge that young people will need to thrive. To quote the Italian Education Minister, Patrizio Bianchi, “everything starts with education and every career is a sustainable career".

Ece Ozdemiroglu, Founder, eftec: “From official negotiations to side events with NGOs, sector organisations, and investment managers, from the Blue Zone, and to the streets of Glasgow on the Global Day of Climate Justice march, COP26 was an exhilarating experience for me. If I had a word cloud for the event, ‘Climate Justice’ and ‘Just Transition’ would be the biggest phrases, both internationally and here in the UK.
 
The statements from the Heads of States are still not enough, but they are encouraging. We must and will continue to bring mitigation and adaptation closer, to help design the most useful role for the public sector, to provide evidence to mobilise more investment in nature, and to encourage everyone to see adaptation as an opportunity to create a healthier and happier society.”

Tim Anderson, Group Head of Transport, Energy Saving Trust, said: “Transport is the single biggest contributor to carbon emissions in the UK and accounts for around a quarter of all global emissions. We need strong policy commitments, practical support and incentives in place at national and international levels to decarbonise transport. We are motivated by the outcomes of COP26 including commitments to electrification, active travel incentives, as well as innovation to support the decarbonisation of rail, marine and aviation. There is significant work to be done to turn this ambition into action.”

Sarah Mukherjee MBE, CEO, IEMA, said: “Whilst I’ve been at COP I have witnessed some great discussions and campaigning for a good outcome to keep temperature rises below 1.5 degrees, but I and our IEMA members are worried that the outcomes of the negotiations won’t go far enough without more concrete plans from countries that are responsible for the highest levels of emissions.
 
There is an onus on those countries that have locked in ambitious emissions targets to continue to persuade those that have not done so to do likewise and therefore demonstrate real climate leadership, alongside a willingness to collaborate on solving this greatest of challenges. We must also continue to equip more people and organisations internationally with the right green skills to guide and lead real change for a sustainable future.”

Peter Jelkeby, Country Retail Manager and CSO, IKEA UK & Ireland, said: “COP26 was an historic opportunity to recommit the world to a 1.5 degree future, and as we emerge from the summit, at IKEA we’re clear that this remains the only way to deliver a more sustainable future. While we welcome the significant announcements made across COP26, governments and our leaders must now listen to the voices of the many people that were raised throughout the summit, including many thousands of inspirational young people to whom we must listen, learn from, and engage with. The UK Government must also recognise the demands for action from businesses and across society, and make good on their commitments and deliver the detailed pathways and policies we need to assemble a better and more sustainable future.”

Professor Martin Siegert, Co-Director of the Grantham Institute – Climate Change and the Environment, Imperial College London, said: “My feeling is that it's been good to hear about the initiatives discussed and launched at COP26 but too early to yet say whether they will be meaningful or successful. Though I'm sceptical about some statements and pledges, ultimately the most important figure is the atmospheric CO2 concentration, and we'll only know whether COP26 has shifted that number in some years’ time. Looking back at the CO2 record from 2015 and afterwards it doesn't look like COP21 had much impact (yet), so while I welcome all the initiatives it may be that we'll need to substantially ramp up deliverable global actions if, in a few years, it turns out that COP26 has not led to in a noticeable shift in the CO2 level.”

Jon Khoo, Head of Sustainability (EAAA), Interface, said: “At COP26 we have discussed the urgency, now it is time to demonstrate agency. The business community is aware of the scale of the challenge we face with the climate crisis, and must now demonstrate its ingenuity, determination and willingness to act. Equally, we must ensure we’re listening to the youth activists, the scientists, and the diverse voices we have heard from at Glasgow. For a pledge is a promise, reducing GHG emissions will be a fact.  
 
It was pleasing to see the built environment and construction take an important role on the penultimate day of COP26 as our industry is connected with up to 40% of global carbon emissions. With this in mind, tackling both operational and embodied carbon emissions must remain a key focus for every nation’s journey to net zero. Finally, we were encouraged by the progress of Race to Zero campaign and increased use of Science-Based Targets as basis for credible action by businesses.”

Simon Winch, Sustainability & Ethics Lead on Environment, John Lewis Partnership, said: “COP26 has been a vital opportunity for world leaders to come together to discuss how we accelerate action towards the goals set out by the Paris Agreement and UN Framework Convention on Climate Change. We are absolutely committed to that ambition and recognise the important role the retail industry has in supporting its goals. This is why we are working hard to establish our science-based targets in line with the 1.5°C pathway, which will build on our existing 2035 net zero commitments. We won't solve the climate crisis alone or overnight but we recognise that the time for talking is over and we are prepared to take bold action to ensure we're part of the solution."

Caroline Laurie, Director of Responsible Business, Kingfisher, said: “Now is the time for us all to take action and we know we all have more to do however, COP26 has delivered important progress through the pledges, initiatives and negotiation progress that has been achieved. Continued momentum is essential to put the world economy on track for 1.5C, both in terms of global negotiations, and in terms of national climate policy.
 
From a UK business perspective, one of the most impactful steps we have seen come out of COP is the requirement for listed companies to publish net zero transition plans that align with the UK’s net zero target. This will not only help accelerate actions to decarbonise the economy but will also address concerns over greenwashing. However, the commitment could be made stronger by broadening its application to all large companies.”

Simon Virley, Vice Chair and Head of Energy and Natural Resource, KPMG UK, said: “While the debate has already begun about whether COP26 has been a success or a failure, the truth is it’s somewhere in between. Progress was made in a number of areas: initiatives like GFANZ that has mobilised $130 trillion of ‘net zero’ global capital and the ‘Glasgow Breakthroughs’ on clean tech are welcome, as are the agreements on reforestation, cutting methane, phasing out coal and the take-up of EVs. But, even with these measures, the world is definitely not on track to limit global warming to 1.5 degrees.
 
“One very big and welcome shift has been the much greater involvement of the business and finance community at COP26. In Glasgow there was evidence of more of a ‘bottom-up’ approach, with businesses taking the initiative on developing plans for Net Zero and not waiting for governments to act. COP26 is best viewed not in isolation but as part of an ongoing, global process of negotiations and initiatives to reduce climate change, one that continues next year at COP27.”

Nigel Wilson, Group CEO, Legal & General, said: “In the two weeks of COP26 the world is ever more convinced of the imperative on action and delivery. Debate is not enough. The challenges and deliverables agreed in Glasgow on how we tackle climate reflects that this is not only the most urgent issue but also the biggest investment opportunity of our lifetimes. We can harness the power of business and markets to make sure that the transition happens. That is why our roadmap to net zero focuses on funding the transition to support a low carbon future and deliver secure returns. That is why we are investing in renewable energy, and we have actionable climate plans in place across our major business areas including investments, housing and commercial property.”

Daniel Johns, Chair of the National Flood Forum and Director at the Aldersgate Group: “COP26 has focussed attention on critical areas of climate action like never before. Adaptation, nature and water have finally had the focus they deserve. Yet despite that welcome shift, we are still not where we need to be in the races to net zero and resilience, especially in preparing for flooding, sea level rise and increasing water scarcity. If anything, COP26 has highlighted just how far governments are now lagging behind where businesses and the public want them to be in preparing the country for climate change.”

Duncan Burt, Chief Sustainability Officer at National Grid, said: “COP26 has set us on a trajectory where we can conquer climate change but we are just at the beginning of a vast effort to deliver and exceed the promises that we have made. There remains much still to do but Glasgow’s COP26 has moved us firmly forward, bringing us with the margin of error of 2C warming. Many of the major building blocks of a climate friendly future are understood and now simply need to be built: zero carbon electricity supply, electric vehicles and charging infrastructure are all underway in the US, UK and around the world. But more needs to be done to demonstrate that richer nations will play their part on leading the global transition: richer nations should go faster and ensure the financial commitments to support the global transition are met.
 
We are working to deliver zero carbon energy for our communities and to help accelerate the transition. We are working globally to enable the wider transition through initiatives such as GGI-OSOWOG.  We must now move at speed to seize the opportunity to limit warming below 2C and keep 1.5C in sight.”

Greg Jackson, Founder and CEO, Octopus Energy Group, said: "COP26 was a great chance for business leaders, governments and activists around the world to come together to work towards a green, clean future, and Octopus Energy are delighted to have used its galvanizing influence to announce a flurry of agreements to bring our technology and wind turbines to even more countries, turbocharging the green energy revolution around the world. But, before we all pat ourselves on the back, COP26 also shed light on the fact that we still have a long way to go.
 
Octopus Energy recently secured funding from Al Gore founded Generation Investment Management and we'll continue to use it as fuel for our global green mission. But please, we ask of you all - we have the tools to make green energy the cheapest energy for everyone, let's not waste any more time in weaning ourselves off dirty fossil fuels for good."

Gavin Templeton, Partner, Pollination, said: “It remains to be seen whether COP26 will be judged as a success or a missed opportunity but the stark warnings from the IPCC climate change report appear to have shifted momentum in the debate. Decisive action has been taken on halting deforestation, cutting methane emissions and the phasing out of coal-fuelled power plants and India’s engagement with the net zero target must surely be viewed as a diplomatic win. It is clear the transition to a low-carbon economy will require a reframing of the global economy, radical thinking, and breakthrough ideas so it is fitting that natural capital finally took centre stage and $130trillion of private capital has been directed to decarbonisation. GFANZ has laid down the gauntlet to policy makers and public sector financiers so will they step up to the plate? The time for talking is over and we now need concrete measures to accelerate the transition towards net zero.”

Philippa Spence, Managing Director, Ramboll UK, said: "COP26 has delivered progress but fallen short on securing our 1.5-degree future. I urge businesses and authorities to prioritise adaptation and resilience measures, whilst accelerating the pace of decarbonisation. The solutions to do so exist here and now, but must be strengthened with changed leadership behaviours and the willingness to adopt low-carbon business models. The private sector can lead the green transition, but it will take bravery. We must be open to leaving the tried-and-tested behind, and acknowledge that some of the challenges are not as hard we think!”

Keith Anderson, CEO, ScottishPower, said: “It’s fair to say that Glasgow has never experienced anything quite like COP – it has energised civic society and brought commitments from business ranging from the car manufacturers to the finance sector to take action to address the climate emergency. 
 
“From our headquarters in Glasgow, at ScottishPower we’re proud to be playing our part in the green transformation.  Speeding up the journey to a greener future is at the heart of everything we do. We were the first large energy company in the UK to generate the 100% Green electricity - closing our coal plants, ditching gas, and focusing entirely on green generation and investing in the grid to bring on even more renewables. All of our investments – £10 billion in the next 4 years – are determined through the prism of Net Zero.
 
“What we’ve seen over the past two weeks are the building blocks being laid for the Net Zero transition, with enduring commitments on coal, methane, forestry and transport. On their own they may not be enough, but together they begin to build momentum. My expectation is that COP26 will prove to be the springboard for faster action and greater ambition. Reflecting on a momentous fortnight, what really brought home the significance of COP to me was seeing the thousands of people – of all ages, backgrounds and nationalities – coming together to march for change last weekend. Coming past our building, which is decked out in the global warming stripes along its base, it was clear to me that the message really was very simple: do more, do it now, do it faster, do it for them.”

Carl Ennis, Chief Executive Officer, Siemens plc, said: “Measure of the success of the COP negotiations must be more nuanced than simply the ultimate target. Net zero, with net benefits, is a journey, and whilst the discussions in Glasgow may not have detailed all the steps required, I believe that we should focus our efforts on delivering what we can do right here, right now. Business is ready to play its part.”

Meg Baker, Director of Education, SOS-UK, said: “We welcome the progress being made to connect the climate crisis with the role of education as a key enabler for change. At COP26 we saw the first ever convening of Education and Environment Ministers as part of the presidency programme which is a positive step in the right direction. From this a number of nations have made meaningful commitments to embed climate and sustainability into education policy, including the UK Department for Education who used the event to launch their draft Climate and Sustainability strategy. The strategy includes a strong focus on training and skills as well as integration into STEM subjects which are all absolutely crucial, for an even more ambitious strategy we are calling for this to cover all subject areas to break the current silos we are seeing in education.”

John Scanlon, Chief Executive Officer, SUEZ recycling and recover UK, said: “Although frustrated by the absence of waste and resources on the agenda at COP26 before the conference began, two weeks on I am more upbeat – it was there, time and again, woven through and embedded in speeches by high profile figures from across the globe, indicating the pivotal role resource efficiency plays in meeting our emission reduction pledges. With the Environment Act passing into law this week, the path is clear for the reforms needed to transform our take, make and dispose culture to a more circular economy and we stand ready to work with our partners across the value chain to make resource efficiency a reality.”

Giles Bolton, Responsible Sourcing Director, Tesco, said: “We are encouraged by a number of the agreements secured at COP26, notably in areas such as eliminating deforestation and reducing potent methane levels by 30%, both by 2030. We look forward to supporting the implementation of these initiatives. Delivering low carbon economies and net zero commitments requires everyone to play their part, facilitated by targeted investment. Earlier this year we announced our own commitment of achieving net zero across our entire value chain by 2050, in line with a 1.5C trajectory. We welcome the announcement of the Glasgow Financial Alliance for Net Zero to deliver more than $130 trillion in financing to transition global economies by 2050.
 
We hope COP26 will lead to continued ambitious action, both from governments and businesses and that the UK will accelerate its transition to net zero emissions. We have no more time to waste in this important decade of action.”

Maria Connolly, Partner and Head of Clean Energy, TLT LLP, said: “Collaboration will continue to be key even after COP26 is over, but it’s extremely encouraging to have seen so many organisations coming together over the last couple of weeks to make global pledges. In particular, the launch of The Adaptation Research Alliance was a hugely positive step towards creating affordable low carbon technologies. However, it was slightly discouraging to see only a small number of countries signing up to the policy declaration on the transition to zero emission vehicles, with some of the world’s largest auto markets staying on the side-line. Currently private sector investment is driving the change in this market and we’re seeing creative new joint-ventures and deals come about to deliver record numbers of EV charging stations. While there’s still much to be done, we can be encouraged that the progress made over the last week or so will surely go some way in helping all nations reach their net zero goals.”
 
Bevis Watts, CEO, Triodos Bank UK, said: “Triodos Bank welcomes the inclusion of dedicated discussion on the role of finance in the COP26 programme, and the creation of the Glasgow Financial Alliance for Net Zero (GFANZ). Having called repeatedly for net zero transition plans to be made mandatory, we see the announcement that UK financial institutions will be required to produce such plans on a ‘comply or explain’ basis as a step in the right direction. It is critical that the standards developed for such plans are robust, science-based and aligned to 1.5-degree scenarios.
 
However, more action is needed. We call for an end to investment in fossil fuel expansion and exploration, for robust carbon pricing that truly reflects its social and environmental cost and for fossil fuel subsidies to be systematically dismantled.  And we ask that the financial sector be regulated not only in line with the potential risks and opportunities that arise from climate change, but also with recognition of its role in the causes of this crisis. If we want a net zero society and economy, we need to regulate for a net zero financial sector.”

Julie Hirigoyen, Chief Executive, UK Green Building Council, said: “We needed this COP to deliver global commitments to limit temperature rises to 1.5C and whilst it is far from perfect, the Glasgow Climate Pact is a step in the right direction but far more still needs to be done.

Important progress for our sector has been achieved through initiatives which will help drive the decarbonisation of key construction materials. Likewise, we have also seen a powerful drive on steering private financial capital towards low-carbon investment, with welcome initiatives targeting disclosure, credibility and transparency.  However, much of the momentum has come from the market with a multitude of impactful global climate action initiatives announced by the Building to COP Coalition, Race to Zero and World GBC. 

As we look to move from pledges to action, especially here at home, the launch of UKGBC’s Whole Life Carbon Roadmap for the UK Built Environment marks a significant milestone. Co-produced and supported by key industry organisations, it sets out a clear pathway of the policies and stakeholder actions we need to reach net zero moving forwards.  With forthright action lacking at the COP26 negotiating table, it's now even more important to deliver measurable action through implementing the Roadmap here in the UK.”

Colin Skellett, Group Chief Executive, Wessex Water said: “The fallout from COP26 will continue to be picked over in the months ahead. Irrespective of the global outlook, UK business is primed to play its part and needs long-term certainty from government and regulators. Coming away from COP26, we need an ongoing strong commitment from the government to deliver Net Zero in partnership with the private sector as part of its wider environmental goals. This should include mechanisms and incentives to attract private investment in new technologies and nature-based solutions to decarbonize our supply chains.”

Rick Willmott, Group Chief Executive, Willmott Dixon, said: “We welcome the leadership demonstrated by the UK government at COP26 and are delighted that many world economies and large companies have like Willmott Dixon committed to a net zero transition pathway aligned to 1.5C. We now urge others to join us in turning their commitments into action to deliver a world fit for future generations. It really is Now Or Never.”
 
Darren Moorcroft, CEO, Woodland Trust, said: "At COP26 it has become clearer than ever that we must urgently drive down emissions and do all that we can to ensure that staying within 1.5 degrees stays alive. The stakes could not be higher. Life depends on it and that requires leadership which extends way beyond Glasgow and enables everyone to play their part to the full.
 
Another powerful message emanating from COP 26 is that restoring nature is central to tackling the climate crisis and that they are two sides of the same coin. Post COP, we must protect and expand vital habitats such as woodland with a renewed energy and sense of purpose both at home and abroad. The UK's desire to lead on climate must not end with the Glasgow conference. Instead, we need the Government be a loud voice on the international stage while implementing the Net Zero strategy at home by seeking out every opportunity to do more and faster for nature and climate together."

David Symons, UK Director of Sustainability, WSP said: “COP26 has to be viewed as a success. National carbon commitments are at the higher end of expectations and there’s been many standout pledges from decarbonising transport to halting deforestation. These all support WSP’s goal of halving the carbon of our designs and advice by 2030. But perhaps most important is the leadership that chairing COP26 has brought to the UK. For the first time we have a clear, long term national Net Zero Strategy which sets out clear plans. The UK’s Net Zero Strategy, the new Environment Act, and the global commitments made during COP26 are warmly welcomed, and need now to be implemented at scale, at pace and in full.”

- FOOTNOTES -

[1] Glasgow Financial Alliance for Net Zero (November 2021) Amount of finance committed to achieving 1.5C now at scale needed to deliver the transition

[2] BBC News (November 2021) COP26: China and US agree to boost climate co-operation
 
[3] BBC News (November 2021) COP26: World leaders promise to end deforestation by 2030
 
[4] BBC News (November 2021) COP26:US and EU announce global pledge to slash methane
 
[5] COP26 (November 2021) Breakthrough agenda – launching an annual global checkpoint

COP26

Environment Act becomes law: reactive statement

9th November 2021

Reacting to the Environment Bill becoming law, Nick Molho, Executive Director at the Aldersgate Group, said: “The passage of the Environment Act into law marks a major milestone for the UK, particularly as it hosts the important COP26 climate summit. Having a framework which supports nature restoration and looks at the whole of the environment – including land as well as sea – is a key step forward in efforts to reverse the decline of nature. Businesses have long supported an ambitious and robust Environment Act, and having legally binding long-term targets will play a significant role in making continuous improvements to the natural environment.”
 
Nick Molho added:
“Going forward, our collective attention should turn to delivering the ambition of the Environment Act on the ground. The forthcoming consultation on the development of the long-term targets must deliver ambitious targets that reflect the urgency and scale of nature restoration required. Similarly, it will be important to ensure that the new Office for Environmental Protection is able to carry out its function of holding the Government and public bodies to account, and that there are strong and credible interim targets in place to support short-term delivery. Finally, to be delivered effectively and affordably, the targets of the Environment Act must be embedded across government policy in areas such as planning and agriculture.”

NAture

Proposal to set up an independent expert panel to review net zero targets important to ensure a strong baseline and level playing field for business

8th November 2021

Reacting to the United Nations Secretary General's proposal to set up an independent expert panel to review net zero targets, Nick Molho, Executive Director of the Aldersgate Group, said: “In the run up to COP26, an increasing number of businesses have recognised the commercial and moral imperative of playing their part to tackle climate change, and have taken on net zero emissions targets. This is welcome. But it is important that there is a strong baseline and level playing field in place that allows investors, businesses, consumers and the public to independently assess the credibility of different commitments and the progress that individual businesses are making to meet them.

Nick Molho added: Ensuring that net zero emissions targets, and the plans to achieve them, are based on scientific, transparent and comparable criteria is not only key to building public and consumer trust, it is also essential to guide investment decisions. An increasing number of investors want to grow their investment in low-carbon technologies, infrastructure and services, and to do so, they need to have a clear picture of businesses’ climate commitments. So, as a business organisation that has always stood for robust targets and disclosure requirements, the Aldersgate Group supports the UN Secretary General António Guterres’ proposal to set up an independent UN-led expert panel to provide recommendations on the most credible ways in which businesses should set net zero targets.

Nick Molho concluded: To be effective, an independent UN panel should build on the most credible target setting frameworks that exist already, such as the Science-Based Target Initiative, as a lot of work has already gone into identifying what constitutes robust, science-based criteria. Providing independent recommendations and guidance on how businesses should develop their net zero transition plans and report on the progress they are making against their targets would also be welcome.”

COP26

Strong action as over half of FTSE100 companies commit to tackle climate change

4th November 2021

Responding to the announcement that over half of FTSE100 companies are now committed to eliminating their contribution to climate change by 2050, Nick Molho, Executive Director at the Aldersgate Group, said: “The fact that 60% of the FTSE100 has signed up to the Race to Zero shows that businesses in multiple sectors of the economy are already well engaged in the transition to net zero emissions. This is also not just about large businesses - many SMEs are taking action as well. There is much that the business community can do to support the move to net zero, including setting ambitious targets, backing these up with credible delivery plans and crucially requiring their supply chains to drive down their own emissions. However, businesses need the support of stable and long-term policies to help them get to net zero and this will be particularly key in areas such as heavy industry and agriculture, where cutting emissions is particularly complex.”

Formatted London

Welcome net zero transition plans must be underpinned by international carbon pricing and markets

3rd November 2021

In the Chancellor of the Exchequer’s speech to COP26 today, he announced plans to make London the world’s first net zero-aligned financial centre by mandating the publication of transition plans to reach net zero for financial institutions and listed companies.

Reacting to the announcement, Josie Murdoch, Senior Policy Officer at the Aldersgate Group, said: “This marks a huge step forward on aligning financial flows with the ambition of the Paris Agreement and limiting warming to 1.5 degrees. The announcement builds on the existing requirements in the UK for companies to publish their climate-related financial disclosures, which outline the risk climate change poses to their business operations, and follows a major call for mandating net zero transition plans from many Aldersgate Group members and FTSE 100 companies, including BT, Kingfisher and Tesco, and financial institutions such as Aviva, Legal & General Investment Management and Santander. It will now be vital for the Government to work closely with the business and finance communities to give them the support, guidance and time needed to implement these new requirements.
 
The Chancellor’s announcement also follows the news last night that the Glasgow Financial Alliance for Net Zero – an alliance made up of more than 450 banks, insurers and asset managers across 45 countries – is poised to deliver $100 trillion of investment over the next thirty years. Domestically, it is estimated £50 billion of additional investment will be required by 2030, in the UK alone, to put us on track to deliver net zero by 2050. Internationally, estimates have been put at US$100-150 trillion. These new announcements put delivery of these investment requirements within reach. It is critical that the UK now uses the remainder of the summit to encourage more countries to adopt mandatory climate-related financial disclosures – to date, 35 countries have committed to this – and introduce regulation on net zero transition plans."
 
Josie Murdoch added: “These pledges must not be seen as the silver bullet to delivering a net zero-aligned global financial system. We now need supporting policies, such as a strengthened carbon price to reflect the real economic cost of emitting carbon into the atmosphere, and world leaders must agree the rulebook for Article 6 of the Paris Agreement and establish a credible global carbon market. These measures will further ensure financing is flowing into the low carbon technologies and infrastructure needed to meet net zero by 2050.”

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Business leaders call on governments to keep 1.5C alive at COP26

29th October 2021

Ahead of the COP26 international climate summit, the Aldersgate Group and leaders from business, academia, and civil society are urging world governments to respond to the challenges set by the UK Presidency [1] and seize the opportunity the talks present to deliver a clear pathway towards keeping average temperature increases to within 1.5C.

They emphasised the significant economic opportunity presented by the transition to net zero emissions, called on all major emitters to increase their emission reduction pledges (NDCs) in line with the 1.5C target and called for progress on meeting climate finance pledges to developing countries, phasing out coal, progressing rules for international carbon trading and mobilising international finance towards low-carbon infrastructure.  

The IPCC’s recent Sixth Assessment Report [2] delivered a clear message to policymakers, declaring a code red for humanity and stressing the need for immediate action to address the climate crisis. COP26 is a crucial inflection point, and with the right commitments and negotiation progress, it provides a unique opportunity to put the world economy on a clear pathway towards net zero emissions and preventing warming of more than 1.5C.

Although welcome commitments have been made by a growing number of economies such as the United States, Japan, the European Union, and the UK ahead of the talks, further commitments and negotiation progress are needed in several areas.     

In particular, it is vital that a growing number of major emitting nations increase the ambition of their NDCs – and put in place credible delivery plans - to put the world economy on a pathway to net zero emissions and towards limiting warming to 1.5C. Urgent progress is also required on delivering the promised $100bn of climate aid promised to developing nations, agreeing a phase out date for coal, finalising a rule book to set up a credible global carbon market under Article 6 of the Paris Agreement, joining up innovation efforts to decarbonise some of the most complex parts of the economy such as heavy industries, and mobilising much larger pools of investment towards low carbon technologies.

Nick Molho, Executive Director of the Aldersgate Group said: “COP26 is a crucial opportunity to show that the international community can build on the Paris Agreement and take another step towards significantly reducing global emissions. The stakes couldn’t be higher, with the IPCC leaving us in no doubt that we have reached a code red for humanity. Businesses now want to see bold commitments and tangible steps from all major emitters to get the world on track for the 1.5C target, prevent the worst impacts from climate change and unleash the low carbon investment the world economy urgently needs to see.

The UK Presidency has demonstrated welcome leadership in the run-up to the summit, through its diplomatic efforts and the release of the UK’s Net Zero Strategy, it’s now time for all major emitters to translate this into success at the summit.”

Henrik Pedersen, CEO, ABP, said: “ABP strongly supports the UK Presidency’s ambitions for COP26. It is essential that governments recognise the critical role that ports around the world play in reducing emissions. As the UK’s leading ports group, ABP is setting the pace in decarbonising our own operations (down 35% since 2014), and we are one of UK’s largest corporate generators of solar energy with 6.5MW. As well as providing strategic locations for the decarbonisation of supply chains, we are helping deliver the UK’s wider climate objective by supporting the offshore wind and renewable energy sectors, and the decarbonisation of industry through the growth of hydrogen and carbon capture and storage technologies.”

Andy Wales, Chief Digital Impact and Sustainability Officer, BT Group, said: “What we need to see now, from both governments and businesses, are clear action plans to deliver pathways to 1.5 degrees Celsius. We urge leaders from around the world to step up in committing to net zero targets. At BT, our path is clear – we have a target to be a net zero emissions business by 2030 for our own operations and 2040 for our supply chain and customer emissions.”

Duncan Price, Global Leader for Sustainability & Climate Change, Buro Happold, said: “The publication of the UN IPCC Sixth Assessment Report, the COP26 climate summit and the associated Race to Zero campaign have shifted the political narrative, catalysing corporate commitments like never before. Now we need the world’s governments to play their part and deliver a clear pathway towards keeping the 1.5C target alive.”

Steve Murrells, CEO of Co-op Group, said: “We all have to recognise that we are in the grip of a climate crisis and need to act accordingly. Put simply, we need to reduce the amount of carbon we put into the atmosphere – and we need to do that now.

We need co-operation at the heart of our collective response if we are to successfully tackle the climate crisis at a global level. I believe it is vital that world leaders seize the moment in Glasgow, and then ensure they legislate, regulate and incentivise when they get home to ensure that all businesses step up.”

From the producers and manufacturers in our global supply chain, to every community we serve here in the UK, the impact of climate change is already being felt, and is only going to be felt more acutely in the years ahead, unless collective action is taken now.”

Iain Patton, CEO, EAUC – the alliance for sustainability leadership in education, said: “As UN Observers at COP26, representing the EAUC Community of over 7000, the EAUC delegation of staff, members, sector leaders and students is in Glasgow to ensure that education is at the heart of climate action! We have been working hard in the run-up to COP26 to ensure that UK and Irish Governments establish policies and funding that will enable universities and colleges to lead on implementable and aggressive emissions reduction policies. We are also working to address climate governance and sustainability in education that students urgently need to create a world with a safer climate.”

Sarah Mukherjee, CEO, IEMA, said: “The history of climate negotiations has been punctuated by the highs and lows of judgements passed on previous conferences. Glasgow must be different. Time is now too short and the stakes too high for COP26 to fail. Yet success is not certain; leaders must now step up if 1.5°C is to remain even an aspirational target and the necessary finances for achieving net zero are to be put place, to avoid a path leading to catastrophic global warming. But leadership must be inclusive, coming from all levels and sectors of business and industry, if Glasgow is to be remembered as the moment the world woke up.”

Peter Jelkeby, Country Retail Manager and Chief Sustainability Officer, IKEA UK & Ireland, said: “Climate change is one of the defining issues of our time and we’re determined to show that it’s good business to be a good business. At IKEA we want to show that healthy and sustainable living can be affordable, attractive and convenient for the many. Today, we are already supporting our customers to live more sustainable lifestyles, whilst helping to create the circular economy that we’ll need to transition to net-zero. We are proud to be a Partner of COP26 and will work closely and collaboratively with the UK Government and other partners to seize this opportunity for ambitious climate action and with world leaders gathered together, this is a historic opportunity to turn the tide on climate change.”

Alyssa Gilbert, Director of Policy and Translation, Grantham Institute – Climate change and the environment, Imperial College London, said: “We call for governments to commit to ambitious greenhouse gas reduction targets, adaptation plans and a strong climate finance package to drive the essential short and medium-term action needed on climate change. These international signals and roadmaps create the momentum and expectations for the future that will allow the strategies and actions that business, nations and civil society are trying to implement to thrive. Sitting in a university, we want our knowledge and innovations to be implemented and scaled up around the world, driven by these global signals.”

Sam French, Business Development Director, Johnson Matthey, said: “It is crucial that world leaders show clear ambition and adopt bold commitments on the key priority areas outlined for COP26. A positive outcome at the summit will provide businesses with further confidence to continue their investment in the innovative technologies needed to reach net zero. At Johnson Matthey we have seen first-hand the economic opportunities associated with the energy transition, through schemes like the HyNet industrial cluster in the North West of England, where industry will be powered by hydrogen.” 

Simon Virley, Vice Chair and Head of Energy & Natural Resources, KPMG UK, said: “COP26 must keep alive the Paris Agreement goal of limiting global warming to 1.5 degrees. The effects of climate change are already evident around the world, even with 1 degree warming on pre-industrial levels. At KPMG, we are doing our bit with a global commitment to reach Net Zero by 2030, and helping our clients navigate the risks and seize the opportunities created by the energy transition.”

Nigel Wilson, Group CEO, Legal & General, said: “Climate is not only the most urgent issue but also the biggest investment opportunity of our lifetimes. We can harness the power of business and markets to make sure that the transition happens. We must all now move from promises and commitments to action and delivery. Our roadmap to net zero focuses on funding the transition to support a low carbon future and deliver secure returns. We are investing in renewable energy, and we have actionable climate plans in place across our major business areas including investments, housing, and commercial property.”

Phil Bentley, Chief Executive Officer, Mitie, said: “The UK continues to lead the way globally in driving decarbonisation across both the public and private sectors. However, if we are going to meet the stretching targets needed to limit the impact of global warming, we all need to go even further, and faster, and make net zero a reality. With COP26 in a matter of days, we all need to take responsibility. Now is the time for Governments from across the world and industry to work together to take even bolder action.”

Duncan Burt, Chief Sustainability Officer, National Grid, said: “We want to hear strong alignment from the major economies including the US, China, the EU and wider G20 on the pace of change and action being taken during this decade to cut carbon emissions. That means a faster transition to electric vehicles, an end to burning coal, investing in renewable energy and financial support to help nations tackle the impacts of climate change.”

Stefano Agostini, CEO, Nestlé UK&I, said: “The window of opportunity to take action is closing. Collective global ambition and commitment are urgently needed if we are to limit climate change below 1.5 degrees of warming and avoid dangerous and irreversible tipping points. As a food and drink business operating in 187 countries globally, we need bold commitments from governments that chart a course towards achieving this so that we too can meet our goal of reaching net zero by 2050 and halving our emissions by 2030. COP26 is therefore an incredibly important moment for us and for society. Together, with clear ambition, clear action and courageous collaborations we can make this a good COP that we can look back on with pride.’

Larissa Kennedy, President, NUS, said: “Improving the ambition of Nationally Determined Contributions isn’t the real challenge at COP26. Our real challenge is getting political leaders to honestly and urgently deliver the rapid carbon reductions and climate aid they have already pledged. Young people are tired of broken promises. My generation will never forgive them if they continue to fail to deliver.”

Philippa Spence, Managing Director, Ramboll UK, said: “Now is the time global leaders have to be bold. Going into COP there is no doubt as to the weight of responsibility they are carrying. As an industry we urge them to make the hard, but necessary decisions to deliver their NDC’s in line with the 1.5C target, do the just thing for developing nations to support their transition and finalise the Paris rulebook.”

Beccy Speight, Chief Executive, RSPB, said: “We are in midst of a nature and climate emergency, our wildlife and wild spaces are under threat at a time when nature-based solutions should be part of our response to climate change.  As well as helping carbon sequestration, investing in nature can also lead to the creation of new jobs; cleaner water, air, and healthier soil; better and more resilient protection against the impacts of climate change such as flooding and drought; and benefits to our mental and physical health whilst simultaneously restoring the wildlife we love. In short, we can revive our world, we can leave a positive legacy for the next generation.

As hosts of the summit, the UK must ensure that COP26 is remembered as a moment when the world not only kept the goal of limiting temperature rises to 1.5 degrees of warming alive, but also set the agenda for how commitments will be backed with financed actions, including for nature.”

Carl Ennis, CEO, Siemens plc, said: “Climate change is a global issue that needs to be addressed locally. Many of the technological solutions to Net Zero are already available, but more needs to be done to deliver them at scale. Governments, local leaders, industry and investors must work together to unlock the finance needed to accelerate change.”

John Scanlon, Chief Executive Officer, SUEZ recycling and recovery UK, said: “The circular economy, resource efficiency and sustainable waste management are notable by their absence on the COP26 agenda but with resource use driving half of the world’s climate emissions, they represent a significant opportunity for governments to up the ambition of their emission reduction pledges and move towards one world living.”

Maria Connolly, Head of Clean Energy and Real Estate and Executive Board Member Responsible for Sustainability, TLT LLP, said: “COP26 is no time for half measures. The agreements and policies coming out of this summit need to be as bold as they are effective at keeping average temperature increases to within 1.5C. In fact, major organisations are begging governments to impose more stringent climate rules on the business sector, and businesses urgently require greater clarity and incentives to steer the corporate ship away from carbon emitting practices and more quickly in the direction of a greener future. This is the right thing to do, and it makes great economic sense. It is time for the world’s leaders and negotiators to get specific about the path to net zero, and serious about the 1.5C target.”

Simon McWhirter, Director of Communications, Policy and Places, UKGBC, said: “Limiting global temperature rise to 1.5 degrees is a non-negotiable, and although it’s sometimes seen as a hackneyed phrase, we are truly now at a critical tipping point; one when world leaders must seize the opportunity to set and protect the 1.5 degree pathway. The built environment is a major contributor to global emissions and our buildings - and the communities that live and work in and around them - will be especially vulnerable to the catastrophic consequences of climate change if we do not act decisively. We already have many of the solutions required to build better now, and our sector stands ready to play its part. We are therefore calling on world leaders to set out ambitious plans and start the action to accelerate the capacity of our industry to deliver, through ambitious green finance mechanisms, standards and global net zero commitments. Ambition is critical but plans and action are even more so.”

Mary Thorogood, Director, Head of Public Affairs Northern and Central Europe MarCom, Sustainability & Public Affairs, Vestas, said: “At COP26 next week in Glasgow, governments around the world must move from talk to action in order to achieve the goals they’ve signed up for as part of the Paris Agreement. Through the drastic scale up of renewable technologies like wind energy, let’s decarbonise all sectors of the global energy system and scale up, now!”

Rick Willmott, Group Chief Executive, Willmott Dixon, said: “The built environment sector contributes 39% of global carbon emissions. Last year we announced what we believe are the construction industry’s most ambitious sustainability targets to 2030 because we see that putting net zero and green growth at the heart of our business is core to our continued development and success. Around 350,000 new roles in construction alone could be created by putting the UK on track for net zero emissions by 2050. We urge both world economies and large companies to join us in committing to a net zero transition pathway aligned to 1.5C.” 

—ENDS—

[1] Rt Hon Alok Sharma MP (October 2021) Paris Promised, Glasgow Must Deliver, 2021

[2] IPCC (2021) Sixth Assessment Report, 2021

COP26

Budget 2021: More effort needed to put net zero at heart of economic policy

27th October 2021

Reacting to the Budget and Comprehensive Spending Review announced by the Chancellor of the Exchequer today, Nick Molho, Executive Director at the Aldersgate Group said: "We recognise that this was a tricky Budget to deliver after a uniquely challenging period for the UK economy, and the desire to stimulate economic activity across the country was welcome. However, coming a week after the welcome publication of the Government’s Net Zero Strategy and its Green Finance Roadmap and a week ahead of COP26, it is disappointing that the Chancellor’s Budget contained so few references to the Treasury’s role in supporting the UK’s net zero transition and its other environmental ambitions. Economic evidence is clear that investing in low carbon infrastructure and nature restoration delivers high economic growth multipliers in terms of job creation, productivity gains and in generating the tax revenues the Chancellor needs to fund high-quality public services, as well as driving economic activity across the country. [1]

The Chancellor’s commitment to increase investment in skills and education is welcome but significant attention must now be given to putting together a comprehensive low carbon skills strategy, which will ensure that students and those already in the workplace are both equipped with the skills they need for a net zero emissions economy. This must include a comprehensive response to the key recommendations recently made by the Green Jobs Taskforce." [2]  
 
Nick Molho added: "It was positive to see the progress the UK is making in areas such as green finance, including through the UK Infrastructure Bank’s first investment this week. Going forward, the Bank’s investments should be predominantly targeted in complex areas such as building retrofits and others that require significant funding to ensure viability, like hydrogen and carbon capture.
 
It will also be important to see tangible increases in funding for local authorities to deliver decarbonisation, as they have a crucial role to play in delivering essential clean energy, transport and skills investment at a local level. Finally, the government must ensure that new fiscal measures do not undermine the UK’s progress towards net zero. In areas such as transport, the main focus must be to make low carbon forms of travel like rail and bus links as reliable and affordable as possible, rather than subsidising domestic air travel.” [3]

—ENDS—

[1] Zenghelis, D. and Rydge, J (2020) Rebuilding to last: how to design an inclusive, resilient, and sustainable growth strategy after COVID-19, commissioned by the Aldersgate Group:  https://www.aldersgategroup.org.uk/asset/1684

[2] Aldersgate Group was part of the Green Jobs Taskforce and helped shape the final recommendations of the report: https://www.gov.uk/government/groups/green-jobs-taskforce

[3] Earlier today the Aldersgate Group launched its Net Zero Strategy Policy Tracker, which you can access here: https://www.aldersgategroup.org.uk/asset/2019

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Aldersgate Group publishes Net Zero Strategy policy tracker

26th October 2021

Today the Aldersgate Group has published its Net Zero Strategy policy tracker, which summarises the positive announcements in the Strategy, identifies remaining policy gaps on a sector-by-sector basis, and highlights the next steps for building on this ambition and accelerating progress towards a prosperous net zero economy.

The Aldersgate Group welcomes the publication of the Net Zero Strategy, alongside the Heat and Buildings Strategy, Net Zero Review, and the Greening Finance roadmap last week, which provide a clearer framework for how the UK will meet its carbon budgets and drive job creation, innovation, and business competitiveness in the process. Setting out a clear blueprint for achieving net zero ahead of the COP26 negotiations is essential for persuading other large emitters to adopt more ambitious emissions reductions targets and showing how these can be delivered in practice.
 
However, key policy gaps remain, particularly in crucial areas such as energy efficiency, heavy industry decarbonisation, agriculture and land use, and skills. The policy briefing launched today discusses the main decisions that still need to be put in place to enable businesses across all sectors to cut emissions, boost their competitiveness and deliver productivity gains in the process.

Key recommendations include:

  • Investing in interconnection and storage to deliver greater energy security and help lower wholesale electricity prices.
  • Developing and enforcing regulatory levers to achieve higher levels of energy efficiency in buildings and lower energy bills for customers.
  • Developing a clear roadmap for decarbonising dispersed sites, working with local authorities and local enterprise partnerships to ensure these locations are over time connected to CCS infrastructure and hydrogen production sites.
  • Publishing further detail on how agriculture and land use can contribute towards achieving the UK's net zero target.

The 15 page document makes concise recommendations to build on current progress, covering all of the major areas in the strategy; including power, hydrogen, industry, heat and buildings, transport, finance, and skills. It also highlights the next steps for engaging the public in the transition, in particular in relation to the rollout of new technologies and home retrofits.   

Ana Musat, Head of Policy at the Aldersgate Group said: “The Net Zero Strategy represents an important step forward for the UK as it looks to decarbonise and seize the economic opportunities that a successful transition to net zero emissions could provide. It shows crucial leadership ahead of COP26 and sets a clear direction for climate and environmental policy in the coming years.
 
There are however areas in which the Strategy must go further to deliver emissions reductions and provide the support and market signals that businesses need to invest in low carbon solutions. In this briefing, we offer a clear roadmap for building on the Strategy in the coming years and accelerating the net zero transition, while also delivering economic benefits and engaging the public in the process.”

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Net Zero Strategy: a major opportunity for UK plc

19th October 2021

The Aldersgate Group welcomes the publication of the Net Zero Strategy today, highlighting the significant growth and job creation opportunities that a successful transition to net zero emissions could provide to the UK economy. The Group urges Government to build on this progress and rapidly firm up the policy detail that is required for these benefits to materialise in key areas such as energy efficiency, heavy industry, and nature.

Nick Molho, Executive Director at the Aldersgate Group, said: “The evidence is clear that the transition to net zero emissions is a major opportunity to deliver economic growth and trigger job creation in multiple sectors of the economy throughout the country. [1] Whether we achieve this in practice is ultimately down to the decisions we take today, and having a clear policy plan in place is critical. Today’s Net Zero Strategy is an important step forward towards achieving this.

The Strategy sets a clear overall direction for the UK economy, recognises the critical importance of public policy signals to attract private sector investment and contains positive measures in the power, transport and heating sectors. The commitment to fully decarbonise the power grid by 2035 will provide an essential bedrock to cost-effectively cut emissions in many parts of the economy and reduce exposure to fossil fuel price fluctuations. The commitments to kickstart the electric heat pump market, introduce mandates to scale up zero emission vehicle production and increase investment in local on-street residential charging are particularly welcome.”

Nick Molho added: “There are a number of areas where further policy clarity is required to put the UK on course to meet the Sixth Carbon Budget. These include putting in place clear regulatory targets and fiscal incentives to drive investment in energy efficiency retrofits, which is essential to ensure a cost-effective roll-out of low carbon heating, lower household energy bills, and reduce demand on the UK’s power grid.   

Whilst the ambition to develop four low carbon industrial clusters by 2030 is positive, upcoming consultations will need to result in clear business models to support the scaling up of carbon capture and storage, hydrogen and electrification in industry. Greater attention should also be paid to connecting dispersed industrial sites - such as cement, glass and ceramics - with the low carbon infrastructure that will be deployed in industrial clusters. [2] Beyond the commitments on tree planting and peatland restoration, the Environment Bill should be used to set a broader and more ambitious set of nature restoration targets, underpinned by ambitious environmental improvement plans, to help the UK adapt to climate change and deliver much needed negative emissions.”  

Nick Molho concluded: “Looking ahead, it is important that the Government continues to focus on the ‘people dimension’ of the net zero transition. This should include a clear strategy to put in place quality standards and information campaigns to support citizens throughout the transition to low carbon heating. Following the recommendations of the Green Jobs Taskforce, this should also include the development of a comprehensive low carbon skills strategy that will ensure that both the current and future workforce are equipped to seize the employment opportunities created by the transition to a net zero emissions economy. [3]

- FOOTNOTES - 

[1] Aldersgate Group, Rebuilding to last: how to design an inclusive, resilient, and sustainable growth strategy after COVID-19: https://www.aldersgategroup.org.uk/asset/1684

[2] On 9 September 2021 the Aldersgate Group released a report with Frontier Economics on Accelerating the Decarbonisation of Industrial Clusters and Dispersed Sites: https://www.aldersgategroup.org.uk/asset/1976

[3] Aldersgate Group was part of the Green Jobs Taskforce and helped shape the final recommendations of the report: https://www.gov.uk/government/groups/green-jobs-taskforce

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Smart regulation is critical for greening finance

18th October 2021

Responding to the publication today of the government’s new strategy Greening Finance: A Roadmap to Sustainable Investing, Josie Murdoch, Senior Policy Officer at the Aldersgate Group, said: “We welcome the government’s plans for greening the financial sector and embedding climate and the environment into decision-making for financial institutions and corporates, as well as into investment products.[1] Three elements of the new Roadmap are particularly welcome. Firstly, the plan to integrate different disclosure frameworks within the Sustainability Disclosure Requirements (SDR) integrated framework, which will be based on the Taskforce for Climate-Related Financial Disclosures (TCFD) framework. This will reduce reporting burden for businesses. Secondly, the SDR requirement for firms to publish transition plans that align with the government’s net zero commitment, on a comply or explain basis. Thirdly, requiring companies to disclose which proportion of their activities are aligned with the new UK Green Taxonomy will help to prevent greenwashing.”
 
Josie Murdoch added: “Looking ahead, the government must ensure that the UK SDR and its taxonomy are aligned with other international frameworks, such as the EU’s Sustainable Finance Disclosure Regulation (SFDR). This will simplify the reporting process and ensure that businesses operating in several jurisdictions are not subject to multiple reporting requirements that may be incompatible. A timeline setting out when the different elements of this new regulation will be introduced would also help businesses prepare for these new reporting standards. Finally, a further commitment on requirements for businesses to publish net zero transition plans ahead of COP26 would be welcome. By making it mandatory for large businesses to publish plans on how they will ensure their operations and investments are aligned to the UK’s net zero target, government will send a clear signal on green finance and demonstrate leadership at the international level.”
 
-ENDS-
 
[1] In June 2021, the Aldersgate Group called for stronger financial regulation to be introduced across the economy, in order to green the UK financial system. We argued that new regulation would ensure a level playing field, increase comparability of disclosures and reporting, and ultimately ensure that finance is being allocated as strategically as possible to deliver the UK’s climate goals.

City of London

Heat and Buildings Strategy: energy efficiency in buildings is key to decarbonisation

18th October 2021

The Aldersgate Group welcomes the Government's announcements in relation to its Heat and Buildings Strategy, set to be published imminently, which will be instrumental in tackling the built environment’s share of emissions, representing 17% of the UK total. [1] To maximise economic opportunities and deliver lower bills for customers, the Group highlights the importance of additional regulatory and fiscal measures to drive energy efficiency retrofits.

Ana Musat, Head of Policy at the Aldersgate Group, said: “Decarbonising the UK’s built environment is a significant challenge, but one that comes with major opportunities – including job creation potential, reducing the UK’s reliance on fossil fuels, and delivering lower bills for customers. The strategy is set to include important measures for realising that vision, such as a commitment to accelerate the installation of heat pumps, innovation funding to bring down the cost of installation, and grants to help households meet the upfront cost. All of these measures are fundamental to deliver a fair transition to clean heat, mobilising critical private sector investment and growing supply chains."
 
Ana Musat added: “To build on these strong foundations, Government should set clear regulatory and fiscal measures to drive the uptake of energy efficiency retrofits, which will be key to lowering energy bills and tackling fuel poverty, as well as reducing demand on the grid. Energy efficiency retrofits can also create significant economic activity and job creation, being labour-intensive and rooted in local supply chains: 108,000 net new jobs could be created annually until 2030 through energy efficiency. [2] There is also potential to scale up these projects by investing in skills, for instance through the rapid implementation of the Green Jobs Taskforce’s recommendations. [3] Measures like the rollout of minimum energy efficiency standards for domestic buildings and commercial properties and a reduction of VAT for energy efficiency retrofits will be essential in creating demand and and attracting investment into insulation and deep retrofits.”
 
FOOTNOTES


[1] Climate Change Committee, Sixth Carbon Budget
[2] Cambridge Econometrics & Verco for Customer Focus (October 2012) Jobs, growth and warmer homes: evaluating the economic stimulus of investing in energy efficiency measures in fuel poor homes
[3] Aldersgate Group has been part of the Green Jobs Taskforce and helped shape the final recommendations of the report

Housing cropped

Climate adaptation must be a policy priority across government

13th October 2021

Responding to the publication of the Environment Agency's third adaptation report, Nick Molho, Executive Director at the Aldersgate Group, said: “Building on the recent climate risk assessment from the Committee on Climate Change, today’s report from the Environment Agency makes it clear that England is not yet prepared to deal with the impacts of climate change that we are already locked into. Efforts to adapt to climate change and cut emissions must now both be pursued with the same degree of ambition and should be hardwired across the policy making of all government departments from Treasury and housing through to transport, planning and industrial strategy. Given the immense task ahead, regulators such as the Environment Agency should be sufficiently well resourced and empowered to ensure they can carry out their critical environmental protection functions effectively.”
 
Nick Molho added:
 “A step change and a systemic approach is needed to better protect our homes, businesses and transport links, with responsibilities clearly divided between governments, regulators, businesses and homeowners. In the near term, the Government should recognise the role that early and ambitious action to restore England’s natural environment can play in helping us adapt cost-effectively to extreme weather events such as flooding and heat waves. It should use the return of the Environment Bill in the House of Commons next week to set an ambitious target setting process to significantly improve the state of our woodlands, peatlands, soils and other critical parts of the natural environment.”

Forest and river

Labour calls for mandatory net zero transition plans: Aldersgate Group reactive

13th October 2021

In a speech today ahead of COP26 in Glasgow, Shadow Business Secretary Ed Miliband called on the government to make it mandatory for financial institutions and FTSE100 businesses to publish plans for meeting net zero. This follows a letter signed on Monday by the Aldersgate Group and a range of large companies and financial institutions [1], calling for mandatory transition plans to be introduced for large companies from 2025, with the government opening a consultative process in 2022 to develop a roadmap towards the introduction of such a requirement.
 
Reacting to the announcement, Nick Molho, Executive Director of the Aldersgate Group, said: "We welcome today’s announcement from the Shadow Business Secretary Ed Miliband. Although 60% of the world’s largest companies now support, or report in line with, the recommendations of the Taskforce for Climate-Related Financial Disclosures, less than a third of PRA-regulated banks and building societies surveyed in 2020 had a science based target or net zero strategy in place [2]. The Aldersgate Group sees the introduction of mandatory net zero transition plans as the natural next step to climate-related financial disclosures and one which is essential to drive greater market transparency and good business and investment decisions. At a time where a growing number of companies are taking on net zero targets, the introduction of such a requirement would also promote a level playing field as the economy as a whole moves towards net zero emissions."
 
Nick Molho added: “To support the introduction of mandatory net zero transition plans, it will be essential for government policy to encourage businesses and financial institutions in the near term to produce plans on a voluntary basis and for regulators to provide them with supportive guidance. Publishing a comprehensive set of sustainable finance definitions through the upcoming UK green taxonomy will also be essential to support companies in this process and ensure that clear, transparent and comparable disclosures can be produced. It will also be important for businesses and financial institutions to continue mainstreaming sustainable finance knowledge amongst their staff, to ensure they have the expertise and skills required to produce quality plans."

- ENDS -

[1] This week the Aldersgate Group and leading companies, including various FTSE companies and financial institutions, wrote to the Chancellor and Secretary of State for the Department of Business, Energy and Industrial Strategy, calling on the UK Government to make the disclosure of net-zero transition plans mandatory for large companies. Further information can be found here.

[2] Financial Stability Board (October 2020) 2020 Status Report: Taskforce on climate-related financial disclosures; and PWC (October 2020) Rising to the challenge: climate risk in the UK banking sector

Big ben

Leading companies call on UK Government to make disclosure of net-zero transition plans mandatory

12th October 2021

Leading UK companies including various FTSE companies and financial institutions responsible for over £4.5 trillion GBP in assets have written to the Chancellor and Secretary of State for the Department of Business, Energy and Industrial Strategy calling on the UK Government to make a landmark announcement ahead of the UN Climate Change Conference (COP26) to make the disclosure of net-zero transition plans mandatory for large companies. 

Signatories include FTSE 100 companies such as BT, Kingfisher, and Tesco, and financial institutions such as Aviva, Legal & General Investment Management (LGIM), and Santander, as well as industry groups such as the Association of British Insurers (ABI) and the Aldersgate Group, and civil society organisations such as WWF.

The letter notes that transition plans are needed for companies to credibly deliver their net-zero goals. The signatories also note that financial institutions will find it challenging to deliver their net-zero goals without having transition plans for companies in their portfolios.

The UK Government has already called on companies to voluntarily set net-zero targets and disclose net-zero transition plans ahead of the crucial COP26 summit in Glasgow. Moreover, the government has adopted a roadmap to make it mandatory by 2025 for large businesses and financial institutions to disclose climate-related risks and opportunities according to the recommendations of the Taskforce on Climate Related Financial Disclosures (TCFD).  

However, although the TCFD this year has moved toward making transition plans a key part of its guidance, the UK government has yet to provide clarity on how the rollout of UK disclosure requirements will cover transition plans and other net-zero disclosures.

The letter therefore calls on the government to go a step further and make the disclosure of net-zero transition plans mandatory for large companies, with a clear timeline for rolling out this policy by 2025, and to help in developing official guidance on what a credible transition plan looks like. 

The UK has a clear opportunity to catalyse a stronger and more resilient UK economy by helping to ensure that the business and finance community is prepared to meet the goals of the Paris Agreement. According to new analysis from WWF (embargoed 07.10.21, 00:01), currently only 19% of FTSE100 have disclosed a credible action plan to reduce their climate emissions to net-zero by 2050.

By committing to make disclosure of net-zero transition plans mandatory and to develop official guidance on transition plans, the UK would be at the forefront of global leadership on climate policy and standard-setting in green finance.

Michelle Scrimgeour, Chief Executive Officer, Legal & General Investment Management and co-chair of the UK Government’s COP26 Business Leaders Group, said: 

“Climate change is one of the greatest systemic risks we face today and achieving net zero by 2050 will be crucial to help steer the world towards a more sustainable future. As founding members of the Net Zero Asset Managers initiative, LGIM is committing – in partnership and on behalf of our clients – to invest in alignment with the net zero emissions framework by 2050 or sooner. As long term investors we play a pivotal role,  not only in decarbonising investment products on behalf of our clients but also influencing the real economy transition by engaging with and holding businesses accountable on their net zero transition plans.

We need to see substantial change across economies and society globally to achieve this goal. While there is clear progress in many areas of industry,  it will not be enough and we are supportive of the Government in its aim to raise standards across the entire market.

As co-chair of the UK Government’s COP26 Business Leaders Group, I am encouraged by the progress that is being made and the collaboration to get there.  There is still much to do and we all need to play our part. Inaction is simply not an option.”

Nick Molho, Executive Director at the Aldersgate Group, said:

“It has been welcome to see climate-related financial disclosures become mandatory for large businesses in the past year, with the UK being the first major economy to introduce such regulation. However, although 60% of the world’s largest companies now support, or report in line with, the recommendations of the Taskforce for Climate-Related Financial Disclosures, less than a third of PRA-regulated banks and building societies surveyed in 2020 had a science based target or net zero strategy.

We therefore see mandatory net zero transition plans as the natural next step to climate-related financial disclosures and one which is essential to drive good business and investment decisions and promote a level playing field. The plans will ensure that all corporates and financial institutions have a strategy in place to decarbonise their supply chains and assets and address climate risks. Introducing such a requirement will ensure businesses operating in the UK are equipped to support the delivery of the country’s net zero target and the goals of the Paris Agreement and will put the UK economy at the forefront of the global shift towards net zero emissions.” 

Phil Bentley, Chief Executive, Mitie, said:

“Sustainability targets are meaningless without an action plan to make them a reality. At Mitie, we are proud to be actioning our plans and we are well on our way to meeting our target of net zero carbon emissions for our operations by 2025, whilst also helping our customers get their roadmaps in place too. By mandating that businesses disclose their own net zero transition plans, Government can play a key role in helping the nation go further, and faster, towards the decarbonisation of Britain.”

Ingrid Holmes, Executive Director, Green Finance Institute, said:

“After net zero commitments are made for 2050, the clear next step is to develop robust transition plans. To date the transition plans companies have published have been of variable quality and transparency, better guidance is clearly needed – including the role and value of including information about alignment to the forthcoming UK taxonomy.

Nick Mabey, Chief Executive of E3G said:

“This remarkable letter shows there is strong & broad business support not only for disclosing risks but also for showing how companies will actually deliver on their promises. Ahead of COP26 the UK can set a global example in flushing out greenwash by supporting firms who show true climate leadership.”

Tanya Steele, WWF’s chief executive said:

“These leading businesses are playing their part in achieving the UK’s climate goals.  But recent WWF research shows that only 19% of top UK companies have published a detailed action plan to reduce their climate emissions to Net Zero. With some of the largest UK companies calling for mandatory regulation to create a level playing field, it is time for the Government to announce legislation to ensure all large businesses publish transition plans for how they will cut their climate emissions.”

Mark Versey, CEO, Aviva Investors, said:

“As a business aiming to achieve net-zero carbon emissions by 2040, Aviva supports mandatory transition plans. These are vital if companies’ net zero commitments are to translate into the reduction in global emissions required to meet the Paris Agreement. Ahead of COP26, the UK should demonstrate its international leadership on climate change by stating its intention to make transition plans a mandatory requirement.”  

Sarah Mukherjee MBE, CEO at IEMA

"Translating corporate net-zero ambition into action requires credible transition plans which focus on delivery. Mandating this for large companies is a critical step towards a net-zero future."

Carlota Garcia-Manas, Head of Engagement at Royal London Asset Management said:

“In order to enable the necessary actions to support the Paris Agreement, climate disclosure needs to evolve from backward looking reporting to credible net-zero transition plans.”

Ben Wilson, Director of Corporate Affairs and Climate Change at Association of British Insurers, said:

“Transition plans will play a crucial role in meeting our net zero ambitions and forms a key part of the ABI’s own climate change roadmap. A consistent system for disclosing these plans will complement the Government’s existing commitment to mandatory financial disclosure, and allow different industries to identify where collaborative, cross-sector action can have the most impact.”

City of London

Cement industry commitment shows growing business momentum to deliver on the 1.5C target in the Paris Agreement

11th October 2021

Responding to the Global Cement and Concrete Association's commitment to to cut their greenhouse gas emissions by up to a quarter this decade and reach net zero by 2050, Nick Molho, Executive Director of the Aldersgate Group said: “The global cement industry is responsible for around 8% of global CO2 emissions, so today’s net zero announcement from many of the world’s largest cement manufacturers – including Chinese companies - is significant. Coming from an industry that is energy intensive and complex to decarbonise, today’s commitment shows that there is growing momentum across the global business community to deliver on the 1.5°C target in the Paris Agreement.

"To put UK industries at the forefront of this global transition, the Government’s net zero strategy must grow the market for green cement through the introduction of product standards and public procurement criteria that mandate greater resource efficiency and lower embodied emissions. As cement plants often operate away from large industrial clusters, Government policy should also support cement plants to connect to the carbon capture and hydrogen infrastructure that will be developed in these clusters.”  

Cement

Aldersgate Group announced as Race to Zero Accelerator

24th September 2021

During Climate Week NYC, the Aldersgate Group has been announced as an official Accelerator for the UN-backed Race to Zero campaign, which is a global campaign rallying non-state actors – including companies, cities, regions, financial, educational, and healthcare institutions – to take rigorous and immediate action to halve global emissions by 2030 and deliver a healthier, fairer zero carbon world in time. The campaign’s accelerators commit to boosting the campaign by supporting their members in applications to join and building awareness of its objectives through strategic communications, messaging, and events.

With members spanning business, civil society, educational institutions and professional institutes, the Aldersgate Group believes that ambitious and stable low carbon and environmental policies make clear economic sense. Many of the Group’s members have set ambitious net zero targets and are already developing plans to meet them. Over the course of the past year, the Group has driven a 43% increase of signatories across its membership into the Race to Zero.

Nick Molho, Executive Director of the Aldersgate Group, said: “In order to deliver emissions reductions in line with the Paris Agreement, and meet global net zero targets, collaboration between business, government, civil society, investors, and education institutions is crucial. That is why we have signed up to become an Accelerator for the UNFCCC’s Race to Zero campaign, to champion this cause and fast track action across society.

“This year’s IPCC report made clear the urgency of the task at hand: we must get on track for the 1.5C target of the Paris Agreement to minimise climate impacts, while also harnessing the opportunities of a net zero economy. COP26 will be a crucial moment to make progress on issues such as emission reduction pledges, international commitments on climate finance, the phase out of coal power, and carbon pricing.”

Nigel Topping, UN High Level Champion for Climate Action, said: “Momentum continues to build in the run up to COP26, with businesses, cities and investors raising their ambition and taking action to race towards a greener, fairer, healthier, zero carbon world. We're delighted to welcome the Aldersgate Group as an important Accelerator to the Race to Zero to help us expedite this agenda."

The unifying goal of the Race to Zero campaign is for all members to halve emissions by 2030, and achieve net zero as quickly as possible, by 2050 at the latest. So far, it has mobilised 799 cities, 35 regions, 4,475 businesses, 220 financial, 731 educational and 45 healthcare institutions as they work together to present decarbonisation initiatives. Collectively these non-state actors now cover nearly 1 billion people, over 11% of global CO2 emissions and almost 15% of the world’s GDP.

Race to Zero members must work in line with a clear set of guidelines, by pledging to have emissions reduction targets that are in line with the goals of the Paris Agreement, backed by clear and comprehensive plans, and supported by transparent reporting on progress throughout the process.

COP6

Clear plan of action needed to cut industrial emissions, improve competitiveness and create jobs

9th September 2021

Following the Government’s recent strategies on industrial decarbonisation and hydrogen, today the Aldersgate Group launches two major publications from Frontier Economics and University College London (UCL) calling for a more detailed policy framework to drive low carbon investment in heavy industry.

Based on significant engagement and case studies from several industrial sectors, these papers present tangible solutions to accelerate the decarbonisation of UK heavy industry in a way that will drive innovation, increase competitiveness, and create jobs across the country.
[1]


Heavy industrial sectors like steel, cement, glass, and ceramics are essential to the UK’s economic prosperity, contributing £170bn to the UK economy and directly employing nearly 3 million people across the country [3]. As the UK transitions to a net zero economy, heavy industrial sectors will be fundamental to providing the building blocks for low carbon infrastructure, goods and services. They also have a unique opportunity to develop new competitive advantages and expand into new markets during the net zero transition.

Despite some welcome commitments in the Government’s Industrial Decarbonisation Strategy and Hydrogen Strategy, a more comprehensive and ambitious plan of action is urgently needed to deliver cuts from industrial emissions at the pace and scale demanded by the UK’s net zero target.

Backed by extensive engagement with industry representatives from manufacturing sectors such as steel, cement, glass, ceramics and chemicals, today’s publications put forward specific recommendations to scale up innovation, roll out supporting infrastructure and accelerate low carbon investment in industrial clusters and dispersed sites (Frontier Economics). They also feature proposals to tackle the investment and competitiveness barrier created by high industrial electricity prices, which is slowing down efforts to electrify and decarbonise parts of industry (UCL).

Nick Molho, Executive Director of the Aldersgate Group, said: “There is strong appetite across heavy industrial sectors to accelerate emission cuts and seize the potential opportunities created by the net zero transition in terms of innovation, new investment and job creation at industrial sites across the country. The Government now has a key role to play in supporting industry, by taking firm decisions on infrastructure funding and policy support and by tackling head on the investment barrier stemming from high industrial electricity prices.”

Accelerating the decarbonisation of industrial clusters and dispersed sites (Frontier Economics)

Industrial clusters and dispersed sites (those located more than 25km from the 6 major industrial clusters) contributed an estimated 37.6 MtCO2e and 33.6 MtCO2e of emissions respectively in 2018. [4] Despite differences in their net zero journeys and technological solutions, industries predominantly located in clusters (steel, chemicals) and those mainly located in dispersed sites (cement, glass, ceramics) will require similar policy solutions to decarbonise. Key recommendations in this report include:

1. Provide certainty to industry on the future availability of low carbon hydrogen, biomass, and carbon capture usage and storage (CCUS), by using contracts for differences (CfDs) and government matchmaking. Industrial producers need confidence that low carbon hydrogen and CCUS infrastructure will be available to support innovation and investment in low carbon technologies. To build on the commitments of its Hydrogen Strategy, the Government should establish a certification for low carbon hydrogen, explore CfDs for key alternative fuels and CCUS, legislate for low carbon hydrogen and CCUS targets, and act as a “matchmaker” between suppliers and industrial producers.

2. Work closely with Local Enterprise Partnerships (LEPs), local authorities (LAs) and devolved governments to design local infrastructure plans to help connect dispersed industries to the infrastructure being deployed in clusters. LEPs and LAs can play a key role in ensuring that dispersed industrial sites such as cement plants have access to the essential low carbon infrastructure located in industrial clusters.

3. Provide targeted UK ETS free allowances or support through Carbon Border Adjustment Mechanisms (CBAMs) to prevent unintended impacts during the transition to low carbon business models. In cases where the requisite policy, infrastructure, and technology support is not in place to allow specific industries to decarbonise and respond to carbon price signals, industries should receive interim support in the form of free allowances or CBAMs to avoid a competitive disadvantage and the risk of carbon leakage.

4. Drive greater resource efficiency in industry through changes to regulation and increased accessibility of funding. Changes to building and waste regulations and introducing targets for recyclable material could be of significant benefit to sectors such as glass (which can use recycled glass in production) and steel (around 90% of end-of-life steel could be collected and recycled in electric arc furnaces). Access to innovation funding, such as through the Industrial Energy Transformation Fund, should be made easier by simplifying timelines and allowing businesses to apply for funding on a rolling basis.

5. Introduce demand-side policies to grow the markets for low carbon and resource efficient industrial products. This could be done by using product standards (similar to the Buy Clean California Act for construction materials), procurement policies (such as the CO2 Performance Ladder used in the Netherlands), and information campaigns.

Matthew Bell, Director and Joint Head of Public Policy at Frontier Economics, said: “The UK has an opportunity to develop competitive, low carbon industries to match growing global demand for low carbon industrial products. Meeting this demand is likely to help a very broad range of industrial sectors. Our report highlights the most important and urgent actions that the Government must take to help UK industry take the lead in winning new contracts, whilst also meeting our climate commitments.

These actions include improving the predictability of the future supplies of low carbon fuels, enhancing the links between Westminster and parts of local government (including Local Authorities and Local Enterprise Partnerships), and ensuring the UK’s trade policy supports the competitiveness of UK businesses as they move to net zero – such as through the possible introduction of carbon border adjustments and demand led measures such as product standards.”


Delivering competitive industrial electricity prices in an era of transition (UCL)

The UK has significantly higher industrial electricity prices than European competitors. With electrification key to industrial decarbonisation, delivering low cost and low carbon electricity is essential. Seizing the opportunity provided by the rapidly declining policy costs of renewables must be a priority. Key recommendations from this briefing include:

1. Maintain an efficient framework to accelerate investment in the cheapest forms of mature renewable energy such as onshore wind, accompanied by a predictable, rising carbon price to reduce investor risk. Offshore wind should be further supported with investment in surrounding supply chains and infrastructures such as ports.

2. Establish an integrated approach to network development, funding, and pricing. Independent Future System Operator Objective(s) should include more coordinated oversight of future generation and network developments, to minimise costs and facilitate the power sector’s transition to zero emissions.

3. Support continued growth of interconnection (through Ofgem’s cap-and-floor revenues system) and offshore grid development and reduce friction in electricity trade. Each 1GW of interconnection capacity can reduce UK wholesale electricity prices by 1-2%, [5] by making low cost, low carbon imports available and increasing variable supply and demand. The government should seek to restore UK participation in the day-ahead electricity markets with neighbouring EU countries, the absence of which is estimated to result in £45 million in lost trade in 2021. [6]

4. Establish a market for long-term, zero carbon and tradable electricity contracts, grounded in the declining cost of unsubsidised renewable electricity sources. These contracts would mitigate the indirect costs of carbon prices, and the volatility of fossil fuel prices.

5. Investigate options for moving some policy costs from electricity prices to gas prices over time, with interim competitiveness support for major gas users unable to electrify or transition to low carbon fuels in the short term. This will incentivise electrification and more evenly distribute the costs of the low carbon transition, while ensuring industry has the appropriate support to remain competitive.

6. Improve scrutiny and transparency of reported electricity price data. In order to effectively assess the degree to which electricity prices faced by UK industrial consumers are changing, both over time and relative to international competitors, reliable data is crucial. As part of Quality Assurance we recommend a review of how this data is requested, collected, and reported by BEIS.

Michael Grubb, Professor of Energy and Climate Change at UCL Institute for Sustainable Resources, said: “The UK electricity system has already undergone part of its low carbon transition. Thanks in large part to carbon pricing, coal is no longer significant – and that in itself reduces the impact of carbon costs on UK electricity prices. But industry is still carrying the legacy cost of building up renewables, which are part of the larger energy transition. Those costs could be spread more evenly, and in particular, reforms are needed to ensure that industry can benefit both from access to the now-cheap renewables, and from smoother participation in the capacity market.”

Paul Drummond, Senior Research Fellow at UCL Institute for Sustainable Resources, said: “Historic investment in the deployment of renewable energy technology, and the substantial reductions in cost it produced, now presents the UK with a clear opportunity to both reduce the high electricity prices faced by energy-intensive industries relative to many of continental neighbours, and emissions reduction through increasing electrification. The government must make sure a clear, long-term policy architecture is in place to encourage investment in increasingly subsidy-free renewables and grid interconnection, and effective and efficient markets in electricity trade and system balancing.”

Laura Cohen, Chief Executive of the British Ceramic Confederation, said: “Almost all of our members' 150 sites are located off-cluster. To switch from firing with gas we need to move to hydrogen, bioenergy, or electricity. We need policy interventions now for off-cluster manufacturers to remain competitive over this extended period until options are widely available, particularly as most of our members are paying an eye-watering £130/MWh which makes electrification uneconomic. Given the scale of the challenge we need much more government funding and supportive policies to develop and implement decarbonisation technologies for these off-cluster sites.”

Martin Casey, Director of Public Affairs Europe at CEMEX, said: “CEMEX very much welcomes these two reports: Individually, and when considered together, they provide deep insight into the real challenges faced by UK industry and provide well thought-out suggestions for actions and policies that the Government should take onboard. The competitive, sustainable and climate neutral future of essential material production in the UK depends on it”.

Sam French, Business Development Director at Johnson Matthey, said: “Decarbonising and modernising the UK’s heavy industrial sectors is an urgent necessity on both climate and economic grounds. These two reports provide a clear plan of action to drive innovation, cut the cost of new technologies, improve the competitiveness of industry and drive job creation. Industry needs a clear, net zero aligned roadmap to deploy hydrogen and CCUS infrastructure, alongside predictable revenue mechanisms and carbon pricing trajectories to unlock private investment in new technologies, business models and skills.”

Edward Heath-Whyte, Head of Environment and Sustainability at Liberty Steel, said: “As we approach COP26 it is important to ensure the low carbon transition for energy intensive industries is supported by appropriate policy measures. Liberty Steel UK is committed to supplying GREENSTEEL from its Rotherham Electric Arc Furnaces as part of the UK’s transition to becoming a low carbon economy. It is important that government takes steps to help drive this innovation from industry, in order to accelerate the net zero transition. As the Rotherham steelmaking plant is a ‘dispersed site’, we support the recommendations made in this report to help us and other sites like Rotherham accelerate the pace and cost-efficiency of reaching net zero."

Shane Hughes, Carbon Consulting Lead at Ramboll, said: “We welcome Aldersgate Group’s well informed policy recommendations. Britain kick started the Industrial Revolution but now heavy industry urgently needs ambitious policies to support the UK to again lead in the Net Zero Revolution. Get this right and heavy industry can both be climate positive and attract massive inward investment.”

Brian Holliday, Managing Director, Siemens Digital Industries, GB&I said “For the UK to achieve carbon net zero by 2050 it’s vital that UK manufacturing decarbonises. Whilst UK Government’s policy framework is advancing, industry needs greater forward certainty to allow leaders across the spectrum to plan effectively. This report highlights the challenges facing manufacturers with complex operations and I trust it will catalyse focus to address their needs. Industry has much work to do and needs greater insights to the art of the possible and more accessible technology solutions from multiple vendors.”

Dr Martyn Kenny, Sustainability Director at Tarmac, said: “Achieving the decarbonisation of UK heavy industry will require close collaboration between government and the UK cement and concrete sector. A comprehensive and ambitious plan is now needed to develop the policy environment, technologies and supporting infrastructure essential to decarbonise both industrial clusters and dispersed sites.

Tarmac is committed to this transition and has defined a clear pathway to not only achieve net zero by 2050, but even to go beyond net zero and remove more carbon than we emit. It is now critical that government delivers the policies needed to provide clarity and certainty, in order to facilitate a just transition that supports investment, competitiveness and jobs.”

[1] The Aldersgate Group’s new report, commissioned from Frontier Economics, Accelerating the decarbonisation of industrial clusters and dispersed sites is available to download here. The Aldersgate Group’s new briefing, commissioned from UCL, Delivering competitive industrial electricity prices in an era of transition, is available to download here.

[2] These publications will be discussed at a public webinar from 9.30am to 11.15am on September 9 with panellists from key industry organisations and lead authors of each report. You can register here.

[3] UK Industrial Decarbonisation Strategy (2021), page 16

[4] ibid, page 17

[5] National Grid (2014a) Getting more connected: The opportunity from greater electricity interconnection, National Grid, London

[6] Roberts, D. (2021) An initial assessment of the extent of inefficiency in electricity trade, Frontier Economics [online]


Decarbonisation of 29 million homes at risk due to significant gaps in net-zero plans

25th August 2021

It’s currently too complicated for people to adapt their homes for net zero and too often things go wrong. That’s the message today from a major coalition of consumer and industry groups in an open letter to the Prime Minister.

Citizens Advice, Which?, Aldersgate Group and the Federation of Master Builders are urging the government to work with them to address the obstacles currently faced by consumers and ensure lessons from previous energy efficiency schemes are learned. Otherwise it risks undermining the UK’s ability to decarbonise its 29m homes.

By making sure this process is as easy as possible for the public to engage with and understand, the government can maintain public trust and support and realise the benefits of emissions cuts, safer and warmer homes and innovation and jobs.

  • Consumer confusion - right now the process of installing low-carbon heating, upgrading insulation or installing smart technologies is time-consuming, confusing and stressful. Researching and choosing the right technology, finding a reputable installer and having the work completed demands huge amounts of knowledge, time and effort.
  • Things go wrong too often - the process of making adaptations is often beset by problems, including poor installation, technologies not working as expected, and people facing difficulties fixing things when they go wrong.

The coalition is also urging the government to avoid the mistakes of past energy efficiency schemes. Mistakes which left too many people struggling with damp and mould due to poorly installed insulation. Others suffered damage to their homes, leaving them with long-term problems that were expensive, disruptive and distressing to resolve.

Despite recent improvements, current consumer protections are not ready for the pace and scale of the work needed to improve millions of UK homes.

The coalition is calling on the government to take the opportunity to fix these gaps through its upcoming Net Zero Strategy and put in place a long-term strategy to help households overcome the barriers to adapting their homes for the net-zero transition.

  • Information - from installing low-carbon heating to upgrading insulation, it’s confusing for people to know what steps to take and what technologies to install. People need more accessible and unbiased information to help make the right changes to their homes.
  • Consumer protections - the consumer protection landscape must be fit for purpose. If protections don’t keep up with the pace of change, the door will be opened to scammers and rogue traders. Previous energy efficiency schemes have been marred by such problems - which also began to emerge with the Green Homes Grant.
  • Costs - many people will need financial support to make changes to their homes. There needs to be a comprehensive long-term policy framework that provides certainty for businesses and consumers, which offers financial support such as predictable and well-advertised grants, low-cost loans and financing.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“Our evidence is clear. Right now, making green changes to homes is too confusing and too often things go wrong for those trying to do the right thing. The public are behind the net-zero transition, but they need the right information and tools, particularly when it comes to adapting their home.

“By getting things right now, the government can give people the confidence to make changes and play their part in getting to net zero.”

Rocio Concha, Director of Policy and Advocacy at Which?, said:

“Decarbonising millions of households across the UK is a vital, but complex component of the government’s net-zero strategy, and its success will depend on ensuring consumers are supported in transitioning to low carbon heating systems, which will involve radical changes to their home.

“The level of support consumers need must not be underestimated, and we are urging the government to ensure its net-zero policy has provisions to help consumers navigate the heating market, through access to the right information, strong consumer protections, and if needed, financial support.”

Nick Molho, Executive Director of the Aldersgate Group, said:

“Cutting emissions from homes is a significant part of achieving net-zero emissions but the transition also presents a real opportunity to improve the quality of the housing stock and the affordability of energy bills across the country.

“The Government has a significant opportunity with the upcoming Net Zero Strategy to set a clear direction of travel through predictable regulatory targets, easily accessible policy incentives and much improved information and local support measures. It is vital that energy efficiency and low-carbon heat schemes are placed on a long-term footing, so that industry can invest, train its workforce, and grow consumer confidence.”

Brian Berry, Chief Executive of the Federation of Master Builders, said:

“With our homes consuming 35% of all energy in the UK and emitting 20% of our total carbon dioxide emissions, it’s clear that net zero will only be possible alongside a long-term plan to green our homes. Short-term interventions, such as the prematurely closed Green Homes Grants Scheme, served only to undermine, rather than create, certainty for both consumers and builders.”

 “Any policy framework must be long-term, allowing time for local building firms to complete the relevant training to retrofit homes. Homeowners need to be informed about what changes need to happen to their home to make it environmentally-friendly. We recommend each building should have a renovation passport, setting out the path to net zero. We also need a locally-led approach that is sensitive to local communities’ needs.”

Housing

Ambitious trials and policy clarity key to support hydrogen

17th August 2021

Reacting to the publication today of the Hydrogen Strategy, Nick Molho, Executive Director at the Aldersgate Group said: “The Government’s consultation on business models to make large-scale low carbon hydrogen production commercially viable and the commitment to develop a credible standard to ensure UK hydrogen production is consistent with the net zero target are two important steps forward. Low carbon hydrogen has a crucial role to play in cutting emissions in complex sectors of the economy, such as long-range road transport and heavy industry in both clustered and dispersed sites. The key to ramping up production and cutting the cost of low carbon hydrogen will be to pursue meaningful demonstration projects in sectors such as steel, co-ordinate the deployment of supportive infrastructure, support investment in skills, and provide rapid clarity on the market mechanisms industry can rely on to make a predictable return on investment.”  
 
Nick Molho added: “The Government’s hydrogen production strategy must take into account the fact that different types of hydrogen are at different stages of development. They therefore have different requirements in terms of the innovation, infrastructure and policy support they require, with green electrolysis for example needing support to scale up over time from pilot trials initially to large commercial scale projects. Given the currently limited availability of low-carbon hydrogen, it will be essential that the use of hydrogen is first of all prioritised towards areas where few low carbon alternatives exist to cut emissions, such as in heavy industry and long-distance transport.”   

hydrogen

Evidence is clear – global action on climate change cannot wait

9th August 2021

Responding to the publication of the Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Report, Nick Molho, Executive Director at the Aldersgate Group, said: “The message from the IPCC is crystal clear: climate change is happening here and now and it is caused by greenhouse gas emissions linked to human activity. Today’s report has huge implications for policy makers in terms of tackling greenhouse gas emissions and adapting to the levels of climate change the world is already locked into. To keep the 1.5C target alive and adapt to a changing climate, governments around the world must provide unequivocally clear policy signals to significantly accelerate the investment that is urgently needed in ultra-low carbon infrastructure and nature-based solutions. The business and finance communities have a clear role to play too by taking on credible net zero emissions and biodiversity restoration targets and delivery plans.”
 
Nick Molho added: 
“The UK Government has a critical role to play in the coming months. On the global stage, it needs to gather maximum momentum to bring emission reduction pledges from all key emitting nations in line with the 1.5C target and look to underpin this with tangible global collaboration and initiatives in areas where cutting emissions is particularly complex. Domestically, the expected publication of the net zero strategy and the finalisation of the Environment Bill provide the Government with a unique opportunity to set out the detailed and comprehensive policy framework to unleash the low-carbon investment that is needed across the UK’s homes, industry, energy, transport and land management sectors and maximise the job creation opportunities that will come with this.”

Ice caps

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