Sunak softens UK policy amidst ‘cost’ of delivering net zero

In a speech on Wednesday, Sunak also confirmed the government has revised its policies in relation to the phase-out of gas boilers in homes and on home insulation too.

The policies had been outlined as part of a broader package of measures with a view to supporting the UK’s transition to a greener economy. Sunak said that he is “unequivocal” that the UK will meet its international commitments, but said the UK needs “a fairer, better way” to achieving that than the path set out by earlier governments.

The UK has legally binding climate targets – including to achieve ‘net zero’ greenhouse gas emissions by 2050, relative to 1990 levels – which were set in the context of international commitments made by the government in recent years, including the Paris Climate Accords.

In his speech, Sunak cited rising costs associated with implementing the policies needed to achieve net zero and that that requires there to be a rethink in respect of some policies. He said the UK is at risk of “losing the consent of the British people” in relation to the entire decarbonisation agenda if the public is exposed to too high a cost in implementing change quickly.

Sunak said: “We’re stuck between two extremes. Those who want to abandon net zero altogether – because the costs are too high, the burdens too great or in some cases, they don’t accept the overwhelming evidence for climate change at all. And then there are others who argue with an ideological zeal: we must move even faster, and go even further no matter the cost or disruption to people’s lives and regardless of how much quicker we’re already moving than any other country. Both extremes are wrong. Both fail to reckon with the reality of the situation.”

“The test should be: do we have the fairest credible path to reach net zero by 2050, in a way that brings people with us? Since becoming prime minister, I’ve examined our plans and I don’t think they meet that test. We seem to have defaulted to an approach which will impose unacceptable costs on hard-pressed British families. Costs that no one was ever told about, and which may not actually be necessary to deliver the emissions reduction that we need. I’m confident that we can adopt a more pragmatic, proportionate, and realistic approach to meeting net zero that eases the burdens on working people,” he said.

Specific changes to government policy were announced in Sunak’s speech. He said the ban on the sale of new petrol and diesel-powered cars and vans will be pushed back from 2030 to 2035, stating the transition towards electric vehicles should, for now, be driven more by consumers than by government. He said the revised date for the ban aligns with similar policies in other countries, including Germany, France, Spain, Australia, and some US states.

Sunak also confirmed a softening of plans to require all UK homeowners to move away from gas-powered boilers by 2035. The phase-out had been due to begin from 2026.

“We will give people far more time to make the necessary transition to heat pumps,” Sunak said. “We’ll never force anyone to rip out their existing boiler and replace it with a heat pump. You’ll only ever have to make the switch when you’re replacing your boiler anyway, and even then, not until 2035. And to help those households for whom this will be hardest I’m introducing a new exemption today so that they’ll never have to switch at all.”

Sunak also confirmed that plans to impose new energy efficiency obligations on domestic landlords from 2025 are also scrapped. The government is expected to set out its position on the level of energy performance certificate (EPC) that landlords for new and existing commercial tenancies will need to achieve, and by when, later this year.

“While we will continue to subsidise energy efficiency – we’ll never force any household to do it,” Sunak said.

Siobhan Cross of Pinsent Masons, who advises businesses in the real estate market on how to address the impact and effects of climate change, said: “It seems likely that many businesses in UK real estate, with their own corporate climate targets and understanding built over years of what they need to do to reduce greenhouse gas emissions, will continue moving forward with energy efficiency measures, regardless of this policy shift, but changes like this and uncertainty over long-term policy does not promote investment. It also runs contrary to the recommendations contained in the Skidmore review that the government commissioned, which advised the acceleration of many net zero-driven policies.”

A raft of other policy proposals Sunak said were under consideration in the context of net zero have also been “scrapped”.

Sunak said: “The proposal for government to interfere in how many passengers you can have in your car. I’ve scrapped it. The proposal that we should force you to have seven different bins in your home. I’ve scrapped it. The proposal to make you change your diet – and harm British farmers – by taxing meat. Or to create new taxes to discourage flying or going on holiday. I’ve scrapped those too. And nor will we ban new oil and gas in the North Sea.”

In his speech, Sunak also trailed a series of forthcoming government announcements. For example, he said he would set out the government’s “ambitious environmental agenda” to protect nature before he attends the 28th UN Climate Change Conference (COP28) that begins in Dubai on 30 November.

He also said “comprehensive new reforms to energy infrastructure” will also be brought forward shortly by the government – perhaps in an indication that businesses can expect new national policy statements (NPS) in relation to ‘nationally significant’ infrastructure projects (NSIPs) in energy to be finalised, following consultation on revisions to the existing NPS earlier this year. In a statement accompanying Sunak’s speech, the Prime Minister’s Office also confirmed that a new ‘fast track’ system for NSIPs would be made available for “major eligible transmission projects”, while Sunak said applications for grid connections will no longer be considered on a “first-come-first-served” basis – alluding to forthcoming new criteria aimed at “raising the bar to enter the queue and make sure those ready first, will connect first”.