The Government has confirmed that it will not introduce quarterly
reporting on how it is meeting net zero targets while enhancing
energy security when it rolls out new oil and gas licences in the
North Sea. While the Environmental Audit Committee (EAC)
appreciates there will be a role for oil and gas in the net zero
transition, MPs had raised concerns that the issue of new fossil
fuel licences could send mixed signals to the market about the
Government’s appetite for decarbonisation.
The Government’s rejection of EAC’s recommendation is within its
response to the Committee’s ‘Financial sector and the UK’s
net zero transition’ report.
In its report published in November, EAC also called for
companies to have mandatory transition plans for net zero, and
argued that the current ‘comply or explain’ approach defeated the
point of the policy as a company could disclose by simply not
having a transition plan. The Government declined to engage with
this recommendation. EAC notes that both the Government and the
Financial Conduct Authority (FCA) are expected to consult on the
approach to transition plans.
While the Committee is disappointed that the Government rejected
recommendations to send clear signals to the market by setting an
end date to new oil and gas licensing in the North Sea and on
transition plans, EAC is pleased to see progress on increasing
the funding allocated to the Boiler Upgrade Scheme and on carbon
markets. The Government confirms that consultations on voluntary
carbon markets and carbon border adjustment mechanisms (CBAMs)
are expected in early 2024.
With a General Election expected later in 2024, efforts to
implement policy informed by the consultations could run out of
time in the current Parliament. Other long-awaited consultations
on transition plans and the UK green taxonomy remain overdue. An
investment roadmap for nature, expected in Autumn 2023, has now
been pushed back to the end of 2024, raising concerns that it
will be pre-empted by a General Election.
In light of EAC’s concerns that key areas such as transition
plans and green taxonomy were not sufficiently engaged within the
Government response, the Chair has also written to the Minister
for Energy Efficiency and Green Finance and the Treasury Lords
Minister urging them to take the Committee’s arguments into
account in full in all relevant upcoming consultations.
Environmental Audit Committee Chair, Rt Hon MP, said:
“The UK is a global leader in efforts to embed environmental
improvements into finance and across the wider economy. But this
is no time for any complacency: the Committee warned in November
that mixed signals from Government in terms of net zero policy
risked undermining further progress.
“From mandatory transition plans to offering companies greater
clarity on net zero investment in sectors across the economy,
there is plenty the Government can be doing to enhance the UK’s
standing. So much of the journey to Net Zero Britain hinges on
the private sector playing a key part and the Government must be
clear and unwavering in setting out the roadmaps for achieving
its environmental objectives.
“While there have been several positive moves in recent months –
including the funding boost for the Boiler Upgrade Scheme which
the Committee had called for – there are clear risks to making
meaningful policy progress arising from outstanding Government
consultations due to a looming General Election. This ought to
concentrate minds in the Treasury and across Whitehall: to keep
the UK as the global green finance leader it currently is, the
Government must continue to be swift and agile in its policy
development and implementation.”
