The UK’s Net Zero Review, detailing how the UK can achieve a ‘pro-business’ transition to its 2050 climate target has been released, but what could these outcomes mean for your business?
The Mission Zero report was commissioned last October, by former Prime Minister Liz Truss to assess the best way for the UK to reach its legally binding 2050 climate target while maximising opportunities for economic growth, business prosperity, innovation and social sustainability.
The Review examines how poor policies and the array of incentives for low-carbon technologies on offer are hampering the private sector’s confidence and ability to invest in these areas.
SMEs (small and medium-sized enterprises) account for 99.9% of the business population. According to a report from the British Business Bank, these companies are also responsible for around half of the nation’s non-domestic emissions. This means they have a crucial role to play in the net zero transition, but as highlighted by the report, they face challenges including resource, funding, and skills constraints.
The review, which was undertaken with the focus of a ‘pro-business’ transition, lists several recommendations the government should consider to drive growth in this area, let’s dive into these now.
Bridging the green skill gap
The Government is hoping to fill two million full-time green jobs by 2030, but, as confirmed by the office of national statistics (ONS) in February 2022, there has been no significant change in employment in the green economy or the level of turnover generated by low-carbon sectors between 2015 and 2020.
There is a skill gap in the labour market which is hindering businesses from achieving their net zero targets. To support businesses in addressing this challenge, the Skidmore Review recommends launching a ‘Help to Grow Green’ campaign for SMEs by 2024. The campaign should be a one-stop-shop, offering information resources and vouchers for SMEs to plan and invest in the transition.
“As firms are stepping up to the mark and decarbonising their own operations, their supply chains and proactively pushing forward the transition, it is important to recognise those efforts and allow firms to benefit from their green credentials.” the report states.
Skidmore’s Review calls on the Government to deliver a plan for creating green jobs and ensuring there are enough skilled workers to fill them. It recommends the action plan includes timelines for delivery, plus a breakdown of skills by industry and geographical location.
The Review also notes that the Government’s decision to convene a Green Jobs Taskforce in 2020 was a positive step, but lists the evidence that the Government has not heeded the recommendations it has put forward. It explains that many organisations giving evidence to the Review reported some of the same key challenges raised by the Taskforce, including a lack of clarity on accessing retraining programmes and the affordability of such programmes, plus the quality of jobs available after training.
With these recommendations, the Review hopes to create a wider pool of green skills for companies to use.
Implementation of a sustainable governance structure
The review, revealed many respondents were frustrated by a lack of direction on future plans, in cohesion between government departments, and uncertainty over the length of funding commitments. Research has now detailed how this is holding back the deployment of green technologies, hampering investment across all sectors, and inhibiting the ability to create British jobs.
Skidmore has called for an over-arching government financing strategy to be implemented by the end of 2023. This strategy will aim to provide long-term clarity to businesses and investors, and ensure we capitalize on our industrial strengths.
Furthermore, he has called for a concrete long-term approach to net zero projects and an Office for Net Zero Delivery whose responsibility will be for planning net zero deliveries, ensuring best practices for key projects, and taking ownership of net zero priorities across multiple departments.
Progressing incentives for investment in decarbonisation
One of the key components of the net zero transition is the flow of wealth into environmentally sustainable technologies and businesses.
“The Skidmore Review is absolutely right to emphasise that the net zero transition is a major pro-business and pro-investment opportunity” said executive director of the Aldersgate Group, Nick Molho, “businesses have long recognised this, a fact that is reflected in the rapidly growing number that are taking on ambitious net zero emission targets backed by clear delivery strategies.”
The Review highlights how investment and innovation will bring low-carbon technology to the mass market, and recommends reviewing the incentive structure for investment into activities such as decarbonisation. These benefits should be considered through the tax system and capital allowances in order to achieve clarity, certainty, consistency, and continuity of policy.
In addition, caution is needed in protecting industries from environmental undercutting, in which companies move their production to another country with more lenient environmental laws to avoid strict regulations. To combat this, it’s recommended to speed up decision-making to enable the Government to implement effective future carbon leakage mitigations, which they are aiming to do from 2026.
The much welcomed report should now help businesses receive certainty in their decision-making and increase the incentives to invest in new, green technologies.
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