The plan promises 250,000 jobs and emphasises a “green industrial revolution” to stimulate a post-pandemic economic recovery.
On 17 November 2020, UK Prime Minister Boris Johnson announced a ten-point plan as part of the government’s initiative to “build back better”. The plan aims to bolster the economy and “turn the UK into the world’s number one centre for green technology and finance, creating the foundations for decades of economic growth”. The ten-point plan will mobilise £12 billion of government investment — and potentially three times as much from the private sector — while aiming to create 250,000 jobs in the UK.
In July 2020, the UK pledged £3 billion towards a green investment package. In the mini-budget, Rishi Sunak, Chancellor of the Exchequer, promised to establish a green home grant, decarbonise public buildings, and create green jobs.
The UK government also recently announced plans for a climate-focused financial services regime. This programme seeks to help the UK maintain its position as an international financial centre, with the most important initiatives including: mandatory disclosures aligned with the Task Force on Climate-related Financial Disclosures, a UK taxonomy, and the launch of a Sovereign Green Bond.
The ten points in the plan announced by the UK Prime Minister are:
- Offshore wind. Quadrupling production to 40 Gigawatts (GW) by 2030, supporting up to 60,000 jobs, and aiming to produce enough energy to power every home.
- Investment in hydrogen. 5GW of low carbon hydrogen production capacity by 2030 for industry, transport, power and homes, and aiming to develop the first town heated entirely by hydrogen by the end of the decade. This could result in total investment of up to £500 million.
- Nuclear power. Developing the next generation of small and advanced reactors, which reportedly could support 10,000 jobs.
- Electric vehicles. A ban on new petrol and diesel cars and vans in 2030 and supporting national manufacturing bases including in the West Midlands, North East, and North Wales to accelerate the transition.
- Transport. Cleaner public transport, including green buses and new cycle lanes.
- Planes and ships. Supporting difficult-to-decarbonise industries to become greener through research projects for zero-emission planes and ships. Plans include £20 million for a competition to develop clean maritime technology.
- Homes. £1 billion investment in energy efficient homes, schools, and hospitals, whilst creating 50,000 jobs by 2030, and a target to install 600,000 heat pumps every year by 2028.
- Carbon capture. £1 billion investment in carbon capture and storage, with a target to remove 10 million metric tonnes of carbon dioxide by 2030.
- Natural environment. Planting 30,000 hectares of trees a year by 2025 and rewilding 30,000 football pitches’ worth of countryside.
- Innovation and finance. Setting up a £1 billion energy innovation fund to commercialise new low-carbon technologies and establishing London as a global centre for green finance.
Questions for the Future
While the Prime Minister’s policy is new as a complete and comprehensive package, certain measures are not entirely novel. For example, the Green Homes Grant Scheme was announced earlier in the year by Mr Sunak, and the path to making London a Green Finance Centre was announced last week.
Market commentators have raised concerns around the funding of the initiative and whether the UK’s plan can be implemented within the allocated £12 billion governmental budget. By way of comparison, Germany announced that £35.8 billion, a third of its recovery package, will be allocated to sustainable investments in green hydrogen, renewable power, and electric vehicles. France also pledged that £26.8 billion will be directed to greener energy policies.
Non-Governmental Organisations have expressed concerns, specifically about whether the package of measures is sufficiently ambitious, and whether support for nuclear and hydrogen will be enough to achieve the goal of net zero emissions by 2050.
The government has confirmed that more details, including clear timetables and changes in regulations, will follow.
Latham & Watkins will continue to monitor developments in this area.
This post was written with the assistance of Sabina Aionesei in the London office of Latham & Watkins.