Sustainability & ESG: An opportunity to lead in Net Zero technologies
Posted on: October 24th 2022 · read
The new UK government needs to lead by example and to ensure the BEIS produces a transparent and easy to understand Net Zero transition plan for the UK economy.
We need to find incentives for organisations who are taking this matter seriously and are really pushing the net zero agenda. Most importantly, why are we not investing in more R&D? This is a great opportunity for the government to lead in Net Zero technologies.
More transparency to businesses is required from the UK government as how the UK will achieve its net zero target. This does not bode well for the UK climate credentials which may create further economic uncertainty.
No clarity was provided on the new UK Government’s approach to Net Zero commitments, or if there are to be any changes to the implementation of climate disclosures across the UK economy by 2025.
As a reminder, in response to the Glasgow Climate Pact, the UK revisited its 2030 NDC to ensure it remains a fair and ambitious contribution to global action on climate change (the target announced in Dec 2020 was to reduce all gas emissions by at least 68% by 2030 on 1990 levels). There is no information to suggest the new leadership will amend the Net Zero target set by the previous administration.
The emergency tax measures announced by the Chancellor, together with the economic uncertainty, have raised several concerns and questions for businesses with regards to greener technologies and ways of working:
- Does the energy plan announced by the Government provide momentum for capital towards greener technology to support the transition to Net Zero?
- The Energy Bill Relief Scheme for businesses is in place for 6 months - what happens after 6 months? What is the expected support? How can businesses forecast in this situation?
- What is the approach to the long- delayed consultation on the UK green taxonomy?
- The new administration has pushed to boost fossil fuel production to help weather the energy crisis - how are these announcements going to impact the NDC submitted by the previous administration?
There is a big gamble on economic growth, plus a relaxation of planning permissions for oil and gas. Most significantly, there are steps being considered by the Government to reduce planning restrictions on land use, such as the easing of planning rules for onshore wind farms. This is a positive development but one which needs to be balanced with the Environment Act 2021, and Defra Land Use policies, as it will impact the farming community, who are already dealing with a significant number of issues regarding land use and input production costs.
These initiatives risk losing momentum for, and reducing the importance of, the Net Zero agenda. The new Government should focus on prioritising research and development, to assist organisations in finding ways to incentivise investment in green technologies that are needed to deliver our Net Zero target.
This report by the UK Climate Change Committee (CCC) warned that there are still significant gaps in the UK Government’s Net Zero policy, including sustainable land use and the energy efficiency of buildings.
The following recommendations were included in the report, for the Department for Business, Energy & Industrial Strategy (“BEIS”) to consider:
Introduce a package of measures within this, including a one-stop-shop for SMEs to get decarbonisation advice with a carbon foot-printing tool, develop a strengthened low-carbon advisor / auditor role for SMEs and develop an effective financing strategy to support SME decarbonisation (timing 2023).
- Introduce a package of measures within this, including a one-stop-shop for SMEs to get decarbonisation advice with a carbon foot-printing tool, develop a strengthened low-carbon advisor / auditor role for SMEs and develop an effective financing strategy to support SME decarbonisation (timing 2023).
- Do not delay in taking steps to legislate for listed UK companies and financial institutions to publish transition plans from 2023.
- Publish plans for a clear transition plan standard, based on a transparent consultative process with experts, practitioners and private sector actors, and building on lessons learnt from the Task Force on Climate-Related Financial Disclosures (TCFD) (timing 2022).
- To develop concrete proposals for standardising and regulating the claims corporates can make relating to offsets, for ensuring the quality and additionality of offsets on the market, and for directing carbon offsets to the highest quality and impact projects (timing H1 2023).
We consider the above recommendations critical and a matter of priority. It remains to be seen if the Chancellor will focus more on green policies and Net Zero measures in his medium-term Fiscal Statement, scheduled for November 2022.
For further guidance on any of the tax measures discussed in this article, please contact your usual MHA advisor or Contact Us.
Read the latest tax commentary - visit our dedicated hub where we will be providing resources, advice and practical guidance on what these tax measures mean for you and your business, to help you prepare and manage their impact.