Prime Minister’s 10-point climate plan underlines the vital ‘dance’ between innovation and policy

Published: 18 November 2020

By Guy Newey, Director of Strategy and Performance, Energy Systems Catapult

The Prime Minister’s 10-point package marks the first substantial climate intervention by a PM since the start of the coalition. That matters. It gives a clear signal outside and, just as importantly, inside Government that Net Zero is a priority.

The 2030 ban on new Internal Combustion Engine cars and vans is a huge step that underlines the seriousness of intent. Such a regulatory move is much more important for innovators and investors than any subsidy offered.

It also underlines the ‘dance’ between innovation and policy. Imagine trying to do this 10 years ago when G-Whizzes were pottering around. Much easier with Tesla Model 3s on the streets, and prices falling. The regulatory move now confirms that innovation-driven transition.

There is also an important commitment to technologies that have high system values – nuclear, CCUS and hydrogen – which underlines what Energy Systems Catapult found in our Innovating to Net Zero whole system analysis and their importance of them for reaching 2050 targets.

And the audacious hydrogen towns proposal, which we hope can lead to a series of pathfinding Net Zero towns and cities across the country. This is crucial to allow us to test how Net Zero is going to work in places and harness local political climate ambition.

The decarbonisation of buildings may be down at number seven on the Prime Ministers 10 point list but it is the toughest nut to crack of them all. There is some significant funding on energy efficiency and low carbon heating, and a commitment to installing 600,000 heat pumps annually is a big step forward in ambition.

But low carbon heating will only take off at the pace and scale we need when there are desirable consumer propositions in the market (which in turn need regulatory and economic signals for innovators to invest – we need to start the same dance with buildings, between innovation and policy, that we had with EVs).

And what was really intriguing – emerging in the PM’s frontpage FT article – was the explicit mention of carbon pricing (see our now famous chart on the wide range of effective carbon prices across different sectors to see how badly the UK is doing on this); and a new taskforce.

The taskforce is important, not just for a show of political will, but because we need to make sure all this stuff fits together. And it needs to work for people; low carbon needs to be better and, where possible, cheaper. After all people have a veto on net zero.

The scale of the changes required at the pace required (as digitalisation also lands on the energy sector), means we need to think anew about the market and regulatory arrangements that are going to make the shift to low carbon as smooth as possible.

So its a massive step forward, with more massive steps still to come.