The government has published two important papers on delivering clean economic growth and infrastructure.
Together, they set out how the government intends to leverage private investment into sustainable infrastructure in order to achieve both decarbonisation goals and economic growth.
The National Infrastructure Commission (NIC) has published a consultation on its National Infrastructure Assessment 'Congestion, Capacity, Carbon: Priorities for National Infrastructure', and the Department for Business, Energy & Industrial Strategy (BEIS) has published the 'Clean Growth Strategy'. Although published independently by different government bodies, there are many similarities between the two papers. The overall message is that if the UK fails to invest in its infrastructure with a modern, green approach in mind, then the country's economic growth will also be jeopardised.
National Infrastructure Assessment (NIA)
The NIA is an interim assessment to identify key priorities for consideration and consultation ahead of the publication of the National Infrastructure Strategy in 2018. It highlights the 'three Cs' - congestion, carbon and capacity as the key challenges for UK infrastructure growth. It warns that by 2050 the UK's population and economy will have grown significantly, placing substantial pressure on outdated infrastructure. It also warns that meeting the challenge of climate change will require transformations in energy generation and transport, and that UK infrastructure will need to adapt to the effects of climate change, such as increased risks of drought and flooding. Other environmental challenges needing to be addressed include air and water quality.
The NIA sets out seven key priorities:
- Building a digital society: fast, reliable data services everywhere.
- Connected, liveable city-regions: linking homes and jobs.
- New homes and communities: supporting delivery of new homes.
- Low-cost, low-carbon: ending emissions from power, heat and waste.
- Revolutionising road transport: seizing the opportunities of electric and autonomous vehicles.
- Reducing the risks of extreme weather: making sure the UK can stand up to drought and flooding.
- Financing infrastructure in efficient ways: getting the right balance between public and private sectors.
Smart systems are seen as having a key role in tackling the priorities, for example, improved digital transport signalling, water metering and remote monitoring. However, most emphasis is placed on increasing the rate of homebuilding, with housing described as 'the greatest infrastructure capacity challenge of all'.
The NIA suggests that responsibility for delivering the ambitions set out in the NIA will fall on regulators such as Ofgem, Ofwat and Ofcom, and on the private sector. It states that 'Regulators are as important as Ministers' and notes that 'Britain's digital infrastructure is mainly the responsibility of Ofcom, the telecommunications regulator, not the government or parliament, with the investment required lying almost entirely with the private sector.'
The consultation period for the NIA closes on 12 January 2018.
Clean Growth Strategy (CGS)
The CGS claims that it 'delivers on the challenge that Britain embraced when parliament passed the Climate Change Act' and that 'Achieving clean growth, while ensuring an affordable energy supply for businesses and consumers, is at the heart of the UK's Industrial Strategy.' Most importantly, however, there is a recognition by the government that economic growth and increased environmental protection are not incompatible.
There are 50 key policies and proposals set out in the CGS, covering all sectors of the economy that contribute to the UK's carbon emissions. These are divided into eight broad categories:
- Accelerating Clean Growth - the CGS proposes developing world leading Green Finance capabilities.
- Improving business and industry efficiency (25% of UK emissions) - there are proposals to, among other things, consult on improving the energy efficiency of new and existing commercial buildings and on raising minimum standards of energy efficiency for rented commercial buildings, and to simplify business energy reporting requirements.
- Improving our homes (13% of UK emissions) - notably, there is an aspiration to develop a long term trajectory to improve the energy performance standards of privately-rented homes, with the aim of upgrading as many as possible to EPC Band C by 2030, where practical, cost-effective and affordable.
- Accelerating the shift to low carbon transport (24% of UK emissions) - most of the focus is on road transport, with the key new policy being to end the sale of new conventional petrol and diesel cars and vans by 2040. Surprisingly, there is no mention of air transport in these policies; the expansion of Heathrow gets only a passing mention in a Technical Annex.
- Delivering clean, smart, flexible power (21% of UK emissions) - there is a strong emphasis on reducing power costs, with the announcement of a draft bill to require Ofgem to impose a cap on standard variable and default tariffs. The previously-made commitment to phase out the use of unabated coal to produce electricity by 2025 is also repeated.
- Enhancing the benefits and value of our natural resources (15% of UK emissions) - the proposals include publishing a new 'Resources and Waste Strategy'.
- Leading in the public sector (2% of UK emissions) - £255 million of funding will be made available to public bodies in England for energy efficiency improvements. Public bodies will also be given help to access sources of funding.
- Government leadership in driving clean growth - there is an attempt to ensure joined-up policy-making through the creation of a 'Clean Growth Inter-Ministerial Group'.
BEIS is seeking views, comments and suggestions on the CGS up until the end of December 2017.
What are the implications of the NIA and CGS?
In contrast to the NIA, the CGS puts figures on how investment is going to be spent to support the government's objectives, stating that '£2.5 billion will be invested by the government to support low carbon innovation from 2015 to 2021'. Whereas the NIA seems to be in place as a fact-finding exercise through consultation, in order to develop solutions to the priorities set out within it, the CGS seems to suggest that those solutions already exist, but just need to be implemented. It may be several years before we see legislation being brought forward to implement many of the proposals in the CGS, but at least some of the proposals set out a long-term trajectory to provide greater certainty for business.