Government pushes green agenda but is warned that North Sea licences threaten future investment

Thu 3 Aug 2023
Posted by: Phillip Adnett
Trade News

Net Zero logo surrounded by images of green energy symbols

The government has made a slew of new green policy announcements today (3 August) but has been warned that the UK’s attractiveness for green energy investment from overseas could be at risk if it goes ahead with granting new licences for oil and gas drilling in the North Sea.

Ministers have re-affirmed their commitment to hitting existing net zero targets and ensuring that the UK reduces its overall emissions, both to boost business confidence and to tackle security issues.

Climate change risks

The shift in tone comes as the 2023 edition of the official National Risk Register highlighted the potential damage that could be caused by continuing and worsening climate change.

Deputy prime minister Oliver Dowden said the assessment was the most comprehensive the government had ever published.

The report included a review of the likely impacts of climate change such as heatwaves, flooding, droughts and other forms of extreme weather. Several of these events would be “catastrophic”, it warned.

Energy

Another key part of the National Risk Register was the UK’s future energy security.

Dowden drew attention to government efforts to boost wind turbine production, with progress reported on the Dogger Bank site.

Additionally, foreign secretary James Cleverly is set to announce a “clean energy partnership” with Zambia as part of the UK’s new ‘Green Growth’ compact with the southern African nation.

New licences controversy

The granting of new licences for the oil and gas industry to drill in the North Sea earlier this week was reportedly part of a move to shore up the UK’s domestic energy supply, Bloomberg reports, but it was met with widespread condemnation from environmental groups.

Australian business mogul Andrew Forrest threatened to pull his investments, largely centred around green hydrogen and electric vehicles, from the UK over the “clickbait” policy.

Shadow business minister Bill Esterson criticised the government’s “backtracking on Net Zero”, arguing that the uncertainty created by the Conservative ministers’ actions undermined both businesses and workers.

Today, protesters from Greenpeace covered Sunak’s Kirby Sigston house with a black piece of cloth to draw attention to “the dangerous consequences of a new drilling frenzy” caused by the new licences.

Investment

Energy security minister Grant Shapps yesterday (2 August) announced a £22m increase in government backing for its “flagship” renewables scheme.

The £227m fund is meant to support low-carbon electricity generation as well as investment in green energy more generally.

However, City AM reports that industry executives have warned that the UK needs to improve its investment environment if it wants to attract more private sector funding for green energy projects.

Directors from renewable energy companies warned that the industry needs confidence and a “sensible fiscal environment” to continue investing in the still-emerging technologies.

A recent report by the Economist Intelligence Unit into the global green subsidy race found that the UK still ranked behind the EU, US and India in wind generation, as well as remaining significantly behind Poland, Hungary and Sweden when it comes to the production of electric vehicle battery production.

Global sustainability

The UK is also set to adopt a global set of sustainability reporting rules for companies.

The Department for Business and Trade (DBT) said it has largely adopted the International Sustainability Standards Board (ISSB) to create the new UK Sustainability Disclosure Standards (SDS).

The framework will form the basis for any reporting by companies on risks and opportunities related to sustainability and climate change matters.

DBT has said it will largely follow the global rules, only deviating when necessary, with UK SDS expected to be formed by July 2024.

The ISSB was formally backed by International Organization of Securities Commissions in July, as reported by Reuters.