‘Green Day’? Fears grow government is to prioritise fossil fuel projects in upgraded climate strategy

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Green Day

Reports suggest Number 10 wants to rebadge much-anticipated ‘Green Day’ package of decarbonisation policies as ‘Energy Security Day’ and ensure a lead role for new gas projects

Green groups have responded angrily to reports over the weekend that the government’s much anticipated update to its Net Zero Strategy could be accompanied by approval for new oil and gas projects and a potential rolling back of windfall taxes on fossil fuel firms.

The government is widely expected to unveil a wave of decarbonisation and energy policies on Thursday as part of a package that had been badged as ‘Green Day’ by Whitehall insiders.

But reports in both the Guardian and the Financial Times this weekend indicated Number 10 is poised to rebrand the day of announcements as ‘Energy Security Day’ and is considering launching the package in Aberdeen, the capital of the UK’s oil and gas industry.

The precise details of the launch are yet to be finalised, but reports indicated Prime Minister Rishi Sunak could travel to Scotland to unveil the new measures, which may include approvals for new oil and gas projects.

The Guardian reported that a decision on whether to approve the controversial Rosebank oil field has reached the desk of Energy Security and Net Zero Secretary Grant Shapps.

Meanwhile, the FT reported the Treasury is considering plans to introduce a ‘price floor’ into the windfall tax regime imposed on oil and gas companies last year, which would see the new levy rolled back if energy prices fall below a certain level.

It also reported Number 10 is keen to see gas play a critical role in the new package of measures. “It is not Green Day,” one insider told the paper.

Green commentators responded angrily to the news. Tom Burke, a co-founder of the E3G thinktank, told the Guardian: “This is Fawlty Towers politics – don’t mention the environment! It’s a sop to the right wing. It’s clear this is not a strategy, just an assembly of lobby interests… The real problem for the UK is that the US, with the Inflation Reduction Act, and the EU have started the race for a green economy. That race has gone off and we are not in the race. Green day was supposed to be an opportunity to get back in the green race, but this is just supporting [fossil fuel] lobbies.”

The news comes as a new analysis from Goldman Sachs suggested the package of subsidies and policies introduced through the US Inflation Reduction Act (IRA) is set to mobilise $3tr worth of investment in clean energy tech through to 2031, primarily through tax credits for electric vehicles, renewable energy, nuclear power plants, batteries, energy efficiency programmes, hydrogen and carbon capture and storage (CCS).

This week’s announcements from the UK government are still expected to feature a raft of decarbonisation policies as Ministers are required to update the UK’s Net Zero Strategy in response to a High Court ruling that last year branded the current strategy as “inadequate”. Ministers are also expected to formally respond to the recent review of the UK’s net zero policy landscape by Conservative MP Chris Skidmore.

As such, the government is expected to confirm a number of long-awaited new decarbonisation policies, including measures to improve energy efficiency in the private rental sector, a zero emission vehicle (ZEV) mandate for auto manufacturers in the UK, and new ‘business models’ to enable a wave of CCS and hydrogen projects.

The Times reported yesterday that the package is set to include approval for at least six CCS projects that are to share £20bn of financial support over the coming decade, as well as 10 year ‘roadmap’ for boosting low carbon hydrogen production.

Industry groups are also hoping for fresh measures to ease planning barriers and accelerate grid connections for new renewables projects. And the government is reportedly debating proposals to introduce a carbon border adjustment mechanism that would effectively impose import levies on products from economies without effective carbon pricing regimes in place.

Meanwhile, Shapps confirmed in an article in the Sun that the government is planning to rebalance green levies on gas and electricity in a move that should make electric heating systems such as heat pumps more competitive. “On Thursday, we will also commit to addressing the imbalance between gas and electricity costs in household bills, to make electricity cheaper for the long term,” he wrote. “I want to remove the distortions in the energy market, and this could take £100 off your electricity bill.”

However, the Guardian reported that more ambitious proposals for a mandate for all new homes to feature solar panels, the creation of a new Office for Net Zero, a ban on gas flaring from 2025, a clearer duty for Ofgem to enable the decarbonisation of the energy sector, and the introduction of a national energy efficiency programme are all expected to be rejected by the government.

The Department for Energy Security and Net Zero was considering a request for comment at the time of going to press.

Writing on Twitter, former COP26 President Alok Sharma said the key test of the ‘Green Day’ announcements would be whether it serves to meaningfully accelerate investment in green technologies and jobs.

“[The UK] must set out a meaningful response to green growth initiatives by other nations, with regulatory reform and financial incentives,” he said. “The [US] Inflation Reduction Act is already helping to attract billions of dollars more of private sector investment in green industries. We are fast approaching a cross-roads. We can promote the UK as a hub of global excellence for the growth industries of the future or we can allow others to win this critical race. Half measures, mixed signals and delayed delivery of already announced policies will not cut the mustard with a private sector wanting to back the UK Green Industrial Revolution.”

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