Is there anything under the bonnet of govt’s climate policy?

Campaign groups such as the film-maker Richard Curtis’s Make My Money Matter have high hopes that getting the stewards of the bulk of people’s savings to focus on where they are investing will help deliver  the UK’s contribution to net-zero. It is certainly part of the equation. But what will make or break the UK government’s objective of meeting its climate change commitments is not the supply of finance, but the demand for it.

The two largest sources of greenhouse gases in the UK are housing and transport, and within those sectors use by households is by far the greatest generator of carbon. The product solutions to the problem are mostly known too — households need to replace gas boilers and they need to buy electric vehicles.

Prime minister Boris Johnson has set out a 10-point plan that contains very ambitious targets in these areas. Some 600,000 households a year should switch out gas boilers for heat pumps from 2028. From 2030, the sale of purely petrol and diesel vehicles will be banned in the UK.

Yet these targets do not sit on the kind of detailed plans that pension trustees will now be required to publish. Indeed, the apparent absence of planning for the frameworks in which the consumer markets will operate looks as if it is going to make it very difficult for pension trustees to invest in green markets in the UK on any significant scale.

Businesses that want to gear up to sell mass market green products need to show that the demand will be there before they are able to ask for large-scale financing. They cannot currently do so.

This also potentially has knock-on effects for the big, graced by politicians in high-viz jackets, electricity generation and network infrastructure projects. These too will only be investible at a reasonable cost if it is clear that the scaling up of the electricity grid is going to be paid for through increased demand.

‘Natural’ gas is an environmental problem

The market for domestic heating is the least organised. Consumers are largely unaware that ‘natural’ gas is an environmental problem. The upfront costs of new heating technology is high compared with the cost of a gas boiler.

There is currently no incentive scheme from the government available to most people to encourage them to invest in switching. There are no mechanisms for aggregating demand that would in turn make it feasible for suppliers to scale up in response.

Consumer trust in the market is low. Redress can be hard to find because installers are not necessarily required to belong to trade bodies, nor for there to be a pooled insurance equivalent to the National House Building Council’s guarantee to protect consumers if they discover problems long after the supplier has disappeared.

The chopping and changing of previous, and in any event undersized, government subsidy schemes has also made suppliers reluctant to invest in training, exacerbating the risk of poor installation.

A range of possible alternative technologies also means that consumers may take a risk if they pursue an individual initiative now. Unlike the car market, there is no apparent ultimate hard stop date by which old technology will no longer be on sale.

Battle of standards

The hard stop date for cars could also turn out to be politically fragile if consumers do not take to electric vehicles in larger numbers well before 2030. The main problem in the car market is that suppliers are  engaged in a battle of standards to try to individually capture 100 per cent of the market.

It is unclear why policymakers are indulging this. The lack of interoperability of charging connections and payment systems and the absence of any “universal service” plan for charging points means that the overall infrastructure roll out makes for an unreliable consumer service.

A suite of departmental reports is awaited with anticipation. These should give us a far better idea of whether there is anything under the bonnet of the government’s climate policy. We are not overconfident.

The background noise and discussion in think tanks is all oriented towards supply-side projects. It is to be hoped that the Taskforce on Innovation, Growth and Regulatory Reform’s report on better regulation after Brexit was not a straw in the wind. The climate change-related reflections in the report hardly considered the functioning of the consumer markets at all.

Unless the government thinks again, removing barriers to growth in these sectors by adopting consumer-focused, market-making regulation, and ensuring that real, simple-to-use incentives are made available to consumers, it risks failing spectacularly to meet its targets.

Andrew Tarrant is director of EU affairs and public policy at Whitehouse Communications.

This article was first published by Pensions Expert.

The Whitehouse Communications team are experts in providing public affairs advice and political analysis to a wide range of clients who seek to engage with policy makers in the EU institutions, but also with the member states of the European Union and beyond. For more information, please contact Viviana Spaghetti, at

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