Sunak's net zero reset and why it's a climate nothingburger

I love democracy, but sometimes I hate politics. With everyone hyperventilating over UK Prime Minister Sunak's net zero speech yesterday, I guess I should share my thoughts. Particularly since I'm probably the only "out" conservative known to many people working on climate change.

As Amber Rudd likes to say, the first job of any politician is to get elected, or re-elected. If track record were all it took for the Conservatives to get re-elected, they would be home and dry. After 13 years in government, the UK leads all advanced economies in decarbonization, and has chalked up an impressive list of achievements - from COP26 in Glasgow, which elicited pledges from 66% of the global economy to get to net zero by 2050 and 91% by 2070, to being the first major economy to legislate for Net Zero 2050, the largest economy to endorse Beyond Coal and eliminate it from its power generation mix, the largest global creator of marine reserves, and so on.

Sadly, the fact is that while the majority of voters accept the reality of anthropogenic climate change and endorse the idea of net zero, only a minority support measures that hit them in the pocket. That's not a UK thing, it's global thing - which surfaces in every well-constructed survey of public opinion and can bubble over in the form of France's Yellow Vest protests or the election of Trump/Bolsonaro-style populists. This is one of the Five Horsemen of Net Zero Apocalypse that I wrote about in my recent BloomberNEF piece:

https://about.bnef.com/blog/liebreich-net-zero-will-be-harder-than-you-think-and-easier-part-i-harder/

Sunak's big climate reset is all about getting re-elected, which means it's all about holding on to some of those famous Red Wall seats. And let's just say that voters there are not effete Westminster bubble types who care what European metropolitan elites think. Even in London, to the horror of many on the centre left - in other words most people working on climate change - a surprising number of voters really dislike things like Congestion Charging, Low Traffic Neighbourhoods and Ultra-Low Emission Zones. 40% of Londoners voted for Brexit. That is electoral reality.

Let's look at the substance of what Sunak announced. He has blocked proposals to tax meat and flights, to force each house to have seven bins for recycling, and to let strangers into our homes to rip out our boilers. Scandal! does he not care about climate change? But wait - there were no such proposals! It's a trap for Labour: oppose Sunak's Net Zero reset and they become the party of meat taxes, holiday taxes, seven bins and forced boiler removals.

Sunak also announced, of course, that he was pushing back the dates for banning ICE car and gas boiler sales. This more troubling, because now we are talking real changes to real policy, in areas where the UK needs to see hundreds of billions of pounds of investment to get to Net Zero.

I'm going to go out on a limb and say it won't make much difference to the UK's climate trajectory.

In the case of cars, the switch to EVs has passed the tipping point. Cost of EV ownership is on a par with ICE cars, range is good enough for almost all users, convenience of home and even on-street charging is a huge selling point, charging infrastructure is broadly keeping up with sales. Ford and BMW have already said that this won't change their plans for models or investment.

Will there be some ICE cars sold between 2030 and 2035? Sure. Will enough of them still be on the road by 2050 to make us miss net zero? Not really.

As for boilers, UK heating policy is in such disarray that the 2030 boiler ban had turned into more of a handicap than a help. The average Brit thinks that heat pumps don't work (despite their popularity in really cold countries and the millions of them heating offices and HORECA premises around the UK) and that they cost ￡15,000 (when a quick Google search shows the figure is around ￡2000).

This is not an accident. The UK gas heating industry, aided and abetted by its cronies in the Global Warming Policy Foundation, Net Zero Watch and the media have done a great job sabotaging progress towards low-carbon heating in the UK. Mike Foster, former junior Labour Minister under Gordon Brown, now CEO of gas heating lobby, the Energy Utilities Alliance, was recently caught funding a PR campaign aimed at "sparking outrage" about heat pumps. Boiler companies, installers and gas distribution network operators continue to inject misinformation about hydrogen boilers into the public forum.

So the British public has been punked on net zero heating. That is a scandal and it should have real consequences for the careers of the people involved. But it is a scandal that has peaked. Slowly, the public is becoming educated about heat pumps and other forms of electrical heating. Slowly, the number of heating engineers that can do a good heat pump installation is increasing. Slowly people are becoming aware of the 44 reports that now say hydrogen will have little or no role in the future of UK space heating. Slowly it is dawning on home-owners that their next boiler will be a heat pump, just as ten years ago it began dawning on them that their next car would be electric.

And then the bombshell: Sunak's announcement that he would increase the Boiler Upgrade Scheme (BUS) from ￡5,000 to ￡7,500, no questions asked. While the average house might require ￡10,000 of fabric improvements to install a low-temperature heat pump and get to a Coefficient of Performance of 4, a large number of houses don't. Octopus, British Gas and others were almost at the point of being able to offer some home owners heat pump installations with all cash costs covered by the ￡5,000 BUS. Those now turn into a cash premium of ￡2,500 for installing a heat pump. This is going to act like an intravenous shot of adrenaline into the market. And, as tens of thousands more people find out that heat pumps work (85% of households switching to them report improved comfort), the pubs are going to fill up with heat pump evangelists.

So, both in the case of EVs and heat pumps, I believe that future will be decided much more by bottom-up trends than by top-down, sweeping statements and targets.

Labour is, of course, leading in the polls, so all this might be moot. But if, against the odds, Sunak wins the next General Election, yesterday's climate reset will be seen by history as one of the key turning points. When it comes to the UK's decarbonisation trajectory, however, it will most likely have no perceptible effect.