Free net zero projects from ‘tyranny’ of Treasury rules

Upfront public investment in energy infrastructure must be freed from the “tyranny” of the Treasury’s short term spending plans, the government’s ex-net zero tsar has urged.

Former energy minister Chris Skidmore warned that private investors’ decision making timescales are out of kilter with Treasury rules stipulating that government spending plans can only be set out three years in advance.

Skidmore added that “investors and companies take decisions in decades, not in years”, while speaking at the Innovation Zero conference.

“We need to decarbonise and have this opportunity to do it but we need to do it now,” Skidmore added.

“The funding structures that are in place to incentivise change needs to be altered, we need to get out of the tyranny of the spending review above all.”

As an example of the challenges posed by these short-term timescales, Skidmore pointed to how the German government’s 10-year hydrogen strategy has committed £10 billion of investment, while the UK’s equivalent has earmarked £243 million over three years.

“We’re going to be in trouble and capital flight is beginning to take place. It’s a reality, we can’t just talk the energy transition into happening,” he added.

The ex-minister, who resigned as a Conservative MP earlier this year over the government’s decision to award new North Sea oil and gas drilling licences, said government policy “rowbacks” are also undermining investor confidence.

“The bottleneck often starts at the top and the reality at the moment is that we have a government that is not willing to recognise this mission based (net zero) opportunity and to deliver long-term certainty and consistency of policymaking.”

Pointing to last autumn’s government backtracks on electric vehicles policy and private rented landlord energy efficiency standards, he questioned why private investors would want to put their money into UK when they don’t see a “consistent approach” from the government.

“We need that long term certainty,” said Skidmore, who published a government review of delivery of the UK’s 2050 net zero target that he signed into law when serving as energy minister in 2019.

He also called on the government to follow the examples of France and Germany by setting out a public information strategy on net zero.