Short-term support for green innovations puts net zero target at risk

The government has been warned that its tendency to implement complex short-term support mechanisms for progressing green technologies is putting the country’s overarching net zero ambitions at risk.

In a damning 25-page report, the Public Accounts Committee (PAC) calls for the government to reform its funding mechanisms to provide certainty to businesses looking to invest.

The cross-bench group of MPs’ report also identifies a lack of clarity and support from government for both businesses and consumers, warning that government policy lacks oversight and transparency in supporting innovation to deliver net zero.

It adds that while the government has 115 net zero-related funding programs many of them pre-date policy decisions. It adds that because these funding streams are delivered through eight different government departments it is often difficult for businesses to know where to go for support.

The report adds that the uncertainty that is generated from short-term planning is of particular concern, in the context of the government’s announcement in September 2023 to delay the phasing out of new fossil fuel vehicles and heating systems.

Dame Meg Hillier, chair of the PAC, said: “Our Committee has warned time and again of the damage that can be done to delivering policy by the lack of long-term planning and funding from government.

“There is no more critical area where this is true than on net zero. If the government continues to leave businesses to peer through a haze of uncertainty, then that investment will not be forthcoming. Businesses and consumers need certainty.

“On supporting innovation for net zero, the government needs to agree with itself on what success looks like, what failure looks like, and report transparently on progress.

“Such basic building blocks being absent four years after a pledge critical to our very way of life was made is disappointing. The government must call an end to this faltering approach, or risk spelling out to industry, the public and the world that the UK is simply not serious about tackling climate change.”

The report makes seven recommendations. They are:

• DESNZ [Department for energy security and net zero], working with the Treasury, should set out its plans for supporting priority technologies beyond the confines of the spending review period, including, where appropriate, potential funding support. It should explain how recent announcements to delay the phasing out of new fossil fuel vehicles and heating systems will impact on costs.
• Ahead of the next Spending Review, the Treasury, working with DESNZ and DSIT [Department for science, innovation and technology], should take the opportunity to review whether the current complex funding arrangements, which largely pre-date the development of the Innovation Framework, are best suited to supporting the fast-paced innovation needed to deliver many aspects of net zero.
• When it next reviews progress against the innovation priorities, DESNZ, working with other government departments, should commit to assessing specifically the challenges consumers might face in adopting new technologies and whether these are being adequately addressed when re-assessing priorities.
• DESNZ, working with other departments, should identify clear responsibilities for overseeing cross-government progress on each of the net zero technologies. These responsibilities should include paying particular attention to whether factors that might impede deployment of viable technologies are being given early enough attention, for example by policy teams, regulators and the investment community.
• Government should define the outcomes, rather the outputs, that it is hoping to deliver from each technology in the short, medium and longer-term to enable it to benchmark progress and ensure that taxpayer support continues to be well targeted.
• In reporting on progress on the priority technologies, government should include its assessment of which technologies are likely to deliver within the timescales required and those it regards as higher risk.
• For each of the technology areas, the government should report publicly on progress against the measures of success that it has defined, to make it visible whether the initial expectations are being met.