‘Critical gap’ in energy policy means government will miss net zero targets, MPs warned

The government is on course to miss crucial targets needed to ensure it meets its legally-binding net zero ambition for 2050, after failing to put “credible plans” in place to encourage the transition to a green economy, a House of Lords committee has warned.

In a report published today, the Lords’ Industry and Regulators Committee said there is “insufficient policy detail” incentivising what they say is the £50bn a year of investment required every year to transform the UK’s energy system.

In a statement, the committee said their report found a “critical gap” in how the government will address energy policy to hit net zero by 2050.

“The targets have not been matched by the policies and the clarity over financial incentives necessary to unlock the substantial private investment needed to fund new energy technologies for both industrial and domestic use,” the statement said.

Lord Hollick, chair of the committee, said: “The government has set ambitious targets for net zero including a carbon-free power system by 2035. However there is no point planning a carbon-free energy future if you haven’t got a clue how you will get there or how it will be paid for.

“We now need urgent action from the government to answer outstanding questions on issues such as how they will incentivise households to replace gas boilers with heat pumps – and what plans there are for the 6 million homes where heat pumps may be unsuitable – what funding mechanisms will be established to encourage investment in small modular nuclear reactors and how the upgrade of our infrastructure to allow the use of hydrogen for heating will be funded. These are basic questions that need to be answered before we will get the investment we need to get to net zero.”

In the report, the committee calls on the government to consider the full range of funding options for energy investment, including reviewing its opposition to the use of government borrowing.

The committee also warned that “expecting the costs of net zero to be met exclusively by energy users through their bills is regressive and would place a severe burden on many consumers, particularly given the present surge in energy prices which is putting intense pressure on those least able to pay”.

Lord Hollick also said that funding was not the only challenge the report identified, but also suggested the government required renewed vigour and improved strategy for implementing the necessary policy changes.

He said: “While money is a key challenge it isn’t the only one. We need better coordination across government and a real drive and focus to deliver net zero. This requires tackling highly sensitive, political decisions that affect all consumers and taxpayers.

“That is why we are calling for a new Energy Transformation Taskforce within government that will report directly to the prime minister and take the lead in setting and coordinating net zero strategy and policy across government.”

The government has rejected the findings in the Lords’ report, and reiterated its commitment to moving the UK away from climate-altering fossil fuels.

A spokesperson told The Independent: “We will meet net zero target by 2050 and are on track to do so. Detailed measures are set out in our comprehensive Net Zero Strategy, which has been widely welcomed by a range of experts, including the independent Climate Change Committee.

“With oil and gas prices are at record highs, so we need to move away from expensive fossil fuels. The more clean, cheap and secure power we generate at home, the less exposed we will be to expensive gas prices set by global markets.”