Businesses must be incentivised to deliver net-zero outcomes through their funding and support as part of the Green recovery.
Stimulating green economic recovery through infrastructure development
Infrastructure development has been identified as a key component of the Government’s agenda in stimulating the economy following Covid-19. Green infrastructure projects can provide long-term climate-ready outcomes, meaning that these not only facilitate a transition towards net-zero but also demonstrate adaptation and resilience in the face of climate change.
Funding the development of Green infrastructure now also mitigates the UK economy’s own transition risk as it relates to climate change. By supporting the design and development of infrastructure that is already climate-ready, the UK will have a demonstrable lead in building a Green economy. It will also be at less risk of having to retrofit infrastructure in the future in order to meet both domestic and international standards and targets.
Green financing for a green recovery
The UK is not currently on target to meet even the previous goal, enshrined in the Climate Change Act 2008, of reducing carbon emissions by 80% relative to the 1990 levels (https://www.instituteforgovernment.org.uk/explainers/net-zero-target). Financing Green projects and initiatives will not only facilitate economic recovery, but it can also accelerate the pace of change required to meet the UK’s commitment to achieving the Sustainable Development Goals by 2030.
Acceleration toward the Net Zero Target can be further incentivised through provision of targeted financing and support for development as well as widespread adoption of technologies that would enable a more rapid transition to take place. For example, Brexit has already had an impact on sectors such as the automotive industry. Financing green technologies and industries to replace these will enable a more rapid shift towards goals such as the proposed ban on the sale of new petrol, diesel or hybrid cars by 2035. The creation of a world-leading Green technology capability and industry in the UK will also position it economically as an exporter of these technologies.
Given rising unemployment in the wake of the coronavirus, a focus on financing green infrastructure projects can also create much-needed employment opportunities across a range of skillsets. There is a need to think of the infrastructure required to support a green economy more broadly – for example, there may be mechanisms at present that encourage the financing of the electric vehicles, but not the ability to finance the infrastructures required for recharging vehicles. Creating the infrastructure required for large-scale adoption of electric vehicles, would additionally signal the UK’s global leadership in the greening of infrastructure and create potential new export opportunities for British expertise and green technology.
It is vital that unintended consequences do not arise from greening the economy and that the benefits accrue to all parts of the UK and to all sectors of society. Skilled workers in traditional, brown industries will need to reskill in order to both contribute to the development of, and benefit from, the Green economy. Support for training and redeployment of skills must be built into Green recovery plans, along with impact assessments on local economies.
The days of frequent, intensive and high-volume long-distance commuting might well be over, and this creates an opportunity for the financing and development of green infrastructure outside of the major cities. Creating mirrors of the technology and innovation hubs that existed in London prior to lockdown, and providing local education and training to staff these, could also facilitate the transfer of skills, capital and resources from the South-East to other regions, enabling revitalisation of the UK’s regional communities.
If you would like to learn more about or get involved in our net-zero Covid-19 economic recovery programme, Project Cygnus, please reach out, we’d love for you to contribute.