A Principled Stance
Chris Skidmore, former MP and author of the net zero review, talks about what the next UK government should do to get the country’s net zero commitments back on track.
“I cannot vote for the [Offshore Petroleum Licensing] bill next week. The future will judge harshly those who do. At a time when we should be committing to more climate action, we simply do not have any more time to waste promoting the future production of fossil fuels, which is the ultimate cause of the environmental crisis that we are facing.”
This quote from former UK Conservative MP Chris Skidmore’s 5 January resignation letter to parliament demonstrates his intransigence in supporting the government’s plan for more frequent new oil and gas licences and increased production of fossil fuels in the North Sea.
“The government stuck to the script of backing the North Sea Transition Authority, which doesn’t follow a net zero pathway because its emission ambitions aren’t fit for purpose,” he told ESG Investor. “With everyone else working so hard to decarbonise, why should you let those responsible for the crisis off the hook? It’s not a just transition if oil and gas is allowed to carry on regardless.”
His resignation was even more impactful given he is the author of the government-commissioned review, ‘Mission Zero – Independent review of net zero’, published in January 2023 and looking at how the UK could deliver on its climate targets in a manner is more affordable, and pro-business.
“The UK is at an important moment in its energy transition journey, where many decisions have been made in terms of our ambition and commitments around the path to net zero,” Skidmore added. “The next stages involve finding the delivery mechanisms and levers to make that happen – including trebling renewable power and doubling energy efficiency measures.”
But the government has drawn criticism regarding its ability to achieve agreed climate targets – such as a 100% reduction of greenhouse gas emissions by 2050 compared with 1990 levels – even from its own Climate Change Committee. In May, a High Court ruling ordered it publish a revised net zero strategy.
Unlike many other countries, the UK has targets that are legally binding under the Climate Change Act 2008 (2050 Target Amendment) Order 2019 – which Skidmore, in his former capacity of interim minister of state for energy and clean growth, signed into law in June 2019.
“We’re five years on from signing [the act] into law, and we have five years now to meet our 2030 goal of 68% of emissions reduction,” he said. “However, the bigger challenge for the UK government is that it’s not on track beyond 2030.”
Long-term vision
The recent High Court case acknowledged the government’s attempts to get back on track to net zero. Skidmore’s review was part of these efforts, following a previous High Court ruling in July 2022. Importantly, the government accepted 100 of the 129 recommendations set out in the report.
However, what the government hasn’t done, according to Skidmore, is committing to long-term mission-based financing structures. He highlighted examples in other countries, such as the US’s Inflation Reduction Act (IRA) – which promotes investment in green technology with the support US$369bn in subsidies through grants, loans and tax credits until January 2031.
Granted, the UK is now preparing for its upcoming general election on 4 July, which means some longer-term decisions have had to be put on hold. But to get back on track, the next government will need to move away from being tied to election cycles, Skidmore advised.
“We need to carry-on regardless,” he said. As such, the more power we can devolve to other agencies – as well as regional and local authorities – to deliver on decarbonisation and the energy transition, the better.”
He pointed to the many solar grid delays that have hindered progress. According to energy regulator Ofgem, as of last year, 220 projects awaiting connection to the grid by 2026 – with only half of them having obtained the required planning permission and start dates being pushed back by up to 14 years in some cases.
“The bottleneck starts at the top – we have too much centralisation,” Skidmore argued. “We should be getting money out the door and into the hands of those who can make decisions locally. Such action would be more efficient, more productive, and more impactful and costless.”
For example, Bristol City Leap – Bristol Council’s energy investment programme – is planning £7 million worth of public investment in decarbonising the city. It also plans to bring in £424 million during the first five years of a 20-year partnership with Ameresco, an independent US clean technology integrator.
“Such a framework demonstrates that the taxpayer is not on the hook for net zero and there is a market solution,” said Skidmore. “What’s extraordinary is the climate crisis, but the actual economics of the transition are no different from any other transition based on technology that must be led by the markets and private sector.”
Yet, many believe the UK government needs to provide the right incentives so that innovators – not just in technology, but also financial innovators – can participate. “I’m confident that we can step up, but everyone seems to be waiting for the government to act,” Skidmore added. “Perhaps the government needs to create a ‘big bang’ moment for net zero financial reform, similar to what took place in the late 1980s [in the UK financial markets].”
The net zero race
The former MP also emphasised the importance of the Global Stocktake, and the development of new nationally determined contributions (NDCs) under the Paris Agreement, which need to be submitted by 2025 with detailed sectoral commitments.
“The real change will come when the NDCs are examined and Namibia has made a commitment on green hydrogen, or Sweden has made a commitment on green steel,” said Skidmore. “Then we can create the trade relationships that will underpin international supply chains for these new industries.”
With competition around sustainable investing heating up globally, the UK government to ensure the country remains attractive – particularly at a time when green pledges have been rolled back by the incumbent administration, driving potential scores of investors away.
“We are in this net zero race and there will be a first-mover advantage – there’s no prize in coming second,” Skidmore argued. “The UK has the opportunity to develop new business models, innovate and export its innovations abroad.”
He cited the IRA as an example of a government initiative having successfully triggered a manufacturing and investment renaissance.
“For every dollar that the US government has invested in the IRA, the private sector has spent $5.47,” he said. “That demonstrates that countries need to act fast in this new global market.”
Skidmore is a strong proponent of creating a similar investment strategy in the UK, whereby the government could demonstrate what’s on offer for investors. “There is much more that can be done on developing not just transition plans for companies, but to involve them in transition planning with local authorities and regions.”
He pointed to multinational consumer goods company Reckitt’s commitment to reducing CO2 emissions in the Humber region, where it was founded, as an example of such collaboration.
“Reckitt has used its convening power to support small and medium-sized enterprises on their journey to net zero,” said Skidmore. “It’s not going to be a problem for banks and large corporates to commit to net zero, but SMEs will need support to deliver on their promises.”
Given how much sway the UK government holds on procurement and product standards, a clear commitment to low-carbon steel, concrete and buildings could help remove a large quantity of emissions, according to Skidmore. It would also create supply chains that can support the wider economy.
“It’s not just about having a green finance strategy – it’s also about ending fossil-fuel financing,” the former MP added, pointing to companies such as NatWest and Unilever, which have committed to divesting from fossil fuels. “That doesn’t happen overnight, because just divesting and allowing another investor to purchase the asset isn’t the answer. We need long-term support to move to an alternative [energy source].”
New venture
In addition to his other attributions, Skidmore is also Chief Operating Officer at Better Earth – a policy and consultancy venture co-chaired by former UK prime minister Boris Johnson and Amir Adnani, CEO of US-based uranium production and exploration company Uranium Energy Corp.
Alongside sister company Emissions Reduction Corp (ERC), Better Earth is looking to support carbon-intensive countries by capping orphaned oil wells.
“There are opportunities to repurpose and transform assets, as well as geothermal opportunities for disused and existing oil wells, to move away from fossil fuels into clean energy,” said Skidmore. “As countries develop their NDCs, they need to be coordinating national net zero strategies, which many don’t have as yet. I can provide policy expertise on how to bring sectors together and run a net zero review.”
Better Earth is looking to identify projects that could encourage investors to participate, he explained – the first of which should be announced soon.
After a 14-year stint as a parliamentarian mainly focused on policy, Skidmore’s vision has now shifted to helping ensure the net-zero-by-2050 transition starts today – and is ready to work with investors for that purpose.
“The UN’s Loss and Damage Fund will take time to take off, but I’m convinced that investors are ready to go now,” he said. “I want to show there is this opportunity to move the dial in reducing CO2 and methane emissions, particularly if we need to hit the 75% emissions reduction [indicated by the International Energy Agency].”
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