“My 10-point plan will create, support and protect hundreds of thousands of green jobs, whilst making strides towards net zero by 2050,” said Prime Minister Boris Johnson as he outlined his much-publicised ‘Green industrial Revolution’.
It is certainly an ambitious target and one that has got plenty in the infrastructure community excited with the potential for new investments.
The problem is, though, that decarbonising the country is a sprawling task that goes way beyond simply moving from coal and gas-fired power stations to wind farms and nuclear power plants. It is capturing carbon in infrastructure projects, it is transforming all public sector fleets to run on electric or hydrogen. Ten points, frankly, is not even the start.
And then there is the cost. PwC has estimated in a report published on the same day as the 10-point plan that the UK needs to spend £40bn a year, every year of this decade, on green infrastructure if it wants to be in a position to reach the net zero target by 2050. In particular, it suggests there will be a much greater need for private finance to help the government reach its target.
The government recognises it won’t do this all by itself. The 10-point plan promises to mobilise £12bn of public capital and “spur” three times as much private investment by 2030. Not even a government minister can make 3x12 add up to 400.
Nonetheless, for those in the industry, none of this will be new – and Johnson’s announcement hasn’t really changed anything. Many are already working to deliver new infrastructure with an eye on its carbon output, and have been for some time.
What the market lacks is a solid, investable pipeline that will enable both public and private players to get a firm grip of the initiatives that need to be developed and a way in which they can be delivered. Even if the government decided it wanted to fund all this work by itself (and was in a position to do so), a programme of work is the bare minimum that is required.
Over the years, particularly since the slow, painful death of PFI since 2010, there has often been talk from different governments and their officials about creating an “environment for investment”, whereby the state creates the rules and allows the private sector to come in and work its magic where it sees opportunities.
That may make sense in some scenarios. But where there is an urgency focused around something as huge and amorphous as the net zero agenda, simply sitting back and telling the private sector to take its pick simply won’t work. There will need to be co-investment; incentives for the private parties to get involved where projects are in themselves unviable. There will need to be direction from central government over what the priorities are, and what types of projects are the ones that will have the most impact.
This all goes much further than any 10-point plan possibly could. Nonetheless, it is worth looking at some elements of the government’s strategy as it takes its first tentative steps along this path.
Perhaps the announcement that has grabbed most attention is the plan for sales of diesel and petrol cars to be banned from 2030, instead of 2035 as previously announced (and 2040, as originally planned). There was £1.3bn in Johnson’s plan put aside for supporting charging infrastructure, but even this large sum will only scratch the surface of what is needed if the entire population is expected to be driving electric vehicles in around 15 years’ time.
Maybe there is a hope that the likes of Shell, BP, Texaco and others will see the writing on the wall and replace the petrol pumps on their forecourts with electric charging points, all at their own expense.
That, though, is only part of the challenge when it comes to electric cars. Unlike petrol or diesel, the electricity won’t just sit in the vehicle waiting to be used. So charging points outside people’s houses, on roads and at public car parks will all be required.
Furthermore, it’s not necessarily clear that we will be driving electric vehicles. Hydrogen vehicles could end up being more successful, in which case they will also need their own infrastructure. What then of all the new electric charging points up littering the roads? They would become the modern equivalent of the Betamax, a byword for new technology that became obsolete almost as soon as it was introduced.
The plans for nuclear power are similarly vague. There is £525m for “to help develop large and smaller-scale nuclear plants”, including researching new modular technology. However, anyone who has seen the cost of the Hinkley Point C development will know that £525m does not get you very far when building a nuclear power plant, never mind when it is split across research and development (also a notoriously cash-guzzling activity).
Meanwhile, carbon capture is something that has been touted by successive governments for some time. Johnson might want to create four “carbon capture clusters”, but doing so will not be easy, or cheap. At one time the government even considered using a PPP model to develop the first plant, but those plans quickly fell by the wayside when the level of risk and complexity of the project became apparent in Whitehall.
So while the Infrastructure & Projects Authority talks up the interest from private investors in the UK’s energy programme, those conversations appear to be very much around the hypothetical, rather than based on a core pipeline of projects and opportunities.
That could change, of course, with the launch of the National Infrastructure Strategy, still expected to be published later this month. Either way, the government will need to be thinking much bigger than 10 points if it wants to really reach the net zero future it so often talks about.