HomeGreening the economyWithout the right building blocks in place, ‘net zero’ will just be an aspiration

Without the right building blocks in place, ‘net zero’ will just be an aspiration

To most people ‘infrastructure’ is an abstract word. Something engineers and policy wonks worry about, which has little to do with their everyday lives. And yet, from the buildings we live and work in, how we move around, the way we get our energy and water, to the systems that give us access to food and other goods, infrastructure is the backbone of our economy and our society. It governs all of our choices, including how green we can be.

The most effective way to kickstart economic recovery
The government has set itself the ambition for the UK to be a net zero carbon economy by 2050. Given the carbon intensity of our current way of life and long investment cycles, there is no time to lose in taking the big steps needed towards this transition. Over the next ten years, amongst other things, we need to see significant expansion of public transport and electric vehicle charging, millions of homes will have to be made more energy efficient, rates of tree planting will have to more than triple and dozens more high quality recycling plants will need to be built to keep valuable materials circulating in the economy. To achieve all of this, the right infrastructure has to be in place.

And this is one example of a clear win-win. As well as tackling climate change and the decline of nature, it will also be the best way to promote economic recovery, increasing demand in the short term, and promoting growth and productivity in the long run. In fact, rapid scale up of new infrastructure for a low carbon economy could help to create over a million much needed jobs across the country over the next decade.

We have to get this right or we risk saddling taxpayers and communities with unsuitable infrastructure that worsens climate change and leaves the country unable to deal with the big challenges of the 21st century. People will see the benefits directly too, with warmer homes, cheaper energy bills, longer lasting products, and healthier and greener neighbourhoods.

Gaps in spending and policy are holding up progress
A number of gaps in the government’s approach are holding back investment in this transition. The National Infrastructure Strategy (NIS), which the government should have published this year in response to the National Infrastructure Commission’s assessment in 2018, has been repeatedly delayed. A number of other policies have suffered a similar fate. If these are finally published this autumn, as expected, they should provide clarity on the country’s priorities and give businesses and investors greater visibility of the future direction of travel. As emphasised by James Heath, chief executive of the National Infrastructure Commission “in these exceptional times, the most precious commodity is confidence”.

The situation is not helped by a lack of public investment. We estimate there is a £11.4 billion gap in investment for net zero in the current financial year alone, across transport, buildings, circular economy and natural infrastructure. And this gap is projected to grow in 2021-22 and subsequent years to reach £13.5 billion per year. Lack of public funding is a problem, given that government is the main source of investment for the transport sector (which is the biggest source of carbon emissions in the UK) and it is public investment that leverages private sector spending in sectors like building retrofits for energy efficiency.

Worse, the government policy and investment that is in place is continuing to promote high carbon, environmentally damaging economic activity. For instance, the £14.1 billion allocated for building new roads and increasing the capacity of existing roads is undermining the progress towards decarbonising the transport sector, as well as increasing traffic and air pollution.

Unless homes built now are made to meet the Future Homes Standard, the government’s housebuilding plans will saddle households, with higher than necessary energy bills and big costs to solve poor energy performance. This standard, unfortunately, is literally true to its name, as it isn’t set to come into force until 2025.

Investment focus on ‘energy from waste’ infrastructure is also locking the country into having to generate enough waste material to feed it, rather than investing in measures to cut waste wherever possible and make the best use of resources.

We need a new approach
Putting in place the right building blocks for a resilient and prosperous economy needs an infrastructure rethink. We’ve just published a report which sets out options for a new approach.

We think a ‘net zero test’ should be embedded in all infrastructure decisions, including the Treasury’s review of its Green Book guidance on appraising public policy and investments, and updating the National Policy Statements. The government should aspire to go further than the net biodiversity gain for developments proposed in the Environment Bill, including major infrastructure within these provisions and making it an objective of net environmental gain by 2050 at the latest.

The National Infrastructure Strategy, and other national strategies that will have a bearing on infrastructure delivery, should outline a clear priorities and pathways to support the net zero target. The government should also commit to more funding for the recovery and scale up of low carbon industries across the country in its forthcoming spending review.

There are some sectors and activities that will also have to be newly recognised as important national infrastructure requiring development. These include circular economy systems that allow reuse, remanufacturing and high quality recycling, to reduce the climate and environmental impacts of the products we use. Another overlooked sector is natural infrastructure, like woodland and green spaces. These provide necessary services in storing carbon from the atmosphere and improving air and water quality. Given the current lack of information about these sectors, the government should carry out an urgent stocktake, so that existing capacity and future needs for net zero are fully understood. Infrastructure agencies, such as the National Infrastructure Commission and the Infrastructure and Projects Authority, should have the explicit remit to address the policy and investment needs to expand these sectors.

Infrastructure for a green economy isn’t a ‘nice to have’. Getting it built now should be the foundation of the government’s mission to reach net zero and ensure the green economic recovery that most people want.