Badenoch’s breaking of the climate consensus will have consequences

Margaret Thatcher warned the world of the risks of global warming and called for action in 1989. That, and the consequences of substituting gas for coal, was enough to make the UK a climate leader through the 1990s. 

David Cameron hugged huskies and was a major factor in persuading the Blair government it needed to avoid being outflanked on climate policy. This laid the ground for the Climate Change Act, passed with minimal dissent in the 2000s.

This piece of legislation (and the EU renewables targets that Tony Blair had signed up to) carried momentum forward under the coalition, when Liberal Democrat energy and climate change secretaries could face down George Osborne’s Treasury, before Theresa May upped the aim to net zero. She was followed by Boris Johnson, who brought the COP to Glasgow and went big on the possibilities from net zero (even though his plans to get there did not pass muster).  

But that was the high point of Conservative climate enthusiasm. Rishi Sunak mouthed platitudes about his daughters but was pretty indifferent. But Kemi Badenoch is now challenging long-term Conservative commitment to climate action by declaring that May’s net zero target, being taken forward even more enthusiastically by Ed Miliband, is unachievable and should no longer be the policy anchor. That takes the Conservatives nearer Reform’s out and out hostility and has opened up more blue on blue warfare as Theresa May’s reaction has shown. 

Badenoch's climate intervention make the UK less attractive for energy investors

The reaction of Energy UK – the energy industry trade body – was to point out that “treating the Climate Change Act as a political football is a surefire way to scare off investors”. It pointed out this would lead to “pull the rug” from projects, cost jobs and do nothing to lower bills. Of course, the Conservatives are not in government – but the energy industry has benefited from the framework created by the Climate Change Act that has given certainty to industry that a change of government will not mean a radical change in direction (some sectors have been less protected by the CCA – we have seen stop-start policies on carbon capture and storage and EVs). The prospect that an alternative government in 2029 would reverse track (Reform have threatened to tear up renewable contracts) raises the risk around investments, raises the required return and will make other countries relatively more investable destinations. 

Voters still want climate action, but the government needs an answer on bills

Badenoch cannot be accused of following focus groups in her move away from net zero, with most voters still worried about climate change and wanting action. But they also are still very concerned about energy bills – and here Badenoch is kicking at the government’s energy Achilles heel. 

At our event with Energy UK and SSE at Labour party conference, Dhara Vyas of Energy UK raised concerns about consumer bills. The government promised a reduction by the end of the parliament – but they have stayed high, and without action by the Treasury it is not clear they will come down significantly.  

Statistics out this week also showed that the UK has the highest industrial electricity prices in Europe – which is making life difficult for the most energy intensive industries. The government promised action to bring them down in its modern industrial strategy, published in June, but its plans for how to do it, and critically how to pay for it, have not been published.  

The government also needs to make sure that the way it pursues the energy transition does not lock the UK into higher energy prices for longer than necessary. It brought forward the clean power target from the Conservatives from 2035 to 2030 but did not ask the National Energy System operator whether that would significantly increase costs. The government needs to show that it can be pragmatic and that it will not pay whatever it takes to hit its self-imposed target. 

Badenoch needs an energy policy

We now know what Badenoch does not want. But she has discarded the Conservatives’ energy policy anchor. At the party conference in Manchester the IfG will be hosting a roundtable – again with Energy UK and SSE – on what Conservative energy policy should look like. Watch this space.