Minister Raises Concerns about Potential Negative Impact of ‘Net Zero Leviathan’ on Businesses

Minister Raises Concerns about Potential Negative Impact of ‘Net Zero Leviathan’ on Businesses

In a recent speech at the Innovation Zero conference in London, Energy Secretary Claire Coutinho expressed her concerns about the potential negative impact of a “Net Zero Leviathan” on businesses in the UK. Coutinho warned that central government directives could stifle the country’s enterprise economy and lead to an ever-increasing set of targets and government control over outputs and prices.

Coutinho emphasized the importance of allowing the free market to drive progress towards net zero emissions. She acknowledged that taking the market-driven path might involve some uncertainty but argued that it would enable the UK to tackle emissions while keeping costs low for businesses and families. She stressed that the government’s role is to create the right market conditions for capital to flow and remove barriers for industries and citizens.

The concerns raised by Coutinho come at a time when key net zero targets have been pushed back. In March, the Department for Energy Security and Net Zero (DESNZ) proposed delaying quotas for the sale of heat pumps under the Clean Heat Market Mechanism. This decision aimed to give businesses more time to prepare and allow more consumers to adopt heat pumps.

In September, Prime Minister Rishi Sunak also rolled back several interim net zero targets to alleviate the potential high costs of green technologies for Britons. The ban on new petrol and diesel-powered vehicles was pushed back from 2030 to 2035, and the transition timeline for households to switch to heat pumps when changing boilers was extended from 2030 to 2035.

However, the government has used legislation to incentivize industries to meet green targets. The Zero Emission Vehicle Mandate, which came into effect in January, requires car manufacturers to sell a certain percentage of electric vehicles each year or face penalties. By 2035, electric vehicle sales are required to reach 100 percent. Manufacturers failing to meet the target will be fined for every diesel or petrol car sold above the limit.

Despite these measures, recent reports have shown a decline in the share of electric vehicles in new registrations. The Society of Motor Manufacturers and Traders has called for more government support for consumers, highlighting the challenges ahead in achieving net zero milestones. The Office for Budget Responsibility also downgraded its forecast for electric vehicle sales, reflecting a more cautious outlook.

Net Zero Watch, a campaign group advocating for rational energy policies, welcomed Coutinho’s concerns but urged her to translate words into action. The group commended the government’s potential move away from what it called “irrational” climate policies but warned about the negative impact on the motor sector.

Andrew Montford, director of Net Zero Watch, called on Coutinho to cancel the Zero Emissions Vehicle Mandate to support UK car manufacturing. It remains to be seen how the government will address these concerns and strike a balance between achieving net zero emissions and supporting the economy.