The Clean Growth Strategy - Government releases its strategy for a low carbon future

by Hogan Lovells

Hogan Lovells

On 12 October the Government released its latest strategy to promote “clean growth” in the UK. It sees clean growth as growing the UK’s national income, while cutting greenhouse gas emissions that contribute to climate change.

In her ministerial statement, Claire Perry, the Minister for Climate Change and Industry, outlined the strategy as an important milestone in the UK’s efforts to cut emissions, while at the same time growing the economy. However as you might expect she notes that this is not the end of the process.

The strategy sets out the Government’s proposals to achieve clean growth – including a target to invest over £2.5bn to support low carbon innovation from 2015 to 2021.

The proposals are wide ranging, including improving low carbon transport and enhancing the UK’s natural resources. Some of the key real estate points flagged in the Government’s strategy are:

1. Accelerating clean growth

• Setting up a Green Finance Taskforce to play an advisory role in the provision of public and private investment in the green finance market.

• Working with mortgage lenders to develop green mortgage products for more energy efficient properties.

2. Improving business and industry efficiency

• Continuing with plans to close the CRC energy efficiency scheme following the 2018-9 compliance year, and implementing an increase to the main rates of the Climate Change Levy from 2019.

We think this is good news. Having been mentioned in the March 2016 budget, we have heard nothing since and we thought that it might have been overlooked following Brexit. It is good to see that this is still on the agenda.

• Further consultations on improving energy efficiency in commercial buildings and continuing to raise minimum standards of energy efficiency.

• Establishing an industry energy efficiency scheme to help large companies install measures to cut their energy use and bills.

• Ensuring that landlords continue to refurbish and improve the performance of their buildings.

3. Improving the energy efficiency of homes

• An aspiration for as many homes as possible to be EPC Band C by 2035.

• Improving privately rented homes with an aim for as many to be EPC Band C by 2030, including consulting on how social housing can meet similar standards.

• Carrying out an independent review of Building Regulations and fire safety with a view to strengthening energy performance standards for homes under the Building Regulations.

So where does this strategy leave us? Bearing in mind that this is simply a strategy – not much further than where we were before. It certainly shows that this is on the Government’s radar. The Climate Change Act 2008 already requires the UK by 2050 to reduce its emissions by at least 80% from the 1990 baseline. The next steps will see a series of Government consultations and an Industrial Strategy White Paper, in anticipation of setting the sixth carbon budget by 30 June 2021.

In connection with the release of the strategy, we saw two further steps towards clean growth. The Government issued a call to evidence on the Green Deal Framework, which may suggest that it will be tweaked to align with Minimum Energy Efficiency Standards. It also released a consultation to seek views on additional measures and incentives to encourage home-owners to invest in energy efficiency improvements. You may have seen in the press reports that this could be achieved by measures such as stamp duty incentives. Watch this space for a follow up blog on consultations to come.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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