Cash-strapped Britain to water down green targets as economic reality bites
The U.K.’s Labour government has made a big bet on environmental policies — but what happens when green goals clash with ambitions for growth?
LONDON — Faced with a clash between driving growth and going green, the new U.K. Labour government has sent a signal about its priorities: staying in power trumps all.
Prime Minister Keir Starmer’s government is poised to relax rules on U.K. electric vehicle (EV) sales, which are central to his government’s climate ambitions but have faced intensive lobbying from the car industry.
The pace of the switch to climate-friendly EVs is having “negative effects” on the car market and on the U.K.’s “attractiveness” to investors, the Society of Motor Manufacturers (SMMT) warned last week.
And with growth central to Labour’s hopes of staying in office by turning around a stagnant U.K. economy, Starmer’s top team is clearly listening.
“I’ve got no interest in the country hitting its climate targets by shutting down jobs and industry,” Business Secretary Jonathan Reynolds told a parliamentary committee Tuesday when questioned about the pressure on car makers.
An overarching 2030 target for banning the sale of new, wholly petrol and diesel-fueled cars remains. But Reynolds has promised industry his department will “fast-track” a consultation on changing the zero-emission vehicle (ZEV) mandate — a set of annual EV sales targets with steep fines for manufacturers which miss quotas.
Fast track consultation
The details are not yet clear but Reynolds told industry bosses Tuesday night that he and Transport Secretary Louise Haigh had “heard you loud and clear on the need for support to make this transition a success.”
Any move to water down the targets would be bad for the government’s climate goals, said Colin Walker, head of transport at the Energy and Climate Intelligence Unit (ECIU) think tank.
The ZEV mandate “is one of the most impactful measures the government has for reducing CO2 emissions across transport,” he said, adding: “The green agenda and the growth agenda are not mutually exclusive.”
Labour often makes the same argument. Starmer calls climate action a “huge opportunity” for the economy and job creation. Chancellor, Rachel Reeves has loosened public investment rules to direct money to energy infrastructure.
But Starmer’s decision, as opposition leader ahead of the summer’s general election, to ditch the party’s totemic £28 billion per year green investment promise, showed Labour will shift away from climate commitments under pressure. And cars are just one issue where political reality is starting to bite.
The U.K.’s aviation industry is eyeing a chance to expand airports, with Gatwick lobbying for a second runway. A decision is due in the new year — and Gatwick’s bosses hope ministers, eager to spur growth, will acquiesce. If they do, they will over-rule Whitehall’s official climate advisers, who say there should be “no net airport expansion across the U.K.”
Developers v green campaigners
Meanwhile, Labour’s promise to build 1.5 million new homes over this parliament, a pledge at the heart of its growth agenda, pits developers against campaigners worried about the environmental impact of all that building.
It also sets up a row between two wings of the green movement: Climate-conscious renewable energy developers and nature advocates worried about pylons and wind turbines damaging habitats and wildlife.
New planning legislation, designed to speed up development, is expected in early 2025.
For now the focus is on the automotive sector, which — like much of the business lobby — says it is on board with U.K. green goals. SMMT boss Mike Hawes met with ministers last week and said the industry was committed “to both economic growth and net zero.”
Indeed, EV sales in the U.K. are increasing, with a record month in September 2024. But manufacturers have also warned over the smaller profit margins currently achievable for electric cars against the old, polluting combustion engines.
Evidently, ministers are alert to those warnings. “Slowing this [EV] transition could have dire consequences,” the ECIU’s Walker said in a statement. The fear for green lobbyists is that pro-growth arguments — wielded by influential industry interests — could start being used to knock back green goals wherever they’re inconvenient.
What's Your Reaction?
