Britain as a Precursor of Climate Policy in Europe

The UK has been a leader of all the energy transformations since early modernity in Europe, from the first industrial revolution (coal and steam in the 18th and 19th centuries), through the shift to oil (in the early 20th century), then in the use of nuclear energy (mid-20th century), to replacing coal with natural gas (1980s). The beginnings of the current transformation are related to the desire to protect public health. The Clean Air Act of 1956 eliminated coal stoves as a source of individual heating in cities to combat smog.[1] At the turn of the 21st century, the climate transformation entered the mainstream of British politics in the context of environmental protection and as a global  challenge. Despite the traditional reliance on the support of trade unions in industry, the Labour governments of Tony Blair and Gordon Brown, who were working to create an image of the UK as a leader in globalisation, saw the potential of the green economy. A similar evolution took place in the Conservative Party under the leadership of David Cameron, which was symbolised by its adoption of a green tree logo.[2]

In 2008, the UK became the first country in the world to set legally binding targets for reducing greenhouse gas (GHG) emissions, adopting them in the Climate Change Act 2008 (CCA), which in general enjoyed cross-party support[3]. This act embedded in law a plan to reduce CO2 emissions by at least 34% by 2020 as compared to the 1990 levels and by at least 80% by 2050.[4] Notably, in the European Union, a comparable scheme only aimed to reduce these emissions by 20% by 2020. The consensus around the ambitious climate programme was facilitated by the British economy’s domination by the service sector and its permanent deficit in the trade of goods.[5]

After 2016, an important factor modifying the original assumptions of the CCA was the withdrawal of the UK from the European Union (Brexit)[6], which was implemented in two stages in 2016-20. Essentially, Brexit broadened the UK’s freedom to choose regulatory and economic instruments for implementing the transformation. In November 2016, the UK ratified the Paris Climate Agreement, and in December 2020 it announced its Nationally Determined Contribution in the form of reducing GHG emissions in the entire economy by at least 68% by 2030 as compared to 1990. On 1 January 2020, the UK implemented a National Emissions Trading System in place of the EU’s European Trading System.[7]

Climate Transformation as Key to Industrial Policy

The transformation was favoured by the industrial strategy adopted in 2017 by Theresa May’s government.[8] Despite important differences in the programmes of May and her successor Boris Johnson, especially on the central issue of Brexit, her climate strategy was maintained in 2019. However, it has been undergoing comprehensive revision in the context of the post-COVID 19-pandemic economic recovery needs. The strategy interpreted the transformation as an opportunity to strengthen industry and gain an advantage in foreign markets. The UK government predicted that low-carbon sectors in 2015-2030 could grow by 11% per year[9], four times faster than the rest of the economy. Re-industrialisation based on emerging technologies was also important from the point of view of the hard-to-sustain sectoral structure (dominance of services, especially financial, at the expense of industrial production) and geographical context (dominance of South-East of England) in the British economy, which were key socioeconomic causes of Brexit.[10]

The strategy was based on support from the British government for branches of the economy that would allow them to produce high added-value while reducing emissions, as well as having high export potential. In 2017, it was assumed that UK export revenues could increase by £60-170 billion by 2030[11], creating an opportunity to eliminate the trade deficit and even create a trade surplus. It was assumed  this goal would be achieved by, among others, the use of the excellent British scientific and research base. The following sectors were identified as future-oriented sectors: medical, pharmaceutical, genetic engineering, agrotechnology, energy (including the development of hydrogen as a zero-emission fuel), digital, and transport.[12] In the field of climate transformation, limiting the risk of excessive intervention and picking winners was achieved by setting the overarching goal of UK climate policy (i.e., reducing GHG emissions) whilst leaving the largest possible area of influence to market mechanisms.

The central role in British economic growth ascribed to clean technologies justified the government’s involvement not only in creating regulations stimulating their development but also in partial financing. Visible successes were achieved in the field of offshore wind energy generation, where in 2009-2020 the amount of produced energy increased seven times, and some 10,000 jobs were created. This gave Britain the position of a world leader in terms of production volume.[13] Another area of implementing the strategy in the field of energy policy was the creation of a public-private industrial partnership coordinated by Rolls-Royce for the design and construction of small modular nuclear reactors (SMRs).[14]

In the power sector, the most advanced in decarbonisation, the implementation of the strategy has resulted in a faster increase than assumed in the share of renewable energy and imported energy (especially from nuclear power plants in France), at the cost of lower consumption of natural gas than projected.[15] Despite the decline in domestic production of gas, the changes in the energy mix have allowed the UK to maintain self-sufficiency in supply at around 50% between 2016 and 2021.[16]

The 2017 strategy document devoted a lot of space to electromobility. At that time, there were just over 100,000 electric vehicles on British roads. However, with the introduction of a ban on the sale of new vehicles powered solely by internal combustion engines from 2040,[17] the number of electric and hybrid vehicles on British roads increased to 175,000 in 2020, while monthly sales of electric and plug-in hybrid vehicles reached 33,000 in 2021.[18] As a result of these changes, the UK has become the third-largest market in Europe for electric and hybrid vehicles. Nevertheless, the further development of electromobility faces a barrier in the form of infrastructure (lack of charging stations and transmission networks).

The EU-UK Trade and Cooperation Agreement (TCA), ratified in 2021, generally made the climate transformation in the UK independent of the regulations and decisions of EU bodies (e.g., the Court of Justice of the EU)[19], including on energy taxation and the EU energy taxonomy[20]. On the other hand, the TCA consolidated many links and areas of coordination of the British transformation with EU policies, such as state-aid rules. During the negotiations, the British side paid great attention to the issue of rules of origin for batteries and other key components of electric vehicles to secure the export of such cars to the EU market in the future. The TCA also exempted trade in gas, electricity, and equipment for the vehicles’ production from customs duties and quantitative restrictions.[21] Moreover, the agreement was supplemented by another one between the UK and the European Atomic Energy Community on the peaceful use of nuclear energy.[22]

The Challenge of Mitigating the Economic and Social Costs of Climate Change

Despite the consensus among the political parties, the debate about the costs of the green transformation have led to growing politicisation of the issue. The formation of the climate change consensus within the British political elite resulted in significant support for this process on the part of citizens, which in turn resulted in majority support for the withdrawal of fossil fuels from the energy mix, investment in the development of the necessary infrastructure, and the general development of electromobility.[23] However, the 2019 general election, while confirming the overall direction of the climate transformation, also revealed a tendency to politicise the issue over the pace, model, and tools of its implementation.

The attitude of society to the green transformation is shaped by a series of socioeconomic variables that could divide the UK on this issue into two relatively coherent electoral blocs with opposing interests. Support for the most ambitious transformation goals is highest among people under 30 who live in large urban centres and have middle or higher incomes. In turn, the lowest support for the transformation is seen among the population in medium-sized cities and many rural areas, people over age 50, and among those with lower incomes.[24]

The most comprehensive research so far on the attitude of British society to climate policy, entitled “Climate Consensus”, published before last year’s COP 26 summit in Glasgow, complete this picture by highlighting the importance of reasonable economic costs in keeping high support for the green transformation. For example, limited restrictions on the rules of car use (including lower speed limits) were supported by 80% of the respondents, while more serious ones (e.g., fees for driving within city congestion areas) were accepted by only 40% of the public. Support for the construction of a national electric car charging network by 2028 was 91%, while an accelerated version of this project, at the expense of higher fees, by 2026 was accepted by only 35% of respondents.[25] It is also worth paying attention to a similar phenomenon concerning issues strongly related to the lifestyles and values of citizens. For example, support for the promotion of voluntarily limiting the consumption of red meat and dairy by citizens was 93%, but the introduction of a 25% tax for this purpose was backed by only 25% of respondents. Likewise, the introduction of additional frequent-flyer charges was supported by 89% of respondents, while additional charges for all passengers were supported by only 41% of those polled. These issues have been steadily gaining importance since the beginning of 2022, due at first to inflation driven by the pandemic-period aid programmes, and then from February to the effects of the sanctions against Russia triggered by its attack on Ukraine. Importantly, in May the costs of living in the UK hit a record high after World War II and have continued to rise.[26]

The attitude of society to the green transformation is becoming of fundamental importance because the systematic implementation of the CCA objectives since 2008 (e.g., reduction of CO₂ emissions by an average of 3% per year in the period 2009-2019[27]) has led to the exhaustion of relatively easy fields of transformation (“low-hanging fruit”), where significant effects could be obtained at a relatively low social cost.[28] Currently, actions under the CCA and the 2017 industrial strategy are focused on sectors such as construction and agriculture, which directly affect the interests of many citizens and where it is more difficult and more expensive to reduce emissions.[29]

This mechanism is illustrated by the energy transformation in housing. For historical reasons, a significant proportion of Britain’s housing stock is not energy efficient.[30] Achieving the overall goals of the energy transition requires a reduction of emissions generated by households in the UK of at least 25%. Consequently, in 2019 major[31] investments were still required in at least 20% of the 29 million households, while more limited investments were necessary in around 80% of them, and only 1% of them met the energy target.[32] Moreover, while the regulations introduced in 2003 increased threefold on average the energy efficiency of new buildings compared to older ones, in 2019 these standards were found to be too low to meet the goal of climate neutrality and are being revised.[33]

Consequently, massive investment in insulation, heating, and heat-recovery systems for residential buildings will be required in the UK soon. They can be co-financed under the Green Deal Programme from public funds and by the owners (with up to 75% co-financing).[34] Nevertheless, the transformation in housing will burden the family budgets of most Britons to the tune of several hundred to many thousands of pounds a year. The issue of energy poverty —affecting more than 3 million households in England alone—has meant that high energy prices have been a politically inflammatory component of household budgets for several years now.[35] Initially, the rises resulted from subsidies for renewable energy production, but now they mainly stem from the costs of maintaining reserve electricity generation capacity based on coal and gas when renewable energy is lacking and to compensate for the instability in gas prices.[36] In response to these rising costs, the UK government introduced on 1 April a 5-year period of zero-percent VAT on renewable energy and energy producing-equipment, such as heat pumps (in the EU, the corresponding minimum rate is 5%).[37]

Similarly, the issue of the transformation in transport has been politically heated. In metropolitan areas, transport has been largely electrified for decades (e.g., railways, the Underground, and trams) and the population density has been favourable to the development of electromobility too (short trips, easy access to charging stations). However, outside these centres, the reduced availability of public transport and the resulting dependence on private vehicles has been bringing to the fore the issues of access to the electromobility infrastructure and the costs of its daily operation.

The surge in public debt to GBP 2.4 trillion, the highest inflation and taxation levels in the last 30 years, and the rising costs of living and doing business are reinforcing in the public debate voices opposing the government’s ambitious climate-policy goals.[38] Importantly, the critics are strong in Johnson’s political base.[39] On the other hand, left-wing environmental groups are calling for more ambitious targets in terms of the pace of achieving emission reductions.[40] Until the outbreak of the pandemic, Conservatives promoted transformation based on market regulation and selective public investment, including public-private partnerships, with a general desire to minimise public spending. The left-wing opposition, in turn, supported the intervention model, combining extensive market regulation with an extensive programme of public investment, especially in transport and energy infrastructure.

The impact of the pandemic[41], which is still difficult to fully estimate, has been that the Johnson government borrowed many instruments from the interventionist model, despite the scepticism in his own parliamentary backing. This resulted from the necessity for the Treasury to meet far-reaching financial obligations to provide public aid to many sectors of the economy (e.g., aviation) and, when needed, effective nationalisation (e.g., railways). This has fundamentally lowered the psychological barriers to the use of similar instruments for the purpose of the green transformation. The pandemic has also exposed problems with access to housing in metropolitan centres, especially in London, increasing the pressure to create new jobs and investment in the Midlands, Northern England, South Wales, and Scotland’s Central Belt.

In response to these pressures, revision of the 2017 industrial strategy was launched last year. It was intended to achieve several, parallel goals. First, it was to strengthen the chances of a successful COP26 summit in Glasgow in November 2021 hosted by the UK[42]. In this respect, it was complemented by the British government’s adoption of goals going beyond the commitments in the CCA, in particular the achievement of climate neutrality by the UK by 2050. Second, they wanted to promote the transformation through post-pandemic economic reconstruction (“build back better”). The UK government intended that such an approach would serve the interests of Conservative Party voters recruited in 2019 at the expense of the Labour Party. Third, the revision was to harmonise the green transformation with the new global strategy announced in March 2021[43]. The Integrated Review identified climate change as one of the key threats to UK security. At the same time, it described the climate transformation as an opportunity in terms of R&D on new technologies, their export, and in international development policy. Consequently, the green transition was characterised as an instrument for the pursuit of the UK’s foreign interests.[44]

Security First!

Until recently, the British climate debate had devoted relatively little attention to security issues, but in the last few months there has been a profound change in this regard. First, as a consequence of challenges in foreign policy, especially the revaluation of China’s role in the international system in 2020-21, Brexit, the pandemic, and Russia’s aggressive policy on the gas market at the end of last year, followed by its invasion of Ukraine on 24 February. These issues not only increased the importance of military security in UK foreign policy but also made British politicians and society aware of the importance of internal resilience to crises arising abroad, including those affecting the supply of energy resources and electricity. Although in the British debate competing approaches to the securitisation of the climate transformation have been presented, without doubt security issues gained prominence.[45]

The implementation of the climate transformation has become more complicated in the last two years. In July 2020, the UK authorities excluded Chinese entities from investing in nuclear and 5G infrastructure as a result of a conflict concerning changes in the status of Hong Kong[46] and the situation in Xinjiang[47], as well as the U.S.-China rivalry[48]. At the same time, relations with France deteriorated. Notably, France repeatedly threatened to cut off electricity supplies to the Channel Islands and the UK during disputes over access of its ships to British fishing grounds after Brexit.[49] In the last weeks of 2021 there was also speculation in natural gas prices on the European market[50], actively reinforced by Russian Gazprom, which threatened the stability of the British energy market and called into question the role of this fuel in it.[51]

The result of these experiences was the emergence of revised aims in the energy strategy. These included, first, the stabilisation of energy prices (and their future reduction) to maintain public support for the transformation, second, limiting investment in the energy (and other critical) infrastructure of countries with conflicting interests to those of Britain, and, third, increasing the degree of self-sufficiency and diversification in the supply of energy resources and electricity. The point of reference for the last of these three challenges was the fact that since the adoption of the CCA, the share of imported energy resources in British consumption has increased from 26% to 35% (topping out at about 48% in 2013) while electricity imports have tripled (mainly from France, from 7 GWh to about 23 GWh).[52]

In light of the public debate at the turn of 2021-22, it seemed that the future British energy mix would be based on offshore wind farms and nuclear energy, and in the short term on domestic production of hydrocarbons as transition fuels.[53] This was indicated by the announcements from February this year concerning the licensing of six new North Sea oil and gas fields and opening a debate on ending the 2019 moratorium on shale gas production in Lancashire.[54] Moreover, even before Russia’s invasion of Ukraine, the UK adopted a course of giving up Russian energy supplies, which after the outbreak of fighting was confirmed by sanctions excluding the import of Russian oil.[55] Crises in the last year also highlighted the need to reverse the negative effects of the Cameron government’s privatisation of the gas storage system, which led to limiting its capacity to 2% of annual consumption (while the European average exceeds 20%).[56]

The nuclear sector model based on large investments, burdened by politics, delays, and uncontrolled increases in costs, was also subject to revaluation.[57] British SMRs[58] were considered as a new element of the mix and the development of which was contracted by the British government to a consortium led by Rolls-Royce in June last year.^[59] These changes were to make it possible to limit electricity imports, both in response to the problems of the French electricity sector[60] and in pursuit of energy independence. An important component of the calculation was the Franco-British (and, consequently, EU-British) dispute over the interpretation of the TCA. Although currently the UK is a net importer of energy from the EU, thanks to the expansion of British offshore wind farms it should ultimately become a net exporter to the EU.[61] However, the necessary interconnection of national energy networks came to be seen in the UK as a risk factor due to the disputes with France. A manifestation of such calculations may be the January decision of the UK government to reject the application for the construction of a new electricity bridge with France.[62]

The discussed assumptions were operationalised in the new energy security strategy[63] announced on 7 April. The British government declared the expansion of electricity production in eight large nuclear power plants and a network of SMRs up to 24 GW by 2050. As old-generation reactors are systematically decommissioned and only one of them will remain operational until 2035, it will be necessary to accelerate the pace and scale of new investment in this field. The document also provides for an increase in offshore wind energy production to 50 GW by 2035. Notably, this value exceeds the current average electricity consumption in the UK. The strategy also promises to search for oil and gas deposits in the North Sea and to strive to increase the number of solar farms.

While this strategy relatively clearly defines methods of strengthening the broadly understood energy security, it leaves the problem of reducing the costs of the green transformation for citizens in the short to medium term unanswered. In this respect, the document seems to reflect the divergent interests and visions within the ruling Conservative Party and a lowest-common-denominator compromise.

In the strategy announced on 7 April, there are no declarations on co-financing the modernisation and insulation of buildings as the fastest way to reduce energy demand and at the same time an important socioeconomic issue. Due to the high budget deficit, the Treasury opposed a £200 million programme to help low-income families to insulate their homes. The strategy also ignores the issue of building wind turbines and extracting gas from onshore deposits due to the controversial nature of building necessary installations in rural areas represented by Conservative MPs.[64] In this regard, the document did not consider the change in preferences of British public opinion after the Russian invasion of Ukraine, in which they seem to support the lifting of the moratorium on the exploitation of shale deposits and on onshore wind turbines.[65]

The Role of the Green Transformation in Devolved Politics

The implementation of the green transformation in Britain may be hampered by the different priorities of the autonomous authorities of Scotland, Wales, and Northern Ireland. The constituent parts of the UK, which undergo systematically developing decentralisation (devolution)[66], see the green transformation as one of the keys to their economic future. The rivalry between the political parties forming the central and devolved authorities concerns in particular planning powers in the field of the development of renewable energy installations, the future of the nuclear industry, as well as the distribution of subsidies and revenues from carbon taxes and other public levies.[67]

In the context of the nuclear sector, this rivalry also has a specific impact on security issues. From the point of view of not only the Tories but also Labour and the Liberal Democrats, this sector is necessary from the point of view of the UK’s energy independence, as well as the needs of military programmes, which are key to maintaining the UK’s global position. The civilian infrastructure provides co-financing of necessary training facilities and production of fissile materials for military applications. The nuclear issue, however, co-defines the dispute between parties supporting the British union and those backing Scottish independence. The Scottish nationalists have traditionally advocated the denuclearisation of Scotland, and in particular the elimination of British military nuclear infrastructure located there[68]. However, outside of Scotland there are no real alternative locations for it in the UK that would be able to provide uninterrupted operation of military nuclear infrastructure. This is particularly true in the case of nuclear submarines and installations for servicing their power plants and storing nuclear weapons.

The competition between the pro-independence coalition of the Scottish National Party (SNP) and the Scottish Greens and the unionist parties resulted in the SNP’s shift from a position in favour of the extraction of oil and gas from deposits in the Scottish waters of the North Sea to its exclusion. The coalition’s plan is to replace hydrocarbons with wind and tidal power plants.[69] Consequently, unionist parties—especially the Conservatives ruling in London—were relegated to positions of greater support for the British oil and gas industry concentrated in Scotland. Hence, the Scottish Tories found themselves at risk of adopting a position opposing the position of their government in London (i.e., planning to achieve climate neutrality by 2050). The last position was additionally undermined by the need to strengthen UK energy self-sufficiency after the Russian invasion of Ukraine.

Conclusions

The British model of climate transformation, especially considering the latest UK energy strategy and the country’s interests with respect to Russia’s aggression towards Ukraine, reveals many structural similarities to the Polish model. It is necessary to point out the central role of the nuclear sector assumed in both countries in the context of stabilisation of power obtained from renewable energy sources and ultimately the production of green hydrogen. The British experience and the new energy strategy show a need for the parallel development of a network of large nuclear units and SMRs. The former is supported by proven technology and ultimately low unit costs of electricity production, while the latter by the expected relatively low costs, speed, and flexibility of their construction. On the other hand, the weaknesses of the former are the delays and rising costs of large-scale investments, while for the latter it is the costs of technology development (hence the UK’s quest for foreign investors).

Although the nuclear technologies used in Poland and the UK will come from different sources, it is worth paying attention to the post-Brexit British solutions for the certification of these installations as well in the field of cybersecurity of smart energy networks and market regulation. For example, the mechanism described in Art. 29a of the ETS Directive and intended to protect the EU emissions-rights market from excessive fluctuations was based on the pre-Brexit UK proposals.

The UK also provides valuable insights into the social legitimacy of the climate transition. Since the early 2000s, the UK has developed and consolidated a cross-party consensus to decarbonise the British economy, and individual governments have systematically adopted increasingly ambitious targets and deadlines, including the definition of an ambitious green transition in 2019 as one of Brexit’s operational goals. Although such a high degree of consolidation of the British establishment around the climate transformation is a stark contrast to Poland, it does not prevent the build-up in the UK of socio-political tensions in terms of costs and the pace of change.

The new energy geography of the country (and as a result, revised economic landscape) and the impact of the transformation on the lifestyle of the British seem to be of key importance. Polling in the UK shows simultaneously high general support for the transformation’s goals and a reluctance to bear the costs of it in one’s personal life. In particular, there is no willingness to accept increased prices for energy, fuel, and transport (including air travel). In practice, this means the need to develop new critical infrastructure (e.g., charging stations for electric vehicles and additional transmission networks), as well as to create investment incentives in neglected post-industrial parts of the UK. From the point of view of the liberal and conservative sides of the political spectrum, a key limitation in this respect is also the ideological reluctance to large-scale public investments necessary to implement this programme within the assumed timeframe. The Tories are also faced with the problem of a proportionately higher cost of the green transformation on the lower-middle-class voters who are an important part of their present-day electorate and who are the least supportive of the transformation for ideological reasons.

In British conditions, political and economic disputes over the transformation may take the place of the earlier debate on the attitude towards the European Union. The social groups involved in both disputes are similar. The COVID-19 pandemic has resulted in a high level of support for the “build back better” vision but is yet to be transformed into a mature strategy.[70] If this goal is not achieved in the coming years through next-generation industrialisation projects, then it is likely that the transformation will become a source of strong political polarisation, fundamentally undermining the possibility of achieving ambitious climate goals with high public support. In practice, this would mean a shift from the current political consensus and broad, but often shallow, social support for the green transformation towards the rise of two camps competing on the issues of support for and resisting climate change policy .