Sunak answers CLA calls for pragmatism with changes to net zero approach

In a speech on Wednesday this week, Prime Minister Rishi Sunak unveiled several significant changes to key aspects of the UK's net-zero policies. While these announcements will raise questions about the government's commitment to environmental sustainability, the commitment to net zero by 2050 remains the same.

The announcements address critical concerns of CLA members about the practicalities of decarbonisation and reaching net zero in rural areas. The “pragmatic, proportionate, and realistic approach” must be used as an opportunity to fine-tune policies and provide sufficient support to those affected by the transition to net zero.

One of the announcements was the decision not to introduce updated Minimum Energy Efficiency Standards (MEES) for the private rented sector. After years of lobbying by the CLA, Sunak said he will scrap policies to force landlords to upgrade the energy efficiency of their properties, instead encouraging households to do so when they can. Sunak said that the government will continue to subsidise energy improvement works.

The CLA and others previously reported a delay to MEES, but this complete retraction of the policy demonstrates how broken the energy efficiency policies were. Properties which remain under current MEES targets of EPC ‘E’ will need to continue to invest in upgrades or have a registered exemption in place, existing regulations will not be repealed.

The scrapping of increased MEES is met with relief by the CLA as it means members will not be required to spend potentially exorbitant amounts, up to the proposed £10,000 cost cap, on upgrades that might not be suited to their properties. This arbitrary cost cap would have placed an undue financial burden on rural property owners, who often face higher costs due to the remoteness and unique characteristics of their homes. Rural homeowners have less access to tradespeople due to their remoteness and are more likely to need bespoke solutions leading to higher costs.

While this announcement is welcomed, government must continue to improve Energy Performance Certificates (EPCs) so that property owners can make informed decisions of how to improve their energy efficiency. It will continue to be important for government to recognise that rural homes present unique challenges when it comes to decarbonisation. Rural homes are more likely to be of traditional construction, have solid walls, and have been built before 1919. The CLA will continue to engage with government on these reforms, including sitting on the Reduced Data Standard Assessment Procedure (RdSAP) advisory group.

Rural private rented homes are vital for the rural economy, providing housing for residents in these areas. The unachievable MEES targets were leading CLA members to withdraw from the market, exacerbating housing shortages in rural communities. The retreat on MEES targets will give rural landlords more confidence to stay in the sector, ensuring the availability of housing options in rural areas.

Another announcement pertains to the ban on off-grid oil boilers, which was initially scheduled for 2026 but has now been pushed back to 2035. There will also be an exemption for households who cannot afford the transition, they will never be forced to change their heating system. The delay is something the CLA had asked for, arguing that 2026 was too soon for the phase-out. Unlike urban areas, rural properties are overwhelmingly not connected to the gas grid and rely on alternative energy sources such as oil boilers. While we are pleased that rural homes will not serve as the testbed for the phase-out, it's essential for government to utilise this extra time wisely to encourage innovation in alternative fuel markets.

Additionally, rural homeowners are more likely to struggle with electrical grid capacity. Sunak announced the first ever spatial plan for energy infrastructure, and importantly for members indicated a new approach to grid connections. Operating on a ‘ready first – connect first’ basis, the hope is that projects to upgrade grid capacity will not be delayed unnecessarily.

Concerns around the availability and suitability of heat pumps for rural properties, for example, must be addressed comprehensively to ensure that the pushed-back target can still be met. Reforming EPCs will be crucial for this task. But Sunak’s reference to the recently launched Great British Insulation Scheme will only go some way, government must ensure that improvements to heat pumps are made to ensure they are suited for properties which by their nature are difficult, or impossible, to insulate. We were pleased to hear in Sunak’s speech that the Boiler Upgrade Scheme will be increased by 50%, meaning property owners will be able to get £7,500 towards the cost of a heat pump, or biomass boiler. The CLA is responding to an open government consultation which proposes administrative changes to the Boiler Upgrade Scheme which intend to make the scheme more accessible.

The government has extended the ban on the sale of new petrol and diesel cars by five years, now aiming for 2035. This delay raises questions about whether the UK will be able to keep pace with other countries in the transition to electric vehicles. There were also announcements on no new taxes for air travel, and no new policies which would encourage diet changes such as eating less red meat.

Although pragmatic delays are welcome, interfering in other net-zero policies could have adverse effects on CLA members. Particularly members engaging or planning to engage in private environmental markets, such as voluntary carbon credits and biodiversity net gain, may find the markets spooked by the recent announcements. These markets offer opportunities for landowners and businesses to contribute to sustainability efforts while benefiting economically. Any reduction in government commitment could undermine the confidence in these private markets, which are still at an early stage of development.

Through the recent (and defeated) Levelling Up Bill amendment designed to soften nutrient neutrality rules to unblock housebuilding, the UK Government was trying to balance environmental and economic considerations. While it's crucial to stimulate economic growth, it should not come at the expense of environmental sustainability. If the right balance is not found, the rural economy as a whole will suffer.

In conclusion, while some the changes announced by the Prime Minister are necessary to address practical challenges and ensure a smoother transition towards net zero, they also raise questions about the government's commitment to raising environmental standards to decarbonise.