‘We’ll only hit net zero targets if we rip up planning rules in the first 100 days’

It wasn’t just auto-industry bosses Rishi Sunak blindsided with his net zero U-turn. By delaying the go-ahead for a major solar farm on the same day, and by refusing to commit to HS2, Sunak sent a signal that’s been heard loud and clear across the investment world: when it comes to climate policy, UK regulatory certainty is gone. And not just for the auto industry.

“We are looking to raise billions of pounds of investment into the UK,” one solar energy boss told me. “Because of Sunak’s speech, I’m now having to fly across Europe to persuade investors not to divert the money to projects in the EU, because it now looks like a more stable and reliable market.”

The private sector will be key to net zero, but needs regulatory certainty

As Labour responds to Sunak’s gambit, clearly designed to mobilise voters to reject paying the upfront costs of the climate transition, what matters is not just that we oppose the pushback of the 2030 target for electric vehicles. We need to establish – as far in advance as possible – a stable and predictable approach to business regulation.

To understand why, consider the two broad green energy strategies, described by the economist Daniela Gabor as “de-risking” versus the “Big Green State”. Under a state-led approach, the government borrows money to invest – for example, in greening the steel industry – but, in return for shouldering the risk, it takes part ownership and a share of the profits. De-risking, by contrast, involves the state setting stable, predictable prices for clean energy, immovable cut-off dates like the EV target and above all a planning regime designed to release solar, wind, grid and nuclear projects from years of delay.

After the fiscal catastrophe of last autumn, even statists like myself recognise the next phase of the transition will need to be largely funded by the private sector, with investors getting the upside.

The good news is, from all the conversations I’ve had with energy investors, we don’t need the state to spend £28bn a year to do the heavy lifting. Set the right prices, planning rules and regulations, and investment funds are queuing up to build clean energy and green tech in Britain. What they need is regulatory certainty. And that’s what Sunak blew away.

Labour must given an honest answer about how we achieve net zero

But the de-risking approach, on its own, cannot answer questions of social justice. And that’s the flaw that Sunak is determined to exploit. When the Prime Minister says politicians have failed to “look people in the eye and explain what’s really involved”, he’s right. When he says people who disagree with him must explain to families why they have to pay the upfront costs of heat pumps or the premium on a new EV, he has a point.

So Labour needs to spell out the social justice principles that will underpin the regulation, investment, planning and industrial policy decisions it makes in government. We need to start by giving an honest answer to Sunak’s question: why should families pay more and change their lifestyles? The answer is because every tonne of carbon we emit into the atmosphere today helps turn the floods, storms, wildfires and tidal surges we’re experiencing now into unpredictable, global climate chaos. In those conditions, homes could become uninsurable; major coastal roads and rail routes impossible to maintain.

Sunak says we need to do this with the carrot only, not the stick, citing the move from horse-drawn carts to cars. Sorry, but it took my family of coal miners until the year 1962 to own their first car; they were invented in the 1890s. A better parallel would be the Clean Air Act 1956, which forced the rapid transition away from domestic coal burning towards gas and electrical heating, with public subsidies for the new equipment.

There is no avoiding the fact that the costs of transition are large. The question is, how will they be shared between consumers, companies and the state – what politics can do to mitigate the social injustice generated by the change.

Sunak’s principle is clear: that borrowing to invest in climate mitigation is immoral. He believes the costs of the climate transition should be borne, not by the taxpayers of tomorrow through debt and interest payments, but by consumers of today. And if the consumer cannot pay, the transition has to be delayed.

That’s the logic behind last week’s U-turn. Labour has rightly rejected it. But we have also inherited a bunch of hit-and-hope climate targets, set in the era of Cameron, May and Johnson, when governments signed up to ambitious carbon budgets without ever legislating for the means to achieve them.

Our party must tackle Sunak’s argument head on – and as soon as possible

At Labour’s upcoming conference, I want to see the party take Sunak’s argument head on; we are close enough to an election for businesses and consumers to be demanding regulatory clarity from us now.

Will we reinstate 2030 as the cut-off for new ICE vehicles? Hard to do once the auto industry has adapted to 2035, but that’s not really the biggest issue. Labour’s commitment to clean electricity by 2030 is equally daunting, in a world where the National Grid can’t offer solar farm connections until the mid-2030s and where astroturf groups are bombarding MPs with petitions against the pylons and transformers needed to speed things up.

Only if we rip up the infrastructure planning laws in the first 100 days does a Labour government stand a chance of decarbonising electricity by 2030. Only if we offer generous and progressive subsidies to poorer households can we drive insulation and heat pumps to the levels needed. As for EVs, we need to combine a cut-off date with a comprehensive automotive industrial strategy, where the state directs, orchestrates and collaborates with the private sector to achieve rapid cost reductions.

Sunak is out of step with public opinion on climate change. But the right-wing tabloids are stoking fear and doubt. So let’s not flinch from the challenge: the just transition has to involve redistribution – from the better off to the poorer, and from the taxpayers of tomorrow to the consumers of today. The alternative is not that we carry on with petrol cars and gas boilers. It is that homes and businesses become uninsurable, entire sectors – like coal already – become uninvestable and the national security of our country remains hostage to the oil and gas dictators.