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The Government has unveiled its Net Zero Strategy – what does it mean for investors?

30/11/2021

In mid-October, the UK Government unveiled its Net Zero Strategy: a set of proposals and policies to help every sector of the economy to meet the UK’s net zero target by 2050. 

It’s by no means a small task, and it’s one that requires both industry and the public to play their part. It is also a plan that requires a great deal of investment, with page 328 of the report stating that, in this decade alone, an additional £335 billion of investment is required.

Officials have suggested that, between 2021 and 2025, around £60bn of private investment would be required to make these ambitious plans happen. Their plan, it appears, is to prime the attack with public sector funds, in the hope that this will give enough momentum for private investors to jump in. 

 

An appetite for green investment

There certainly seems to be an appetite for green investment – not just from UK investors, but from overseas. In mid-2020, we wrote about how the UK had risen to 6th in the EY Renewable Energy Country Attractiveness Index – and now, in November 2021, the UK has risen to 5th.

While the appetite is there, there are also concerns. For many, the electric vehicle market, for example, may need to develop further before investment is considered. And with greenwashing still a major concern for those considering responsible investment, it may be that more needs to be done to alleviate investor concerns for government plans to work. 

 

Are business models investable enough? 

However, these are not the only concerns. An article from the Tony Blair Institute for Global Change questions whether some of the key areas that require investment – such as bioenergy, heat pumps and CCS – actually have investable business models in place. 

While there are plenty of promises about the future performance of these sectors, the article highlights that “firm propositions are not in place”. This is also cited as a concern for Aviva, who note that, in many sectors, there is still a great deal of work that needs to be done to show investors that they can be confident in investing in the sector. 

The Government’s net zero plans are certainly ambitious and – if done right – could potentially give private investors a range of reliable, rapidly-growing sectors in which to invest their money. However, it appears that more work needs to be done to put concrete plans and frameworks in place. 

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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