Sunak Considers Diluting Green-Energy Policies, Delaying Diesel Ban

(Bloomberg) -- Prime Minister Rishi Sunak said he would roll back some green-energy policies without abandoning the UK’s carbon goal, opening rifts within his Conservative Party and adding new uncertainty for companies that have invested based on those targets. 

The premier is due to give a speech in Downing Street on the government’s green agenda on Wednesday afternoon. 

Sunak was pressed into issuing a statement justifying his move late Tuesday after the BBC reported he would soften key policies, such as the timing of a ban on the sale of internal combustion cars. “We are committed to net zero by 2050 and the agreements we have made internationally, but doing so in a better, more proportionate way,” Sunak said, without providing specifics.

Among the moves under consideration, Sunak is weighing deferring by five years to 2035 a ban on the sale of cars powered by diesel and petrol, according to a person familiar with the plan. He might also weaken plans to phase out gas boilers, said the person, who asked not to be identified as the government hasn’t yet made the decision public.

Cabinet members were taken by surprise, a person familiar with the matter said, based on Sunak’s call with ministers on Wednesday. Some are worried about the impact on business if the 2030 deadline is moved.

The governing Tories trail the main opposition Labour Party by about 20 points in most national polls, and Sunak has faced criticism from within his party that he’s been too timid since taking power last year after months of upheaval. He’s seeking policies that will draw a sharper contrast with Labour leader Keir Starmer ahead of an election expected next year. 

But watering down green commitments risks widening Conservative divisions just as the party prepares for its annual conference in Manchester next month. Embracing a green agenda has long been a key Tory policy and helped former Prime Minister Boris Johnson stabilize Britain’s global reputation in the wake of his successful campaign to leave the European Union.

The move was met with an angry response from senior Conservative figures. Former business and energy minister Alok Sharma, who was president of the COP26 climate conference in Glasgow, warned that it would “not help economically or electorally.”

Simon Clarke, another former cabinet minister, said the move would “shatter” the UK’s pro-climate consensus. He also said that voters in northern England, set to be the battleground in the next general election, support net zero because the policy delivers jobs in new industries.

The government is likely to be vulnerable to legal challenges from environmental groups over meeting its climate targets, according to Adam Bell, a consultant at Stonehaven and former senior civil servant working on energy. The government would either have to find new ways of cutting carbon emissions or face being accused of misleading the public with claims that the UK remains on a trajectory to net-zero emissions by 2050.

“It will potentially destabilize thousands of jobs and see investment go elsewhere,” Chris Skidmore, a former energy minister who helped draft the UK’s net zero policy, told the Press Association. “Rishi Sunak still has time to think again and not make the greatest mistake of his premiership, condemning the UK to missing out on what can be the opportunity of the decade to deliver growth, jobs and future prosperity.”

A delay to the ban on the sale of new petrol and diesel cars would also be a blow to automakers investing in electric-vehicle production in Britain, because the prospect of the 2030 ban is set to markedly boost demand. Only last week BMW AG announced plans to invest £600 million ($744 million) into its factory in Oxford to make electric Minis, and as recently as July the cabinet minister Michael Gove said the 2030 ban was “immovable.”

Starmer has made the shift to greener industries and technologies a centerpiece of his plan to help the UK break out of its current period of economic stagnation. Ed Miliband, who is in line to steer UK energy policy if Labour wins power, described Sunak’s plans as a “complete farce” and described the British premier as “rattled, chaotic and out of his depth.”

Sunak sees a glimmer of political hope in diluting the green agenda after eking out a narrow victory over Labour and holding Johnson’s once-strongly Tory parliamentary constituency in a special election in July. The Conservative candidate in Uxbridge and South Ruislip tool a prominent stance against the expansion of London’s ultra-low-emission zone, a flagship green policy of the capital’s Labour mayor, Sadiq Khan.

Party strategists have also looked at the push back against green policies in some European nations including Germany and the Netherlands, and interpret that as a warning to slow down the rollout of net zero policies.

“Cars are heavily integral to everyone’s daily lives and as we saw in the Uxbridge by-election, there was a very strong rejection of policies like ULEZ, which was a punitive and ill-thought out tax on drivers,” Home Secretary Suella Braverman told Times Radio on Thursday. “We are not going to save the planet by bankrupting British people.”

Tory MP Karl Turner, also praised the government for having “seen the light,” using populist language similar to the kind dominating debates in places like the US. “The only people who will complain about this delay are the central London eco-zealots who do not live in the real world and are rich enough not to be affected,” Turner said. 

Khan hit back at Sunak and defended his ULEZ policy in an interview Thursday with Bloomberg’s Francine Lacqua in New York.  

“This is basically lazy politics from a weak prime minister,” Khan said. The prime minister is “throwing red meat to his backbenches because he’s so weak and ineffectual,” he said.

(Updates with Cabinet ministers taken by surprise in fourth paragraph)

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