The UK needs to spend around £30bn per year until 2040 to have any chance of hitting its net zero goals, the Government’s National Infrastructure Commission (NIC) has said.
Spending by private companies will also need to increase from around £30bn-£40bn over the last decade to £40bn-£50bn in the 2030s and 2040s.
The commission, set up to give impartial, expert advice to ministers on major long-term economic infrastructure projects, warned that without significant public and private investment the UK will face challenges to rebalance “its economic geography, meet climate obligations, improve resilience and enhance the natural environment”.
Sir John Armitt, the commission chair, said the UK was at a “pivotal moment” with “the opportunity to make a major difference to this country’s future. But we need to get on with it.”
The report says around eight million buildings will need to switch from gas boilers, which currently heat about nine in 10 English properties, to cleaner alternatives by 2035 to meet the 2050 net-zero target.
A third of the lowest-income households, including those living in social housing, should have their costs fully funded through a £2.5bn annual fund, it adds.
Other property owners should be eligible for a £7,000 subsidy for electrified heating systems, with the offer reduced over time to accelerate early take-up. The report also suggests interest-free loans to help with costs, and planning reforms to make it easier to install heat pumps.
Sir John said the Government was “failing to cut the mustard” in its efforts to hit their own net-zero pledges.
“We’ve got a 2035 target which is only 12 years away. I find it hard to accept that we are likely to meet that when we are installing 50-60,000 heat pumps at the absolute most per annum at the moment when the Government has set itself a target of 600,000 heat pumps per year by 2028,” he said.
“It is not cutting the mustard at the moment so therefore there has to be a significant improvement in order to achieve that 2035 (target).”
Sir John also pointed out that under changes brought in by Mr Sunak, fewer households will be able to claim support for heat-pump costs.
James Heath, NIC chief executive, said the UK was “way off” switching eight million properties from fossil-fuel heating in the next seven years – a transition likely to make fuel bills cheaper.
Other recommendations include making the grid more flexible to ensure reliable power supplies, and creating a strategic energy reserve to ensure economic security.
The report also backs public transport upgrades in England’s largest regional cities, improvements to the national road network, and boosting electric vehicle public charge points to reach at least 300,000 chargers by 2030.
It says gigabit-capable broadband needs to be available nationwide by 2030, as well as support for the market to enable the roll out of new 5G services.
Greater investment in the UK’s water network is vital, including more reservoirs to cope with water shortages and reduced leakages as well as measures to help reduce demand.
The commission also says there is an urgent need for a “new comprehensive and long-term rail plan” in the light of the Prime Minister’s decision to cancel HS2 north of Birmingham, and the decision “leaves a major gap in the UK’s rail strategy around which a number of cities have based their economic growth”.
Sir John said: “Making these investments now should lead to permanently lower infrastructure costs for households.
“People often talk about infrastructure as the backbone of our economy: what our infrastructure needs now is the collective mettle to turn commitments into action that will reap rewards for decades to come.”
The NIC says the Government needs to set out a clear plan and stick to it, to lend certainty to investors and help build up supply chains. It should also give clear guidance on priorities, investment ahead of need, and business models to support emerging technologies
The report echoes calls for speeding up the planning system for major projects, particularly energy transmission schemes with clearer community benefits, in return for hosting key infrastructure.
The NIC said the plans have been costed “in line with government’s guideline for public investment”.
Nick Winser, a commission member, said the report states “unambiguously” that NIC does “not see any role for hydrogen in the future of home heating” in the sixth carbon budget, which covers the period 2033-2037. “It is simply not ready at scale to be used for heating,” he said.
However, excluding hydrogen technology would result in the the gas network being ripped out of 25 million homes and amount to expensive stupidity, the energy union, the GMB warned.
Andy Prendergast, GMB national secretary, called the decision to rule out hydrogen as a green energy solution “utterly farcical”. “Hydrogen offers one of the few realistic green solutions for heating available without overloading our creaking energy network,” he said.
“Ripping out the gas network for 25 million homes is expensive stupidity when existing pipes can be repurposed to carry hydrogen. If the UK wants energy independence and to save tens of thousands of gas jobs, we need stop ignoring the green hydrogen revolution we are perfectly placed to capitalise on.”
Darren Jones, Labour’s shadow Chief Secretary to the Treasury, said: “There is no doubt we need a transformation in the UK’s approach to infrastructure to drive investment and growth across Britain.
“However, after 13 years of economic failure and stagnation, the biggest obstacle to this report’s recommendations being implemented and to get our economy growing is the Conservative Party.”
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