Climate Change Committee warns net zero reversal would undermine investor confidence

Nigel Topping, chair of the Climate Change Committee, has issued a stark warning to the incoming prime minister that reversing the UK’s net zero policy would disrupt business operations and damage the economy by undermining investor confidence. In a report to parliament published on Wednesday, the committee assessed progress toward the 2050 net zero greenhouse gas emissions target, noting that while renewable energy expansion and electric vehicle adoption have advanced, heat pump installation rates have stalled significantly.

Topping emphasised that consistency in policy direction is critical for industry investment decisions, pointing to the institutional framework established by the 2008 Climate Change Act. He cited a recent Confederation of British Industry report estimating the net zero economy at approximately £100bn annually, a sector that is growing faster than the broader economy and creating higher-paid jobs. The committee argued that any attempt to water down clean energy commitments would deter businesses and increase reliance on volatile fossil fuel markets.

The report highlighted a severe lag in heat pump adoption, with installations in existing homes rising by only 7% this year, a sharp decline from the 56% increase recorded the previous year. Topping attributed this slowdown to high upfront costs and market structures that currently make electricity more expensive than gas. He called for government reform to break the link between power prices and the cost of gas, arguing that such a change would reflect the lower cost of renewable generation and make heat pumps more financially attractive to households.

While heat pumps are at least three times more efficient than gas boilers, the committee noted they do not currently produce bill savings for consumers on certain energy tariffs. However, the report indicated that when paired with solar panels and electric vehicles, heat pumps can generate substantial savings, particularly for rural homes dependent on oil heating. Topping urged the government to assist low-income households in decarbonising, noting that these benefits are currently largely out of reach for lower-income demographics.

The intervention comes amid political uncertainty following the resignation of Keir Starmer, with Andy Burnham identified as the likely successor. While Burnham has previously supported offshore wind and renewable energy, some of his advisers have contrasted his bid for reindustrialisation with net zero goals, a distinction economists argue is false. Topping stressed that power system decarbonisation is largely complete and should be celebrated as a cross-party achievement, urging the next prime minister to hold the course and accelerate the transition to renewable technologies.