Home Business Firms will hesitate to invest in UK after Sunak’s climate U-turns, says Mark Carney | Green politics

Firms will hesitate to invest in UK after Sunak’s climate U-turns, says Mark Carney | Green politics

by Janessa Lee

The UK’s approach to climate commitments has damaged the country’s reputation on the global stage for business investment, according to former Bank of England governor Mark Carney. In critical comments, Carney stated that international companies would think twice before choosing to locate their activities in the UK after the government pushed back key net zero deadlines and approved new oil and gas drilling. Carney emphasized that major businesses now prioritize countries with clear environmental commitments before making investment decisions. By watering down its climate commitments, the UK has created doubts about its commitment to clean power, which complicates discussions with potential investors.

Carney highlighted several countries that have emphasized the availability of clean power to attract international businesses, noting that the UK was viewed as a leader in this regard, but that status has been blurred with recent decisions. These decisions include pushing back the deadline for the sale of new petrol and diesel cars to 2035 and initiating new rounds of North Sea drilling. Carney criticized these moves as “disappointing and mistaken,” stating that credible forward commitments are essential when it comes to attracting investment.

In addition, Carney warned that proceeding with new oil and gas drilling could create a “stranded asset problem” in the UK energy sector. This refers to the risk that the value of fossil fuel assets could rapidly decline. Carney pointed to forecasts from the International Energy Agency that show global oil demand peaking in this decade, emphasizing that the stranded asset problem in the energy sector will become a reality sooner than expected.

Carney’s remarks came during an online event hosted by King’s College London and the Fairness Foundation. He was challenged by former permanent secretary to the Treasury, Nick Macpherson, who argued that the UK’s move aligned with EU policy on phasing out internal combustion engine cars. However, Carney stressed that the issue wasn’t the alignment itself but rather the government’s indecisiveness and inconsistency, which raises concerns for potential investors.

Carney also addressed criticisms he faced during his time as Bank of England governor, particularly from right-wing Conservative MPs who believed he failed to achieve the inflation target set by parliament. He added that it was crucial for the Bank to assess financial risks stemming from the transition away from fossil fuels.

Overall, Carney’s comments serve as a warning that the UK’s weakened climate commitments and inconsistent decision-making could have negative consequences for the country’s attractiveness to international businesses. Clear and forward-looking environmental commitments are increasingly crucial for attracting investment in today’s world, and the UK risks falling behind if it continues to water down its climate goals.

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