Does Sunak care about net zero?

The biggest story of the Tory conference wasn’t about a gaffe or a controversial statement. It was about something that wasn’t said, and the person who didn’t say it. Rishi Sunak’s silence on net zero is a big deal, as the next few weeks will prove.

The Chancellor didn’t mention net zero in his conference speech. So what, you might ask? After all, it’s an environmental thing and he’s Chancellor, right? No. net zero is an economic story, and a big one. It’s about growth, investment, public spending, tax and jobs. According to Sunak’s Treasury:

“This will be a collective effort, requiring changes from households, businesses and government. It will require substantial investment and significant changes to how people live their lives. This transformation will also create opportunities for the UK economy. New industries and jobs will emerge as existing sectors decarbonise or give way to low-carbon equivalents.

Net zero and climate policies are going to be the big story of the coming weeks. As the COP26 summit approaches, the government finally has to bite some bullets and tell us how we’re supposed to stop burning gas in boilers to heat our homes. The Treasury’s final economic analysis of net zero — and the distributional choices involved — should come too.

Why is Sunak so quiet on such a big economic story? Some of his colleagues suspect a narrow political calculation: let Boris own net zero, so that when and if it starts to annoy voters (especially older, small-c conservative ones) then the PM gets the flak. Several people who have discussed net zero with him recently came away with true impressions that he has doubts, but they also note that he is careful not to say anything to explicitly confirm that impression.

Others think this is a new edition of an old Whitehall story. One minister told me this week, in colourful terms, that Treasury officials are strangling net zero policies to maintain their department’s influence. Others are going public to urge HMT to go further here. At a fringe meeting I chaired this week, Guy Opperman, the pensions minister, urged Sunak to expand the new £10 billion 'green gilt' scheme and borrow at least £50 billion to help fund new nuclear power plants.

Opperman’s point, echoed enthusiastically by some of the country’s biggest investment houses, is that there is a wall of private capital looking for opportunities to finance decarbonisation, and not just to get a return. The ultimate owners of that capital, savers and pension-holders, want their money to do some good. That’s a big opportunity for government, but HMG isn’t making the most of it.

I don’t know what’s behind the Chancellor’s tepid approach to net zero, but I find it curious for a young politician with a long career ahead of him. Public opinion and capital markets are both shifting inexorably towards prioritising climate issues. Voters want action on the climate and markets want to fund it. It’s odd that a chancellor who wants to be the future of his party doesn’t appear keen to surf that wave.

Of course, the politics of net zero aren’t a done deal — far from it. gilet jaune style protests over boilers and the transition to electric vehicles aren’t impossible to imagine here, and a few fringe elements in Conservative politics (and journalism) clearly see net zero as a chance to get the Brexit band back together for another tour.

But the smart money is on a greener future. The UK is heading towards net zero and decarbonisation. The only real question for Rishi Sunak is whether he wants to lead or follow.