CBI CEO speech at Business Green Net Zero Festival 2024

Good morning everyone! It’s great to see so many of you here bright and early. 

I want to start by thanking James and the Business Green team for the hard work they put into ensuring we have high-quality, informed journalism on the vital transition to net zero. It really matters.

Now, today I want to focus on just two things. 

First reminding ourselves of the fierce urgency of net zero – not only for growth: we’ve made and won that case with government. 

But also for resilience – how we deliver energy security and efficiency in an uncertain world. 

Second, I want to look at the next big obstacle to achieving that. 

The government is doing great work building momentum on investment and green energy. 

But net zero isn’t just the gleam of a new solar panel or the hum of an onshore wind farm. It’s transitioning our whole economy: from steel plants and shipping, to farming and cities. 

And it’s how to gradually phase out oil and gas, even as they remain an important part of the mix for some time to come. 

That’s the next stage and we cannot underestimate how complex it’s going to be.

Then last up, the Budget is a big moment for that journey and our economy, so I want to talk about what we need to keep up momentum. 

It’s hard right now for any of us to look at global headlines without feeling sadness at all the devastation and human suffering in the world. 

We seem to be entering a new era of world disorder. 

We look at what’s happening in the Middle East, in Ukraine. The almost indescribable humanitarian cost. 

In the here-and-now, I feel strongly the duty of care we all have to recognise how that can impact our teams and people around us here in the UK.  We must not let it divide us as a society.

But more parochially, there is also a worrying impact for our economy. 

If in these evermore uncertain times…

we continue to base our energy so heavily on volatile fossil fuels…

there is a clear and present danger we could be exposed to another energy crisis. 

We are only now comprehending the full damage the 2022 crisis did – to business, households and the most vulnerable.

The recent Energy Crisis Commission led by Sir David Laws, and which the CBI sat on…

…found UK reliance on gas for heating and power left it “dangerously unprepared”.  

So when the Ukraine war sent shockwaves through the energy markets, it created a perfect storm for us. 

The IMF has shown we – businesses and people across the UK – were hit harder than any Western European country. 

Now as we go into winter 2024, household energy bills are still on average 500 pounds higher than pre-crisis. It’s a tough situation. 

And the report findings were clear: the only way we can turn a corner and protect our economy, is moving towards renewable energy and improved storage of that energy. 

True energy security. 

The green economy is essential for growth: I’ve said it before and the CBI will keep saying it. 

But it’s even more urgent than that. 

Renewable energy, battery storage, clean power, energy efficiency on homes – this net zero is the foundation for the growth and security of our economy. 

Without it, we’re building on sand. 

This government has shown that it gets that.

No doubt, there’s been plenty of politics in the first 100 days. But if you look through the smoke, they’ve achieved a lot in a short time. 

Above all, on net zero and the investment we need to make the transition

I’ve warned before that we need to be positive – to show investors the potential in this country and its economy, not the pitfalls. 

And there’s been a real shift in tone from government. 

Rachel Reeves spoke about our “immense potential”, from universities to life sciences, to tech…

and at the investment summit, the Prime Minister said these assets make this “the moment to back Britain.”

Our sense is that message is filtering through. There’s a feeling that things are really starting to move. 

And there should be. Just look at what the energy department, DESNZ, have done recently. 

They’ve moved mountains in a matter of weeks. 

We’ve had GB Energy, commitment and consultation to speed up planning, the new Mission Control for Clean Power… I won’t list them all otherwise James will never get to his questions. 

But there’s been so much. 

Just in the last two weeks we’ve had funding commitments for solar power and CCUS – all great measures that are really starting to cut-through with business. 

Already, Scottish Power’s parent company have pledged to double their UK investment, citing the solar power announcement. 

I can say with confidence, there’s real momentum in our journey to net zero. 

But when you’re running, momentum isn’t just about speed in your legs – it’s about looking at the terrain: what comes next. 

That’s where we need to turn our attention now. 

Reaching net zero in the UK and the energy security we so badly need…

is a two-speed problem.

On one hand, you have investment in new green energy generation. Projects that are like magnets for investment. That makes up more than half our progress since 1990.

On the other, you have the costlier, more complex part: changing what we already have. Transitioning the rest of our economy. 

The farms that produce our food. The factories that create our goods. The freight that transports it all. The buildings we live and work in.

A huge factor in the energy crisis was that we’ve done so little for energy efficiency in our homes and buildings. For every degree of heat a German home loses, a UK home loses three. 

These are the problems we’ve got to solve next, and you can’t underestimate how complex it’s going to be.  

At the heart is getting our transition finance right. 

Now if you’re not familiar with that term, or not exactly sure what it means, don’t worry. 

Eight in ten people – even in business where it’s most important – don’t fully understand it. 

That’s what we found in the Transition Finance Review we just did with government. 

That’s how complex, how tough this next stage is. 

But in essence, it’s about creating the policies, the pathways and signals to get finance flowing where we need it, to transition the whole economy. 

Recognising the green economy isn’t only about the new, but also transitioning the old. Doing it better, more efficiently, with less carbon intensity. And in some cases, choosing not the perfect solution but the achievable one. 

And what’s crystal clear from the start is, government can’t do that alone. 

They must share the load with business.

The market needs room to innovate and get this right. 

But at the same time, investors need the detailed pathways for all sectors. 

They need the framework to inspire confidence: how and when government support will be available, to create the revenue streams which aren’t viable yet. That’s something government can do. 

We need both working together – the clear eye of government and the invisible hand of the market. 

It’s a daunting challenge. A complex challenge. The UK CCC estimates it’s going to take 2.7trn more investment between 2021 and 2035 to transition the whole of the global economy.  for the UK this is an additional £50 to£60 bn per year of capital investment in the late 2020s and 2030s to transition.

And the longer the UK leaves these harder parts, the more expensive it will be for us to make the transition. The more we’ll be energy insecure – at risk from global uncertainty and market shocks. 

But let’s be clear: this is also a huge opportunity for this country. 

We’re already a leader in sustainable finance. Our financial sector, universities, insurance and professional service sectors – are the envy of the world. Our green economy is renowned and growing. Just look at the energy in the room today. (Ba boom)

We have everything we need to make transition finance a powerhouse growth industry for the UK. Not only driving our own transition, but the world’s. 

So, how do we get there?

We’ve recommended resourcing a Net Zero Council, where government can work with industry to hammer out the pathways for all our sectors to transition. 

We called for a new Transition Finance Lab to forge and test the policy tools, the financial products and innovations to get finance flowing where it’s needed. 

And we want new mechanisms to communicate with and involve business. 

Some challenges are too complex, too dynamic to solve with one static policy paper – we need live information sharing for live challenges. 

Then next week’s Budget will be a big milestone in the transition, and for our economy. 

There’ve been a lot of rumours, a lot of speculation – about tax, national insurance rises for employers and more. 

There’s evidence that’s starting to dent confidence. 

This government has made big strides on the investment, the business environment we need to power green growth. 

It’s taken two steps forward on business confidence: let’s not take one back now.

We know the fiscal constraints, the economic backdrop and the tightrope this government is walking. 

But that only makes it more important to bring business in…

to work with us to find the solutions to keep confidence and investment up. 

So as we face the crucial second stage in the transition, we can keep ahead in the race for green growth. 

…with clarity on transition planning, in consultation with business

…with a clear timeline for the Green Finance Strategy.

…and with a Net Zero Investment Plan, mapped across economic sectors. 

We cannot afford to step back now.

Because as we’ve seen, energy transition isn’t just a nice-to-have for the UK. 

The global uncertainty we face abroad, the economic strain at home…

…make it nothing less than existential for us. 

The next stage in that journey won’t be simple or easy. None of this has been. 

But looking at how far we’ve come, what we’ve achieved together, the ideas, dynamism and energy in this room and the businesses I meet every day…

I’m certain we can do it. And I know that we have to. For us and for our children. 

Thank you.