UK: King’s Speech 2024: Bills most relevant to the green and net zero agenda

On 17 July 2024, the new Labour government unveiled the list of Bills (primary legislation) it intends to introduce in Parliament, with economic growth to be “at the heart” of the government’s legislative agenda. This is done via the King’s Speech and an accompanying background briefing document setting out more detail on each of the proposed Bills. 

This blog post focuses on the Bills that are most relevant to the Labour government’s green and net zero agenda. Energy transition and net zero policy is a key priority for the new government, second only to economic growth (see our previous blog post: New Labour government: is the UK back in the race to net zero?)

Water (Special Measures) Bill 

This Bill will give the water regulator, Ofwat, increased regulatory powers, in particular by:

• ensuring water bosses face personal criminal liability for breaches of  the law ;
• giving Ofwat new powers to ban the payment of bonuses if environmental standards are not met; 
• providing for a new code of conduct for water companies “so customers can summon board members and hold executives to account”;
• introducing new powers to bring “automatic and severe fines”; and
• requiring water companies to install real-time monitors at every sewage outlet with data independently scrutinised by the water regulators. 

The government has said that this Bill is just a first step and that it plans to introduce separate legislation at a later stage “to fundamentally transform our water industry and restore our rivers, lakes and seas to good health”.  

NOTE ADDED ON 02/09/24: See also Government press release on a consultation to double reimbursement for water company customers when their basic water services are affected.

National Wealth Fund Bill 

This Bill will put the new National Wealth Fund (NWF) on a statutory footing and will align the UK Infrastructure Bank (UKIB) and British Business Bank under the NWF. 

The purpose of the NWF is to make public-private “transformative investments” in key infrastructure and clean energy. 

The NWF (along with the GBE, discussed below) is central to the Labour government’s mission to deliver growth and clean energy by 2030. It will also play a key role in the government’s forthcoming industrial strategy.

The NWF will be capitalised with £7.3 billion (in addition to existing UKIB funding) and will invest directly in the priority sectors set out in the Manifesto. To ensure investments can start immediately, the NWF will deploy funding through the UKIB. It will aim to generate £3 of private sector investment for every £1 it invests. The intention is to use the £7.3 billion in public capital to catalyse more than £20 billion in private sector investment, initially expected to focus on ports, gigafactories, clean steel, industrial clusters, and green hydrogen.

Further detail about the NWF is expected to be set out ahead of the government’s international investment summit in October. 

The NWF is supported by a National Wealth Fund Taskforce, which is chaired by the CEO of the Green Finance Institute Rhian-Mari Thomas, and includes former Bank of England Governor Mark Carney, Barclays CEO C.S Venkatakrishnan, Aviva CEO Dame Amanda Blanc and large institutional investors.

According to the Taskforce’s initial recommendations (which can be downloaded at the bottom of this page):

• An estimated five-fold increase in investment is required in the UK by 2030 to achieve net zero, with sustained annual investment of £50 billion per year from 2030 through to 2050. This investment need cannot be met by the public or private sector alone.
• The NWF is intended to address the current funding gap for green investment projects that are not being funded by private investors.
• The NWF should be understood as a “sovereign-backed green catalytic fund” rather than a sovereign wealth fund, which are typically larger in scale and invest for purely financial objectives.
• The NWF should be allowed to use a range of financial mechanisms including guarantees, equity and debt to provide private investors with the confidence needed to fund the necessary technologies and infrastructure. The NWF Taskforce is also exploring demand-side instruments, including offtake guarantees and contracts for difference. But the Taskforce recommends that the NWF should exclude pure grants from its remit and instead encourage increased coordination and potential aggregation across existing grant-giving organisations.
• The NWF should crowd in private capital on a deal-by-deal basis, rather than at the fund level. 
• Next steps should include agreement on the NWF’s investment priorities, definition of investment criteria, and confirmation of KPIs.

According to the NFW Taskforce’s Chair: 

“The Taskforce recommendations set out how a combination of catalytic capital, deployed in partnership with a government delivering policy certainty, can make the UK the destination of choice for global investment. The National Wealth Fund will reshape the way we approach public, private risk-sharing, providing private investors with the confidence needed to fund the technologies and infrastructure needed to drive growth and create new jobs across the UK.”

Much of what is said in the government’s background briefing document about the NFW had already been trailed in the Labour Manifesto and a recent government announcement. 

Great British Energy Bill 

The Bill will set up Great British Energy (GBE) - a new, publicly-owned energy production company (headquartered in Scotland ) - which will develop, own and operate clean power projects, investing in partnership with the private sector. The Labour government have described the GBE as a “green investment vehicle” which will aim to crowd in private investment.

The GBE is the flagship of the Labour government’s net zero agenda - intended to help deliver energy security, cheaper energy, and create new jobs, as well as deliver on the government’s mission to have clean power by 2030. 

According to the Labour Manifesto, the GBE is intended to partner with industry to deliver clean power by: 

• co-investing in leading technologies; 
• help support capital-intensive projects; and 
• deploy local energy production.

£8.3 billion has been allocated for the GBE - which will be funded mainly through an enhanced windfall tax on North Sea oil & gas. 

The Great British Energy Bill will require the Secretary of State to prepare a strategic priorities statement. 

As is the case with the NWF, much of what is said in the government’s background briefing document about GBE had already been trailed in the Labour Manifesto. 

For more information, see the GBE website. 

NOTE ADDED ON 02/09/24: The Great British Energy Bill was introduced to the House of Commons on 25 July 2024 and had its second reading 5 September. For more information about the Bill, see Government press release, GBE Factsheet, GBE Founding Statement and Explanatory Notes to the Bill. 

The Crown Estate Bill 

The Bill will modernise The Crown Estate by granting it the power to borrow and widening its investment powers , to unlock significant investment in public infrastructure, in particular offshore wind investment. 

The Labour government have said they want to double onshore wind, triple solar power, and quadruple offshore wind by 2030. Granting the Crown Estate borrowing powers is expected to allow it to bring forward 20-30 gigawatt of new offshore wind seabed leases by 2030. 

As owner of the seabed of England and Wales, The Crown Estate develops, prepares and leases out plots of seabed to offshore wind and other developers (for example, those looking to build carbon capture infrastructure). The pace at which the Crown Estate does this will help Labour deliver on its mission to become a “clean energy superpower” and decarbonise the UK power system (i.e. have a zero carbon electricity system) by 2030.

NOTE ADDED 0N 02/09/24: The Crown Estate Bill was introduced in the House of Lords on 25 July 2024 and has its second reading on 2 September. For more information, see Government press release and Explanatory Notes to the Bill. 

Sustainable Aviation Fuel (Revenue Support Mechanism) Bill  

The Bill will support sustainable aviation fuel (SAF) production in the UK by providing revenue certainty to encourage investment in the construction of SAF plants across the UK. This is one of the key ways to decarbonise air travel.

The Bill will create demand for SAF by setting targets on fuel suppliers to use a proportion of SAF. The government will require suppliers to have at least 10% SAF in their fuel mix supplied to airlines. The government’s policy document states that, although this could be met with imported SAF, demand is likely to be high and it would be prudent for there to be a supply of UK-produced SAF. The government hopes the Bill will increase the likelihood of SAF plants being built in the UK and secure a supply of SAF for the UK aviation sector.

The government’s background briefing document states that the associated greenhouse gas emissions from using SAF are 70% less than fossil jet fuel on a life cycle basis, and that planes can already use up to 50% SAF under current rules.

For more information, se the Department for Transport's written statement to Parliament on sustainable aviation fuel initiatives. 

Planning and Infrastructure Bill 

One of the Labour government’s key planks for growth is to “get Britain building again”. The new government recognises that the current planning regime is a major obstacle to economic growth and clean energy. 

The Planning and Infrastructure Bill will:

• streamline the delivery process for critical infrastructure, including accelerating upgrades to the national grid and boosting renewable energy;
• simplify the consenting process for major infrastructure projects and enable new National Policy Statements to come forward, which will be reviewed every five years;
• reform compulsory purchase compensation rules to unlock more sites for development;
• modernise planning committees;
• increase local planning authorities’ capacity; and 
• use development to fund nature recovery - the government has said it will work with nature delivery organisations, stakeholders and the sector over the summer to determine the best way forward on this. 

A number of key announcements had already been made (see here) prior to the King’s Speech today. 

NOTE ADDED ON 02/09/24: See Government consultation on reforms to the National Planning Policy Framework and other changes to the planning system, which opened on 30 July 2024 and closes on 24 September. 

Other Bills of interest: Draft Audit Reform and Corporate Governance Bill and Better Buses Bill 

The Draft Audit Reform and Corporate Governance Bill will replace the Financial  Reporting Council (FRC) with a new regulator - the Audit, Reporting and Governance Authority (ARGA). There are also plans to extend Public Interest Entity (PIE) status to the largest private companies so that audits of those businesses are high quality and give an early warning of financial problems, and remove unnecessary and disproportionate rules for smaller PIEs. There are also plans to investigate and sanction company directors for serious failures in relation to their financial reporting and audit responsibilities and deliver a regime to oversee the audit market. The changes are intended to increase trust in UK companies and help to underpin growth.

The Better Buses Bill will give new powers for local leaders to franchise local bus services and lift the restriction on the creation of new publicly owned bus operators. Although the government's plans to nationalise railway operators will have received greater attention in the Kings' Speech today, more people in the UK travel by bus than on trains, with road transport a significant source of greenhouse gas emissions in the UK.

Finally, it is worth bearing in mind that just because all of these Bills have been announced, it does not mean they are ready to be introduced in Parliament just yet. However, they do provide a strong statement of intent and confirmation of key priorities for the new UK government. 

It is also worth noting that not all new legislation needs to be in form of Bills/primary legislation. A number of new requirements can be introduced through regulations/secondary legislation made under existing Acts of Parliament (for example, existing powers in the Environment Act 2021 to introduce a deforestation due diligence regime).