Written evidence submitted by the Northern Ireland Executive Department of Agriculture, Environment and Rural Affairs (NZG0075)

Central Service and Contingency Planning Group

Central Management Branch

UK NET ZERO GOVERNANCE REVIEW

I am writing in response to your request of 13 July 2021, for Northern  Ireland  Executive views on the BEIS Committee’s Net Zero Governance inquiry which is looking at the effectiveness of cross-government structures to deliver the 2050 net  zero target. I understand that Committee Members have shown particular interest in the role of the Devolved Administrations.

Following receipt of your request DAERA undertook a consultation exercise with other Executive Departments to also seek their views. On the basis of comments received, and those of DAERA, I offer the following comments in response to the Call for Evidence:

UK Net Zero Governance Structures

1.                  The level  of  accountability afforded by the existing governance structures may not  be sufficient to drive delivery at the pace required. It is proposed that the Climate Change Committee (CCC) be invited to meetings of the Inter-Ministerial Group  to keep Ministers informed, present their findings and provide greater scrutiny of  the work of the UK Government and the Devolved Administrations (DAs).

2.                  As the UK and its DAs publish their various net  zero  strategies,  there  would  be merit in considering how to transition these to Programme delivery governance structures.

3.                  The recent Climate Change Committee’s Progress in Reducing Emissions - 2021 Report to Parliament highlights that  ‘Achieving Net Zero will require  effective adaptation’. However, climate adaptation is not within the remit of UK Net Zero governance structures. Therefore, are the current structures effective in helping to deliver the integrated climate policies required to meet Net Zero?

4.                  We agree with the Committee on the importance of effective governance,  in particular communication and coordination between BEIS and the  DAs.  To that end, a number of publications have been launched  and/or  been  consulted  on recently with more planned in the near future. In light of this, we note that:

• Documents do not always consider and accurately reflect the circumstances within DAs;

• Often these documents are shared with DAs later in their development, with limited time for meaningful input; and

• More consideration needs to be given as to how these publications may affect DAs.

5.                  It is important that devolved powers are respected and governance structures must facilitate engagement at the right level and with the right  people.  This  will  help ensure that decisions can be made by those with the authority to do so and that this happens at a pace consistent with meeting carbon budgets and ambitious net zero targets.

6.                  There is also a need for governance structures to be  as  streamlined  as  possible and joined up with existing groups. For example, the Department for Infrastructure engages regularly with the Department for Transport and Office of Zero Emissions Vehicles in respect of transport decarbonisation. Departments in Devolved Administrations do not have the same level of resources and staff to dedicate to the many policy and operational areas impacted and often it is the same staff in our departments who are working across a broad range of relevant issues.  We  therefore need to ensure that work and discussions are not duplicated and that the various policy agendas are joined up.

7.                  There are a number of small changes that could help to deliver cross-Government action more effectively, which are:

i.                        Ensuring that DAs are kept well informed of  the  BEIS  programme of work and information shared at the earliest possible stage and with sufficient time for considered input;

ii.                         Earlier engagement and input from DAs would help address collective challenges we face. NI Executive  Departments  are  happy  to engage with BEIS to see how this  could be effectively implemented on a  practical level;

iii.                         Funding opportunities must be available to all  DAs in  a  fair   and equitable way – e.g. support schemes should be open across  the UK and designed with input from DAs; local councils in NI to have with the same opportunities offered to local authorities elsewhere; and

iv.                         Consideration should be given to where the various DAs can provide a leadership role given their unique strengths in certain  areas,  e.g.  NI could lead on the design of a new smart meter given our strong digital

sector; or progressing new hydrogen processes to avail of decarbonised alternatives to gas that also utilises circular economy principles.

Metrics

8.                  It has been highlighted at the BEIS Deep Dives  that the CCC and  BEIS  have different sets of statistics which align in many ways.  However  it  would  seem prudent to have one agreed set of targets and metrics  for  the purposes  of clarity  and avoidance of confusion.

9.                  DAERA is leading on development of the NI Executive’s Green Growth Strategy – a multi-decade strategy to address climate change holistically by balancing climate action, the environment and the economy. The benefits from this Green Growth Strategy will be wide-ranging  – green  jobs, emissions reduction,  improved environment and wider societal gain. We are working to establish indicators to measure the success and the impacts of delivering the Green Growth Strategy.

10.             Subject to NI Executive approval prior to COP26, the new Energy Strategy for Northern Ireland proposes monitoring progress through annual reporting which will include the flexibility to be updated at regular  intervals based on changing circumstances and developments.

11.             Within each of the five principles of the NI Energy Strategy, DfE will set specific targets and objectives  that we will report on. In  addition, DfE also intend to monitor  a range of strategic outcome indicators, which can track progress in achieving  the two aspects of our overall vision.

12.             Indicators will allow us to measure success at achieving the Energy Strategy outcome. We are proposing using the following strategic level metrics:

a.       Greenhouse Gas emissions from energy-related sectors;

b.       Jobs and turnover in the low carbon and renewable energy economy;

c.        Domestic energy costs relative to household income;

d.       Business energy purchases relative to turnover;

e.       Households in fuel poverty;

f.          Relative electricity and gas prices.

NI Executive Arrangements

13.             It is worth noting that Climate Change  legislation  is  currently  progressing through the Northern Ireland Assembly. It is  expected a Climate Change Bill, when passed, will include specific arrangements for governance and accountability across the NI Executive.

14.             DAERA is leading development of the NI Executive’s  Green Growth Strategy in partnership with other departments, local government and stakeholders from across the business, voluntary and community sectors. This overarching multi-decade strategy will be supplemented by a series of climate action plans to help Northern Ireland transform our society towards net zero by 2050,  protecting and  enhancing our environment and delivering sustainable economic growth. Development of the strategy involves collaboration with policy leads across Government and is being

supported by CCC advice on sectoral pathways and targets to be included. A draft Green Growth Strategy will be published for consultation in  autumn  2021,  to  coincide with COP26, with the final document and first  Climate Action Plan by end  of March 2022.

15.             The Department for the Economy (DfE) has led a significant collaborative work programme across NI central and local government, arms-length bodies, the energy industry and other key stakeholders to inform the development of a new Energy Strategy for Northern Ireland. The governance structures put  in  place  for  this (Project Board, Government Stakeholders Group, five thematic working groups with over 70 representatives from 30 organisations, an  Expert  Advisory  Panel and Gas and Electricity stakeholders  groups) have ensured that  the  Energy  Strategy involves appropriate contributions from those that will be involved in delivering it.

16.             The Energy Strategy Project Board will now transition to a Programme Delivery Board from September with Deputy Secretary membership from all Departments undertaking a decision-making and implementation monitoring role in energy policy; this will be informed by NICS wide Checkpoint Director  meetings  to  update  on policy development.

Spending Decisions

17.             The long anticipated Net Zero Costs  Review  must be delivered immediately to help us all better understand how we can deliver a low carbon economy whilst protecting the environment and the most vulnerable in our society.

18.             Each Devolved Administration needs to play its part, therefore, a clearer, more detailed understanding of the financial  implications should be provided and the required financial  support that is needed to enable Devolved Administrations to address climate change and meet targets for collective benefit.

19.             As actions are likely to be required over a long time period, and span political mandates, it is essential that financial and economic decisions accommodate these longer time frames.

20.             The Climate Change Committee estimates that NI needs an additional £34bn of capital investment out to 2050 and,  whilst this  will not  all fall to taxpayers, there will be a substantial need for additional public  expenditure  to deliver  on this.  This must be considered by the UK Government and HMT to ensure appropriate additional funding is provided.

21.             In making spending decisions, HMT should take account of the current position of Devolved Administrations on the trajectory towards  net  zero in order  to inform  how to prioritise financial and economic decisions.

22.             For example, compared to the rest of the UK, NI  has  a  fairly  unique position in terms of financing the energy transition as a result of high levels of fuel poverty and low levels of disposable income. In addition, NI has a different regulator, different regulatory environment and an all-island energy market that is not  the same as in  GB. As a result, we can take learnings from best practice and unsuccessful

projects elsewhere in GB, but often NI will require bespoke decarbonised energy solutions to ensure we meet our net zero commitments.

23.             As the NI budget is agreed through decisions made in Whitehall, this leaves the NI Executive with no recourse to raise funds through other means of taxation. The following points regarding funding for the  Net  Zero  transition in NI should be given  due consideration:

• Whitehall should take account of the set of circumstances noted above which NI uniquely experiences and this  should be appropriately mitigated in budgetary decisions to deliver against  “The Ten Point  Plan for a Green  Industrial Revolution”, the “UK Net Zero Strategy” and NI’s devolved net zero strategies currently in progress.

• Further devolved powers may be needed to enable NI  to raise funds  through other means.

Signals and Support for Business

24.             Businesses need clear direction in order to deliver  cross -economy decarbonisation to help inform relevant planning and investment  decisions.  Whilst  it  is acknowledged that  there is still much uncertainty  about the optimal route to achieving carbon budgets, where it can, the Net Zero Strategy should provide clear and timely signals through policy development and financial incentives that give assurance to businesses and empowers them to act. It is clear that if we are to achieve carbon budgets, collective action across public, private and third sector will  be required.

25.             Finally, further consideration of delivery functions and regulatory roles is required to understand the resource implications. Additional resource support for regulation of new and emerging technologies will be required by  existing  regulatory  bodies  as their remits expand.

I trust this response is of help in progressing the ongoing  Net  Zero  Governance  Review and my colleagues will be interested to read the outcome of this inquiry as it will provide useful information on the direction of the UKG and HMT in their  ambitions  to finance, and  the metrics they use, to reach Net Zero.

Yours sincerely

Michael Oliver

Departmental Assembly Liaison Officer

August 2021