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Delivering net zero is not at option but an obligation to protect future generations

Read our comment below on the UK Government net zero policy announcement:

Sam Hollister, Head of Market Insight at LCP Delta said: “Delivering net zero is not an option but an obligation to protect future generations. The UK needs to invest billions to make the transition, and that means attracting international capital. Changes in policy increase uncertainty and that in turn increases the cost of this capital and LCP Delta analysis says an increase of just 1% WACC (Weighted Average Cost of Capital) will increase the cost of delivering the power generation infrastructure to meet net zero by £35bn, and this quickly increases to £75bn if the cost of capital increases by 2%.”

Mark Watts, Investment Partner at LCP, added: “Uncertainty equals risk and the reality is that in many areas, companies that need to research, develop, and invest, will now be faced with that uncertainty following the Prime Minister’s Net Zero pledge announcements.”

“What we need to see now are frank and open discussions on green investment policy – with pace – to ensure that any perceived slippage from the announcements are more than made up for by clarity that drives real investment and activity.”

“The PM’s announcement of plans to invest in or create a more conducive environment for carbon capture, small modular reactors, and grid infrastructure is welcome. More money for funds to invest to help tackle climate change is also welcome but we feel there is far more capital to be mobilised in the UK. The Mansion House speech and the Mansion House Compact give us some clear direction in terms of how we might activate UK patient capital. We continue to advocate that more should be done to free up capital to invest in the energy transition, but the UK is not alone in this regard. We live in a global market where capital is truly mobile, a robust and predictable framework would certainly go a long way to attracting capital to the UK.”

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