It is hard to believe now that David Cameron fought and won the 2010 general election on a slogan of “Vote Blue, Go Green”. When it comes to climate change, the Conservatives have been on a journey. In 2015, the Cameron government helped deliver the landmark COP21 Paris agreement, which set the goal of limiting global warming to no more than 2 degrees above pre-industrial levels. Under Theresa May, Britain became the first country to pass legislation committing to cut greenhouse gas emissions to net zero by 2050. Her successor, Boris Johnson, presided over the successful COP26 summit in Glasgow, which adopted net zero by 2050 as a global target.
Now the Conservatives are led by Kemi Badenoch, who declared in a recent speech that “net zero by 2050 is impossible”. Claiming to tell the “unvarnished truth”, she said that “anyone who has done any serious analysis knows it cannot be achieved without a significant drop in our living standards or, worse, by bankrupting us”. There has “never, ever been a detailed plan for net zero”, she claimed, and the plans that do exist are “muddled”.
Perhaps it escaped Badenoch’s notice that just two weeks before she spoke the Climate Change Committee had published its seventh carbon budget, which provided a detailed plan for achieving net zero by 2050. Far from bankrupting the country, the official advisory body slashed its estimate of the net cost to reach net zero by 73 per cent compared to its 2020 forecast. It now thinks it will cost just 0.2 percent of GDP per year, or about £4bn, with between 40 and 90 per cent of the investment coming from the private sector.
Nonetheless, the Tory trajectory is no outlier. Across the developed world a political backlash is forming against climate action. This mood is spreading from the far right and now affects large swathes of the centre right. The European Parliament elections last year saw big swings to populist parties from the Greens on the back of opposition to net zero. Climate policy is a major dividing line in the current election in Canada and likely to be one later this year in Australia. Above all, the US now has a president in Donald Trump who says climate change is a “hoax”, wants to “drill, baby, drill”, and who has scrapped clean energy subsidies and pulled out of the Paris agreement.
The backlash is being fuelled in part by a sense that the global consensus on climate action is breaking down. Although the COP29 climate summit in Baku, Azerbaijan, at the end of last year managed to agree a new global climate finance goal, it was unable to agree on new emissions reduction commitments. It even dropped the previous year’s historic pledge to phase out fossil fuels. And, in December last year, a summit in Busan, South Korea, failed to rubber-stamp a deal to curb plastic production amid opposition from oil-producing countries led by Russia and Saudi Arabia. Indeed, with China and America, the world’s two biggest polluters, continuing to invest heavily in fossil fuels, it is an easy argument for European politicians that pursuing net zero is not only futile but an act of economic self-harm.
Yet the curious thing is that, while politicians such as Badenoch tend to frame their opposition to net zero in terms of the need to protect business, most businesses do not want climate policies to be weakened. It has become an article of faith in right-wing political and media circles that net zero policies are responsible for the high energy prices that are damaging industry. In fact, the opposite is true (and businesses know it). It is fossil fuels that are keeping prices high. A swift transition to clean energy is vital to reducing energy prices. What businesses crave is clarity and stability in policymaking. Those jumping on an anti-net zero bandwagon are offering neither.
It's true that some high-profile companies have been rowing back on past commitments to reduce their carbon footprints. This only adds to the concerns of a business backlash. BP and Shell are reducing investments in renewable energy and increasing investments in oil and gas. Some car-makers have called for a delay in the UK zero-emissions vehicle mandate (ZEV) designed to phase out sales of new petrol and diesel cars by 2030. Unilever, the consumer goods giant previously seen as a climate leader, last year scaled down its sustainability goals. An exodus of US banks from the Net Zero Banking Alliance has led the organisation to weaken its climate goals.
These are certainly troubling developments, though more nuanced than many critics allow. BP and Shell, for example, say that their changes of strategy are in response to pressure from shareholders. They claim this reflects the reality that delivering renewable energy is a very different business to extracting, refining and retailing fossil fuels, with very different risk and return profiles. But these firms and their shareholders are also clearly betting that the 2050 target will not be met, given that the International Energy Agency forecasts that, under its net zero scenario, demand for oil and gas will fall to a quarter of current levels so that no new fossil fuel production is needed.
That Shell and BP will no longer play a leading role in the transition is disappointing. But that transition does not depend on them. It depends on whether there are sufficient other companies with the appropriate expertise and capital structure—and being offered the right incentives—to create the new clean energy system. If Shell and BP are wrong, it is their shareholders who will suffer.
Meanwhile, car-makers hardly speak with one voice on plans to phase out sales of new petrol and diesel cars by 2030. All manufacturers initially welcomed the ZEV mandate because it gave them the certainty they needed to make the huge investments demanded by EV development and production. But now there is a split between those manufacturers, such as BMW, Mercedes, Hyundai and Toyota, on course to hit their EV quotas and those that are struggling. Stellantis blamed the ZEV mandate for its decision to close its Luton factory, for instance.
Nor should it be a surprise that, as frameworks for climate disclosures are toughened up, companies that set unrealistic targets are forced to revise their plans. It is becoming much harder for firms to engage in greenwashing. Even so, the global trend is that businesses are strengthening commitments to reduce their carbon footprints. The number of companies setting emissions targets under the Science Based Targets initiative (SBTi), a global non-profit organisation, grew from 164 in late 2018 to over 6,600 in November 2024. SBTi requires companies to set near-term goals to reduce emissions by at least 42 per cent from 2020 levels by 2030. For many, the pressure to set targets is being driven by both customers and investors.
Indeed, it is often the private sector pushing for tougher sustainability targets. The UN global plastics treaty scuppered by Saudi Arabia, Russia and Iran in December had the backing of a coalition of more than 275 businesses spanning plastics producers, consumer goods groups, financial institutions and waste management groups. Many of the world’s largest food manufacturers opposed the EU’s decision last year to delay new deforestation laws. In America, a coalition of 42 car makers is lobbying Trump not to kill off EV incentives and emissions regulations. They fear that a slower transition would put them at an even greater long-term disadvantage amid intense global competition with cheap Chinese EVs.
Similarly in Europe the private sector has led the opposition to a so-called Omnibus proposal from the Commission to weaken the European Union’s corporate sustainability reporting rules. A coalition of 150 investment firms signed an open letter last year calling for the broad framework to be respected. With extreme weather events becoming increasingly frequent, investors see accurate data on climate risks as central to managing their own exposures and ensuring that capital is allocated to sustainable businesses. While some banks, fearing reprisals from the Trump administration, may be shelving climate pledges, the risk of being saddled with stranded assets is a real concern for the financial sector.
Yet the Commission’s proposal, in response to political pressures following last year’s European Parliament elections, goes beyond a simplification of reporting requirements. It reduces the scope of the rules so that they apply only to companies with more than 1,000 employees, exempting 80 per cent of European businesses. It also limits disclosures only to risks among a company's immediate suppliers. But according to Sirta Pietikainen, a Finnish member of the European Parliament, it is businesses that have been lobbying hardest against the changes. She told me in a recent podcast interview: “There's a lot of financial companies, a lot of big companies, multinationals and nationals, coming and saying, look, please do not do that.”
What these businesses understand, but which seems lost in parts of the British public debate, is that the clean energy transition is already happening, regardless of what politicians do or say. It is being driven not just by businesses adopting their own transition plans but by technological developments, not least in China. While global emissions may not be falling fast enough to meet the Paris target, the pace of wind and solar installation has been exceeding all forecasts, year after year. That is in turn being driven by a collapse in clean energy costs. Over the last few decades, solar photovoltaic costs have fallen by 90 per cent, onshore wind is down 70 per cent and battery prices are down by more than 90 per cent. They will only get cheaper.
Indeed, the pace of clean technology adoption in some parts of the world is remarkable. Many experts now believe that China will reach peak emissions this year or next. In Pakistan, enough solar panels were imported last year to generate a third of the country’s current electricity consumption. Wholesale electricity prices in Spain and parts of America now fall to zero for extended parts of the day and year, handing them a big competitive advantage. Meanwhile, a tide of cheap Chinese EVs is transforming the global auto market. Chinese brands now account for 18 per cent of the market in Thailand, for example, and 9 per cent of the market in Brazil and Mexico. In the latter case this rate is up from effectively zero just five years ago.
Nor is the clean energy transition motivated solely by concern for the planet. In Europe, the transition to renewables is considered vital to energy security. Reducing reliance on foreign energy imports and exposure to volatile global energy prices improves economic resilience. Labour has been using the same argument to justify its plan to decarbonise Britain’s electricity grid by 2030. Indeed, such arguments will be central to an expected announcement that Labour will greenlight new nuclear power stations. Meanwhile, the growing energy demands of data centres is adding urgency to the need for new generation. By next year, the world’s data centres are forecast to consume as much power as the whole of Japan.
None of this is to suggest that there is no room for political debate on how net zero will be achieved. In fact, at one level, politicisation of climate action should be welcomed. Badenoch is right to say that too often targets were adopted without detailed plans for how to achieve them. Theresa May pushed through Britain’s net zero commitment in a piece of secondary legislation with minimal parliamentary debate. It is hardly surprising that, as targets are turned into policies, creating winners and losers, this process should be scrutinised and contested.
Indeed, much business criticism concerns not the climate targets, but the lack of joined-up policy to deliver them. British car-makers, for example, complain about the lack of incentives to encourage customers to buy EVs and the slow roll-out of charging infrastructure, which has undermined consumer confidence. If steelmakers are going to make the investments necessary to decarbonise, they need to know that there will be buyers for their more expensive green steel. If shipping companies are going to invest in greener fleets, they need to know that someone will be producing the green fuels needed to operate them.
Yet politicians like Badenoch who jump on the anti-net zero bandwagon are not offering anything so constructive. While “drill, baby, drill” may be an option for America it is not possible for Europeans, who lack fossil fuels to extract. Governments that succumb to the backlash will only slow the transition, penalising companies that have already invested in long-term sustainability. They will also give China an even greater competitive advantage.
Worse, at a time when Trump has just plunged the global economy into chaos and when businesses are crying out for stability and predictability, they risk creating additional uncertainty, undermining investment and long-term competitiveness. Just as well, then, that the Tories are at least four years away from power.
