68.The 25 Year Environment Plan (‘25 YEP’) sets out the Government’s goals to improve the environment within a generation. It encompasses multiple aspects of the natural environment, from air quality to access to green spaces, and therefore has significant potential to contribute to the growth of UK environmental jobs and skills in these areas. For instance, the England Trees Action Plan, one of the sectoral plans released under the 25 YEP, says thousands of green jobs will be created through tree-planting. The Resources and Waste Strategy released under the 25 YEP sets out the Government’s ambitions towards a circular economy; SUEZ told us 25,000 to 30,000 additional green jobs are needed in the waste and resources sector to achieve these objectives.
69.Achievement of the 25 YEP goals is reliant on a skilled green workforce to deliver the actions required. However, contributors have raised concerns about skills shortages affecting key 25 YEP policies such as the Environmental Land Management schemes (ELMS) and biodiversity net gain. In respect of ELMS, Mike Hemsley, of the CCC, told us ‘there is definitely a skills gap in training farmers and landowners to do the environmentally beneficial things we want to do with the land’. In our recent report Biodiversity in the UK: bloom or bust?, we identified a severe skills shortage in ecologists as barrier to achieving all of the Government’s biodiversity policies and highlighted a shortage of ecologists within local authorities to oversee biodiversity net gain. We recommended that Ministers invest in chartered ecology training and skills as part of the Government’s investment in green jobs. IEMA told us they had ‘received reports from a major infrastructure organisation of a lack of capability and capacity to meet […] ecology and biodiversity requirements, especially in the context of biodiversity net gain’ and that it was unclear whether ‘a forward-looking skills and jobs evaluation has been undertaken to ensure the capacity and capability is in place’ to achieve the Government’s circular economy ambitions. RSPB told us:
The UK workforce does not, and is not on track to, have the skills and capacity needed to deliver the green jobs required to meet its net zero target and other environmental ambitions (including in the 25-year environment plan). There is a risk that without investment in skills training now, there will be a nature skills (ecology, land management, species conservation) gap for new nature jobs that the economy needs for schemes such as ELMS, net-gain, and the Nature Recovery Network, which are needed to deliver the green jobs required to meet our net-zero target and other environmental ambitions (including in the 25-year environment plan).
70.Neither the 25 YEP nor any of the plans and strategies under the 25 YEP released to date, such as the Resources and Waste Strategy, the Clean Air Strategy, the England Trees Action Plan or the Peat Action Plan, include a plan for addressing skills shortages, or generating the jobs needed to deliver the required actions and outcomes. The NAO say to deliver its long-term environmental goals, the Government ‘will need to ensure that organisations across the delivery chain have access to the skills and resources they need to play their part’. In January 2021, the Public Accounts Committee said the Government had more to do to assess skills gaps and recommended that the Government ‘establish what skills gaps exist, across the key delivery partners and sectors, which are likely to inhibit government’s progress in achieving its environmental ambitions’, and ‘develop a realistic plan to close’ such gaps. IEMA called for ‘all new green policies, strategies and laws [to] be accompanied by an explicit consideration of the skills needed for effective implementation and a green skills plan setting out how any skills gaps will be addressed.’ This would include further sectoral strategies under the 25 YEP, such as the Nature Strategy, expected in autumn 2021.
71.When we asked what the Government was doing to understand and address skills shortages for delivery of the 25 YEP, Minister Pow told us ‘there is a huge amount of thinking going on in Defra’ and Defra was ‘working very hard, at pace, on a plan for what the skills gap actually is’. She told us:
One of the things that farmers are crying out for is to have advisers on the ground to help them steer their way through all the choices they will have for the new projects that they can get into in order to access the replacement for the basic payment, to access the [ELMS] funding. We are very conscious of that. There is a lot of work already started on it but also a great more to do, and we think our skills gap plan will help us to identify what exactly we need to focus on.
Defra’s Skills Gap Plan has the potential to be a valuable tool. To be effective, the Skills Gap Plan should identify both the skills and jobs needed to deliver the 25 YEP, assess the number of people employed currently in these jobs and in the pipeline, and include a plan of action to address any shortfalls identified. The Skills Gap Plan should be aligned with the sectoral strategies and plans already released under the 25 YEP and forthcoming plans, such as the Nature Strategy.
72.We have heard concerns that skills shortages will affect delivery of the Government’s long-term environmental goals, as set out in the 25 Year Environment Plan. It is welcome that Defra are currently working on a Skills Gap Plan to identify where there are skills shortages and collaborating with other departments on this.
73.We recommend that Defra’s Skills Gap Plan cover all areas of the 25 Year Environment Plan and be accompanied by an Action Plan to address skills shortages, developed in co-ordination with the Department for Education and stakeholders. The Skills Gap Plan and Action Plan ought to be published by March 2022 at the latest and aligned with Defra’s existing and forthcoming sectoral plans and strategies, such as the Waste and Resources, Clean Air, Trees, Peat and Nature strategies.
74.The transition to net zero will have an impact across the economy, as it will ‘require decarbonisation of all sectors.’ The Government tasked the Green Jobs Taskforce with identifying ‘options to support a just transition for people working in high carbon industries and enable them to mobilise their skills in support of net zero’, with ‘Just transition & retraining for high carbon workers’ listed as one of the Green Jobs Taskforce’s four priority workstreams.
75.The International Labour Organization (ILO) describes a just transition as a transition towards an environmentally sustainable economy that is well managed and contributes to the goals of decent work for all, social inclusion and the eradication of poverty. Samantha Smith, of the Just Transition Centre, told us that a just transition can be summarised roughly as ‘what the social partners—employers and unions, plus usually Governments—can negotiate to get this very rapid, ideally pretty smooth, process of bringing down emissions without putting a lot of people out of work or creating social unrest.’ BEIS told us:
Ensuring that our transition is a just and fair one for workers and households is a priority for this government. The government will make sure that our growing green economy is inclusive, benefitting people across the UK, supporting workers as industries transform and ensuring costs as well as the benefits are shared fairly, protecting consumers, workers and businesses.
This aligns with the Government’s levelling up ambitions, as set out in its Build Back Better policy paper.
76.We have heard that a just transition is important to ensure the wider public retain support for the net zero transition. Contributors told us public engagement will be important to a just transition. Luke Murphy, of the IPPR, said:
[…] it is about the development of a positive vision, so making sure that we are focused on the journey towards something positive rather than just away from something negative. The way in which you describe carbon-intensive jobs and communities that have a long history in that is quite important in that regard.
Contributors told us that engagement with education and training providers, employers and trade unions was also important. As noted in Chapter 1 for green jobs more widely, delivering a just transition to net zero will require collaboration across Government departments, including BEIS (net zero, energy and industrial strategy), DfE (skills), DWP (benefit, pension and employment support) and the Treasury, alongside co-ordination with local authorities and the devolved administrations.
77.While net zero is a UK-wide policy, we have heard that the impact of the transition will not fall evenly across the UK. Contributors told us there was a need to consider the impact on individual regions, as well as sectors. Luke Murphy, of the IPPR, said:
In Aberdeen, for instance, oil and gas workers make up over 10% of the local economy. Therefore, it is not just sectors we need to think about; it is about where they are placed and the impact it is going to have on these places, albeit recognising […] that some of these job losses can be offset by potential new opportunities.
Mike Hemsley, of the CCC, said while the Government was not expected to actively manage the whole transition, it should ‘at least do a risk assessment and form some kind of plan of where interventions are likely to be necessary.’ Groundwork say that the Government should identify where jobs may be lost and work with affected businesses and individuals to ensure they can access replacement jobs in low-carbon industries, such as home energy retrofit. Samantha Smith, of the Just Transition Centre, said the Government’s role included providing social protections while ‘jobs are changing and disappearing’, citing Spain, which provided a bridge to a pension for older mining workers. Martin Baxter, of IEMA, told us skills provision also required co-ordination at both a local and national level, to understand ‘first, where places are vulnerable and, secondly, what skills and capabilities they have that can be redeployed in the jobs market’. The Green Jobs Taskforce similarly recognised the need for regional, as well as sectoral, action, recommending that ‘where local economies depend on a source of high carbon employment, government should work with local government, employers and workers to diversify local economies, recognising the safety net that is already in place to support workers.’
78.The Government needs to understand where, regionally, the impacts of net zero will fall, in order to ensure its policies are supporting all regions and enabling replacement green jobs to flourish. Amy Jenkins, Deputy Director for Clean Growth, Green Finance and Sustainable Behaviours for Net Zero at BEIS, told us that, building on the sectoral work of the Green Jobs Taskforce report, the Government’s next focus would be on locations:
Clearly, the next step, to the conversation around new jobs created, is working out where those jobs created are likely to be and where they might offset some of the jobs that may no longer exist on account of our net zero transition and where there might be areas where we need to focus on other opportunities. That can be done at both a regional level and a sectoral level. […] In essence, the planning at a sectoral level has started. We are also using the taskforce to understand what the state of play is when it comes to regional planning […] so we are starting to understand how we deliver net zero at a local level, to understand what will be the deployment at a local level and what that means in terms of jobs.
On skills, Minister Keegan told us that local skills improvement plans would feed into the work of the new Skills and Productivity Board. The Skills and Productivity Board, and skills monitoring and assessment more widely, is discussed further in Chapter 4.
79.On support for communities beyond green job creation, such as pensions and employability support, we asked Minister Davies what work DWP had done to identify where support is most needed by those most affected by the transition to the net zero economy. She told us:
We have weekly labour market analysis, such as around furlough, and next week we have our updated jobs numbers, so we are constantly looking at this. As DWP, we have to plan for all scenarios in terms of what could be happening to the economy. […] We know that some sectors are going to come to a close and things are going to be difficult. We need to help people know and understand that transition. This is where we are working with Gillian [Keegan] and working with education about it not being a job for life; it is a life of jobs. […] There is the headline labour market strategy, and then there is the face-to-face support that you get at DWP. That is why we have things like our rapid response service. That is where, if we know there are large job losses coming down the line in a sector, in an area or in a particular company, we get in early to support people, because we know once you have a job it is much easier to transition into another one.
80.The Net Zero Strategy sets out the Government’s ambitions to ‘assess how local areas are working to support workers and communities with the net zero transition across England’; establish a Local Net Zero Forum to ‘support the establishment of clearer delivery roles for local government and provide a single engagement route into HM Government in a coordinated and coherent way’; expand the BEIS Local Programme to help places attract investment and support green jobs, and ‘motivate [and] build public acceptability for major changes’. These ambitions are welcome; what is needed now is a detailed, actionable plan to deliver these ambitions across the UK.
81.We welcome the Government’s commitment to ensuring regions are not left behind in the transition. To ensure this is delivered, it is vital that the Government carry out some planning for a just transition and how the Government intends to support it. This must include plans for public engagement to maintain public support for net zero, provision for wider support such as pensions and employability support, and ensuring local skills provision and (re-)training opportunities.
82.As action to deliver a just transition will require collaboration across Government and co-ordination with local government and the devolved administrations, the plan also needs to set out departmental responsibilities, and monitoring and co-ordinating arrangements. This plan might be included alongside the document setting out departmental responsibilities and funding, recommended in Chapter 1. The Government’s plan for a just transition should also consider replacement jobs in green sectors less directly related to net zero, such as nature and the circular economy.
83.Some regions will be particularly affected by the transition. While the Government cannot actively manage the whole transition, it is important to assess where impacts will fall to ensure there are policies for support and replacement green jobs in place, in line with the Government’s levelling up ambitions.
b)assess regional as well as sectoral impact, to ensure regional skills transitioning plus employment and pensions support is in place; and
As cross-departmental action is required, this plan should set out the departments or bodies co-ordinating just transition action and each department’s responsibilities, alongside plans for monitoring progress and co-ordinating with local authorities and the devolved administrations. The just transition plan should also include plans for stimulating replacement jobs in green sectors less directly related to net zero, such as nature and the circular economy.
85.CCC say ‘the design of policies to reduce UK manufacturing emissions must ensure that it does not damage UK manufacturers’ competitiveness and drive manufacturing overseas’, a problem known as ‘carbon leakage’. The UK currently addresses carbon leakage by requiring large manufacturers to pay for emissions allowances from an Emissions Trading Scheme (ETS), with free allowances available to manufacturers at risk of carbon leakage. CCC say this alone is unlikely to incentivise long-term decarbonisation in the UK, and recommends work commence on developing either a carbon border adjustment mechanism (CBAM) or minimum imports standards. A CBAM, also called a ‘border carbon tariff’ or ‘carbon border tax’, is a tax at the border on imported products based on their embedded emissions, or carbon footprint. CBAM would end the need for free allowances and could prompt other manufacturing countries to decarbonise.
86.No jurisdiction currently applies a CBAM. The European Commission has proposed the introduction of an EU-wide CBAM from 2023 as part of its European Green Deal: its proposal was released in July 2021. A UK CBAM would need to comply with World Trade Organisation (WTO) rules, which aim to prevent discrimination between domestic and imported products, and between WTO member imports. There are technical and practical challenges around determining industry and product coverage and calculating the amount of carbon emitted in the production process of imports. CCC say fair and effective CBAM proposals need to consider the economic challenges all countries face in the covid-19 recovery, particularly developing countries. In our Growing back better: putting nature and net zero at the heart of the economic recovery report, we recommended the Government investigate the merits of CBAM, to accompany work on a carbon tax, as one way of addressing carbon leakage, recognising this would also require measures to ensure that such policies do not adversely impact developing countries.
87.Green Alliance told us that a UK CBAM would ‘increase the impetus for all trading partners to lower carbon emissions and prevent carbon leakage’. Libby Peake, of the Green Alliance, told us that ‘the UK should absolutely be developing border carbon adjustment’, with the caveats that this should be considered as part of a package of measures to combat job and carbon leakage, and that there were ‘considerable practical and legal challenges’ to be overcome. EDF told us that:
Approaches such as Carbon Border Adjustment Mechanisms (CBAM) are gaining greater prominence within the EU; while there will be serious practical challenges in converting these concepts into practical mechanisms, they have the potential to protect domestic industries from unfair carbon competition while giving international competitors incentives to introduce comparable carbon pricing. These approaches are worthy of further exploration in a UK context.
E.ON also suggested that CBAM be considered as a lever to help energy intensive industries to decarbonise, while not being ‘disadvantaged compared to imports which are produced from higher carbon energy systems.’ Peter Walters, of the Chemical Industries Association, told us that to be effective, a carbon border adjustment measure ‘must provide sufficient carbon leakage protection and be accompanied by a framework of supporting policy to help business invest in the net zero transition, without also restricting trade for UK manufacturers.’
88.The Government’s Industrial Decarbonisation Strategy suggests that carbon leakage could be addressed ‘through a range of policy approaches including climate diplomacy and treating imports in ways that seek to compensate for the competitiveness impacts of any asymmetries between trading partners’ climate policies’ and that ‘in the immediate future, government’s preferred method for mitigating the risk of carbon leakage will continue to be free allocation of UK ETS emissions allowances, which will be decreasing throughout the 2020s’. Amy Jenkins, of BEIS, told us:
First and foremost, the Government are very much looking at climate diplomacy—we obviously have the G7 and we will be working towards COP26 at the end of this year—to make sure others are acting in step with us and are upping their ambition. At the same time, we are very much looking through that net zero review from Treasury at what other measures there might be to help mitigate any risk of carbon leakage.
89.The Treasury’s Interim Net Zero review did not mention CBAM specifically, but noted that carbon leakage risks could increase without domestic and international mitigation, with ‘treatment of imports’ included in its list of potential options for mitigation. The final report of the Treasury’s Net Zero Review discussed CBAM among possible policy options to manage the risk of future carbon leakage, noting that ‘any proposal to introduce a CBAM’ would need to consider WTO legality, methodological issues, consumer and business impacts and market effects, and concluding that ‘further work is required’ to understand the risks of carbon leakage, the relative merits of different policy responses and the implications of other jurisdictions’ actions to address carbon leakage concerns. The Government’s response to our recommendation on CBAM in our Growing back better: putting nature and net zero at the heart of the economic recovery report acknowledged the importance of addressing the risk of carbon leakage. In relation to CBAM, the Government told us:
[…] any trade policy measure must comply with the UK’s Free Trade Agreement (FTA) obligations and World Trade Organisation rules and it is not yet clear how a Carbon Border Adjustment Mechanism (CBAM) could be implemented in compliance with this and how effective it would be.
We consider the risk of carbon leakage to the Government’s green ambitions an important issue which deserves greater awareness; in September 2021 we launched a new inquiry, Carbon Border Adjustment Mechanism, to examine the role a CBAM could play in meeting the UK’s environmental objectives and the issues to be addressed in designing such a scheme.
90.There is a risk that the net zero transition could lead to UK job and skills losses if carbon-emitting industries simply move overseas. A carbon border adjustment mechanism (CBAM), recommended in our report ‘Growing back better: putting nature and net zero at the heart of the economic recovery’, should be considered as part of measures to address this.
91.The Government needs to set out in its just transition plan how it will address this risk. During 2021, the Government should conduct analysis into how a UK CBAM could comply with international trade obligations.
Case study: The oil and gas industry in transition
Oil and Gas UK (OGUK) estimates that in 2030, the oil and gas sector will support over 190,000 jobs, compared to approximately 270,000 in 2019. CCC say that the UK’s oil and gas sector is ‘likely to be heavily affected’ by 2050 due to falling international demand for oil and gas, with oil and gas production from the UK Continental Shelf ‘already projected to reduce over coming decades’.
Contributors told us that there were opportunities for those in the oil and gas sector to transfer into roles in offshore wind, carbon capture usage and storage (CCUS), hydrogen, and decommissioning. Platform told us workers had faced barriers in accessing new jobs and re-training in offshore wind, including job vacancies requiring offshore wind experience and expensive retraining courses.
Andrew Mennear, of BP, told us the underlying skills for CCUS and hydrogen would be science, technology, engineering and mathematics (STEM) skills. He told us:
[…] a lot of the new energy infrastructure will be built in the heavily industrialised areas—many of the areas of the country that are identified as being the targets for levelling up. It will create a lot of opportunities in terms of social mobility as well as locally.
185 GOV.UK, (January 2018). The 10 goals set out in the 25 YEP are: Clean air; Clean and plentiful water; Thriving plants and wildlife; A reduced risk of harm from environmental hazards such as flooding and drought; Using resources from nature more sustainably and efficiently; Enhanced beauty, heritage and engagement with the natural environment; Mitigating and adapting to climate change; Minimising waste; Managing exposure to chemicals; and Enhancing biosecurity.
186 GOV.UK, (May 2021), p. 19
187 GOV.UK, (December 2018), p. 7, 31–34, 60–62
188 SUEZ recycling and recovery UK Ltd ()
190 Environmental Audit Committee, First Report of Session 2021–22, , HC 136, Summary
191 Ibid., para 81
192 IEMA - Institute of Environmental Management and Assessment ()
193 RSPB ()
194 GOV.UK, (December 2018)
195 GOV.UK (January 2019)
196 GOV.UK, (May 2021)
197 GOV.UK, (May 2021)
198 National Audit Office, , HC (2019–21) 958, p. 45
199 Public Accounts Committee, , HC 927, Summary, para 4
200 IEMA - Institute of Environmental Management and Assessment ()
201 National Audit Office, HC (2019–21) 1035, p. 44–45
204 IEMA - Institute of Environmental Management and Assessment ()
205 Department for Business, Energy and Industrial Strategy ()
206 GOV.UK, (December 2020), p. 1–2
207 ILO, (2015), p.4
209 Department for Business, Energy and Industrial Strategy ()
210 GOV.UK, , accessed 11 October 2021
212 ; ; ; ; ; Transition Economics (), Platform ()
214 ; ; ; ; ; National Union of Rail, Maritime & Transport Workers (RMT) (); Transition Economics (), Public and Commercial Services (PCS) trade union (); Platform (); Green New Deal UK (); Greener Jobs Alliance (); Association of Colleges ()
215 ; UK Women’s Budget Group (); Biomass UK (); RSPB (); Royal Society of Chemistry (); BSW Timber Group (); Electricity North West ()
216 ; ; UK Women’s Budget Group (); Professor Dave Reay (Chair in Carbon Management & Education at School of Geosciences, University of Edinburgh); Katrine Petersen (Campaign Manager - Narratives at Grantham Institute - Climate Change and Environment at Imperial College London) (), IEMA - Institute of Environmental Management and Assessment (); Solar Trade Association (); Electricity North West (); SUEZ recycling and recovery UK Ltd (); Greener Jobs Alliance (); NNB Generation Company (SZC) Ltd; Laing O’Rourke; Doosan Babcock; EDF Energy; EDF Energy; NNB Generation Company (SZC) Ltd; Agilia Infrastructure Partners (); Chartered Institution of Wastes Management; WAMITAB; UK Resources Council, SUEZ Recycling and Recovery UK Ltd ()
219 Groundwork UK ()
220 ; ;
222 GOV.UK, (July 2021), p. 72
226 GOV.UK, (October 2021), p. 239, 264, 269, 280
227 Climate Change Committee, (December 2020), p. 43
228 Climate Change Committee, (December 2020), p. 101
229 Ibid., p. 102, 104
230 Climate Change Committee, , December 2020, p. 34
231 Ibid., p. 293
232 European Union, , accessed 11 October 2021
233 Institute for Public Policy Research, (June 2021) p. 12
234 Ibid., p. 13
235 Climate Change Committee, (December 2020), p. 347
236 Environmental Audit Committee, Third Report of Session 2019–21, , HC 347, para 229
237 Green Alliance ()
239 EDF ()
240 E.ON ()
242 GOV.UK, (March 2021), p. 23, 35
244 GOV.UK, (December 2020), p. 62, 67
245 GOV.UK, (October 2021), p. 22, 37–39, 42
246 Environmental Audit Committee, Second Special Report of Session 2021–22, , HC 327, para 38
248 Environmental Audit Committee, , accessed 5 October 2021
249 OGUK ()
250 Climate Change Committee, (December 2020), p. 285
251 Department for Business, Energy and Industrial Strategy ()
252 Engineering Construction Industry Training Board (ECITB) ()
253 OGUK ()
254 National Union of Rail, Maritime & Transport Workers (RMT) ()
255 Platform ()