The Bank of England will include green goals in its remit, by greening its corporate bond-buying programme from the end of 2021 after the government said that it must consider the UK’s pledge to eliminate greenhouse gas emissions.
What is Happening?
- Chancellor of the Exchequer Rishi Sunak said in his budget statement this week that Under the green upgrade, the Bank must support the government’s strategy to “level up opportunity in all parts of the UK” and to “transition in an environmentally sustainable and resilient net-zero economy,” according to the Treasury. The BOE says that it will provide more information about how it plans to adjust its corporate bond-buying programme to “account for the climate impact of the issuers.”
- Overall, the chancellor promised a “real commitment to green growth,” following research that showed the central bank is effectively subsidising polluting industries while claiming tackling climate change is a priority.
- The BOE plans to adopt the changes “by the time of our next scheduled round of reinvestment operations in the fourth quarter.”
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Chris Stark, chief executive of the independent Climate Change Committee, said the update to the BOE’s mandate was the “most significant announcement” on climate change in a budget that was otherwise largely devoid of green measures.
- Sunak also announced plans for a new task-force that would look for ways to boost the market for voluntary carbon offsets. He says that the group will seek to “position the city (London) as the global leader for voluntary high quality carbon offset markets.”
- However, the budget was not without flaws. Sunak devoted just two minutes of his budget speech to government plans to reach net-zero emissions, in which he promised “green” growth, innovation or jobs seven times. However, there was no mention of measures to encourage electric vehicles or the green homes grant, a scheme to subsidise insulation and low-carbon heating with grants of up to £10 000 (USD$13 000) per household.
- Sunak also kept fuel duty frozen for the 11th year in a row, which is likely to raise emissions by 300,000 tonnes this year.
- Carbon dioxide from transport, which makes up more than a third of the UK’s emissions, has stayed virtually the same this past decade as gains from people switching to electric vehicles have been nullified by an increasing number of people driving SUVs.
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