Sustainability is a big topic in the upcoming UK general election, as it has been for a few years now, but is there any different between the political parties? Both promise net zero by 2050, but is there anything else? Dominic Rowles writes

As the planet nears critical climate and nature-related tipping points, the next government will play a crucial role in steering us towards a sustainable future. Getting to net zero by 2050 is an objective shared by both major parties, but while they agree on the destination, the way we get there is hotly contested. With that in mind, we examine the two main parties’ plans, and how they could impact investors.

What the Conservatives are promising

The Conservative Party has rowed back on some of its environmental commitments in recent months, emphasising that the net zero transition should not impact living standards, and energy security should be prioritised.

The Conservatives plan to continue licensing oil and gas production in the North Sea to protect jobs and ensure energy security, retaining the windfall tax until 2028-29 unless prices normalise sooner. The party aims to accelerate the transition to renewables by tripling offshore wind capacity, building a new carbon capture facility, expanding nuclear power, and adding new gas power stations to support renewables.

They also pledge to ensure the annual policy costs and levies on household energy bills are lower in each year of the next Parliament than they were in 2023. Additionally, the Conservatives plan to implement carbon pricing on imports of steel, iron, aluminium, ceramics, and cement to ensure a level playing field with countries not taking action on climate change. Lastly, they propose reforming the Climate Change Committee to focus on household costs and energy security.

Labour’s sustainability pledges

The Labour party’s flagship sustainability pledge is to create Great British Energy, a publicly-owned clean power company aimed at boosting energy security and cutting bills, with the goal of fully decarbonising the electricity grid by 2030. They plan to fund this by increasing the windfall tax on oil and gas companies and removing loopholes that allow oil & gas companies to lower their windfall tax bill.

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Labour also proposes severe fines for water companies that pollute rivers and new regulatory powers to block bonuses until issues are addressed. They will not approve new North Sea projects, avoid new coal licenses, and ban fracking permanently.

Other pledges include reinstating the 2030 ban on new petrol and diesel vehicle sales, which the Conservatives moved to 2035 last year, and supporting a carbon border adjustment mechanism to help protect British industries during the transition to net zero. Finally, labour would mandate UK-regulated financial institutions – including banks, asset managers, pension funds, and insurers – and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement.

However, in early 2024, Labour made a significant u-turn on a major green spending pledge, scaling back its commitment to invest £28bn annually in climate initiatives, citing economic constraints and a need to prioritise fiscal responsibility, which drew criticism from environmental groups and sparked a debate within the party about balancing green ambitions with financial prudence.

Commitments other political parties have made

While only two parties are likely to form the next government, smaller parties could play crucial roles if no party secures a majority. These parties will also hold the government accountable and contribute to key debates on sustainability. Their approaches are incredibly diverse – from Reform UK, which wants to scrap the UK’s net zero target altogether, to the Green Party, which wants to reach net zero at least a decade earlier than the current 2050 target.

Beyond their net zero goals, the Liberal Democrats plan to make homes warmer and cheaper to heat through free insulation and heat pumps for low-income households, as well as driving a rooftop solar revolution. Reform UK advocates for ending renewable energy subsidies and fast-tracking North Sea gas and oil licenses, along with supporting new nuclear energy projects. The Green Party wants to generate 70% of our electricity from wind by 2030, cancel oil and gas drilling licenses, invest £40bn annually in the green economy, introduce a carbon tax, and bring key utilities into public ownership.

The Scottish National Party emphasises a just transition for the North East’s oil & gas-dependent region, promoting Scotland’s hydrogen export potential and the Acorn carbon capture project.

Finally, Plaid Cymru seeks to increase green jobs, gain full control over Wales’s natural resources, expand the national renewable energy company Ynni Cymru, and implement a long-term retrofitting plan to enhance energy efficiency in existing properties.

Dominic Rowles is the lead ESG analyst at Hargreaves Lansdown