U.K. Prime Minister Boris Johnson announced new climate goals this week, accelerating the country’s timeline to phase out fossil-fuel-powered cars and embracing nuclear energy. The plans show that Europe—even under conservative governments—is working on more ambitious climate goals than the U.S., at least at the federal level.
The move could boost several European companies, including those focused on renewables and those that are shifting their business to develop more clean energy. The government expects the plan to cost 12 billion pounds, or about $16 billion, and create 250,000 jobs.
Johnson’s 10-point plan accelerates an expected ban on new gasoline- and diesel-powered automobiles by a decade, to 2030 from 2040. Hybrid vehicle sales would be allowed until 2035. That puts the U.K. on track with Ireland and the Netherlands, both of which have similarly ambitious plans for electric vehicles. It could create challenges for car makers, however, unless they quickly pivot to electric vehicles.
(F) has been a market-share leader in the U.K. in recent years, for instance.
The U.K. plan also looks to boost nuclear, wind and hydrogen power, and zero-emission public transportation. And it commits the government to helping make industries like shipping and air travel transition to be more climate-friendly, given that both could take longer to decarbonize.
The Labour Party in the U.K. has criticized the 10-point plan as inadequate, and, in terms of financing, it commits a relatively small amount of money to green industries. U.S. President-Elect Joe Biden’s climate change plan would cost $2 trillion over four years, for instance. Biden also has a much higher goal for job creation, saying his plan could create 10 million jobs.
But in terms of rhetoric, the plan puts Johnson in league with Democrats, who argue that clean energy projects can stimulate job growth. Some Republicans have called Biden’s plan a jobs-killer that would lead to higher energy costs.
In general, European governments have been much more aggressive about tackling climate change. Their plans could lift several stocks there.
Johnson’s plans to boost offshore wind energy could lift companies like Ørsted, a Danish wind-power developer that says it has a 25% market share in global offshore wind. Ørsted (DNNGY) says its projects already produce enough wind power to serve 9.5 million people and it plans to grow that number to 30 million by 2025. The Johnson plan looks to quadruple offshore wind power capacity by 2040.
Renewable energy subsidies and policy support could also help companies that have traditionally operated in other industries.
Johnson’s plans to boost hydrogen power could help companies like
(BP), which has invested heavily in hydrogen projects as it pursues a goal of reaching net zero emissions by 2050. BP is actually partnering with Ørsted on a green hydrogen project at a BP refinery in Germany that has been traditionally used for natural gas.
(RYCEY), which is known for making engines, just announced a plan to build up to 16 small nuclear power plants in the U.K. It may get government support for those plants.
Write to Avi Salzman at [email protected]