Background
Our members' investment capacity could support up to one-third of the total c£2.7trn of investment needed up to 2035 to hit the UK government's Net Zero target (which assumes a 78% reduction in carbon emissions against the 1990 baseline by 2035) - equivalent to c£60bn of investment from our sector each year.
However, unlocking the full investment capacity requires an increase in the supply of opportunities, reductions in complexity of the investment process and improvements to the financial attractiveness of the available investments.
Despite our sector being well-positioned to invest for the long-term and having capacity to deliver a significant proportion of the required Net Zero investment, barriers exist to full deployment of our members’ investment capacity.
Action is urgently required to address these constraints – the Government has an opportunity to act now to ensure as much of the insurance and long-term savings sector’s investment potential as possible is deployed, but time is running out.
Progress Update
We strongly welcome the Government’s ongoing commitment to reforming the Solvency II regime and introducing Solvency UK.
These reforms can unlock £100billion for investment in productive infrastructure and the transition to net zero, while maintaining world leading standards of policy holder protection.
We look forward to continuing to work with the Government to implement these important reforms. To maximise our sector’s investment capacity, it is crucial that the Government provides a clear pipeline of investment opportunities. It is important that the Government continues to send strong signals to markets about the growth opportunities it sees in Net Zero technology to enable sustained investment.
We therefore welcomed the publication of the its plan to strengthen Britain’s long-term energy security and independence, ‘Powering Up Britain’.
It is right for this strategy to emphasise speeding up delivery of large-scale energy projects alongside targeted support for technology innovations where the UK can become a world leader.
As a sector that offers both investment capacity and risk management expertise, we urge the Government to work closely with our sector to support these projects to be a success.