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IMF Country Report No. 22/286
UNITED KINGDOM
TECHNICAL ASSISTANCE REPORT – PUBLIC INVESTMENT MANAGEMENT ASSESSMENT: CLIMATE CHANGE MODULE
September 2022
This Technical Assistance Paper on the United Kingdom was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in October 2021.
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Title page
FISCAL AFFAIRS DEPARTMENT
United Kingdom
Public Investment Management Assessment:
Climate Change Module
Carolina Renteria, Bryn Battersby, Carlos Mulas Granados, Michelle Stone, Tjeerd Tim, Murray Petrie
Technical Report
March 2022
Contents
ABBREVIATIONS
PREFACE
EXECUTIVE SUMMARY
I. CLIMATE CHANGE AND THE UK
A. Climate Change Framework in the UK
B. Climate Change Objectives and Strategies
C. Climate Change and Public Infrastructure in the UK
II. CLIMATE CHANGE AND PUBLIC INVESTMENT MANAGEMENT ASSESSSMENT
A. Climate PIMA Framework
B. Detailed Assessment and Recommendations
C. Cross-Cutting Issues
BOXES
1. Spending Reviews and Timing of Capital Spending Decisions
2. Spending Review 2021 and Climate Change
3. Eligible Expenditures and Reporting for UK Green Gilts
4. Examples of NAO Climate-Change Related Value for Money Audits
5. The Government Property Register: Measuring the Climate Impact of Government Property.
FIGURES
1. Climate PIMA Results
2. Climate Change Governance Framework in the UK
3. GHG-Emission Per Capita of 20 Major GHG-Emitting Economies
4. C02-Emissions in Mt, by Sector, 1990–2020
5. Climate Public Investment Management Assessment Framework
6. The Legal Anchor, Strategies, and Sectoral Plans Guiding Climate Related Public Investment.
7. Excerpt from the NZS: Total Annual Investment Requirements to Achieve Net Zero Pathway
8. Business Case Development Framework
9. Incorporating Climate into Project Development and Decision Making in the UK
10. CCC Estimates on Infrastructure-Related Risks and Opportunities by Urgency Score
11. OBR’s Scenario Analysis
12. Valuation of Risks and Opportunities for Infrastructure Related to Climate Change
TABLES
1. Climate PIMA Summary Scoring
2. Summary Climate-PIMA Recommendations
3. Carbon Budgets and the Pathway to Net-Zero
4. GHG-Emission Per Capita and GDP (excl. LULUCF)
5. NAP 2018–23 Climate Change Risk Priority Areas
6. Local Government Climate Action
7. Incorporation of Climate Aspects into PPP Guidance
8. Exposure of Infrastructure Assets to Coastal Flooding
ANNEXES
1. Action Plan
2. Climate-PIMA Detailed Scoring
3. Climate-PIMA Assessment Framework
4. Government Commitments vs CCC Pathway 2025–35
5. Types of Private Involvement in Infrastructure in the UK
6. United Kingdom: Key Guidance on Incorporating Climate Impacts into Project Appraisal
7. The Netherlands’Governance Approach for a Nation-Wide Energy Transition
8. Climate Change and Green Budgeting
9. Maintenance in the Transport Sector Addresses both Adaptation and Mitigation
10. The UK Government’s Ambition for Climate Capabilities Across Government
Abbreviations
| ALB | Arms-Length body |
| C-PIMA | Climate PIMA |
| CCA | Climate Change Act |
| CCC | Climate Change Committee |
| CCUS | Carbon Capture, Use and Storage |
| CCRA | Climate Change Risk Assessment |
| CfD | Contracts for Difference |
| CGS | Clean Growth Strategy |
| DBEIS | Department for Business, Energy and Industrial Strategy |
| DEFRA | Department for Environment, Food and Rural Affairs |
| DfT | Department for Transport |
| DLUHC | Department for Levelling Up, Housing and Communities |
| EIB | European Infrastructure Bank |
| Eurost at | Statistical Agency of the European Union |
| GHG | Greenhouse Gas |
| GMPP | Government Major Projects Portfolio |
| HMT | Her Majesty’s Treasury |
| IPA | Infrastructure and Projects Authority |
| NAP | National Adaptation Programme |
| NAO | National Audit Office |
| NI | Northern Ireland |
| NIC | National Infrastructure Commission |
| NPPF | National Planning Policy Framework |
| NZ | Net Zero |
| NZS | Net Zero Strategy |
| OBR | Office of Budget Responsibility |
| ONS | Office of National Statistics |
| OSCAR | Online System for Central Accounting and Reporting |
| PC | Public Corporations |
| PFI | Private Finance Initiative |
| PF2 | Successor Framework to the Private Finance Initiative |
| PIMA | Public Investment Management Assessment |
| PPP | Public-Private Partnership |
| RAB | Regulated Asset Base |
| SOE | State Owned Enterprise |
| UK | United Kingdom |
| UKIB | UK Infrastructure Bank |
| UKGI | UK Government Investments |
| VfM | Value for Money |
Preface
At the request of the Chancellor of the Exchequer, a team from the IMF’s Fiscal Affairs Department (FAD) undertook a remote Climate Public Investment Management Assessment (C-PIMA) during September 20 to October 5, 2021. The assessment also incorporates information from relevant strategic documents that were later published, the Net Zero Strategy (October 19, 2021) and the Autumn Budget and Spending Review 2021 (October 27, 2021). The assessment was conducted remotely given health and travel related restrictions in place due to the COVID-19 pandemic. The mission team was led by Ms. Carolina Renteria and included Mr. Bryn Battersby, Ms. Michelle Stone, Mr. Tjeerd Tim (all FAD), Mr. Carlos Mulas Granados (European Department) and Mr. Murray Petrie (FAD short term expert). Mr. Tommy Chrimes from the UK IMF ED Office joined some meetings.
The mission team met from the HM Treasury with the Director for Climate, Energy and the Environment Mr. Steve Field, Deputy Director, Climate Policy, Mr. Joe Taylor, Deputy Director, Energy, Environment and Agriculture, Mr. Jon Fuller, Mr. Ant Parham and Mr. Tom Gourd. From the Green Book team, the mission met with Mr. JP Spencer (Head of Green Book and Major Projects Unit), Mr. Joseph Lowe, Ms. Liz Cronin and Ms. Ibitoye Ibukunoluwa. The mission also met Mr. John Arnold and Mr. Harry Fallowfield of the Infrastructure Strategy Branch, Ms. Dominique Lam (Head of Innovative Finance Branch) and Mr. Harry Pellegrini (Head of Green Finance Legislation) and staff from their teams.
From Departments and Agencies, the team met the Department for Business, Energy and Industrial Strategy (BEIS) Mr. Henry Green, Ms. Gemma Mabin; from the Department for Environment, Food and Rural Affairs (DEFRA) Mr. Tom Handysides, Mr. Nigel Miller; Ms. Caroline Povey and team members; from the Department for Levelling Up, Housing and Communities (DLUHC) Mr. Aaron Gould; from the Department for Transport (DFT) Mr. Bob Moran; from National Highways Mr. Ivan LeFevre, and Mr. Elliot Shaw; and from Network Rail, Mr. Steven Hart and Ms. Helen McAllister.
In addition, the team met with the Climate Change Committee (CCC), Mr. Michael Thompson; from the Infrastructure and Projects Authority (IPA) with Ms. Hariom Newport, Mr. Mark Hunter, Mr. Simon Lawrence, Mr. Daniel Byrne, Mr. William Varah and Mr. Matthew Vickerstaff; from the National Audit Office (NAO) Ms. Katy Losse, Ms. Shoko Okamura and Ms. Emma Taylor; from the National Infrastructure Commission (NIC) Mr. Ed Beard, Ms. Joanna Campbell, Mr. Jonathan Chappel; from the Office for National Statistics (ONS), Mr. Ian Townsend, Ms. Nicole Shearman and team members; from UK Government Investments (UKGI) Ms. Lucie Lambert, Mr. Patrick Daniel, Ms. Siobhan Duffy; from the UK Infrastructure Bank, Ms. Alison Doyle, Mr. Mark Howat, Ms. Helen Williams; from the UK Office of Budget Responsibility (OBR), Mr. Richard Hughes, Mr. Andy King, Mr. Thomas Wickstead and team members.
The mission team would like to thank the UK government for their cooperation and their participation in constructive discussions during the mission. The mission would especially like to thank Mr. Mark Anderson, Ms. Heather Britton and Mr. Ant Parham for their support in organizing the mission.
