Philip Hammond argues UK must “apply the creativity of the marketplace” to solve climate change as he announces new energy efficiency, biodiversity, construction, and carbon offsetting policies

Environmental policies were at the centre of Philip Hammond’s attempts to woo younger voters in today’s Spring Statement, with the Chancellor unveiling a raft of new environmental initiatives covering housing, aviation, biodiversity and energy efficiency.

“Our challenge is to demonstrate to the next generation that our market economy can fulfill their aspirations and speak to their values,”

Hammond said, in a nod to waves of public protests in recent weeks, including strikes by UK schoolchildren, urging the government to take more radical action to battle climate change. But Hammond insisted the solution to the climate crisis lies in driving innovation in the private sector.

“As with the challenge of adapting to the digital age, so with the challenge of shaping the carbon neutral economy of the future, we must apply the creativity of the marketplace to deliver solutions to one of the most complex problems of our time, climate change, and build sustainability into the heart of our economic model,” he said.

Much of the new action was focused on cutting carbon emissions from the UK’s housing stock, after the government’s climate advisors, the Committee on Climate Change (CCC), warned earlier this year that UK homes fall well short of standards needed to meet climate targets.

The Chancellor today said he would adopt the CCC’s advice to end the use of fossil fuel heating systems in new homes from 2025 under a ‘Future Homes Standard’, with green alternatives such as heat pumps instead being installed as standard in all new homes. The standard will also require “world-leading” levels energy efficiency, the Chancellor said, adding that the standard will “deliver lower carbon and lower fuel bills”.

Hammond also said the government will launch a consultation later this year on increasing the proportion of ‘green gas’ onto the grid, in a bid to reduce UK use of natural gas.

Meanwhile, the Chancellor confirmed plans to require developers to deliver a “biodiversity net gain” for new domestic and commercial buildings.

Under the programme potential development sites will be ranked according to their current environmental importance, with developers then required to demonstrate an improvement in biodiversity by planting more trees for example, or creating green corridors to protect wildlife habitats.

Where green improvements cannot be made, developers will be liable to fund habitat protection and restoration schemes elsewhere in the country.

“Following consultation the government will use the forthcoming Environment Bill to mandate biodiversity net gain for development in England, ensuring that the delivery of much-needed infrastructure and housing is not at the expense of vital biodiversity,” Hammond confirmed.

Hammond was keen to point out there is “an economic, as well as an environmental case for protecting the natural world”, adding that later this year the government will launch a global review into the link between biodiversity and economic growth, headed by Professor Sir Partha Dasgupt from the University of Cambridge.

He also announced more support for small businesses to cut their energy bills.

Hammond also said he would launch a call for evidence on Offsetting Transport Emissions, which will consider whether travel providers such as airlines should be forced to offer carbon offsets. Hammond promised any scheme would have to offer “genuinely additional offsets” to avoid double counting issues.

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