A net zero target would present an unparalleled opportunity for UK green business - provided government matches it with bolder policy making
In recent years, a growing number of business across the UK economy have taken a leap in setting net zero emissions targets. The scale of ambition required for companies such as BT, John Lewis and Tesco to meet a net zero target should not be underestimated, and these companies should be applauded for their market leading position, which puts them well ahead not just of their competitors but of even our national climate targets.
But today a group of firms committed to driving net zero strategies forward warned they would be unlikely to meet their goals unless the government steps up its game.
"We have set an ambitious net zero by 2045 target, but we need collaboration and policy support to realise it," argued Andy Wales, chief digital impact and sustainability officer, BT Group.
A net zero target will "require clarity from government on the pathway going forward as these global issues require long-term planning and structural changes and not just quick fixes," added Alexander Law, public affairs manager at Michelin Tyre.
"We call on government to provide leadership so we can all play our part in addressing the risk of climate change," echoed Sarah Handley, carbon neutral programme manager at Siemens plc.
The intervention comes at a critical time, with the government's climate watchdog - the Committee on Climate Change - due to issue its report next month on whether the UK should ramp up its existing carbon reduction targets to meet a net zero ambition.
What business says it needs to make such a goal work in the real economy really matters. It matters because a net zero emissions economy, by its very nature, means there is no sector that can hide. Every business in every industry across the country will be affected by target, whether that means reshaping entire business strategies to eliminate emissions from the ground up, to paying out for hefty offsets to cover emissions we don't yet have the answers for.
In this context, designing a net zero approach to government policy that works for the UK's business community is essential.
The Aldersgate Group, an alliance of leaders from business, politics and civil society working to drive action for a sustainable economy, is at the very heart of this debate. Today, alongside orchestrating the business calls for action, it has released two detailed reports outlining both the scope of opportunity presented by a net zero target, and what business needs from government to get there.
The first of the two papers, compiled by Vivid Economis and the UK Energy Research Centre (UKERC) on behalf of the Aldersgate Group, considers what will be needed to accelerate net zero innovation - how to scale carbon capture and storage technology for example, eliminate emissions from buildings, or decarbonise air travel.
It considers what lessons there are to be learned from previous innovation cycles, from the adoption of smartphones to the rollout of a domestic gas grid and the shift to debit cards over cash and cheque transactions. "An important feature of the assessment is that we define innovation as learning that occurs during R&D, demonstration and the early stages of deployment," it points out. "The lessons are therefore intended to accelerate learning related to any technologies that are not yet widely deployed."
It's core conclusion is that government must find a way to move past its "fear of failure" when it comes to innovation policy, taking bolder bets and larger leaps into the unknown to accelerate the development and scaling of big ticket climate solutions such as Carbon Capture, Storage and Use technology (CCUS) or net zero industrial clusters. Officials can learn just as much from unsuccessful trials as from those which have gone well, the study contends.
The government has shown its willingness to support these technologies - with hydrogen gas grid trial slated to start in Keele later this year and £170m of government funding earmarked for a low-carbon industrial cluster by 2030 - but Whitehall needs to be thinking bigger in terms of the scale and number of such schemes, the paper suggests.
After all, backing technologies at scale was critical to the rollout of ATMs and the transition from town gas - or coal gas - to natural gas, and government must be prepared to once again dip not just its toe in the water, but a whole leg.
"Businesses want to see the government's innovation policy move beyond the 'fear of failure' and trial critical technologies such as CCS and hydrogen at scale in order to inform key policy decisions in areas such as heat and industrial decarbonisation," commented Nick Molho, executive director of the Aldersgate Group.
Other key recommendations, based on learnings from the past, include the importance of building trust among the public for new technologies with the use of certified standards, information sharing and rapid reponse to concerns. It's also important government co-ordinates the rollout of low-carbon technologies with digital services, which together can work to make life better - easier, cheaper and more comfortable - for the consumer than the incumbent systems.
The second report, written by the Aldersgate Group, sets out the key policy measures that should accompany any official net zero policy target introduced by government. Firstly, and perhaps most obviously, government will need to accelerate action to address the shortfall in existing carbon budgets. After all, as the paper points out, the UK is not currently track to meet its targets under carbon budgets four and five. If the UK is to make net zero emissions a reality, it stands to reason it must get beyond the 80 per cent reduction line first - and that means better policies to ensure existing targets are met.
Secondly, a net zero target must be set as quickly as possible, to give businesses the maximum time to plan ahead for the transition and put long-term investment strategies in place.
And perhaps most crucially, government must pay much more attention to life cycle emissions when designing policy.
Eliminating the emissions associated with making a product, as well as its transport and use, will be a critical component of the net zero transition, and is likely to demand fundamental change to a whole host of business models across the corporate landscape. But the Aldersgate Group argues businesses currently have little incentive to adopt new business models, a risky process for most firms. The government will need to offer both technical support and targeted funding to give firms the breathing space to trial new approaches. This must come alongside efforts to drive the market for net zero carbon infrastructure, products and services through tough product standards. "Such measures will play a key role in stimulating the growth of domestic zero carbon supply chains and help to reduce the UK's imported emissions, while ensuring there is a level playing field in the market," the paper states.
Other target areas for policy reform include more focus on supporting the UK workforce's transition to low-carbon roles, improving local funding systems for green development, and harnessing the UK's diplomatic reach to sell the idea of 'net zero' abroad, so as to build new international markets for net zero products and services.
"The challenge ahead is significant, but so is the opportunity," the paper concludes. "The Aldersgate Group's engagement with a broad cross-section of businesses, many of whom have already set their own net zero commitments and science-based targets, has demonstrated optimism that there is a significant industrial and export opportunity for the UK if it is an early mover in setting a net zero target, as long as it is underpinned by a supportive policy package."
In response to the report, a spokesperson for the Department of Business, Energy and Industrial Strategy said: "The UK is a world leader in tackling climate change, and through our modern Industrial Strategy we will continue to reduce emissions through the 2020s. This includes a world-leading clean growth mission to cut emissions from heavy industry, and investing over £2.5bn to support low-carbon innovation."
"But it's clear that all parts of society need to do more, which is why we've asked the Committee for Climate Change to advise on the country's long-term emissions goals, including on setting a net zero carbon target."
Ultimately, if the world is call a halt to runaway global warming, at some point every country in the world will have to embrace the idea of net zero emissions. Given the UK has staked much of its global reputation on its role as a climate leader, we should expect net zero to reach the UK sooner rather than later.
But the government's job doesn't end with the setting of a net zero target. It will need to be accompanied with a full spectrum strategy outlining how the innovation and investment will be delivered. With Westminster currently lurching from one Brexit-related crisis to the next, there are question marks as to whether government has the bandwidth to deliver such an ambitious to-do list. But if the Brexit process has taught us anything, it is that fudging a difficult issue in the short term rarely works out in the long run.
Meanwhile, UK plc is chomping at the bit to get full decarbonisation underway. Business has signalled it is ready to change - but the big question is: is the government?
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