The net zero transition is big, much bigger, than you think
If, as David Wallace-Wells so memorably put it, climate change is worse, much worse, than you think, then the net zero transition is big, much bigger, than you think.
Today's Committee on Climate Change report, entitled Net Zero - The UK's contribution to stopping global warming - is a remarkable piece of work, sweeping in its reach and ambition, but firmly rooted in technological, economic, and political reality. The result is a confident and optimistic route map for a 21st century economy that can be navigated at manageable cost and pace, unlocking a raft of environmental, financial, and societal co-benefits along the way.
One of the most striking aspects of the report is how eminently feasible and in line with existing technological and cultural trends, it all feels. From offshore wind as the backbone of our energy system and increasingly plant-based diets as standard to more liveable cities and expanded electric vehicle fleets, so many of the core recommendations simply build on momentum that is now well established. Even when the report wrestles with the heavy lifting of decarbonising more challenging sectors such as industry or heat we can see how many of the technologies and systems required are already starting their journey down the cost curve. Nothing about the report seems impossible.
And that is why the response to the report, especially from businesses, has been so staggeringly effusive. "A new dawn for climate change action in the UK," trumpets the CBI. "A clear signal of global climate leadership by the UK," says top investors. "We have now agreed that there is an emergency and we need to act immediately," warns Business in the Community. "It is vital the UK government follows the advice," argues the Blue Chips of the Corporate Leaders Group.
Yes, concerns remain about the impact of badly managed climate policies on short term competitiveness, but there is an almost universal recognition that deep decarbonisation is essential; climate impacts, public pressure, and investor demands are all escalating; and there are big gains to be had from cementing the UK's position as a world leading clean tech hub.
Business leaders can see these upsides are self-evident if you extrapolate just a little from the CCC's analysis. The Committee calculated delivering net zero by mid-century would cost one to two per cent of GDP in 2050, but that is a rounding error; the analysis does not include the huge co-benefits such as improved air quality, heathier forms of transport, and reduced climate risks; and clean tech cost reductions keep beating even the most bullish of predictions. A decade ago the CCC's modelling showed cutting emissions 80 per cent by 2050 would cost one to two per cent of GDP, now it says full decarbonisation has the same price tag. A decade now awaits of electric vehicles undercutting conventional vehicles, sustainable land management methods racking up invaluable ecosystem services, and smart grids, storage, and renewables all maturing fast - would anyone bet against the cost estimates for net zero tipping positive by 2030?
As Ambrose Evans-Pritchard notes in the Telegraph today, the shift to net zero is the biggest technology transition the world has ever undertaken and technology transitions are almost invariably net positive for an economy. "There is no macro-economic cost to a climate target with zero emissions," he writes. "To claim that we cannot afford to wean ourselves off fossil fuels by 2050 is to rely on primitive accounting fallacies. The switch to a post-fossil economy is more likely to be an accelerant to GDP growth, akin to the successive upheavals of steam power, electricity and digital technology, each with a ripening phase of 30 years or so." Or to put it another way, only the laziest of incumbent businesses would not want to get involved with the biggest market-creating investment drive of the century.
That's the good news, the problem is there is a 'but' coming, and it is a gigantic, scary, probably visible from space, 'but'.
If the CCC's chopping of the net zero challenge into sector specific chunks makes it seem surprisingly manageable, a step back to take in the full picture provides a very different perspective. This is a blueprint for transforming every home, every street, every office, every factory, every school, every car, every diet, every policy, every job, every aircraft, every farm, every forest, in some cases unrecognisably, and all before people under 40 retire.
Optimists will argue similarly rapid technological transitions have been made in the past, pointing to examples such as the initial roll outs of street lighting, gas boilers, PCs, smart phones, and the like. But we've never before been asked to complete so many transitions concurrently, covering so many sectors of the economy, and with so much at stake. And then there is the challenge of taking our national Industrial Revolution and playing as proactive a role as possible in taking it global.
There is a sobering passage in Wallace-Wells The Uninhabitable Earth that is worth considering:
"The scale of the technological transformation required dwarfs any achievement that has emerged from Silicon Valley - in fact dwarfs every technological revolution ever engineered in human history, including electricity and telecommunications and even the invention of agriculture ten thousand years ago. It dwarfs them by definition, because it contains all of them - every single one needs to be replaced at the roost, since every single one breathes on carbon, like a ventilator…
"… These are infrastructure projects of a scale so far from our experience, in the US at least, that we hardly expect their existing corollaries to ever even be repaired anymore, instead learning to live with potholes and service delays. On top of which, unlike the internet or smartphones, the requisite technologies are not additive but substitutive, or should be, if we have the good sense to actually retire the dirty old varieties. Which means all of the new alternatives have to face off with the resistance of entrenched corporate interests and the status quo bias of consumers who are relatively happy with the lives they have today."
That is the daunting context. The CCC can and has shown how to make the economic case for a net zero revolution, but what of the accompanying revolution in our political economy? How do you practically translate the CCC's recommendations into the full suite of policies and investment decisions so urgently needed to turn a net zero target into a net zero reality? How do you accelerate the embrace of net zero technologies and lifestyles as they start to bump against inevitable resistance from those industries and individuals who feel, rightly or wrongly, that their prospects are being curtailed? How do you win a culture war where even vegetarian sweets are grist to the reactionary mill? You might well win in the end, but how many valuable years will be wasted in the social media trenches?
Targets are great. We all have them, be they quarterly targets or target weights, but you can't reach them without real world action.
The CCC is understandably protective of its independence and politically savvy enough to recognise that it is more likely to get the government to embrace a net zero target if it focuses on the positives and holds off from putting the boot into Ministers' recent failures too vigorously - hence the astute decision to delay reviewing the existing medium term carbon budgets for now.
But the report also makes it clear that a variant of the old joke applies: 'what's the best way to get to a net zero emission economy?' 'Well, I wouldn't start from here'.
Significant decarbonisation progress has been made, but across energy efficiency, onshore renewables, electric vehicle infrastructure, the apparently delayed green finance strategy, missed tree-planting goals, and flawed Green Brexit plans, the government is not even harvesting the low hanging fruit that are essential to meeting our current emissions target, let alone the more ambitious net zero goal. Essential work on green heat, carbon capture, heavy industry, and low carbon aviation and shipping has barely begun, despite the fact it has been obvious for a decade that transformational efforts need to be made.
You could envisage this as good news, as it provides evidence of how quickly the government could shift the UK onto a net zero decarbonisation trajectory if it was so minded, but is there really compelling evidence a government so riven by Brexit will take such steps?
Again, the answer depends where you sit on the optimist/pessimist spectrum. In the last 24 hours the Environment Secretary, Business Secretary, and Energy and Clean Growth Minister have all hinted very strongly that a legally binding net zero target is coming. Climate change "is an emergency, it is a crisis, it is a threat", declared Michael Gove yesterday. It seems highly likely the UK will indeed become the first major economy to adopt a legally-binding net zero target this summer, boosting its chances of hosting next year's UN Climate Summit and demonstrating to the world we can do important and admirable things beyond Brexit.
But at the same time, whither the Prime Minister? It was depressingly predictable that the press would this week prioritise a story about who's up and who is very much down in Westminster over a policy story, even when that policy story points to the fundamental re-engineering of the economic lives of every citizen in the pursuit of nothing so dramatic as the salvation of civilisation. But were the government really committed to maximising the investment signal that is the raison d'etre of a net zero target the Prime Minister would be across the airwaves, all cabinet ministers would be highlighting how their department will respond - Chris Grayling, we are looking at you - and the government would formally declare a climate emergency. New Whitehall governance structures and the prioriotisation of a wide package of new emission reduction policies would then follow, with this autumn's Spending Review marking a highly visible turning in the UK's decarbonisation journey. That is what the net zero project demands; nothing less will do.
Such a drastic plan is unlikely to emerge any time soon, even if it offers the clearest route for the Prime Minister to both secure a legacy beyond Brexit and deliver an economic boost to offset any Brexit-related dip. But government foot-dragging and triangulation simply means businesses have an even more critical role to play. Corporate leaders and investment decisions makers now need to read the CCC report - or at least the executive summary - and reflect on what it means for them.
The primary purpose of the Climate Change Act, the UK's Carbon Budgets, the Paris Agreement, the Clean Growth Strategy, and now the net zero routemap has always been to provide an investment signal; to shift decisions away from high carbon assets that could soon become stranded and towards future-proofed green infrastructure. With each new target and investment signal the direction of travel becomes clearer. Each time, the message is the same: 'when we revisit this the targets will be more ambitious, the legislation more demanding, the technologies more competitive'. For all the setbacks presented by the financial crisis, Trumpism, and now Brexit, the steady ratcheting of climate ambition has continued. The signals have cut through the noise ever more clearly.
To date too many investors and businesses have continued to ignore these signals, even as those that have followed them have tended to outperform their markets and rack up impressive returns on their clean tech investments. That is why global emissions keep rising and billions of dollars continue to flow into high carbon projects. Too many investors think the political leaders declaring they will deliver on the Paris Agreement are lying or incompetent. Those leaders should be furious their integrity and abilities are being questioned. They should also be doubly committed to proving their critics wrong.
Whatever happens next, and the odds are the UK will soon have a hugely ambitious new emissions target, the net zero vision is a declaration that enough is enough, full decarbonisation is going to happen. No one will be able to say they were not warned. The signal will become ever more deafening as clean tech costs continue to plummet and record-breaking summers swell the ranks of Extinction Rebellion and its fellow travellers. As the leading clean tech analyst Michael Liebreich has observed, corporate leaders have just two business cycles to position themselves for a dramatically transformed economy that by 2030 will be almost halfway along the net zero path. It would be criminal to waste those cycles and not be taking steps right now to embrace the clean technologies that will rapidly become the norm. That is the clearest message to businesses from the CCC's report.
The net zero transition is a big undertaking, almost certainly the biggest any of us will ever embark upon. We might as well get on with it.
SEB revises its predictions for sustainable bond market upwards, after stellar results in first quarter of the year
How Organic Valley is leading a growing trend designed to tackle Scope 3 emissions
Brewing giant pledges to deliver carbon neutral production by 2030 and full value chain by 2040
Health systems will bear the brunt of the climate-related health emergencies, so bold action needs to be taken to reduce the sector's ever-growing emissions, a new report argues