Committee on Climate Change CEO discusses infrastructure, airline bailouts, COP26 and making the best of a bad situation
It all seems so long ago now, but back in 2019 BC (before coronavirus), Greta Thunberg and Extinction Rebellion had helped drive awareness of the climate crisis to record levels, net zero had become the climate action bar to reach, and there were good reasons to hope that Brexit - whichever side of the debate you stood on - might finally make way a broader policy discussion on other critical issues, not least the UK's decarbonisation pathway.
Lending high-level economic and political credence to that growing public clamour for action, the work of Chris Stark and his small team at the Committee on Climate Change (CCC) in driving the issue up the agenda should not be forgotten. An eloquent yet easy-going communicator, Stark had only been at the helm for a matter of months when the CCC unleashed the first in a wave of crucial advisory reports making the compelling case for the UK to deliver net zero emissions by 2050, not just as a necessity for the climate, but as an eminently achievable goal that would leave both the economy and society far better off.
Within months, in one of Theresa May's final acts as Prime Minister, the UK became the first major economy in the world to legislate to achieve net zero emissions by mid-century, in line with the Paris Agreement. It was a historic moment, hailed by CCC chair and veteran of Westminster climate politicking Lord Deben as "the most special day" as he blinked back tears at last year's BusinessGreen Leaders Awards.
But less than 11 months since that day, the world has been turned on its head, with everyone from world leaders to school children struggling to comprehend how the social, political, and economic landscape has shifted. Suddenly, barely days into 2020, a new paradigm began to take shape. At the start of a decade when the climate crisis was set to become a genuine priority for political and corporate leaders, another global crisis of even more pressing proportions for governments, businesses, and citizens stormed over the horizon. Climate change and our collective response has once again - albeit understandably this time - found itself playing second fiddle to a more immediate crisis, the full ramifications of which remain far from clear.
But while Covid-19 may change how the world tackles climate change in the immediate term, the targets, technologies, and pressing need to deliver net zero emissions by the middle of the century remain precisely the same. As Stark said in a conference call last month: "Nothing has changed, yet everything has changed."
Speaking shortly after that call to BusinessGreen from his makeshift home office - aka his bedroom - Stark is, like many working in the green economy, continuing to wrestle with what coronavirus could mean for the climate fight, alongside the wider fears about public health and economic uncertainty that everyone shares.
"Every day I have these sort of existential dread moments, and I wonder what we're doing with all this," he concedes, half-jokingly. "I have good days and bad days, but today is a good day - I feel quite positive about it all today."
The climate fight is nothing if not a rollercoaster, and Stark's is a sentiment that could have applied at any time since the science became irrefutable and political and corporate action failed to match up to the worsening impacts, it's just that right now it all feels even more acute. But while there are undoubtedly huge new challenges to contend with, the lockdown has also afforded many politicians, businesses, and citizens the opportunity to experience - albeit against a bleak backdrop - a different approach to life, marked by home working, limited travel, cleaner air, and localism.
So, does Covid-19 make delivering net zero easier or harder? "Gosh, I'm not sure I can answer that question," Stark responds. "There are many risks to it that weren't there before, but there are also opportunities - which I don't think would have been there had we not had Covid - to address some of the more fundamental questions, for example about travel and behaviour change. So I don't think it's as easy as saying it's going to be harder or easier, but I am very, very clear that there are some very problematic risks to achieving net zero and the Paris goals if we take the wrong response to the recovery, as we did in 2009."
Building back better
Whether governments use their economic recovery plans to support decarbonisation and long-term economic resilience is now the single biggest question at the top of the climate agenda. Scores of leading global corporates across Europe and America are calling for it, as well as investors managing trillions of dollars of assets. Meanwhile, public polling suggests bailing out high carbon companies without attaching carbon reduction targets would be an unpopular move. Encouragingly, word from the EU Commission suggests it remains steadfast in its 2050 net zero ambitions and that combatting climate change should feature strongly in economic recovery packages. Positive noises have also come from those leading governments in Germany, France, Italy and the UK, buoyed perhaps by increasingly irrefutable evidence from leading economists that investing in renewables, energy efficiency, and clean technology offers the best response to the recession for jobs, growth and wellbeing. Only today British Prime Minister Boris Johnson told the Commons that "our determination to get to net zero by 2050 remains undiminished".
But with economies only tentatively easing lockdown conditions, many major recovery plans have yet to emerge. And this time the stakes are even higher, and the economic outlook even bleaker, than was the case the last time green stimulus packages were up for debate in the wake of the 2008 global financial crisis. "I think the biggest risk that sits before the global mission on net zero is the risk of fossil fuel lock-in," warns Stark. "If we choose to do what we did in 2009, we will lock in fossil fuel use with our infrastructure choices and we wouldn't have enough time to reverse from that now. You're going to see big problems potentially if we make the wrong decisions. That's the biggest risk."
Decisions taken by political and business leaders in the coming weeks could therefore define the decarbonisation trajectory for the coming decades. With business priorities, strategies, and revenue projections being redrawn as we speak, it therefore remains pivotal to ensure climate action does not slip off the boardroom table. And the job of Stark and his CCC colleagues is now to guard precisely against that outcome at a political level; to, as ever, ensure the government keeps on track with its statutory net zero objectives as it plots a recovery from the pandemic.
If we choose to do what we did in 2009, we will lock in fossil fuel use with our infrastructure choices and we wouldn't have enough time to reverse from that.
To that end the CCC is already hard at work assessing the impact of the pandemic on the UK's net zero and interim targets, and has revised its work programme for 2020 accordingly. Its annual decarbonisation progress report to Parliament in June will set out more detailed advice to the government on how to build a green, resilient recovery to the impending recession. And ahead of that detailed analysis, it has already written to the Prime Minister Boris Johnson offering a glimpse of the key areas where an explicitly green recovery plan could unlock significant environmental, social, and economic benefits. The letter sets out six "resilience principles" to help guide any recovery measures, including boosting green jobs, locking in sustainable behaviour change, strengthening resilience against future risks, boosting tax incentives to cut CO2, and avoiding the long-term 'lock-in' of emissions.
It is a useful framework for business, as well as political leaders and there are plenty of exciting net zero ideas and opportunities signalled in the letter, of which further detail is expected in the CCC's official advice and progress report to Parliament next month. But first and foremost, as the letter makes clear, any government support - loans or bailouts - for carbon intensive industries "should be contingent on them taking real and lasting action on climate change, and all new investments need to be resilient to future climate risks".
With so many planes grounded, airlines are perhaps the most high profile example of struggling high carbon firms seeking state support to survive. British Airways alone is set to cut 12,000 jobs, while at Virgin Atlantic 3,000 jobs are at risk. Yet in France, the €7bn support offered to Air France shows that 'green strings' and climate conditions can be attached to bailout money if governments choose to. The company has accepted the support on the understanding it develops a strategy to become the world's greenest airline and stops operating domestic flights where rail links offer a viable alternative. Stark, too, is clear that state support for aviation and shipping should come with green strings attached.
"I would like to see those steps or interventions from government come with the very clear strings that [airlines] have to improve fuel efficiency, develop synthetic fuels, and - crucially - take meaningful steps on negative emissions," he says. "That means negative emissions schemes that are scalable and allow us to credibly say that we have a proper negative emissions market in the UK."
Even before Covid-19, these were always key issues which airlines would need address if they were to continue to exist in a net zero world, and in fairness to the industry a growing number of leading operators were working on such plans. But there is clearly now an opportunity to ensure green aviation R&D efforts and negative emissions programmes scale up much sooner.
The plight of the airlines highlights another key issue the CCC is keen to addressin its upcoming reports: employment. In its recent letter, the CCC said the government should embed 'fairness' as a core principle of the net zero transition and the Covid-19 recovery by making sure lost or threatened livelihoods are supported with retraining and new, green opportunities. There is much to learn from the sudden disorderly transition to a lockdown society so as to help prepare a far more orderly, smooth transition away from high carbon industries towards a net zero economy, Stark suggests.
"I'm sure we'll want to talk about how we try and manage the unemployment impacts of Covid, which look to me to be profound, in such a way that we provide the appropriate support for the employment transition - a just transition - and the retraining requirements of it," he explains.
Shovel-ready green infrastructure
While the economic and employment outlook may well look dire - the Bank of England has warned the UK is heading towards its deepest recession on record - the government does find itself with some factors in its favour for building its path to recovery. Recent research led by a group of leading economists including Joseph Stiglitz and Lord Nicholas Stern, concluded that infrastructure investments in renewable energy, electric vehicles, green public transport, and home retrofitting offer the strongest path to recovery. Many of these sorts of projects and more have also been repeatedly highlighted as a top priority by both the CCC and the National Infrastructure Commission (NIC), and, crucially, the UK does boast world-leading low carbon industries that have helped the country decarbonise faster than any other G20 nation over the past decade.
The government had been due to offer its response to the NIC's recommendations in the form of a new National Infrastructure Strategy earlier this year, and despite unsurprising delays, it is thought to have been close to completion before the coronavirus crisis struck. A planned Energy White Paper, green heat strategy, transport decarbonisation plan, and the overarching climate action strategy that is due to be formally submitted to the UN this year are all in the pipeline, providing Ministers with an array of policy levers that can help mobilise job-creating green investment within weeks and months rather than years.
"The first criteria for green stimulus projects will obviously be shovel-readiness, and in particular infrastructure priorities that we know the government was already on the point of nailing down in its infrastructure strategy," Stark predicts. "There will be a host of well-prepared infrastructure projects that we can get going quickly, and as long as they are well targeted, they can be a real boon to the goal of net zero overall, and especially in a world where the government can effectively borrow at zero interest rates."
With hindsight, Stark says he is glad the National Infrastructure Strategy did not emerge as planned at the Budget back in March, as it allows for that Strategy - when it does eventually see the light of day - to take account of the new post-Covid-19 paradigm in which the UK finds itself. As such, he ponders whether some of the vast sums earmarked for roadbuilding plans could be redirected towards expanding fast broadband access across the country, given so much of the workforce is now working from home rather than commuting. And, most obviously, there is scarcely a better time than now to embark on a major, no-regrets energy efficiency programme to futureproof draughty homes and businesses, which Stark argues would immediately create jobs and demand in the economy.
"I think infrastructure priorities should change coming out of a crisis like this," he says. "This is the time to be doing energy efficiency. I would love to see the government give the priority it deserves. At a time when energy prices are falling, it would otherwise get less prominence, so this is the time to do it, because when energy prices start to rise when demand returns, we will wish that we had fixed the roof when the sun shone."
As MPs have frequently warned, the UK stands little chance of achieving net zero without vastly improving the energy efficiency of its building stock, and it is therefore positive the government last week re-asserted its intention to allocate £9bn of support over the next decade for energy efficiency and low carbon heating systems.
This is the time to be doing energy efficiency. I would love to see the government give the priority it deserves.
The likely sums involved inevitably lead to a debate over costs. The questions of who foots the bill for green infrastructure is already a key issue for the Treasury as it carries out its hotly-anticipated Net Zero Review this year, but it is sure to become even more of a consideration as budgets come under intense pressure in the unfolding recession. However, the early signals from Number 11 are that there is little appetite for another round of austerity measures, with leading figures in government intensely aware that there is no public appetite for cuts and that stimulating demand must remain the economic priority for the forseeable future.
And if the Treasury does need to boost its coffers, the state of the beleaguered oil industry and unprecedentedly low prices for fossil fuels means the Covid-19 crisis throws up opportunities - such as putting up fuel taxes as fuel prices drop - to now harness fiscal policy to accelerate progress towards net zero. Stark suggests such thinking is likely to form a much bigger part of the CCC's advice going forward.
The Treasury, he says, is "going to have to think pretty fundamentally about the tax base after the unprecedented intervention in public spending that we're seeing at the moment to prop up the lockdown economy". "So the question of where we get our taxes from is going to be right back in the frame," he continues, highlighting the drop in fuel duty revenues as a result of lower car use. "I don't think we're going to be able to look so obviously at environmental taxes as a revenue raiser because, frankly, they're going to start to have the behaviour changes that was always hoped they would have."
COP26 and climate diplomacy
However, the CCC is not solely focused on rallying support for a green stimulus in the coming weeks; it also gearing up to launch its advice on the UK's sixth carbon budget, covering the period 2033-37, later this year and is keeping a watchful eye on the government's preparations for COP26, the critical global climate summit which has now been kicked-into next year.
Corporates that are well prepared for the net zero transition and climate change itself are the ones that will be successful
Making a success of COP26 by rallying countries around the world to ramp up their climate ambitions under the Paris Agreement was already a major diplomatic challenge for the UK, but even with another six months or more to plan for the Summit, Covid-19 makes that challenge even more difficult. Stark argues that against this daunting diplomatic backdrop it becomes even more important that the UK sets an example and delivers an ambitious, world-leading programme of net zero policies and actions in 2020 in order to help convince other countries to step up to the plate. The UK's COP presidency is, in effect, one of the biggest incentives for the UK to keep net zero front and centre in the government's thinking as it navigates its path out of the current pandemic crisis.
"The legwork on diplomacy for COP is the piece that needs to ride alongside the domestic efforts to cut emissions," Stark explains. "I really hope that in December when we publish our advice on the sixth carbon budget, that that stands as a big moment in the year. That's the moment for the UK government to accept the advice of an independent technical body - the CCC - and to say to the world that it is prepared to accept a shorter-term target to cut emissions in the 2030s to get us on track to net zero. That will be a really strong and compelling part of the diplomacy that goes with the presidency of the COP next year."
The 'strategic clarity' of net zero
There are reasons to be positive that market pressures in the wake of Covid-19 can further accelerate both the global and domestic decarbonisation drive. With the oil and gas sector under intense financial pressure, plummeting oil prices bolster the case for shifting capital towards renewables and clean tech instead. A host of oil majors have unveiled net zero targets and even the CEO of BP, Bernard Looney, is now publicly pondering whether 'peak oil' demand may have already been reached. Against that backdrop, having net zero goals in place should serve to benefit businesses and policymakers in the coming months, Stark suggests.
"There's a strategic clarity to net zero that is really helpful in these moments of reconstruction after a global crisis," he explains. "For the industries themselves, I think we are going to see an accelerated transition. The oil price impact is I think the biggest single shift that we've seen. That is going to have such fundamental implications for anyone in the oil sector, unless of course you're a Saudi or Russian oil producer, so your outlook on what to invest in will change dramatically after this, and that I hope will hasten the transition."
There are clearly bright spots currently visible in the economic wreckage left by Covid-19 as far as the net zero transition and climate action are concerned, and the coming weeks and months will see business and policymakers put critical flesh on the bones of their promised green recovery plans. There is also the wider hope that the huge scale of the impacts that can flow from failing to plan for known risks has resonated in boardrooms across the world and will prompt corporate and political leaders to ask if they are sufficiently resilient to complex and escalating climate risks. For Stark and the CCC, that means better pricing of climate risk, better transition planning, and greater appreciation for bringing in science into boardroom discussions in order to take account of longer-term concerns should all now be to the fore.
"Economies are always in transition, and in general orderly transitions are better than disorderly ones," Stark notes. "We are witnessing the impacts of a disorderly transition right now. We're going to have to manage that as best we can, but we also have to learn from it. So we should rebuild from the Covid crisis in a way that support the necessary transition to net zero rather than stirring up a disorderly transition down the line. That is something that should matter in boardroom discussions right now about future strategies, because we know that these corporates that are well prepared for the net zero transition and climate change itself are the ones that will be successful. So at this moment of crisis and disorder, what we should try and pull out from it is a strategy that's better equipped for the future."
Net zero may be a target set in stone for 30 years from now, but the pandemic has brought into focus just how quickly the economy and society need to shift onto a far more resilient, fairer, and healthier footing. The journey towards net zero emissions has not become any easier, but the destination is now more important than ever.
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