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Climate change investment demands clearer goals from UK government

A clear strategy of how to reach net zero is missing. Whether the new prime minister can and will change this is unclear. Until the government lays out its plans as to which climate change solutions it prefers for investors and industries, low-carbon markets will not see any flood of investment - something badly needed to see any real progress, experts say.

Over the past year, too little has been achieved on carbon reduction and prevention by the government to grade it unsatisfactory. Is this a signal for future failure or just a tough start on the difficult uphill road to net zero? Arguably, the Committee on Climate Change’s (CCC) latest annual report, which surfaced this week, was pretty grim. Only one out of 25 annual targets were met by the UK government, exacerbating worries about how the country will fair in the critical years to come.

What the government lacks most is a clear strategy, setting out when and on which technologies it places its bets on and how it answers the question of how to get to net zero, experts told E&T.

We asked Chris Stark, the CCC’s CEO, why the government had failed so miserably despite its good intentions. On one hand, the government claims to be willing to make big bold steps, to listen to the signs and evidence and targets for reaching net zero by 2050 – a goal which is, by a distance, one of the most ambitious things this country has set itself in some time, Stark explained.

On the other hand, you have a government that doesn’t seem to have woken up to the issues of climate change in any real sense and failed to put concrete plans in place to either meet the impact of climate change that we know is already here or to reduce the emissions at the scale necessary to reach net zero.

The reasons why action is missing would not be easily decipherable, Stark concedes: “I think it has something to do with the fact that at the moment, the government does not have climate change written throughout its objectives. Not every department is aligned with [climate change] goals and it is something that you really need to have if you aim to have a successful stab in tackling climate change. We don’t have national plans in place anywhere near the right level of ambition”.

Whether the two candidates to be the next leader of the Tory party, and thus the prime minister, will be able to solve those issues, Stark doesn’t know. Neither candidate (Boris Johnson and Jeremy Hunt) demonstrated overambitious zeal for the cause, but were neither opposed to it. Stark remains hopeful, but it would be hard to decide from the statements by the candidates given so far.

“I have noticed that both candidates, Boris included, have made references to net zero and their support for it. But there isn’t much beyond that,” Stark said. He questions whether any real thinking has been done and what needs to be done to elevate the whole program: “It is so fundamental that it has got to be led at the most senior government level and that means the attention of the prime minister”.

Stark doesn’t think there is essentially a need for a climate activist as prime minister, but “you need to confront the economic reality of climate change and the societal, technological and behavioral shift that is required. The requirement for a fundamental shift would dictate a top-down approach for objectives in the department of transport, department for health, crucially in the department for housing. “We don’t see that yet”, he said.

The sheer quantity of greener solutions within various sectors can give investors a headache and make them ponder which solutions will be embraced by the government, industry and citizens. With so many options at hand, net zero progress is at risk of being inhibited, experts believe.

“This is why we look to the government to do some of this. This is a very capital intensive challenge”, Stark said, but it would be of no surprise at all that “we don’t see that flooding into low-carbon markets and options because it hasn’t been made clear to investors what the government is planning to do”.

With 30 years to get to zero carbon, he said that the government wouldn’t need to do everything on its own, “but it needs to be clear with the market which strategies they employ in each sector or the things they like to see happening in each sector to get to net zero”. This way, Stark believes, the government will be able set better conditions for investors and finance. In a handful of sectors he witnessed the importance of good policy. One of them is wind power. The impact of good policy on flows of investment for offshore investments in the sector would be unmatchable with other sectors.

A good example is the passenger transport sector. We would not see the same level of investor interest in electric vehicle in this country because it is not clear how and when the government is planning to switch over from internal combustion engines (ICE). Neither would it be clear when the charging network infrastructure will be in place, Stark explained.

Especially for transport, a lack of decision-making by the government could affect net zero. E&T attended this week’s LowCVP Annual Conference. Greg Archer, director at Transport and Environment and previously director of Low Carbon Vehicle Partnership, thinks that not choosing a winner in time could have negative consequences for the road to net zero.

The mantra of technology neutrality would be harmful and delay a transition. “We have to have technology neutrality as government can’t pick any winners. The reality is we can’t afford technology neutrality”. Archer explains that businesses would not be able to endure because they have to developer and cater for every single solution. The government would not be able to afford it either, as it would need to build different infrastructure for every solution. The public would get confused, he said.

At the LowCVP Conference, Michael Ellis, member of parliament and minister of state for transport was overheard saying that he is keen to bring all sides to the table, but it would be difficult as “we don’t really know what choices there actually are and what choices people actually want to have and what will be technically available in 15 years time. So, we really are in a challenging situation. The best way to get there is to work together”.

 

The lack of knowledge would not be justified, according to Archer. “Actually there comes a point where you do know enough. Where we now are, it is pretty clear with the price and performance where batteries are going, we know that the passenger car market needs no more debate”, he said.

Evidence that some transport lobbyists are trying to delay a transition within the sector, Archer said, is that “there seems to be an enormous disconnect between what the European Automobile Manufacturers’ Association says and what many of their members do in regards to electrical vehicles”. “They spend their lives in talking down electric vehicles. Why are they doing that? Because they are trying to weaken CO2 regulation”, he said.

This would not include trucks, however. Archer thinks that in five years’ time it would be clear which solutions for trucks would need to be picked.

CCC’s findings on the government shortcoming on its targets also puts pressure on the question of whether setting targets at all is useful, especially if they are not being met. The concept of ‘carbon budget’ has merit, explains Kevin Anderson, professor of energy and climate change at Manchester University. He told E&T that there is far too much focus on the dates, “but the climate does not care about the dates”.

“Most people know what a budget is and they can feel what a budget is like. It is a lifetime budget, really.” Anderson worked in-depth on carbon budget analysis, explaining how much can still be emitted under climate-critical change scenarios. Recently, he investigated how much can be emitted on a local level.

In Manchester for example, where the local council owns half of Manchester airport – a relatively large airport – the council said it wouldn’t want to factor aviation into the emission budget calculation.

“As a climate scientist, I can ignore that, said Anderson. “So then we looked at aviation at a national level and found that this sector actually takes up the largest part of the budget”. The mayor of Manchester was not very happy when he was told that the actual climate target would be 40 times harder to achieve should aviation be included. The lesson, Anderson says, is that we can’t afford to leave things out and it will make it harder for all the sectors.

The UK’s fair Paris 2°C carbon budget for energy amounts to 3-3.8 GtCO2 for 2020 to 2100, under nine years of current emissions. Anderson’s results would be more conservative than those of CCC. Among the reasons is that ‘highly speculative’ negative emission technologies, exacerbating the problem of accountability, should be treated with care.

Emissions from aviation and shipping, as well as emissions associated with imports and exports and offshore emissions, currently left out of many calculations, would add up and make it hard to figure out real progress. If all were added to the list, a mere 10 per cent drop in global emissions has been achieved since 1990, a much more dire tally than the numbers communicated, e.g. numbers suggesting that the UK’s CO2 emissions have fallen 38 per cent since 1990.

Within the UK, agriculture should receive more scrutiny, too, particularly post Brexit, says Stark. There would be a real opportunity to recalibrate policy, he said: “It is something we shouldn’t be afraid of”. This would also involve tackling the need to change our land use, so that we make sure land supplies climate with the natural climate risk-protection to avoid things like flooding”.

CCC’s long-term goals foresee cutting the consumption of beef, limiting lamb and dairy by 20 per cent and afforestation of 30,000-50,000 hectares every year until 2050. The housing sector is also of major concern to experts. Stark said that the sector had “sailed through some of the most obvious issues that faced us when it comes to climate change”.

One key concern in the housing sector remains overheating. 20 per cent of homes are estimated to be prone to it this year. More worrying is that the sector keeps building new houses which overheat and “that is something that we just can’t have”. The government has made a commitment here, including a gas boiler target, but a zero-carbon solution for energy would be pressing. The other major concern is what to do with the 27 million homes that are presently heated by fossil fuels and over the next 30 years will need to be taken off it.

How much technology would be part of the solution to get to net zero? CCC’s findings suggest that roughly 40 per cent is down to low-carbon technologies and 10 per cent delivered by a behavioral shift. The vast majority, however, would be a combination of those two things.

For those and other concerns the new prime minister will need to handle it with due care and attention, he said. Stark remains full of hope. He considers the climate committees in parliament as one of the most promising developments in the past couple of weeks. The Citizens Assembly announced by six Select Committees gives an opportunity for public input into the climate change debate on how to get to net zero. This is the first time that has happened, Stark said.

“It is the first time to see what people’s preference are and how to get to net zero, not only what targets we need”, he said. The results from the citizens’ assembly are answers on how to reach a statutory target for net zero overall. Stark sees this work as an important complement to the work done by the CCC.

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