Writing the book on the net zero transition

The Climate Change Committee (CCC) has just published the book on the net zero transition. At around 1,000 pages perhaps it is the War and Peace of the green industrial revolution, an exploration of every corner of society at a time of historic flux. Or maybe it's the Middlemarch, a realist depiction of a community responding to legislative reform and technological disruption. Let's hope it is not the Don Quixote or Infinite Jest. There must be no tilting at windmills and the last thing we need right now is another post-modern meditation on a future dystopia - we can get that from watching the news.

What the CCC's Sixth Carbon Budget has in common with those various masterpieces - apart from the fact it too will be referenced by far more people than ever read to the end - is that it is about to become, in its own way, a canonical text.

The 1,000 pages on the Sixth Carbon Budget stretched across three documents - The UK's Path to Net Zero, the Methodology Report, and Policies for the Sixth Carbon Budget and Net Zero - are a remarkably in-depth and meticulously referenced blueprint for how to transform a modern industrialised nation into a net zero emission sustainable economy within just three decades. Spare a thought for the climate sceptic bloggers who are even now trying to scan all 1,000 pages in a desperate attempt to find the one out of context footnote or cherry-picked graph they can hang their entirely predictable critique upon.

For everyone else, here is the most comprehensive analysis to date of how a net zero emission economy can be built while still improving living standards, bolstering competitiveness and resilience, and maintaining public and political consent. As such you can make a case for it being one of the most important documents ever published. This is not necessarily hyperbole.

Like any classic work, the reports draw heavily on the tradition of which they are a part. In its broadest sense, the CCC's analysis today simply reiterates what advocates of climate action have been saying at least since the 2006 Stern Review on the Economics of Climate Change, and arguably for decades previous. The costs of inaction on climate change far outweigh the costs of action. When you correct the market failure that results in greenhouse gas emissions it is entirely possible to tackle the climate crisis and build a healthier, fairer, and more prosperous economy for all. The deployment of clean technologies creates a virtuous circle of economies of scale, green jobs, reduced climate impacts, and myriad co-benefits that mean net zero emissions can be achieved at likely net benefit to the economy. The alternative is around 3C of warming this century that would pose a cataclysmic threat to civilisation as we know it.

This analysis now has a remarkably solid evidence base and is widely, if imperfectly, accepted by almost every government on the planet, investors with trillions of dollars of assets under management, and the thousands of powerful companies that have publicly pledged to deliver net zero emissions.

However, the report also contains the shock of the new. The unifying thread that runs through the 1,000 pages is the analysis of how the costs of decarbonisation have fallen far faster than even advocates of clean technologies expected. Renewables and energy storage costs have plummeted, there are very good reasons to think hydrogen, heat pumps, and electric vehicles can follow suit. Just a year ago the CCC estimated the UK would need to invest around one per cent of GDP a year to deliver net zero by 2050, but it now believes it may require investment equivalent to around 0.6 per cent of GDP in the 2030s before falling to just 0.5 per cent by 2050. These surprisingly rapid cost reductions have opened up remarkable possibilities.

They lead to the CCC's central recommendation that the journey to net zero emissions by 2050 should be front-loaded. One of the most eye-catching parts of the report is that the CCC is now advising the UK should aim to cut greenhouse gas emissions by 78 per cent against 1990 levels by 2035, when just 18 months ago the UK's legally-binding overarching goal was to reduce emissions by almost the same amount - 80 per cent - by 2050. That is the power of clean tech innovation in action.

Moving faster, earlier has several implications, all of them good. It would provide a major economic boost as the UK labours to recover from the coronavirus crisis. It would offer the rest of the world a template to follow, providing a massive export opportunity for UK plc in the process. And, most importantly, it would bank the emissions savings on offer from the clean technologies that are already in or entering the mainstream as quickly as possible, providing more time and space to tackle the more complex decarbonisation challenges presented by heavy industry, aviation, shipping, and agriculture.  

It is at this point that the usual suspects will reach for their media foghorns and loudly lament the £1tr 'cost' of delivering on the net zero target and the £8,000 'bill' awaiting every household. But such complaints tend to completely (and often deliberately) misunderstand the difference between 'cost' and 'investment'.  

The reality is that an austerity battered UK will need to upgrade vast swathes of its infrastructure over the next three decades. Those 'costs' already have to be covered. The true 'cost' of achieving net zero emissions is the price difference between business-as-usual infrastructure and net zero compatible infrastructure. And such comparisons have to take account of full lifecycle costs, which often work in favour of clean technologies thanks to their inherent efficiency.

Take buses as a simple working example. Every bus in the UK will likely have to replaced by 2050 one way or another. Currently electric and hydrogen buses cost a bit more upfront, but firstly that is unlikely to remain the case as the entire global auto market transitions towards zero emission technologies, and secondly, the massive fuel cost savings on offer from electric buses will quickly offset any upfront price premium. The 'cost' of deploying net zero infrastructure will be negligible. This same equation is repeated in multiple sectors.

And that is before you consider the co-benefits. As numerous economists have noted, if you can capture the positive externalities from clean technologies - the better air quality, the warmer homes, the healthier diets and more active lifestyles - then the cost-benefit equation tilts even further in favour of rapid action. "That's one of the most important messages this year - costs are lower than we previously thought they would be over the next 30 years," observes CCC chief executive Chris Stark. "And in reality those costs are probably closer to zero overall, if we can capture all the benefits of that transition."

However, if the core message from the report is that the net zero transition is achievable and affordable that does not make it a panglossian tale. Two points of narrative tension are evident throughout.

The first is that while the net zero transition may make economic sense it is less clear that it makes sense within the current political economy. The report is the latest in a long, long line of studies to note that the UK is not currently on track to meet its net zero emissions targets. That for all the talk of green recovery and climate action from the Prime Minister and his allies crucial decarbonisation policies and investments remain notable by their absence.

In the long term it may well be possible to achieve net zero emissions at low cost or even net financial benefit, but in the short term the upfront capital investments need to be made, and made in a way where the costs and benefits are fairly distributed. An answer still needs to be provided to the crucial question of who pays for all those home upgrades and electric vehicles. Despite hugely encouraging progress in some sectors over the past decade, the policy framework required to ensure such investments are made is still notable by its absence. The big unanswered question in climate politics is whether that framework can be built fast enough. The fact today's CCC report has been largely overshadowed by the Prime Minister's last ditch trip to Brussels to try and deliver the Brexit deal he promised would be an easy undertaking suggests the government is now providing its own metaphors.

Because the second big point of dramatic tension in the CCC's saga remains the sheer scale of the net zero undertaking and the looming nature of the deadline. It is true, as many critics will today note, that we should have done more two decades ago and we should be moving faster now to deliver on an even earlier net zero target date. But it is also true that nothing this big has ever been attempted before. It requires the retooling of an entire economy before a child born today has left their twenties. It needs transformation akin to the digital revolution that has defined the past 40 years, but faster and in every single industry and every single community. And then it has to be repeated globally.

It is a useful coincidence that the CCC report has been published on the same day as the UN Environment Programme has published its annual Emissions Gap report revealing how without a green recovery that triggers a drastic course correction for the global economy the world is on track for temperature increases of 3.2C this century. That is the scale of the challenge, and just because the CCC has provided a blueprint for meeting it does not automatically mean it will be followed - a lot can still go wrong in this transition.

But the flip side of that challenge is the scale of the prize. One thing that struck me in the latest CCC report - indeed, in all its reports - is the sense of 'if not here, where?'

It was thanks to an accident of geography and history that the UK emerged as the crucible of the first industrial revolution. A modest sized, temperate, island nation replete with coal seams and natural ports provided the context for the technical innovations and seafaring nous that enabled first a global empire and then, through its plundered riches, the construction of an industrialised economy that was then emulated around the world.

A similar accident of geography and history now provides ample clean energy resources, a heritage of world-leading scientific, engineering, and financial expertise, and that same manageable size. It should be possible to harness that context to build a modern net zero emission economy and use it as a template for other nations to follow, just this time without the exploitation and violence of colonialism. Not least, because if a country with such favourable foundations cannot deliver this transition, you have to wonder if those facing even more daunting development and technical challenges can do the same.

And that, ultimately, is the source of the high drama in the CCC's epic tale, and perhaps too the source of the happiest of endings.