Centre for Energy PolicyHow can we manage disruptions on the path to net zero?

How can we manage disruptions on the path to net zero?

The UK is committed to meeting the ambitious net zero target by 2050.  Ensuring a just transition to a net zero society will inevitably disrupt the way we live and work.  But how do we factor in and manage other unexpected shocks and disruptions such as the Covid-19 pandemic?  This was the focus of our recent Energy Conversation where the online audience was joined by Alan Brown MP, Rozanne Foyer of the Scottish Trades Union Congress and our Director Professor Karen Turner.

Our researchers reflect on the key issues that emerged during the discussion including addressing the dual challenges of sustainability and widening inequalities, as well as the broader recognition that has emerged through the pandemic around governments and societies’ capacity to act to effect transformative change.

Dr Christian Calvillo Munoz

There is a quite understandable concern that, in a year with the Covid-19 pandemic, volatile US elections, challenging EU-UK negotiations over a trade deal, and protests in response to entrenched racial inequalities and injustices globally through the Black Lives Matter movement, the attention to climate change would have diminished and the ability/willingness to tackle the problem would weaken. However, last year also brought us record levels of UK flooding and the Californian and Australian wild fires. A brutal reminder that climate change is very much present and it is not going away.

2020 reinforced the level of system-wide change that would be required to tackle a global crisis. We have learned that we can change the way we live, work and travel. We have learned that the government can step in and invest in moments of crisis. We have learned to revalue our communities and the essential jobs that keep everything going. We have learned that a safer, more just and more sustainable world is possible.

Dr Oluwafisayo Alabi

Unquestionably, the Covid-19 pandemic presents a significant disruption to the net zero pathway and more widely to the functioning and wellbeing of the economies and societies. UK policy and policy processes such as the Net Zero Review  undertaken by HM Treasury and the National Infrastructure Strategy outline pathways for economy recovery and rebuilding in the context of managing the near- to long-term impacts of the pandemic.

A key takeaway from the energy conversation emphases the need to consider the lessons learned from the disruption caused by the pandemic and  in what ways to  apply them in managing and delivering the net zero ambition. This will involve adopting an approach that encompasses considering and understanding the role, opportunities as well as the unanticipated implications and consequences of different net zero actions, which in themselves will be disruptive. CEP provides a net zero principles framework, intended to help decision makers in governments and industry do just this, with insights that are crucial to the debates around enabling and realising the net zero transition.

Research with our partner Bellona shows that the pandemic reinforces the need for net zero actions to contribute to sustaining the UK economy and societal wellbeing, which are essential foundations to supporting economic recovery, resilience and prosperity. In line with our Net Zero principles framework, any net zero actions should be considered in terms of ‘who pays’, ‘who gains’, ‘how’ and ‘when’ in order to ensure a just transition. Such that, for example, income inequality gaps do not widen as well as preventing the problem of addressing one form of poverty, without triggering another (e.g. fuel poverty).

All of these are crucial considerations for delivering the net zero ambition and should be part of the debates, discourse and perspectives leading to COP 26.

Dr Antonios Katris

The impacts of the Covid-19 pandemic rippled across multiple areas of policy, including climate change and the transition to net-zero. The pandemic has led to the re-introduction of unfavourable practices like the increased use of private over public transportation, but more positively the announcement and implementation of stimulus measures promoting post-pandemic economic recovery and the achievement of UK’s climate change goals. The Green Homes Grant Scheme announced by the Chancellor in July 2020, and extended in the 10 Point Plan for a green industrial revolution, is a clear indication that the government has the capacity to promote and invest in climate change action. However, participants highlighted that it will be critical to ensure that potential sources of funding like border tax adjustments, specifically introduced to reduce UK’s carbon footprint, are ring fenced and targeted at driving domestic emissions down.

As other colleagues highlight in this blog, great care needs to be taken so that in our effort to address one major issue (climate change) we do not exacerbate another (absolute poverty). For example, jobs and incomes lost in the oil and gas sectors as a result of the transition to net zero could be offset by more employment opportunities elsewhere, to ensure a just transition. For example, it is widely expected that a fully developed Transport and Storage sector for captured carbon can mitigate jobs lost in the Oil and Gas sector.

In our own analyses, we have found that the promotion of energy efficiency improvements, using approaches like the Green Homes Grant Scheme, can lead to a significant growth of the UK economy, creating more employment opportunities in the process. Most importantly, the smaller energy needs mean that the least affluent households can achieve more with their existing income, ultimately leading to a mitigation of both fuel and absolute poverty. Arguably, the new employment opportunities will not necessarily be in the sectors that are being negatively affected by the transition to net zero, but the economic growth gives the opportunity to the government to direct funds and policy focus to those sectors, while simultaneously moving towards its climate change goals.

Dr Jamie Stewart

While the Covid-19 pandemic has resulted in a drop in global emissions, it has reiterated the importance of retaining economic and societal prosperity as we do so – something which hasn’t happened over the last year. As discussed at the Energy Conversation, the pandemic has driven some inequality, with the lowest earners seeing their costs go up (they weren’t spending on certain luxuries anyway) and higher earners seeing their spending/costs reduced (not spending on office lunches, coffees, holidays etc.). Similar risks may exist in the net zero transition, where those who can afford new technology like heat pumps, will see the benefits they bring before others.

Over the last year the Covid-19 pandemic has highlighted the importance of understanding the large scale public policy choices we face in facilitating the transition. For example if we use general taxation to pay for Net Zero (which is often seen as the most equitable way) what impact will this have on the wider economy? Could it constrain spending of higher earners, which has a negative impact on the service sector and all those employed there. This is something we’ve definitely seen over the last year.

So while pandemic has been extremely challenging for obvious reasons, it’s important that we learn lessons from Covid-19 policy choices, which because of their extreme scale and rapid deployment, will have a notable impact of the social and economic well-being of the nation for many years. These lessons could be really important for how we shape energy and climate policy over the next decade.

Watch the recording here