Calling time on the economy vs environment narrative on net zero

Professor Karen Turner

The argument goes that - with the cost-of-living crisis hitting home and about to get worse as the energy price cap rise combines with the increase in national insurance from April, and the emerging impacts of the war in Ukraine - continuing to pursue the 2050 net zero target will just heap more misery on people and businesses who are already struggling. But this economy vs environment narrative playing out around net zero offers little constructive in terms of a way forward on how the UK can act to strengthen her economy in recovering from the COVID pandemic and respond to challenges and opportunities presented by the climate crisis.

Affordability and economic transition lie at the heart of the net zero equation

Instead, we need a narrative recognising that affordability and economic transition lie at the heart of the net zero equation. Indeed, net zero emissions targets are only one part of the climate change challenge. The wider challenge is that all economies and the societies they support must adjust to operating within the constraint of a global environment that cannot withstand more than 1.5-2 degrees more of global warming. This will, of course, bring new costs in recognising and reducing our carbon emissions.

However, it should also compel us to identify ways in which we can increase productivity and efficiency, particularly in delivering and using low carbon options. This will enable businesses, supply chains and people to invest in and realise ways to become more resilient to cost and price pressures. It also offers opportunities for the UK to exploit existing and new capacity and skills to gain competitive advantage in delivering the kind of low carbon goods, services, and technologies that all nations in the world will need going forward.

Of course, many of the drivers of today’s cost-of-living crisis are linked to global supply chain challenges rather than current efforts to meet net zero. Nonetheless, had we made more efforts in retrofitting properties to be more energy efficient and shifting away from (particularly imported) fossil fuel dependency before now, households, businesses, and our energy supply would now be more resilient to the growing pressures. However, lessons can still be learned for the future in terms of how we transition both the energy sector and wider economy to prepare for and buffer the impacts of a range of changes – including but not limited to the net zero transition - affecting how we live and do business.

Enabling the productive and efficient deployment and uptake of low carbon options

Crucially, policy and political attention must become focussed in making the transition affordable – particularly in ways that do not overly burden those least able to pay - and enable the productive and efficient deployment and uptake of low carbon options. It must also focus on identifying and acting on opportunities to transition the economy in ways that allow UK producers to build competitive business models and invest in low carbon futures, while identifying and exploiting new sources of competitive advantage in a transitioning global economy.

Net zero as part of mainstream economic policy-making

This is what will allow us to maximise employment and other sources of real income gains – including enabling households to spend less on energy and fuel bills through more efficient heating, hot water and transport options – thereby providing benefits that can offset pressures on the cost of living. In short, the challenges, opportunities, and trade-offs in responding to climate change become ones of mainstream economic policy making and this is where ‘net zero’ must sit.