Professor of Economic Policy, University of Oxford
Fellow in Economics, New College, Oxford
Interests include Utilities, infrastructure, regulation and the environment. Concentrating on the energy, water, communications and transport sectors primarily in Britain and Europe
Net zero policy in 2,000 pages
At the end of 2020 the government and the Climate Change Committee produced a blitz of documents. We had the Ten Point Plan, the National Infrastructure Strategy, the Energy White Paper and the Treasury’s interim report on its Net Zero Review. Thousands of pages. But what do they tell us? Are they good answers to the challenge of our unilateral net zero target? Is the strategy coherent and cost-effective, and is the money being provided to support it?
The Energy White Paper, the precursor to a new Energy Bill, starts off with levelling-up and jobs. All the documents have at their core the claim that this huge transformation of the economy (and especially the main emissions in heating, transport and agriculture) is going to be achieved at little or no cost. Bills are not going to go up. Is it really true that we can no longer cause further increases in the carbon concentration in the atmosphere – unilaterally – without any pain? Can we go from living beyond our environmental and carbon means without a net cost, or not more than 1% of GDP at worst? Or do we need a rethink, a focus on carbon consumption and a new realism about what we need to do?
How much is it going to cost to meet the net zero target?
The Climate Change Committee, in its 6th Carbon Budget, tells us that the answer is not very much, if anything, once fuel savings are taken into account. Is this really true? Could the conversion of our entire economy – energy, transport, heating and agriculture – be switched from a carbon-intensive one to zero within just 30 years at little or no cost? If it is true then we can look forward to the phase-out of subsidies to renewables, a withering of the need for state intervention except for infrastructure and R&D, a falling tax burden and lower consumer bills. Miracles might happen, but it sounds too good to be true and it is. More likely is the opposite: more and more public expenditure and the need for tax rises, and higher energy, transport, food and heating bills. It is a price worth paying if we are to switch from our carbon-intensive lifestyles and stop living beyond our environmental and climate means. Pretending otherwise – convincing voters and consumers that they can have their cake and eat it – is a dangerous game.
Net zero, green recovery and green industrial revolution plans – what's in a number?
In the UK and the EU, grand Ten Point and Green Recovery Plans are all the rage. In the UK, everything adds up to 10; in the EU it was 20, with its "20/20/20 Climate and Energy Package". They tend to be popular, especially if every technology and lobby gets a prize. There are some advances: this time in the UK, “nature” makes an entry at no. 9 in the latest equivalent of the pop charts. The interesting bits are about what is left out.
In the Ten Point Plan, networks are ignored and carbon taxes are notable by their absence. It's all about production, and the aim is to present “good news”. The politically inconvenient facts that, by not paying for the pollution we are causing, we're all living beyond our environmental means, and that it is ultimately us, as consumers, for whom all this carbon is produced, are ignored. The Plan is all about what happens here. The global problem of the global increase in carbon concentration in the atmosphere – which keeps going up even during the pandemic –and the import of all that stuff made, for example, in China does not figure in the great Plan.
Cracking climate change is all about the much more painful politics of making polluters pay; funding and financing the core infrastructures; and pushing hard on R&D.
COP 26 and global climate agreements - will they work?
In November 2021, world leaders will gather in Glasgow to try once again to crack climate change. It is a formidable task: none of the previous agreements, including Paris in 2016, has made any difference to the march upwards of the carbon concentration in the atmosphere - 2 parts per million every year since 1990. After the 30 wasted years I describe in my book, Net Zero, why would anyone expect a breakthrough?
At the heart of the COP26 negotiations lies the geopolitics between the US and China. Add in the EU and most emissions are captured. There is lots of excitement about Biden replacing Trump, and Xi Jingping’s commitment to becoming “carbon neutral” by 2060. Yet the fundamentals of the US–Chinese relationship have not changed: it is about trade and military power. It is about Taiwan, the Uighurs, and the South China Sea.
COP26 offers another opportunity to focus world leaders’ attention on climate change, but the real action needs to be bottom-up and depends on the unilateral measures nations take. Where the global and the national join up is about trade: about carbon trade and carbon imports. If climate and trade do get joined up at Glasgow, that would really make a difference.
Nature-based solutions to climate change
The big focus in the net zero debates so far has been on emissions – in particular emissions from coal- and gas-fired power stations, and from vehicles, aviation and shipping. That really matters, but it is only half the story: the carbon in the atmosphere is the balance of emissions and the sequestration of carbon by nature – by trees, grasses, vegetation, salt marches, and the oceans. By burning down the rainforests and stripping the carbon out from the soils, we’ve been messing up the ability of nature to do its job.
This second in my series of podcasts sets out the scale of the damage we’ve been doing to nature’s toolkit, and describes what we need to do to move on from destroying nature’s capacity to help solve climate change, to getting it back on track, with the multiple other natural capital benefits that will come too. It is about carbon offsets, carbon markets, and baseline carbon assessments. It is about an environmental policy fit for the net zero agenda, which is now taking centre stage.
Carbon pricing and carbon taxes - an essential part of a net zero strategy
To meet the net zero target by 2050 a carbon price is a necessary (but not sufficient) part of the decarbonising policy architecture. Its time is coming: after the transition ends with the EU, from 1st January 2021, the UK will have its own carbon pricing mechanisms.
This podcast explains why a carbon tax is better than shadowing the EU ETS or inventing a new UK ETS. It tackles the carbon border adjustment issues, and knocks down each of the objections raised by the various interests. It explains how a single carbon price across energy, transport and agriculture would maximise the role of markets and bring carbon offsetting into the mix. Starting by amalgamating all the various carbon prices that already litter the policy landscape, the podcast goes on to set out how a carbon tax can be pragmatically implemented.