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A blueprint for a net zero economy

The aim of the report is to provide independent advice to the UK government and devolved administrations on setting and meeting of future carbon budgets. Armed with a strong team of economists, the material published this week not only sets out proposals for the sixth carbon budget but a pathway to net zero.

It is an epic read (1,000 pages in all) and will take time to digest, consider and respond in a meaningful way (you can find the full suite of reports here). It is, in essence, a blueprint describing how we will transform our economy to a net zero one in three decades.

A 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.

Last year, the CCC estimated that in addition to the normal run rate, additional marginal investment would need to be 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.

This has the led the Committee to recommend front-loading effort: it has recommended a 78% cut in greenhouse gas emissions by 2033-37, 10 percentage points lower than the 2030 goal that Boris Johnson confirmed last week, in an update to the UK’s “Nationally Determined Contribution” to the UNFCCC’s Paris Agreement.

The Committee outlines the usual range of hard-technological necessities: banning gas powered boilers by 2033, for all cars and van to be electric by 2032 (against a ban on sales of 2030 as announced by government), a phase out of unabated gas for electricity generation by 2035 and a phase out of diesel HGVs by 2040, are some of the most notable ones.

Of course, regardless of how much costs of energy storage or renewables have fallen, the plan will require a massive infrastructure programme of activity - around £50 billion each year from 2030 to 2050. The UK will be looking to the private sector investment – so the Treasury’s forthcoming interim report on financing the net zero transition remains a critical one.

Yet only two-fifths of the plan is focused on hard technology changes: the remainder is focused on changing behaviours (from changing diets to plugging in cars in future). BEIS has recently established a behaviour change unit and this will inevitably become a key area in the years to come.

On policy, the Committee calls for consistent, low-carbon policy packages for all sectors, developed within a systems approach, including a clear long-term direction, investable incentives, removal of non-financial barriers and investment in innovation and skills. Alongside it calls for strong regulation to phase out high-carbon technologies and behaviours, a rebalancing of carbon pricing to encourage low-carbon options and deeper public and business engagement, among others.

Yet despite the Royal Society just last week highlighting that achieving net zero will be impossible without digital technologies, there is barely any mention in the report of the increasing importance sectors are placing on digital to enable their net zero trajectories. Partly this is intentional. The Committee set out the goals, and now it is up to government and the market to determine the best mechanisms for meeting those goals.

Digital technologies will undoubtedly play a vital role in simplifying access to the benefits arising from the adoption of these no-and-low solutions and facilitating behaviour changes; and, in so doing, ensuring that the transition to Net Zero is achieve in a just and fair way.

That said the following are noted by the CCC as being important over the coming decade:

• Flexible energy demand, demand and supply side to balance out the variability in renewable generation. On flexible demand, it specifically mentions smart charging.
• Heating-as-a-service
• Shared mobility, connected and autonomous vehicles, and active travel
• Teleconferencing in lieu of international air travel
• Digital green building passports

techUK’s SmarterUK – its smart infrastructure group – is working closely with National Grid, the Energy Networks Association, SMMT, Energy UK, the UK’s renewable energy associations (RenewablesUK, STA, REA) and the Electric Vehicle Energy taskforce to unlock these opportunities, and of course many other compelling use cases.

The enabling role of digital will no doubt become more significant as use cases are crystalised and clearly communicated to the market, and digital technologies co-evolve with sector’s transition plans.

We’ll be publishing a number of deep dive blogs on the CCC’s report over the coming week or so. If you are interested in working with us on any of the issues raised, please do get in touch.

https://www.theccc.org.uk/publication/sixth-carbon-budget/