Net Zero

NET ZERO

HOW WE STOP CAUSING CLIMATE CHANGE

Dieter Helm

Copyright

William Collins

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This eBook first published in Great Britain by William Collins in 2020

Copyright © Dieter Helm 2020

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Dieter Helm asserts the moral right to be identified as the author of this work.

A catalogue record for this book is available from the British Library.

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Source ISBN: 9780008404468

Ebook Edition © September 2020 ISBN: 9780008404475

Version: 2020-11-03

Dedication

To Susie, Oliver, Laura, Amelie and Jake

CONTENTS

Cover

Title Page

Copyright

Dedication

Preface

List of abbreviations

Introduction

PART ONE: 30 WASTED YEARS

Chapter one: No progress

Chapter two: Kyoto and Paris

Chapter three: Going it alone

PART TWO: THE NET ZERO ECONOMY

Chapter four: Living within our environmental means

Chapter five: The price of carbon

Chapter six: Net zero infrastructures

Chapter seven: Natural sequestration, offsetting, and carbon capture and storage

PART THREE: AGRICULTURE, TRANSPORT AND ELECTRICITY

Chapter eight: Agriculture: green, prosperous and low-carbon

Chapter nine: Reinventing transport

Chapter ten: The electric future

Conclusions: A no regrets plan

Endnotes

Bibliography

Index

Acknowledgements

About this Book

About the Author

About the Publisher

PREFACE

I thought I had finished writing about climate change a while ago, with my two books on the subject – The Carbon Crunch: How We’re Getting Climate Change Wrong – And How to Fix It and Burn Out: The Endgame for Fossil Fuels – and ‘The Cost of Energy Review’ (the Helm Review) I undertook for the UK government in 2017.[1]

Back in 2012, in The Carbon Crunch I asked the question: why has so little been achieved? I wanted to puncture the complacency, and especially the peak oil fantasy – that we were going to run out of fossil fuels, and hence the oil price was heading north, making what looked like expensive renewables cheap by comparison. I followed this up in 2017 with Burn Out, pointing out that we have enough oil and gas to fry the planet many times over, and that the exit from fossil fuels will be messy for the great oil-producing countries, and messy for the renewables, as the price of oil and gas falls back. In both books, I stressed that a big part of the answer lay with technical progress and new technologies, and suggested that current renewables technologies would not be enough to solve the problem whatever their initial contributions, and they would not be ‘in the money’ any time soon.

And so it has come to pass. The predictions of the peak-oilers have turned out to be nonsense, the price of oil (and gas) has fallen back and, whatever their advocates claim, renewables are not yet subsidy-free once all the costs have been taken into account.

What I had not anticipated was that no serious progress would yet have been made on the fundamental problem, and that the concentration of carbon in the atmosphere would still just keep on going ever upwards, without so much as a blip, and, if anything, slightly accelerate. Only the Covid-19 coronavirus pandemic has made a difference, and this is likely to be temporary. When set against the enormity of the consequences of climate change, the only rational response is anger.

If this failure to achieve anything much in the last 30 years had been the consequence of not trying, it would be bad but at least understandable. But this is not the case: a huge amount of political capital and money has been spent in the name of mitigating climate change. Many people have been led to believe that current policies are working and that we are making good progress. They are not and we are not.

It is hard to stand on the sidelines and watch the results of badly designed policies and the misleading of people whose goodwill in the face of the wall of costs they will have to pay is essential to making progress.

What really bothers me, and makes me pick up the pen again to write on climate change, is the widely repeated claim made by the UK’s Committee on Climate Change (CCC) in the foreword to its recent report ‘Net Zero: The UK’s Contribution to Stopping Global Warming’:

By reducing emissions produced in the UK to zero, we also end our contribution to rising global temperatures.[2]

This is misleading in that the net zero target the CCC advocates is for territorial emissions in the UK, and unless every other country we trade with gets to net zero by 2050 too, or we stop importing carbon-intensive goods, it is simply not true. The net zero carbon production target takes no account of the carbon we import, and which pervades much of our spending. For a deindustrialised economy with only 20 per cent manufacturing, this is particularly pertinent. To give a simple example, if British Steel had closed down (something which was under active consideration at the time the CCC published its report), UK territorial emissions would have gone down, but the subsequent increased imports of steel from, say, China would mean global warming would go up, and by more than it would have had that steel manufacturing remained here. According to the CCC’s logic, why not close the rest of the British car industry, and INEOS’s Grangemouth petrochemical plant too?

Buried later in the CCC report (page 106) is a chart showing the real villain of the piece, carbon consumption, stated as some 70 per cent higher than carbon production (albeit both badly measured and incomplete). If the UK wants to make no further unilateral contribution to global warming, which as I shall argue it should, then it is the altogether harder net zero carbon consumption that matters, and not just the easier bit of net zero carbon production.

It is also misleading because net zero does not actually mean ‘reducing emissions to zero in the UK’. It is not gross zero but net zero. Net zero means that natural and industrial sequestration must be equal to or greater than the remaining carbon emissions in 2050, of which there are still likely to be quite a lot under even the most optimistic scenarios.

The public are being misled, and the CCC’s formulation has the neat consequence that it makes the climate change problem look like it is all about production (and therefore all about what business does), and not about our personal spending. Having set up this illusion, the CCC effectively admits this later on, suggesting that we will have to eat less meat, change the land cover by planting lots of trees, and alter our lifestyles quite a lot. Here it is on stronger ground, although, as we shall see, not by any means strong enough.

It is not just misleading the public that angers me. It is also that a lot of time has been wasted. Thirty years on from the UN’s drive to address climate change, we are still going backwards at an alarming rate. Up to the start of 2020, the concentration of carbon in the atmosphere carried on going up relentlessly at around 2 parts per million (ppm) every year. The only thing that has worked and lowered carbon consumption is the Covid-19 lockdowns, sharply reducing GDP and emissions.

Anger is not enough, and neither is despair at what has so far failed to happen. We can do much better. There needs to be a plan. This is my attempt to bring together my earlier arguments and analyses, to set out a better way of thinking through the carbon problem, and to lay out what a carbon policy would look like if we really wanted to limit global temperatures. It is what I think we should do.

This is about you and me, and about particular countries like the UK. The global UN-led process has failed. Kyoto and now Paris have not made any real difference, and indeed to the extent that political leaders who signed their countries up to Paris tell their voters and citizens that they are therefore taking action, their pledges can become fig leaves for business as usual. They (and us) can be seduced into thinking that it is ‘job done’. Wishing the end entails willing the means.

I am not against more jaw-jaw at the jamborees that the annual Conference of the Parties (COP) have become. But I am against placing much faith in them producing results quickly enough to head off what is likely to happen, or even any meaningful results at all. What focusing on carbon consumption rather than just production does is put the spotlight on the polluters – you and me – and get the polluters to do something about their polluting ways. You and I can make a difference if we change our carbon-consuming habits, and this will make a difference if countries take up this obligation on a carbon-consumption basis. Better still, it turns out that if those countries exporting carbon-intensive products face a carbon border tax on a level playing field with home producers, this encourages them to introduce their own carbon price and keep the money rather than pay it to our government. I will explain how all this works to get much more effective global action than Kyoto and Paris.

We are not impotent, even in the face of something so large-scale and daunting as climate change. Not only can we make a difference to emissions – we can and should reduce our carbon consumption to net zero – some of these changes can also make our lives better. It is pretty obvious that improving air quality by lowering emissions in cities is good for us. It should be good too in Beijing, Delhi and Lagos. But it gets better once the natural carbon sequestration is brought into the frame. Climate change is not just about what we put into the atmosphere, but what nature takes out.

This is the link to my other and more recent writings on natural capital and the use of the land in Natural Capital: Valuing the Planet and Green and Prosperous Land: A Blueprint for Rescuing the British Countryside.[3] I have been working away at how to ensure that the UK government’s overall objective of leaving the natural environment in a better state for the next generation might be achieved in the 25 Year Environment Plan and the supporting legislation.[4] What I have subsequently realised is that how we use the land is a very big part of how we crack climate change, and that it is a key part of net zero. Instead of focusing exclusively on carbon emissions, we also need to take seriously the other side of the equation: the natural sequestration by the land, by the trees, soils and peats, of those emissions. Nature, if protected and enhanced, does this for free all the time, and in the process produces all sorts of other benefits for us too.

In Green and Prosperous Land, I set out the key principles that should motivate action on the natural environment. These are: the polluter-pays principle; the provision of public goods; and the net environmental gain compensation principle. It is these same principles that should motivate decarbonisation. The polluters – you and me – should pay, and that needs a carbon price to incorporate the costs of our pollution, and this should be applied to imported carbon too (and hence trade). The public goods must be provided by the State, even if private companies do the work. These include the crucial low-carbon infrastructures, and research and development (R&D). None of these will be adequately provided by the market on its own. After all the mitigation options have been exhausted, the residual carbon emissions should be offset, and most of this should be natural rather than the industrial carbon capture and storage (CCS) option (although this too has a role).

The neat feature of this merging of the themes of Green and Prosperous Land and my earlier Carbon Crunch and Burn Out is that the environment gets treated holistically. Not doing so creates a very real danger that the silo approach to carbon policies, to the exclusion of everything else, could cause lots of collateral environmental damage. Think what would happen if the Forestry Commission had in the past been let loose with the objective of maximising carbon take-up. The result would have been lots of spruce and even eucalyptus trees, damaging biodiversity, destroying peat bogs and acidifying water courses. It would have been a disaster on an altogether greater scale than the great green conifer blots on the uplands landscapes that the Forestry Commission created in its first 100 years. A proper plan for decarbonisation should be a plan for the environment as a whole – for water, biodiversity, health and well-being, all within a net zero carbon consumption context.

Significant bits of this plan are no regrets: we should do them anyway irrespective of carbon. This includes the R&D and the infrastructures: R&D has lots of unanticipated benefits, and there are lots of new technological advances that will be essential to cracking the carbon problem. I will detail some of these possibilities as the book progresses. Our infrastructures are in such poor shape that no one would relocate to the UK to access them. They have to be replaced anyway, regardless of net zero. The same is true of much of Europe, the US, India and Africa. There should be net environmental gain, not least because of the great mental and physical health benefits, which are now rigorously documented in the scientific literature, and much else besides.

Whether any democracy would vote for all the policies I suggest remains to be seen. The reason for hesitation is that the real message that a focus on carbon consumption brings home is that the root cause of climate change is one that is uncomfortable: our unsustainable carbon lifestyles. If you and I pay for that pollution, and preferably through a carbon price, then our standard of living will be impacted. It is going to cost a lot, and the challenge is to get on a sustainable consumption path, and hence pursue sustainable economic growth, not gross domestic product (GDP). We will have to rebase our lifestyles. It is going to hurt in the short term in order to have the long-term benefits. For if we do not get back onto a sustainable path, the corollary is that our economies will not be sustained. It will happen, it is just whether it happens ex ante by our deliberate choice, or ex post when nature bites back. That is the democratic choice. Failure to act does not abolish the consequences of not acting. They cannot be escaped.

Climate change can be cracked, but not if we carry on deluding ourselves, and our political leaders carry on colluding in maintaining carbon illusions. What is needed is to shine a light on what is going on, and to set out how to address the problem. Whether it will be enough, faced with the enormous challenge of China, India and Africa doubling their GDP every ten years, and hence each being four times bigger by 2040, remains to be seen. It is our moral duty to try, and to do the no regrets stuff first, and it is our leaders’ duty to tell the truth. That is what I try to do here.

LIST OF ABBREVIATIONS

AI, artificial intelligence

BSE, bovine spongiform encephalopathy

CAP, Common Agricultural Policy

CBA, cost–benefit analysis

CCC, Committee on Climate Change

CCS, carbon capture and storage

CEGB, Central Electricity Generating Board

CfD, Contract for Difference

COP, Conference of the Parties

CRISPR, clustered regularly interspaced short palindromic repeats

DECC, Department of Energy and Climate Change

Defra, Department for Environment, Food and Rural Affairs

DDT, Dichlorodiphenyltrichloroethane

DETR, Department of the Environment, Transport and the Regions

DNO, distribution network operator

EFP, equivalent firm power

EMR, Electricity Market Reform

EU ETS, EU Emissions Trading System

GDP, gross domestic product

GMO, genetically modified organism

GW, gigawatt

HS2, a planned high-speed rail project for England

ICT, information and communications technology

IEA, International Energy Agency

IEM, Internal Energy Market

IP, intellectual property

IPCC, Intergovernmental Panel on Climate Change

LED, light-emitting diode

LNG, liquefied natural gas

mbd, million barrels per day

MPC, Monetary Policy Committee

NDC, nationally determined contribution

NFU, National Farmers’ Union

OPEC, Organization of the Petroleum Exporting Countries

ppm, parts per million

PV, photovoltaics

R&D, research and development

RAB, regulated asset base

SUV, sport utility vehicle

TWh, terawatt-hour

UNFCCC, United Nations Framework Convention on Climate Change

USO, universal service obligation

VAT, value-added tax

WTO, World Trade Organization

INTRODUCTION

It is not going well. Thirty years ago, world leaders vowed to address the new great challenge – global warming. Thirty years later, the concentration of CO2 in the atmosphere continues to grow unabated. Over three decades, it went up from around 355 ppm to well over 400 ppm, rising by around 2 ppm per annum. In 2018, it went up by 2.7 ppm. Not even a blip for the global financial crisis dents the relentless upward path. Only the Covid-19 lockdowns and associated temporary collapse of global GDP have checked its path. Global temperatures have already increased by nearly 1°C since the Industrial Revolution.

The world burns ever more fossil fuels. The last 30 years have been the golden age of the fossil fuels. Far more fossil fuels have been burnt in the past 30 years than in the entire nineteenth century. We have benefited from the cheap energy to fuel our cars, heat and power our homes and our digital equipment, and produce all the many things we are now convinced we need, from clothes, houses and flat-screen TVs, to fast food wrapped in plastics. Fossil fuels have transformed our lives and are a key reason why we have such a high standard of living, and why China and other emerging economies have been able to take so many people out of poverty. Everyone else wants what the first carbon economies have got. If you think we are kicking the fossil fuel habit, think again. We are doubling down instead.

If the objective set in 1990 was to reduce emissions and limit global warming, it has been an utter failure. We are not and have never been on a path to a decarbonised future. Sufficient carbon-based capacity is already installed in the world’s energy systems to bust the 2°C target.[1] The numbers for China alone are staggering: it has now exceeded 1,000 gigawatts (GW) of coal-fired electricity generation capacity (for a rough comparison, the total capacity for all types of generation on the British system is around 85 GW). Furthermore, China is building another 150 GW at home (equal to Europe’s total coal capacity, and not far short of that of the US) and promoting and financing hundreds of coal projects abroad. Those misguided enough to see China as leading the way to a greener energy future just need to look at these facts.

It is not just the emissions but the other side of the carbon balance too. While pumping out ever more carbon, we have simultaneously been reducing the ability of the natural environment to absorb it. The capacity of nature to mop it up by natural sequestration through absorption of carbon by trees, soils and peat has been decimated over the last 30 years. Brazil is accelerating the destruction of the Amazon rainforest (this major carbon sink is now being destroyed at the rate of 1 hectare per minute); the Mekong rainforest in Southeast Asia is threatened by huge Chinese dams upriver; and the future of Africa’s largest rainforest and thus carbon sink in the Congo looks grim. Summer fires rage in the peat bogs of Siberia – another immensely important carbon sink. Malaysia and Indonesia keep clearing their rainforests for palm oil. Intensive agriculture has released the carbon from the soil (and decimated its biodiversity), and depleted the peat bogs – degrading these great carbon sinks. Oceans are being acidified, thus decreasing their ability to absorb carbon.

Why is it going so badly? Weren’t the Kyoto Protocol and the Paris Agreement supposed to deal with this? Why has it all been such an utter failure?

The usual answers are all about the failures of world leaders and corporations. It is all Trump’s fault. It is down to the Chinese Communist Party’s addiction to coal. It is those evil oil and gas companies and the coal mining corporations. With one more big heave, encouraged by global demonstrations, increasingly demanding targets will be pledged by the main polluters and the global fossil fuel industry will be pushed towards oblivion as investors flee from their stranded assets. We can sail off into a new prosperity of a low-carbon transition, towards a net zero world. If we all declare a ‘climate emergency’ and sign up to net zero, all will be well, or at least a lot less bad.

To see why this is not going to crack climate change, the key thing to realise is that this is looking down the wrong end of the telescope. It looks at net zero emissions and production on a territorial basis and sees the solution to climate change as switching that production from high to low carbon in specific territories that adopt a net zero target. Get the producers to change their ways, and all will be well. Just get politicians to force them to do so.

While of course production has to decarbonise, there is much more to the climate change problem – and net zero – than this simplistic approach indicates. The right place to start is with consumption and us the consumers, and only then should we look to the producers. We have to remember that all this stuff that is made with fossil fuels, and thus causes carbon emissions, is made for us. When we temporarily stopped consuming so much during the Covid-19 lockdowns, such as shopping, eating out and travel, down went emissions.