UK’s greenhouse gas emissions — a sectoral analysis and implications
As we get closer to COP26 in November, there will be many interesting analyses and announcements — all opportunities to learn more about how to mitigate against and adapt in the face of climate change. As the UK Climate Change Committee’s excellent set of reports on the 6th Carbon Budget pointed out, there are many steps on the path to net zero greenhouse gas emissions by 2050.
On one hand, a net zero economy is relatively easy to conceptualise: very simply, every activity will need to be carbon-free. Driving a car, heating your home, taking a holiday, watching the TV — all this will need to be powered by either green electricity (whose carbon footprint is net zero), heat sources that are carbon free (so, for example, green electricity or hydrogen), or fuels for which offsetting carbon reductions are taking place somewhere else (which might be the case for some aviation). And every item you purchase (such as food), or service you receive (such as education), will need to have been decarbonised by its maker.
On the other, imagining the path to that net zero future is much more complicated. Given that most analyses are clear that there is no time to waste, the obvious question that arises is this: who needs to do what when, and why would they want to do it? Plenty of reports have been dedicated to that question, too, and are increasingly sophisticated about the mix of policy instruments — from taxes and subsidies to regulation and information — that will be required.
Looking at the underlying pattern of emissions is instructive, in my view, to better understand the agents that will be the leaders of this change, and others that are more likely to be followers. The chart above shows the UK’s current situation.
A big chunk — around 30% — of all direct emissions are made by households. About half of this is heating (mostly gas boilers) and about another half is transport (mostly cars). The good news is that electric vehicles and the related infrastructure are rapidly developing and take-up (partly fuelled by subsidies) is expected to be fast. This will allow passenger cars to become essentially zero carbon. The bad news is that decarbonising the heating of homes is going to be challenging. An economist might think that there is an incentive to do so, anyway: wouldn’t improving insulation, or lowering the thermostat by a degree or two, save the household money?
Well, yes it would, but not enough for it to trigger sufficient behavioural change. There is a whole complex literature around all the reasons why households are still not saving very much energy. But let the following serve as a useful illustration: based on a fascinating report from 2012, I calculate that by wearing a thick sweater and lowering their thermostat by one degree centigrade, a household could save around 13% of their annual heating bill. That sounds rather promising — until you translate it into real money. Would you do this for a saving of £64? [Note: the calculation was done pre-gas-price hike. But even if the figure doubled, I suspect many of us would still not do it.]
The second important point about economic agents arising from the chart is the limited incentives some of the lower-emission sectors might have to take action against climate change. Even with high energy and/or carbon prices, the costs to many of those businesses or organisations would be very small. Of course some would want to reduce their emissions for reasons other than cost — for example, to market their brands as sustainable, or to meet other commitments to customers, employees or stakeholders. But what about the rest?
As I concluded in the short piece I contributed to the Climate Change Committee’s Policy Advisory Group report, I believe that the decarbonisation needs to be done “for them” by someone else, just like it needs to be done “for” households (by and large — e.g., by greening electricity and cars). So, the lighting, heating, buildings and equipment businesses use, the cars or vans they drive, the raw materials and products they consume, the flights their employees take, the food their employees or customers eat — these will all need to have been made zero-carbon by the time they reach the users.
I’m aware that this is a very supply-side view of the net zero challenge. I have glossed over, probably unfairly, some of the demand-side phenomena that should help, including customers increasingly demanding better environmental performance from their suppliers or reacting negatively to the increased prices that might come about as carbon costs rise. Somehow, as an engineer, I still feel a little more certain about the outcomes if left to other engineers. But there is no doubt that a complex mix of professionals are going to be needed in the delivery of this transformation; and that it cannot just be a top-down exercise if there is to be legitimacy and long-term traction.
