The Committee on Climate Change's recommendations for the Net Zero Economy

The Committee on Climate Change (CCC) has published its eagerly-anticipated advice to the UK Government on the UK's long-term climate change targets and has made a series of bold recommendations as to the steps that need to be taken in order to meet those targets as the UK transitions towards a net zero carbon dioxide and greenhouse gas emissions economy.

Although the CCC has no legislative or policy-making powers, it is a statutory body and is particularly influential. As a result, its recommendations are certain to be observed very closely by senior Ministers and will shape policy in the short-term.

Awareness of climate change is at a high - in the past month alone there have been ten days of environmental protests in London; a highly acclaimed visit to the UK by international climate ambassador Greta Thunberg; and last night, Members of Parliament passed a motion declaring an "environment and climate emergency".

What does this mean for business?

The CCC's recommendations are bold and pack a punch; and there are already calls for a "green industrial revolution". Given the demand for strong environmental performance from investors, employees and other climate change-aware stakeholders, we think that following the publication of the CCC's report, businesses will be under increasing pressure to articulate their environmental credentials and performance on a regular basis; to rectify their adverse impacts on the environment, and to make a net positive difference to the environment. Following publication of the CCC's report - and prior to firm Government policy being made - we fully expect stakeholders be asking businesses "what are you doing in response to the CCC's report?" and those without a comprehensive strategy or adequate response will suffer.

Background to Emissions Reduction Targets

Ten years ago, the newly created CCC advised the (Labour) Government that at least an 80% cut in greenhouse gas emissions (when compared with 1990 levels) was needed by 2050. The CCC argued that this would be "an appropriate contribution to a global deal aiming to reduce Kyoto gas emissions to between 20-24 billion tonnes by 2050". The CCC advised that with appropriate policies, the emissions cuts would be affordable, at 1-2% of GDP. Prior to the 80% target being recommended by the CCC and subsequently enshrined within the Climate Change Act 2008, the emissions reduction target was 60% which had been recommended by the Royal Commission on Environmental Pollution in 2000.

Last year, the Intergovernmental Panel on Climate Change (IPCC) published a special report on the impacts of global warming of 1.5 °C above pre-industrial levels, with the aim of strengthening the global response to the threat of climate change. The IPCC concluded that human activities were likely to result in at least a 1.5 °C increase in global warming between 2030 and 2052. The IPCC noted that, "climate-related risks to health, livelihoods, food security, water supply, human security, and economic growth are projected to increase with global warming of 1.5°C". Unfortunately the IPCC report was widely-interpreted as concluding that there were twelve years before action was needed to respond to climate change, whereas it actually encouraged immediate action.

The CCC previously noted that a 4°C increase in temperature has likely been avoided due to existing policies; but that we are on track for a 3°C increase. This would be "a destructive level of warming" and we are not at all close to achieving the global warming goals of 1.5-2°C as set by the Paris Agreement, which the UK ratified in November 2016. Following the "sobering" IPCC report and given the length of time since it has reviewed the UK's emissions reductions targets, the CCC was asked last year to reappraise the 80% by 2050 emissions reduction target.

The CCC's latest report is significant and substantial in all respects - not least in length at over 600 pages (with technical appendices). It certainly achieves the CCC's aim of producing a "gold standard appraisal". This briefing highlights some of the most significant recommendations made by the CCC.

A New Emissions Target

The CCC has recommended that the UK adopts stricter emissions targets than currently apply; so that we are net zero emissions by 2050. For Wales, the CCC recommends a 95% reduction in greenhouse gases by 2050; and in Scotland the CCC recommends net-zero by 2045 - something that the First Minister of Scotland, Nicola Sturgeon, has already pledged on Twitter to do!

Among the many recommendations from the CCC as to how net zero emissions can be achieved, some of the key proposals include the following:

Housing

The UK Government has already stated that from 2025 all newly-built houses will not be connected to the gas grid. According to the CCC, by 2035 almost all replacement heating systems for existing homes must be low-carbon or ready for hydrogen. This will have implications for housebuilders and their supply chains, who will be called upon to develop low-cost heating systems

Sustainable Surface Transport

Transport in the UK accounts for around 25% of greenhouse gas emissions. The Mayor of London, Sadiq Khan, is introducing methods of tackling the city's poor air quality with the recent introduction of the Ultra Low Emission Zone (ULEZ), which levies a charge in addition to the congestion charge on the most-polluting vehicles. Similar schemes may be introduced in other cities in the UK, which will impact everyone living, commuting or delivering goods there.

The CCC believes that all cars and vans on our roads should be electric by 2050 - in fact the CCC suggests that new sales should be electric from 2035, if not 2030. The cost of batteries for electric vehicles is already falling and soon it will be cheaper to buy an electric car than a petrol or diesel motor. The infrastructure in the UK must support the transition to electric vehicles though and this includes requiring new developments to incorporate electric vehicle charging stations. Heavy-goods vehicle electrification is more difficult and the CCC proposes that vehicle and fuel taxation from the 2020s could be designed to push operators to operate electric goods vehicles. The CCC notes that if a hydrogen-based switchover were adopted, 8000 refuelling stations would be needed compared to 90,000 depot-based chargers for overnight electrical charging.

Aviation and Shipping

For shipping, the CCC recommends improved energy efficiency in ship operations and alternative fuels; and recognises that net zero emissions are not achievable and offsets would be needed.

The CCC recognises that aviation is tricky - there are only fossil-fuelled aeroplanes and there is a cultural element in that people want to travel abroad quickly and cheaply. The CCC considered hybrid-electric aircraft from 2040 and reductions in aircraft design speeds as means to reduce emissions as well as greater use of biofuels, but recognises that a fully zero-carbon plane is not anticipated to be available by 2050. As a result, aviation will not be net-zero by 2050 and will likely be required to fund its offsets. The CCC notes its intention to write to the Government later this year with further recommendations.

Power

Although there has already been a dramatic move towards renewable energy, the CCC predicts a doubling of electrical demand by 2050 in order to power all-electric transport and heating systems. By 2050 the CCC predicts 75GW of installed offshore wind capacity in the UK (compared to 8GW currently and 30GW targeted by the Government for 2030). This represents a huge growth market - particularly in relation to the offshore wind supply chain - and it is likely that significant investments will be need in energy efficient storage systems (batteries) - whether on a commercial or domestic scale.

Industry

Industry generally needs to decarbonise - the CCC predicts annual costs of which could be in the region £5-10 billion. Some costs could be passed on to consumers, but there may need to be a carbon trading scheme or taxpayer funding. The CCC also raises the possibility of additional regulation regarding buildings and products standards that would drive demand for low-carbon goods.

Waste

The CCC proposes that by 2025 the UK should cease to send its biodegradable waste to landfill and to increase recycling rates to 70%. The CCC recognises that legacy landfill sites will mean that the sector cannot avoid all emissions.

Land Use and Agriculture

The CCC is not the only organisation that has recently recommended that the general public reduce their meat and dairy consumption. Although the CCC stays clear of ethical and health reasons, instead focussing on the environmental benefits of doing so, the CCC believes that individuals should consider reducing their consumption of beef, lamb and dairy by 20% and this would release land for increased afforestation, biomass production and peatland restoration.

Carbon Dioxide Removal

Innovative technology to capture carbon dioxide from the atmosphere and store it, thus removing the carbon from the atmosphere, is emerging but still in very early stages. The technology is evolving though and the CCC notes that if breakthroughs can be made, it could make the overall net-zero challenge materially easier. The CCC recognises that the costs are high - between £10 billion and £20 billion per year - but suggests that some of this cost could come from industries which are unable to reduce their own emissions to zero - for example, aviation.

Planet+

At the beginning of this briefing, we explained that we expect stakeholders to be increasingly vocal in asking businesses about their environmental performance following publication of the CCC's report. This is what Gowling WLG is doing in the UK.

We have adopted six goals that we want to achieve by 2030. The goals reflect the nature and scale of the challenge and the areas in which we can make a real impact. They are stretching - and our plans to meet the goals will evolve over time - but we are committed to take a lead as a business, and to engage everyone in the firm.

 

We are drawing from the UN's Sustainable Development Goals, and related science and research, to set our destination (PLANET+ goals) and shape our action plans, with international standards ISO14001:2015 (environmental management) and ISO50001:2011 (energy) guiding the way. It is through colleagues, clients, on-site contractors, other suppliers and competitors where the greatest opportunities to make a real difference lie. Listening, tapping into our talent, sharing ideas and bringing everyone with us, is how these stretching goals become achievable over time.