Chris Harris says so far consumer action on decarbonisation remains an untapped resource. How can it be harnessed?
Climate change has been on the political agenda at least since the Kyoto Protocol in 1997, driven by the United Nations Framework Convention on Climate Change, and before that, for example in Margaret Thatcher’s speech to the Royal Society in 1988.
It is a struggle to make greenhouse gases, and carbon dioxide in particular, salient issues to citizens and consumers – even for those who have changed their behaviour because sustainability resonates with them. Climate change has been something for government to sort out and the principal political question was the perceived clean-secure-affordable ‘trilemma and therefore how much to pay for climate change mitigation using macroeconomic policies and the tools of taxes or levies and subsidies.
Society has changed and control is decentralised and diffused. At the political level we have seen government by Tweet in the USA, the Speaker of the House of Commons driving backbencher power and a single issue defining an election across party lines. At a societal level individual responsibility is catalysed by seminal events and images: the Me-Too and Black Lives Matter movements that made us take stock of our unconscious tolerances and biased daily behaviours, were both catalysed by events. The movement away from single use plastics, at a very individual level, was catalysed by images like a whale trying to eat a dustbin and one policy – charging for plastic bags.
The same zeitgeist brings individual responsibility for climate change. For the first time, climate change has become a thing for ‘us’ – me and you – to address, rather than ‘them’ – government.
a ‘rhythm of life’ change to how we live, work, travel and relate to one another
There are two alternative visions of the low carbon transition. One is a policy-tech solution. The other is a ‘rhythm of life’ change to how we live, work, travel and relate to one another. At one extreme, government determines the carbon target and the macroeconomic issues such as how much to pay, and we rely on technology to find solutions that become cost effective. At the other, tomorrow’s weather forecast determines the charging of my/our electric vehicle and in energy-poor ambient conditions (eg no wind or sun) I might go to work 30 minutes later to ride-share with my neighbour.
The choice between these two alternative visions may have been made for us, in the change in carbon target from 20% of 1990 emissions as enshrined in the 2008 Climate Change Act to net zero in the 2019 Act. To achieve the last 20% through tech and policy alone may not be possible. Societal change – the net zero society – can and will achieve it.
Delivering change
What does this mean for electricity and finance? Firstly, the success of the power sector to date in decarbonisation must continue. Tech has delivered, for example in the levelised cost of on and offshore wind, and photovoltaic from domestic to large scale. Tech will continue to deliver, particularly in big data, heuristics and automation. The power sector must, and can, get to negative emissions overall.
Low carbon transportation, whether electric or low-carbon molecules (ie biofuel or hydrogen) is very achievable. But at this point, we have not figured how key infrastructure (windfarms, nuclear power, roads and electrical vehicle charging, electricity networks, large and small gas pipes, decentralised energy such as photovoltaic, etc.) can co-evolve in a coherent ‘cross vector’ way.
the potential for asset stranding is a significant concern for financiers
With pipes for molecules in particular, the potential for asset stranding is a significant concern for financiers. In electricity, the stranding risk is generally small, but residual risks arising for example from regulatory changes in charging methodology and capital cost calculation and benchmarks, remain at the level where there remains a high “deadweight” cost of risk that ultimately flows to consumers. The response of citizens to the issues of the day, reinforced by the commercial opportunities open to them (us) in terms of data and automation, remains a largely untapped resource. The call to action for a zero carbon society will not only be a key enabler: it can help de-risk investment in infrastructure and tech deployment.
Chris Harris is chairing the British Institute of Energy Economics’ (BIEE) next research conference, which will take place in Oxford on 22- 23 September 2020. It is looking for exciting and innovative work on the challenges of delivering net zero.
You don’t have to be an economist or an academic to present. Speakers are welcomed from energy analysts, researchers, strategy and policy thinkers from all backgrounds, including industry, academia and research organisations, government, the finance community, NGOs and consultancies.
Submit your proposal by 3 March. More details here.