The Emissions Gap: What Does It Mean for Us?

Friday, 15 November 2024

The Emissions Gap: What Does It Mean for Us?

The UN Environment Emissions Gap Report was published on 24 October. Disclosure: I have been on the Steering Committee since 2012. Here I summarise some of the conclusions, but focus mainly on the implications. What did the Executive Director of UNEP, Inge Andersen, mean, when she said that ‘We need global mobilization on a scale and pace never seen before’.

The Emissions Gap Report

In one sentence, in my words, not those of the report, an over-arching conclusion of the EGR is that limiting warming to 1.5 degrees is no longer within reach unless two stringent conditions are met: first, rapid reductions in the very short term, in all GHG emissions, including methane; and, second, commitment to carbon dioxide removal during the century running into some hundreds of gigatons.

Have a look at the Figure below. On current policies, there is a 100% probability that 1.5 degrees will be missed, and a 97% probability that 2 degrees will also be missed. There is only a 66% chance of holding warming to 3.1 degrees, and a 10% chance warming will exceed 3.6 degrees. There is only one scenario that keeps warming below 2 degrees: all current pledges are met, and also all mid-century net zero pledges. Unfortunately, current pledges are not being met, and mid-century pledges are not all credible (see Figures in the Appendix). Emissions are currently rising, not falling as they should be, and reached a record of 57.1 Gt in 2023; 11 G20 members (including the UK) will not fulfil their pledges on current policies (again, the relevant Figures are in the Appendix). Hence the alarm expressed in the report; and the call both for immediate reductions and for much more ambitious commitments in the next round of national pledges, due in 2025 for the period to 2035.

Figure 1

Temperature projections from the Emissions Gap Report

Source: https://www.unep.org/resources/emissions-gap-report-2024

What does ‘ambitious’ mean in this context? The Report says that ‘if action in line with 2°C or 1.5°C pathways were to start in 2024, then global emissions would need to be reduced by an average of 4 and 7.5 per cent every year until 2035, respectively. If enhanced action that goes beyond current unconditional NDCs is delayed until 2030, then the required annual emission reductions rise to an average of 8 per cent and 15 per cent to limit warming to 2°C or 1.5°C, respectively.’ Remember, emissions are still rising, not falling.

Who should do what? The answer, of course, is that everyone needs to act - but the finger points especially at G20 countries, who account for 77% of all emissions, and, within that group, to richer and historically high emitters, of which the UK is one. On some fair share estimates, the developed country members of the G20 would need to reach net zero within a decade. See the Figure for the G20 as a whole in the Appendix.

Technically – theoretically – there are options available to bridge the gap: solar and wind energy, forestry, electrification of transport, improved energy efficiency, even carbon dioxide removal in the longer term. The challenge is implementation: overcoming political, financial, institutional and logistical hurdles to deliver change at the pace required.

There is much more in the Report. Do have a look: https://www.unep.org/resources/emissions-gap-report-2024.

Implications for the UK

Which brings us to the UK. The country has a long term goal of net zero by 2050, a forward and legally binding carbon budget to 2037, and an NDCNational Development Council to 2030. All these promise significant reductions, though not on the scale implied by the most ambitious fair share models. The Climate Change Committee says that the reduction in emissions in 2023 was roughly in line with the annual pace of change needed to meet the UK’s 2030 Nationally Determined Contribution (NDC) (5.7% per year from 2023 to 2030). However, the average annual rate over the previous seven years was insufficient: outside the electricity sector, the rate of reduction was only 1.6% p.a. The Committee says that country is not on track to reach the NDCNational Development Council target and that ‘urgent action is needed to get on track’. And note that all these numbers relate to territorial, not consumption emissions, which include imports. Imported emissions have risen since 1990, whereas territorial emissions have fallen, and now account for about 40% of all the UK’s consumption emissions (Figure 2).

Figure 2

UK Territorial and Consumption Emissions

Source: https://www.theccc.org.uk/publication/progress-in-reducing-emissions-2024-report-to-parliament/

Where does the new Government stand? Clean energy is one of five ‘missions’ which frame policy, alongside growth and other topics (Box 1). The Secretary of State for Energy and Net Zero, Ed Miliband, is said to be preparing to announce a new 2035 NDCNational Development Council early, in time for the COP in Azerbaijan in November. He has asked the Climate Change Committee for advice on a suitable target, and they have recommended that the target be increased from a 78% reduction since 1990 to 81%. A full carbon budget covering the period 2038-2042 will be published on 25 February 2025.

There are many issues to sort out – or questions to ask when the NDCNational Development Council is published: many details, of course, on how reductions are to be effected, where the finance is going to come from, and what policy and institutional changes are required, but also some more general questions.

First, it is worth recalling that the Emissions Gap Report built on other standards to propose five tests of successful NDCs in the next round (see Box2 ). Note especially the requirement to be transparent about fair shares and highest possible ambition.

Source: https://www.unep.org/resources/emissions-gap-report-2024

Second, should the UK not pledge reductions in consumption emissions as well as territorial emissions? This would recognise the salience of imported emissions and the importance of demand management in an overall climate plan.

Third, in this connection, should not the Government’s energy mission be broadened to include other emitting sectors? As the ONS has documented, electricity supply accounts for a declining share of total emissions, with buildings, industry, agriculture and waste also important. There is also no reference to nature or the wider environment in the energy Mission, and no reference to the links between mitigation and adaptation (for example, through better land use).

Fourth, what would be the UK’s fair share of global emission reductions. Is a reduction of 81% in territorial emissions compared to 1990 enough? Emissions in 2035 will still be of the order of 200 Mt. The Climate Change Committee describes an 81% reduction as a ‘credible contribution’. Is it? Campaigners think not. So, is this ‘mobilization on a scale and pace never seen before’? Note, however, that the Government has committed to spending £22bn over 25 years on carbon capture and storage. This will need to be factored into the NDC.

Fifth, what trade-offs or choices are implied by the fact that clean energy is only of five missions. In particular, is the climate mission compatible with the growth mission? See this discussion on whether green growth is sub-optimal growth.

On the last question, some guidance is available from the industrial strategy published as a Green Paper consultation in October. This says that ‘growth is the number one mission’ of the Government, but says that growth will be ‘supportive of net zero’ alongside other objectives, including rebalancing growth among the regions. It cites the driving importance of the clean energy commitment, and identifies claimed UK comparative advantage in green sectors associated with the transition. There will be a targeted approach to delivering growth in eight ‘growth-driving sectors’, viz Advanced Manufacturing; Clean Energy Industries; Creative Industries; Defence; Digital and Technologies; Financial Services; Life Sciences; and Professional and Business Services. Areas for policy intervention include: People and skills; Innovation; Energy and infrastructure; Regulatory environment; Crowding in investment; and International partnerships and trade. There is quite an emphasis on geographical rebalancing and on growing high potential clusters.

The document was prepared for the Investment Summit held on 14 October, and is understandably upbeat about the UK’s strengths and comparative advantage. Note, however, that some of the claims about UK leadership in green sectors has been questioned. Reviewing recent research (cited in the Industrial Strategy), Max Mendez-Parra concludes that ‘It is unlikely that the UK would ever present a comparative advantage to produce most of the green goods required to support its net zero transition.’ He argues instead that ‘This does not mean, necessarily, that the UK cannot participate in their production. Following Ricardo’s principle of specialisation, the UK’s transition to net zero could be achieved by importing more efficient green products produced somewhere else and specialize (although, making more efficient and greener the necessary production processes) in other products or services that could be inputs or intermediate goods in the production of green goods.’

Settling this important debate about costs and trade-offs looks to be an important aspect of further work on the UK’s Net Zero ambitions.

It is interesting, by the way, that construction does not feature in the growth-driving sectors, given the emphasis the Government has placed on housing. Is this because it is not considered suitable for foreign investment, or is thought not to be a tradeable sector?

Implications for Brighton and Hove

When it comes to Brighton and Hove, the long-standing Carbon Neutral 2030 programme provides a template. The forthcoming Decarbonisation Pathways Study will doubtless update and extend the analysis: see here for six tests that can be applied to that work. More generally, it is interesting to ask about the links between the new industrial strategy and Brighton and Hove’s own Economic Plan, agreed in July 2024.

Here, I confess I cheated. Rather than parsing the two documents myself, I asked Google’s impressive new AI programme, NotebookLM, to do the job. I uploaded the two documents, and asked it to compare and contrast the UK industrial strategy and the Brighton and Hove Economic Plan. The result is definitely good enough to open a conversation:

Both the UK's "Invest 2035" Industrial Strategy and the Brighton and Hove Economic Plan for 2024-27 aim to promote economic growth, but they differ in scope, focus, and approach.

Scope and Timeframe

UK Industrial Strategy: A national strategy encompassing the entire UK economy, with a long-term vision spanning a decade.
Brighton and Hove Economic Plan: A local plan specifically tailored to the city of Brighton and Hove, covering a shorter timeframe of three years.

Focus and Objectives

UK Industrial Strategy:

○ Primary objective: Drive overall economic growth by focusing on eight broad "growth-driving sectors" offering high growth potential. These sectors encompass both existing strengths and emerging technologies.

○ Aims to shape the type of growth pursued, supporting Net Zero, regional growth, and economic security and resilience.

Brighton and Hove Economic Plan:

○ More localized focus: Aims to build on Brighton & Hove's existing strengths and adapt to a better future, delivering an economy that is fairer, greener, and more productive.

○ Strong emphasis on community wealth building and inclusive growth, ensuring that diverse and vulnerable groups benefit from economic development.

○ Aligns with the Council Plan's outcomes of a city to be proud of, a fair and inclusive city, and a healthy city where people thrive.

Approach and Policy Levers

UK Industrial Strategy:

○ Employs a targeted approach, focusing on specific sectors and places with the greatest potential for growth.

○ Considers both sector-specific and cross-cutting policies to address barriers to investment, including skills, innovation, energy, infrastructure, regulation, and access to finance1920.

○ Emphasizes international partnerships and trade to attract foreign investment and expand markets for UK businesses.

Brighton and Hove Economic Plan:

○ Adopts a more collaborative approach, involving extensive engagement with stakeholders from the private, public, and third sectors.

○ Focuses on promoting Brighton and Hove as a vibrant and creative destination, leveraging its unique attributes to attract investment and support local businesses.

○ Recognizes the importance of addressing inequality and promoting inclusivity in economic growth, with specific actions outlined in the Equalities Impact Assessment.

○ Highlights the need for a skilled workforce, aligning with the emerging City Skills and Employment Plan.

Overlap and Alignment

While distinct in their scope, the Brighton and Hove Economic Plan aligns with several aspects of the UK Industrial Strategy.

○ For example, both plans recognize the importance of a skilled workforce, innovation, and addressing inequality in economic development.

○ Brighton and Hove's strengths in the creative and digital sectors align with the UK Industrial Strategy's focus on these as growth-driving sectors.

○ Both plans emphasize partnership and collaboration to achieve their objectives.

Key Differences

Scale and Specificity: The UK Industrial Strategy is a broad national framework, while the Brighton and Hove Economic Plan is a localized plan with more specific actions tailored to the city's context.
Sectoral Focus: The UK Industrial Strategy identifies eight broad growth-driving sectors, while the Brighton and Hove Economic Plan focuses on the city's existing strengths, such as the creative and visitor economies, alongside emerging opportunities in areas like digital technology.
Emphasis on Inclusivity: The Brighton and Hove Economic Plan places a stronger emphasis on community wealth building and inclusive growth, with specific actions to ensure that benefits are distributed fairly across different communities.

Overall, the UK Industrial Strategy and the Brighton and Hove Economic Plan represent different levels of economic planning, but they share common goals and principles. The Brighton and Hove Economic Plan can be seen as a localized implementation of the broader UK Industrial Strategy, tailored to the city's specific context and priorities.

Finally, and this was for fun, the Industrial Strategy Green Paper asks for input, so I tasked Notebook LM with writing a letter from the Leader of Brighton and Hove Council to the Business Secretary in London.

The Government is calling for comments on its industrial strategy. Brighton and Hove has an economic plan. Draft a letter from the leader of Brighton and Hove Council to the Government Business Secretary, responding to the industrial strategy and listing specific asks on behalf of the City,

Letter to the Business Secretary

The Rt Hon Jonathan Reynolds MP

Secretary of State for Business and Trade

Department for Business and Trade

1 Victoria Street

London SW1H 0ET

Dear Secretary of State,

Re: Response to the UK's Modern Industrial Strategy "Invest 2035" Green Paper

On behalf of Brighton and Hove City Council, I am writing to respond to the government's call for comments on its modern industrial strategy, "Invest 2035." We welcome the government's commitment to driving economic growth and recognize the potential opportunities presented by the strategy for cities and regions across the UK.

Brighton and Hove's Economic Strengths and Alignment with "Invest 2035"

Brighton and Hove has a vibrant and diverse economy with particular strengths in the creative, digital, and visitor economies. These sectors align strongly with several of the growth-driving sectors identified in "Invest 2035," including the Creative Industries and Digital and Technologies sectors12. Our city is home to a thriving community of small businesses, entrepreneurs, and innovators, and we have seen significant growth in these sectors in recent years. For example, the number of jobs in our digital and creative sectors has grown by over 35% since 20153.

We have recently adopted "An Economic Plan for Brighton & Hove 2024-27" which sets out our ambition to build a fairer, greener, and more productive economy for our city45. Our plan is underpinned by the principles of community wealth building and inclusive growth, ensuring that economic benefits are shared widely across our communities and that we address issues of inequality and deprivation6789. This local focus on inclusivity complements the "Invest 2035" strategy's objectives of supporting Net Zero, regional growth, and economic security and resilience10.

Specific Asks on Behalf of Brighton and Hove

While we are supportive of the overall direction of "Invest 2035," we would like to highlight several specific asks on behalf of Brighton and Hove to ensure that the strategy effectively supports the growth and prosperity of our city. Here is what came back.

1. Recognition and Support for Coastal Economies: We urge the government to explicitly recognize the specific challenges and opportunities faced by coastal economies like Brighton and Hove. Coastal towns often have distinct economic structures and face unique issues related to seasonality, tourism, and infrastructure. Targeted policies and investments are needed to support the growth of coastal economies and ensure that they are not left behind.

2. Prioritization of the Creative and Digital Sub-Sectors: We urge the government to prioritize the creative and digital sub-sectors within the broader growth-driving sectors. These sub-sectors are particularly important for Brighton and Hove, and we believe they offer significant potential for growth and job creation at the national level. Specific support could include:

Investment in skills and training programs tailored to the needs of the creative and digital industries11.
Measures to improve access to finance for creative and digital businesses, particularly SMEs12.
Support for the development of creative and digital clusters through initiatives such as targeted infrastructure investments and business support programs13.

3. Investment in Sustainable Transport Infrastructure: Improved transport infrastructure is crucial for the continued growth of Brighton and Hove's economy. We ask the government to prioritize investment in sustainable transport solutions that connect our city to the wider region, including:

Improved rail connectivity to London and other major cities14.
Investment in sustainable public transport within the city, including bus and light rail options14.
Support for active travel infrastructure, such as cycling and walking routes14.

4. Support for Affordable Housing and Workforce Development: The high cost of housing in Brighton and Hove is a significant barrier to economic growth. We ask the government to:

Increase investment in affordable housing to ensure that key workers and those on lower incomes can afford to live and work in the city15.
Support the development of a skilled workforce through initiatives such as apprenticeships, training programs, and collaboration with local businesses and education providers616.

5. Collaboration and Devolution of Powers: We believe that effective implementation of "Invest 2035" requires strong collaboration between national and local government. We urge the government to:

Engage meaningfully with local authorities like Brighton and Hove City Council in the development and implementation of the Industrial Strategy17.
Devolve greater powers and resources to local government to enable us to tailor policies and investments to the specific needs of our communities18.

Conclusion

We believe that Brighton and Hove has a significant role to play in the success of the UK's modern industrial strategy. By working in partnership with the government, we can leverage our city's strengths to drive economic growth, create jobs, and build a fairer, greener, and more prosperous future for all. We urge the government to carefully consider our specific asks and to work with us to ensure that "Invest 2035" delivers for cities and regions across the UK.

Yours sincerely,

INSERT Name

LEADER OF BRIGHTON AND HOVE CITY COUNCIL

Not bad. But how about this? I was looking for a link to an announcement about CCS on the website of the Department for Energy Security and Net Zero, and found the Government has just announced a grant of £5.8m to fund neighbourhood heat networks in six towns: here. Brighton and Hove is not one of the six. That’s a real pity. The City has form on the issue, via the work of the Brighton and Hove Energy Services Cooperative, BHESCo. If I were Leader of the Council, I would definitely be expressing strong disappointment in any letter to Jonathan Reynolds.

This artcile first appeared on the website of Climate:Change, the independent and non-partisan think-tank on socially inclusive climate solutions for Brighton and Hove: www.climatechangebh.org.uk

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The Emissions Gap: What Does It Mean for Us?

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