This post is by Faustine Wheeler and Arpana Giritharan, policy assistants at Green Alliance.
Climate change is harming the global economy. Losses from extreme weather are set to top $200 billion dollars by the end of the third quarter of 2022, with this summer’s European heatwaves estimated to have cost billions. In the long term, the impact of failing to do anything about it fast enough will be even more dramatic: the Office for Budget Responsibility has estimated it could result in debt of up to 289 per cent of GDP, if no further action is taken. This is clearly unsustainable.
Rishi Sunak has pivoted from Liz Truss’s “growth, growth and growth” narrative by axing investment zones, but pressure is mounting for him to focus on plans for economic growth that don’t do further damage to the environment, especially after the recent Cumbria coalmine decision. The government recently overturned the ban on new onshore wind, after coming under pressure from backbench MPs. More broadly, the net zero carbon goal can create multiple opportunities for economic growth, competitiveness and job creation.
Today, Chris Skidmore MP is submitting his Review of Net Zero to government. Our response to the review in October demonstrated how the net zero transition can create growth through the energy market, the circular economy, electric vehicles, alternative proteins development and more. Here were the top three takeaways in our submission.
There are jobs and savings in action on energy
As acknowledged in the chancellor’s autumn statement, rising energy prices are responsible for most of the fall in cumulative growth since March 2022. This highlights the need to speed up the switch to renewable power which is currently nine times cheaper than gas, shift spending towards domestic energy sources and tackle unemployment with more highly paid, skilled jobs.
Our research has found that low carbon power sources support three to five times more secure work per megawatt than gas. With the 30,000 new jobs that could be created in fitting home insulation over the next ten years, the UK trained workforce could grow by 230,000 by 2030, during which time energy bills will be coming down.
The government has already acted on our recommendation to remove the block to onshore wind under the National Planning Policy Framework, but more than this is needed. We think Ofgem should be given a net zero duty to speed up the deployment of renewables. Fully decarbonising the UK’s power system by 2035 – focusing on onshore wind and solar – would distribute secure, skilled work more evenly across the regions, helping to level up the country.
Green finance is a big opportunity
As the largest exporter of financial services in the world, the UK has a major opportunity, given most of the costs of net zero will be borne by the private sector. The Financial Services and Markets Bill, currently going through parliament, should attach green requirements to the Solvency II reforms. Under current proposals, life insurers would be required to hold much less capital in reserve to protect them from unforeseen losses. The capital this releases should be channelled into long term green infrastructure projects, such as low carbon energy. Ricardo Energy and Environment has estimated that low carbon financial services could generate export opportunities of up to £7.5 billion a year in 2030, rising to £17 billion a year by 2050.
Reforming payments to farmers will pay dividends
The agriculture and land use sectors will have to be at net negative carbon emissions by 2050, storing excess carbon emitted by other sectors. This is all while the land is needed for food, reversing nature decline, supporting renewable energy production and for housing and other development. Following Brexit, the UK has a once in a generation opportunity to fulfil these goals by moving away from EU Common Agricultural Policy subsidies which paid farmers based on how much land they had, towards new schemes that pay for the environmental benefits farmers and land managers can provide.
In England, Defra is developing and rolling out new Environment Land Management (ELM) schemes for farmers and land managers. We’ve recommended a ‘three compartment’ approach as a basis for the schemes. Simply, this would mean farmers on the best land would maximise food production in a more sustainable way, using precision technology and other practices to reduce artificial inputs and integrate more nature where it benefits yields. Farmers on the poorest land for food production would be paid to manage biodiverse woodlands, wetlands and species rich grassland habitats as the dominant land uses. On the land in between, where making a profit from food production alone is not always easy, a balance of food production and payment for environmental delivery would increase returns for farmers.
These are just three of the growth wins we’ve offered the Skidmore review. Others, around housing, energy and resource saving particularly make sense in light of the current economic crisis. Net zero is a whole economy approach with huge potential for positive whole economy impact. We can’t afford not to take it.
Read Green Alliance’s response to the government’s Review of Net Zero, conducted by Chris Skidmore MP.