A Sustainable Future: Chris Stark, Climate Change Committee CEO, on Reassessing UK Global Climate Leadership

Listen to Jason Mitchell discuss with Chris Stark, Climate Change Committee CEO, about UK’s global climate leadership and the climate policy outlook for 2024.

 

What is the outlook for UK climate policy in 2024? Listen to Jason Mitchell discuss with Chris Stark, CEO of the Climate Change Committee, about how the implications of COP28 could reshape the UK’s global climate leadership; what the Climate Change Committee is doing to advise the UK government on its climate action and adaptation strategy; and why it’s vital we find more powerful ways to drive the net zero transmission into the real economy into the next carbon budget.

Recording date: 18 December 2023

Chris Stark

Chris Stark is Chief Executive of the Climate Change Committee, and previously Director of Energy and Climate Change in the Scottish Government where he led the development of Scotland’s approach to emissions reduction and the energy system transition. The Climate Change Committee, which was established under the UK’s Climate Change Act in 2008, is an independent, statutory body sponsored by the Department for Energy Security and NetZero that advises both the UK and devolved governments on emissions targets and on progress in reducing greenhouse gas emissions and adapting to the impacts of climate change.

 

Episode Transcript

Note: This transcription was generated using a combination of speech recognition software and human transcribers and may contain errors. As a part of this process, this transcript has also been edited for clarity.

 

Jason Mitchell

Welcome back to the podcast and I hope everyone is doing well. So I'm thrilled to have this discussion with Chris Stark, CEO of the Climate Change Committee, to kick off 2024 with an incredibly consequential general election on the horizon now likely in autumn and new commitments coming out of COP 28, there is clearly a lot at stake this year in the UK, and in my mind there are few people as articulate and insightful as Chris in describing the state of UK climate policy and affairs.

When I last talked to Chris two years ago, it was just before COP26 and I can't help but reflect on the optimism in that discussion. It was decidedly different. Expectations ran high, not low. That seemed equally true for both Glasgow ambitions and UK global climate leadership. The whole notion of investor and corporate net zero commitments felt fresh, not jaded or naive in any respect, and the urgency was palpable back then. Recall that UN Secretary-General Antonio Guterres said that 2021 was a make-or-break year.

And I guess the big question is how much progress do we have to show at a UK and global level since Glasgow?

Or is net zero simply more back end loaded?

Which is why it's great to have Chris on the podcast to discuss the climate picture going into the New Year. We talk about how the implications of COP 28 could reshape UK climate leadership, what the Climate Change Committee is doing to advise the UK government on its climate action and adaptation strategy and why it's vital we find more powerful ways to drive the net zero transmission into the real economy, into the next carbon budget.

Chris Stark is chief executive of the Climate Change Committee and previously director of energy and climate change in the Scottish Government, where he led the development of Scotland's approach to emissions reduction and the energy system transition.

The Climate Change Committee, which was established under the UK's Climate Change Act in 2008, is an independent statutory body sponsored by the Department for Energy Security and Net zero that advises both the UK and devolved governments on emissions targets and on progress in reducing greenhouse gas emissions and adapting to the impacts of climate change.

Welcome to the podcast. Chris Stark. It's great to have you here and thank you for taking the time.

Chris Stark

Not at all and it's lovely to be on the podcast again. Nice to speak to you for the second time.

Jason Mitchell

Absolutely. It's been two years. So Chris, I want to set up our discussion with perhaps the most topical issue. COP 28 What are your takeaways? And I think more importantly, what are the implications for the UK coming out of it, especially against the recent policy messaging, essentially backsliding on Net zero ambitions?

Chris Stark

Well, I think I need some time still to process COP 20. I'm just as we speak, I'm just back from Dubai and I went out for an extended eight days. This time I didn't I didn't do that last year, so I had time in the most of the second week I was there. And it's quite interesting when you're in the bubble in Dubai and in any of the cops is itself in the wrong place to be. If you want to get a sense of what's actually going on because the negotiations are taking place alongside what is now increasingly this of trade there. And, you know, every day has a theme. There's all these things happening each day and there's always a reason to do, you know, meet people and talk about other things, funnily enough. But you know, we're back. We can review what's happened at COP 28. And of course, all the discussion has been about the cover text, as it's sometimes called, the the agreed negotiated text that comes out of every cop. No, it didn't always.

But this year we've got quite an extensive piece of text agreed as a consensus position amongst the various parties to the Paris Agreement. So over 190 countries in the world and the big stories about fossil fuels. And we always knew it would be about fossil fuels, even if that text didn't include language and fossil fuels, is still would have been an explicit use because of where it was hosted in the UAE petrol state. And actually on that issue, this is a cop, I think that probably has delivered more than many people in my field thought it would. So, you know, with this this idea of transitioning away from fossil fuels, you might recall, Jason, in the wake of COP26, we were talking about language that was just about phasing out coal and that, of course, in the at the death and COP26 failed to and became a phasing down language other than seizing a well. This time we're not just talking about coal, talking about transitioning away from old fossil fuels. And I have to say I think that is a major achievement and it is a mixture of a reflection of where we are in the global transition and the reality of that now starting to bite, which means that the text that back is easier to agree because I think everyone nurses were in the plateau period for our use of fossil fuels and cop itself driving some of that ambition. And I think the main reflection I can take on all of this is that the COP process itself is just such an interesting beast, and I tend to think of it now as a way in which globally we sort of raise the floor of our ambition every time we have a cop.

And then alongside that we have a set of side deals or trade or sector agreements or sometimes led by high ambition countries. We sort of push the ceiling of what's possible alongside the floor in the covered text. And this has been another cop that has done just that. But I just want to say one more thing on this, which is that, you know, there's much more than just the language of transitioning away from fossil fuels in this COP. This was the global stocktake cop, which is the the point of it actually in a process set up in Paris in 2015. And this was the cop where we take stock of where we are actually on this challenge of cutting emissions and adapting to climate change. And on that front, in terms of the stocktake that comes out of this cop, there were some things that just didn't get landed, including some really important things like the carbon trading agreements and carbon trading rules, and I would say also issues around financing of adaptation, which you just didn't really get to a place where we've got something measurable and useful. But there's one other big thing here in this court, which I think we can see is unalloyed success, which is that we now have a loss and damage fund up and running, operationalized right at the start.

The COP, the one that was agreed and gaveled. And actually that is a really, really important step because it means that we've now established that there is a, you know, fund, albeit with not very much in it at the moment, but something that will allow us to start properly addressing the issue that there is this massive injustice from climate change, that the wretched economies, the G20 economies are responsible for, let's say 80% of the climate change we've seen so far, and yet it is the poorer economies in the global south that are feeling the biggest the biggest impacts from that climate change so far. And we've got some we know of recompense. I'm talking about the loss and the damage that's been caused there and finding ways of finance that flow to those parts of the world that need it. So I think this will be seen as a landmark call, but not because it was, you know, a success on all fronts. I think it's an interesting call for all sorts of reasons.

Jason Mitchell

That's interesting. I've heard a lot of different views about this, both positive and negative, clearly on the global stocktake on Article six and the number of initiatives announced at it. But what specifically does it mean for the UK, do you think?

Chris Stark

Well, no, the UK position throughout this COP has just been really interesting. Now you might you might know some of your listeners might know that one of the tasks of the key is to produce an annual progress report to the UK Parliament, which we did in June this year. And in that we said something that at the time was thought to be very controversial alongside all of the numerical analysis that we always do each year. We also said that we were worried that the UK had lost its clear climate leadership globally, and I think it's fair to say that the UK Government didn't take too kindly to that. I think in this court we saw the reality of that, which is that not always at the top table in the discussions. I think more than anything there was the backlash amongst the global diplomatic community that works on climate to the speech that the Prime Minister gave in Downing Street in September. And that speech is something we might talk about in this podcast, but that speech is a real shift in tone for a UK government that until this year at least has presented its climate credentials pretty well, I think globally and has has named itself to be among the high ambition countries of the world. I think the UK still is among the high ambition countries as well.

The trouble is that the Prime Minister presented what the UK is doing on that in a different way. That sounded to many and certainly was given the spin to many that we were stepping back from net zero, that we were going more slowly on that journey. And actually if you look at the policy changes we've seen since the Prime Minister made that speech, that isn't the story you see.

In fact, if anything, we're going faster to see more and more policy. But the story presented particularly to an audience at all, my suspect, is that net zero is something that we're going to slightly backpedal on. And actually that is what the global community heard. And I think this year we saw for the UK a reaction to that from those countries of the world that want to see the UK at the top table amongst the high ambition countries. Now we can easily be claim that status. I think no country in the world is a climate hero. So I think there is a lot more still for us to do in the UK, But I think the biggest implication of this cop is that we found it more difficult to be influential because of what had happened back home. That is something we're going to have to keep dealing with. There is no domestic discussion of of climate change. Everything you see is reflected among a global audience that is listening, actually. And I think the UK government saw that and feel that this year. One more thing on this, which is that, you know, there's the government here to negotiate in a cop. There are teams of people and officials who also support the government. And more than ever at any cop, I saw that global influence reaching right into the process. You had Brits everywhere at this cop. So I still think the UK is punching above its weight, but I would like to see that matched by the political rhetoric to act on climate change as well, which feels to me the thing that's shifted this year.

Jason Mitchell

That that's really interesting. I want to drill into this a little bit more and particularly try and reconcile at some points. In October, the Climate Change Committee commented on recent announcements and developments by the UK Government on that zero. Besides being an appeal to government to retain its climate leadership, as you mentioned, the committee stated that quote, We are concerned about the likelihood of achieving the UK's future targets, especially the substantial policy gap to the UK's 2030 goal. I guess what's interesting to me is that in its response to the Climate Change Committee, the Government says it remains committed to the 2050 net zero target, that it has overshot its carbon budget targets to date and it continues to work towards delivery of carbon budget for five and the 2030 NDC So where's the gap here between these two versions of UK climate transition?

Chris Stark

Well, listen, I think both can be true and I think that we have a government that understandably wants to look back at its past achievements, and I do wish to remove those past achievements from the government. I mean, we are we are doing pretty well on some aspects of the decarbonization journey in particular. We also have a very strong institutional framework for acting on climate change, and I think it's still a very good piece of law that govern till next year. We will close the last remaining coal fired power plant in this country, and that is a matter of some celebration, I think, when it comes to the phasing out of coal from energy systems. We are we are still pointing the way on that. And you're absolutely right. We did see and it is absolutely true that so far carbon budgets that have been set under the climate change that have been met, but it's not our job to look back. So when we do our assessment of progress, we're looking into the future and we have a set of legal targets coming up, future carbon budgets, they get harder and harder, as you would expect, as we head towards the long term goals. So what can we do to illustrate that? Well, you know, again, every year we try and bring some new analysis to bear on this and try and look forward and establish what needs to be done for us.

2050 And net zero is, of course, very important and it's very, very good to have the Prime Minister fully commit to net zero. But in a sense it's the least important target that's coming up because it's the one that's furthest away. For me. The one that really matters is the 2030 pledge that we made at COP26 to the UN process, this 2030 place that we call the nationally determined contribution. It has this goal of a 68% reduction in emissions between 1990 and 2030.

Now that is a very tough target and I was very pleased to see the Prime Minister on the day he made his speech in Downing Street in September. He committed to that target twice. So I think we can see that this is a government that is committed to achieving that 2030 target. So if we can use that as a sort of milestone of progress, what we did say simply actually was just look to see what kind of pace of decarbonization would be necessary over the remaining seven or eight years to hit that 2030 pledge and compare that to where we've been recently with decarbonization. And you can I'll give you two very clear metrics of how much ambition and pace we would need to see to hit that 2030 pledge. If you take away the key sectors that are still recovering from the pandemic, shipping and aviation, we are doing pretty well at cutting emissions. We probably need to double the pace of of ambition, of pace of decarbonization over the next six or seven years from where it's been over the prior six or seven years to hit 2030.

But a lot of that is resting on the pace of progress that we've seen in the power sector, where you've got lots of policy to decarbonize the power sector in this country. If we strip out the power sector and look into all these other sectors that need to be decarbonized, we'd need to quadruple the recent pace of decarbonization in all those other sectors. If we want to hit the 2030 pledge. And at the moment, I don't think that we have a policy program that would achieve that. So every month that passes makes it harder and harder to scale that kind of program up. So that's where our concern primarily comes from, is that I'm certain we can hit 60%, but doing so by 2030 is very difficult because there's inevitably inertia in decarbonizing transport systems and how we heat buildings and industry and farming and changing patterns of land use. These things can't be done overnight. So the longer this goes on, the harder it gets, really. And that was the point that we were trying to make in June.

Jason Mitchell

I can't help but ask, do you think a cross-party consensus on net zero is at all possible with general elections in the next 12 months? You look at own data which appears to support the possibility of consensus, given it points to roughly 75% of 16 year olds and older are either very or at least somewhat concerned about climate change. I mean, so there seems to be sort of a real tailwind among the populace for this. Can we reach a cross-party consensus?

Chris Stark

Well, I think we have a cross-party consensus. So can we keep a cross-party consensus? That's the key question, I think, for UK politics, not just UK. Of course it's this issue right around the world and I think you can see that the public broadly supports decarbonization, broadly supports the idea we should act on climate change broadly is worried about climate change and broadly wants to see governments act on it and we'll happily vote for that. But as much as I am an optimist as you will know, Jason, I think it's important to also see that that comes with some strings. There are some edges to that. When you ask people about the key measures that you would need to have in place to achieve decarbonization at the pace that's required that you see some of that consensus shifting. So we're in this sort of strange moment, I think, in British politics, where even today all of the mainstream parties say that they want to act on climate change. We have a government that definitely does want to act on climate change.

But I think at the moment the present government is indulging what you may call greenwashing, which is a kind of interesting movement that we've never seen before in British politics, where policies are being implemented to decarbonize. Even today, as we're speaking, there's a big package of measures that include things like a carbon border adjustment, big things that have been planned for a long time, lots of money still being thrown at incentivizing low carbon technologies. And yet we haven't seen ministers do the media around because they're worried about a very active and a very influential group of voters and people in their own party who are suspicious about these kind of moves. So that worries me if I'm honest.

And I think the next election, I don't think the next election will be fought around climate politics. I mean, I could be wrong on that. I'm not a political strategist. I tend to think that in the end, although there are lots of concerns about what I would regard as a narrow set of voting issues, general elections tend to swing around to where the mainstream is, and therefore you will find there's a whole collection of voters who want to vote for a party that wants that is doing something about the climate. But if this thing is going to stick, we will need an enlightened discussion of this to continue. We will need to not debate that the ends that we need to reach net zero is a non-negotiable as far as the climate is concerned. But we can have a debate about the means no problem. But I think it follows that we also need to present an optimistic, positive, progressive framing for that.

That appeals to a broad number of voters and people in political parties. So, you know, for the right, which is the bit that we worry about most, of course, the political right, I think this needs to be about how markets can deliver in the end and how we will see technology develop in a way that is in line with the science and, you know, that takes, I would say, creative leadership. It takes art for politics and art for leaders who are willing to present it in those terms. And that's what I hope we get, because I'm very worried about a future world where, let's say that parties and the right don't do so well at the next election, and then we get the backlash. It's the post-election period that worries me most in that in those circumstances, because you could you can imagine some fringe views on climate really taking hold. And some of that you can see already there are voices out there that are planning for that future and will make it difficult if that's what we see happen.

Jason Mitchell

It really, really interesting. The UK was the first economy to pass net zero emissions legislation and its leadership at COP26 was undeniable. Even if it has sort of waned over the last couple of years, particularly this year. But Chris, if you reflect back on the last couple of years, is there a first mover disadvantage either politically or economically on a near-term basis? Is net zero legislation by the fact that it's inherently long term in nature, i.e. 2050? Is it a victim of short term political cycles and current government priorities? And I guess with that, what are the tactical measures that the Climate Change Committee can take with respect to this horizon misalignment problem?

Chris Stark

Gosh, what a good question. I mean, is there a first mover advantage to setting a net zero target or decide versus.

Jason Mitchell

The first mover disadvantage.

Chris Stark

First mover advantage or disadvantage? I mean, I think the disadvantage question is a really good one, and I've ever been asked that question. I don't think there is, as long as we don't get too far out of sync with reality. And I think this is the key point back to the speech that I've mentioned a few times now that the Prime Minister made in Downing Street in September. He made a set of points that I could not agree more with about the need for pragmatism, about the need to take people with us on this journey and broadly what the UK has pulled off today is just that. So we've had targets that of course could have been higher and more ambitious, but probably do strain at the limits of what the populace is ready to handle. And we're now in a position where I would say most of the progress we're making on decarbonization at least, is coming from action in the private sector. So I think we will be able to dial up the ambition still further into the future.

But I think we can also see know that that's probably not going to be enough. There's going to need to be bold politics, bold policies that drive us even faster on that journey. And so far in the UK, I don't think we've reached the point where it is a program overall that has caused us to have a disadvantage. And moving fast on this, I think you can look to other parts of the world and see in Germany, for example, I'm thinking of Germany right now, what's happened with the heat pump discussion, Very, very tough targets that were implemented probably before there was a plan in place that would really achieve them, credibly achieve them. And I think this for me is the key thing.

The point of the key in this moment is to look beyond the political cycle and to try and keep the show on the road with advice to government of whatever color about what needs to be put in place now. So that curve to bend sufficiently fast in the future. I see most of the progress in cutting emissions in the UK economy is not going to come in the next five years, but most of the steps to prepare us for the really sharp emissions reductions that we'll see over the 2030s will be made over the next five years. So the key thing for me is that we need to step out of that political cycle and keep looking ahead and that is essentially what the Climate Change Act requires of the CC. We are here to act. We we're here to essentially look to 10 to 15 years hence and try and spell out for the government what the conditions look like so that the next set of policies we see in the next Parliament lead us to that outcome. I think we can keep the show on the road.

I don't think it's that difficult to keep a show on the road. Actually. But I am. I'm with the Prime Minister on this. I think if you get over your skis, as Americans say on this, then that's when the problems arise. And if we don't act this whole year, that's when you get the, you know, the impossible mountain to climb. And there are parts of the world where you see that there's been so little progress in cutting emissions that actually achieving some of the things that have been said into that UN process is going to be impossible. Now, I don't think the UK needs to be amongst those group of countries. I think we should be modeling an ambitious pathway where constantly we see steps put in place to keep us on the right path. And that's how you keep the consensus that we talked about earlier.

Jason Mitchell

Speaking of mountains to climb, how do you think the government's intention to expand oil and gas production in the North Sea? How is it compatible with the language in the global stocktake, which you just talked about, the the declaration about, quote, transitioning away from fossil fuels? In other words, how do you see the government planning to implement at a national level the GST or even to triple global renewable capacity by 2030?

Chris Stark

Let's be clear that does not sit well with that language. I think it would have sat even more at ease if the language had been as strong as some hoped it would be prior to the call. So if we'd be talking about phasing out fossil fuels, that would have been tricky. We're now talking about transitioning away. That is looser language. I have to say back to my earlier point about the call, I actually prefer transitioning away. I think it is a more accurate description of what we're actually doing. We will still have fossil fuels in use, but hopefully we will not be burning them, not not very much past 2050 anyway. And I think that's the key thing for the UK actually, is if you look at the forward projections for production of oil and gas from the North Sea or from UK waters, it's really interesting. The North Sea Transition Authority, which is the regulator that looks over future production. If you look at a chart we produced this year of future gas production, future gas production without new licenses and future gas production with these new license that are being forced upon them by the recent King's Speech, we're talking about and gas particularly, you see it most clearly either a 95% reduction in gas production by 2050 or a 97% reduction by 2050. So it's those two percentage points.

That is the that's what we've been debating for the last couple of years when it comes to licensing in the North Sea. So I suppose my point here is that I see a lot of this now as a major distraction from the fact that actually what we need to be talking about is the 95%, not the 2%, but nonetheless, language matters. So if you signed up to transitioning away, I think you've got to tell a story about how you're doing so and how you're doing so as quickly as possible. And I think this comes to the second part of your question. I suggest the only way in the end that we will tackle this is by substituting oil and gas for something else. And actually that is the point. The bit of the global stop to it I'm most excited about actually is the tripling of renewables capacity by 2030. Look quite interesting. We don't have a baseline for that. So there's still a debate about what that is, but that would be challenging for the UK. But we are probably on a trajectory that allows us to get close to that by 2030, particularly through offshore wind and solar, and that every megawatt of renewable capacity that we'd still Nevilles away at at the economics of fossil fuels, even though we're talking often about different sectors entirely, we are making our way towards a future where we just don't need that oil and gas.

And I think that is in the end, the only way of achieving this transition sustainably, without price spikes, without the problems that come with that, with all the, you know, all the examples and recent experience that we've had from the price spike following the invasion of Ukraine. So I do think in the end you've got to not just have a language about phasing stuff out. Net zero is actually about building war, it's about investing more in new stuff than it is about stopping stuff. So I think that is the way through all this. Actually, I struggle a bit with the oil and gas stuff, as you would expect me to. I deal with climate change. I would rather not see the UK develop its own gas resources. We know we have too much, but I really do think if you keep your eye on the price, we are unusual in the UK in one respect, which is that our transition away from oil and gas will happen by 2050 because of geology, not because of climate politics. And actually we should be making more of that. We are in a very unusual position in the sense that we are just not going to have it after 2050 at any great level at least. So this is a place in the world that will have to develop low carbon options. Otherwise we're not going to be thriving in the global economy.

Jason Mitchell

Yeah, this reminds me of prepping for a podcast with Chris Skidmore and I'd reached out for you for for some advice around questions, and I'd like to turn one of those questions back on you, and that is how do you wrestle with the dilemma of what to do about domestic UK oil and gas production in a future energy security crisis? I think we both agree that it's got to be one of the most difficult questions for political leaders on climate today.

Chris Stark

It really is. I think it's important for me to trying to be balanced on this. I mean, I always try to be in balance, but one of my takeaways of the last couple of years is that it's just not true to say that there is some sort of security benefit from having your own resources of fossil fuels. We've seen Putin weaponize fossil fuel production.

I can understand why governments make a range of decisions for a range of reasons, climate amongst them, but energy security and security of the country being another. I think what I would say, though, is that I'm fairly sure Chris Skidmore would have said the same thing that there is another aspect to security overall, which is the security of the planet, and that we see climate change more and more as a driver of insecurity, a host of ways. And we just know that there is no benefit to the climate in pulling more and more oil and gas out the ground. We already have too much of it around the world, and it will take a bold government, of course, to step away from this entirely.

But even though I accept that there is an energy security angle to this and indeed I have accepted that in written correspondence with ministers, I still think the climate issues need to be pushed more to the fore. We need to have a ministerial direction here that is set by more than just the interests of the oil and gas sector. And we need to think more broadly about the fact that, as I mentioned, our transition is going to be governed more by geology than it is anything else. So we should be getting ahead of the rest of the world in preparing for this transition and doing it as quickly as possible. And we will see better and greater energy security at the end of it. If we achieve net zero.

Jason Mitchell

I think most people would agree that the Climate Change Committee has sort of succeeded as an institutional innovation that provides advice and most importantly, accountability on our net zero goals. But it's clearly not capable of achieving everything by itself. The Skidmore review referred to the lack of cross-cutting coordination on climate policy across government. In your mind, what institutional gaps need to be filled there? What institutional innovations would help accelerate the kind of implementation we need?

Chris Stark

Well, it's very nice of you to say that we've succeeded as an institution. I feel similarly, but I also feel that every single day I'm in this job, I have to keep making the arguments for us. In fact, that's part of the job, I say, just to demonstrate that we are as valuable as I'm glad to think we are. And the key thing about us, I do on occasion meet people who say, the credit could be great if you had more teeth. And I would not have any teeth. I should be as gums as possible because I think that the key attribute of the key is that we are just an adviser. We are here to respond to whatever the political environment is and whatever the circumstances in the economy are. And it's not my job to tell anyone what to do, but it is my job to open up the options space.

So I think Chris Skidmore is absolutely right on this. There are institutional gaps that need to be filled, but I don't think we are one of them. So I think first thing to see is that essentially we are providing a framework for action. What we do is present the guardrails for what needs to happen over the course of the next 20, 30 years, and no more than that. So we present the guardrails, we try and fill in the dots and fill in the colors as to what could be between those guardrails. But then it's for other institutions and the private sets to pick it up. And indeed, for the government itself, that has worked pretty well so far. But where I see gaps there are lots of gaps is in pretty straightforward stuff, actually. I mean, a lot of what we look at is and even in this podcast, we've talked a lot about energy. We have a very, very strong sense of what the future energy system needs to look like. And yet we struggle to. Leo coherent plans, especially spatially for that to happen. That then allowed the public consent to be earned and built. So you can imagine that there's a lot to do there.

And it's not that you need some sort of planned economy to do that, but you need something that spells out what that future looks like so that the private sector can step in and do all the things that the private sector does well. So that I think we need we've got some interesting new institutions now, like the future System operator be rechristened next year that might help with some of that. But there's more fundamental stuff going on here too. I mean, the biggest institution that I think needs to be brought to the table is still the UK Treasury. You still got a set of government actors who are is not not as switched on as I would like them to be on the challenge of decarbonization and the challenge even more importantly, of adapting to climate change and reducing the risk that we face as a country through climate change. I'm afraid to doing that in a world where the Finance Ministry isn't putting this top of the pile as a as a topic is going to be very tricky.

And I say that as someone who used to work for the U.S. Treasury and has many friends in the UK Treasury and respects them deeply. But an interesting point, I think for your listeners to think through. The Treasury thinks about all budgets except one. They think about household budgets, they think about the countries budgets, they think about, you know, how much borrowing we're doing, how much tax we're raising, but they don't think about carbon budgets.

And I think it's quite proper that the Treasury should have its own view about how that carbon budget should be allocated, but they should view it as a budget. And that is, after all, what the Climate Change Act is for. So I think interesting as we head into an election and what's on the other side of that election, anything that can bring the Treasury to the table, not just to discuss what the, you know, what they would like to see happen, but also to confront the implication of their decisions because it's usually the Treasury that will call a halt to things that are too expensive. The Treasury is notably not so good at seeing what they do.

Instead. I think there's a host of other institutions that we could talk about here, but that's the key one for me is that we're going to keep making progress on this issue of climate change. We do need the Treasury to have a view and not just public spending, but also how household budgets are allocated towards this challenge overall. And if we can do that, it's not a big leap. Actually, I think we could make much, much more progress on the issue of climate change.

Jason Mitchell

We talk a lot about the transmission signal from NDC plans down into the real economy. At the time, COP26 felt like the UK had established probably one of the strongest linkages to the real economy, like you said, like decarbonizing the energy system. What's changed since then? What have the last couple of years taught you about the fragility of that transmission? What's missing between the UK's net zero legislation and implementation policies that would provide a more powerful signal in transmission to the real economy? Now.

Chris Stark

I don't know that that much has changed. We've already had a discussion about the siting of climate politics, which is probably been the biggest challenge. But I think the other story that's played out is that, I mean, very clearly when you look back at what we were saying, what government has been saying the last three or four years, the early period of that three or four years was, you know, the of huge ambition in setting zero targets and not much by way of real action followed that. You know, there's a huge program happening in government right now of policy making and implementation. But the kind of reality of decarbonizing buildings, for example, in this country or decarbonizing industry is that is much harder than just setting big goals. If anything. That's been the real lesson for me is that translate the ambition that we saw particularly, you know, I've been in this job for six years to start my team in this job into actual actions that carry public support and the support of the private sector is just much harder than even the most optimistic people might have thought. And that will continue to be the case into the future. I mean, you talked about the NDC. I don't really think there is that much transmission between the NDC and what's happening in the real economy. I think if anything, it's the other way around. It's the NDC reflects where we are in the real economy mostly, You know, we could have much more ambition. I mean, you know, the NDC could be a much higher number. But what holds it back is actually pretty straightforward stuff. No, putting people in the right industries, having the right skills, getting infrastructure in the ground, paying for it. Yes, definitely some of that. But actually the translation of the translation that needs to take place is between these targets that we have that, you know, every even the present government in its reluctance towards net zero, is happy to commit to end to meaningful policy and action on the ground. And of course, that's when the real economy comes in. We're about to use a phrase that one of my colleagues uses. We're waiting for the sneeze now on the transport decarbonization story. And it is you know, it's clearly on the way we almost reaching for the Kleenex now when it comes to that. But there's a host of other sectors where we haven't we're not even preparing for that. So that's the next thing for me is that it's not about NDC, it's not about targets. It's about whether we can actually turn this into something that looks like a meaningful story of progress across the whole economy. And for me, that is harder than even I thought, as you know, pretty experienced policy person coming into this job. We're just going to have to work really hard on this.

Jason Mitchell

In early 2025, the Climate Change Committee will advise the UK government on the seventh carbon budget, which covers the legal limit for UK GHG net emissions from 2038 to 2042. What is that phase of analysis mean, especially as the early 2040 should be seen full decarbonization across many sectors? What are some of the additional actions that could be taken should the UK choose to decarbonize faster?

Chris Stark

Gosh, well, we are about to gear up for the next piece of advice on the carbon budget. We do that every five years. I think the first thing to tell your listeners is that we're going to do that early this time. So the Climate Change Act says we have to give our advice on the next carbon budget every five. The next one to be say is the seventh carbon budget. And as you said, that's for the period 2038 to 42. And it doesn't say when we have to give our advice that we're going to go early in 2025 because we want to try and pitch that advice into the early months of a new parliament. I don't know when the next general election will be, but we are going to target a time directly after when the latest point before that general election.

So February 25. And the reason for doing that is because it really is the next parliament and the one after that will determine our success or otherwise on this path ahead to net zero. And that period of 2038 to 2042 is a fascinating period. I mean, it is the period when certainly for the energy driven sectors, those sectors that are present have emissions that are driven by burning fossil fuels. We should be finishing the job or be close to finishing the job over that period. So we'll be imagining a period in the early 2014 when we will be finishing that job and then trying to build the path to it from where we are today. To two more things to see about that. Firstly, the number itself is a volume of emissions that can be emitted over a five year period. I don't know what that number is. It's probably not that interesting, if I'm honest, because you could probably look at one of our charts from four years ago and guess what it is? It will just be a low number. It's going to be a low number, but it's a net number.

So point number one is that it's a net number, just as you said, Jason, but that means that there's a volume of emissions above the line, gross emissions, and then the something below the line to bring it down to its net figure. And it's the below the line stuff that more and more interests me. So what we call removals, So there's land based removals, that's what nature is mopping up, using CO2 to grow biomass, taking over the atmosphere. And then there's the engineered stuff, the stuff that we eat through some sort of process are actually sucking from the atmosphere. And we have always looked at that removals number and we typically have been a bit hand-waving, if I can put it that way about what's in it, because we didn't need to be accurate. But this time round I think we've got to build more accurate pathways to something on the removals side that includes things like bioenergy with carbon capture and storage.

Very controversial topic also direct to your capture and also the realistic appraisal of what we think nature can do. So I think that's going to be one that's the first thing to say is. Very interesting to think about what that looks like an early 2014. And the other thing to see is that the number itself, as I mentioned, is a small number and I suppose the target itself is not interesting. It's the path to it that matters. So we're going to do a brand new pathway all the way to net zero. We have to start from where we are actually today, not where we would like to be. So pragmatism is the watchword now. I think we've got what can we actually see happen over the next 15, 20 years? It's going to be the key thing for us. That means scaling up things that haven't happened to date, things that we have regretted haven't had sooner need to be done now. So looking at that and then I think the other thing is that we're going to do this slightly differently this time round.

In the past we've taken it as our job to really open up the scenarios, open up the options space, try and present as wide a set of options as possible to government. Well, no, we think actually the job is to narrow that slightly. We need to present meaningful options in a more narrow option space so that stuff gets done. And getting stuff done is definitely the key thing. But we also want to have not just a central pathway to net zero but an ambition pathways, also high ambition path, which presents the broad extent of the options space. If you tip of pivoting into this, if you really go hard at this question, if you have lots of strong policies, how fast do you think you could go on this journey? And that has an additional meaning and additional value within that high ambition pathway and also the options that you could think of as contingency if things don't work as planned. So we need to set out the contingent options for government if some of this stuff doesn't work.

We are increasingly worried with the fact that the government only has one option in many areas to decarbonize it, and if that doesn't look like it's working as well as it could, what is the option space? Where do you go next? What Are the contingent options, Where's the contingency? So we think we can illustrate that too, with these two broad pathways that essentially set the range of emissions reductions, do we think it's possible for the country to achieve over the next 20 years? So for me, I don't know if there's anything more interesting than that that seems to me is absolutely critical to the future path of the economy.

Jason Mitchell

Absolutely. There's quite a lot of advocacy for strong climate action, including from the Climate Change Committee, suggests that it's an economic net positive. But this is often based on equilibrium models of the economy, where changes are achieved through the mechanism of a carbon tax, for instance, which is in many ways an idealized outcome. In fact, any government induced transition is likely to be really messy.

I think you'd agree. I'd add that research is coming out of a few places that shows that renewables aren't quite as cheap as we think. Once we take into account the cost of grid services such as inertia, the overprovision of renewables required, and the redundancy and backup storage for generation as an example at the aggregate level, research suggests, and there are a few places Jp morgan Thunder Energy, the countries with higher renewables penetration have higher retail and wholesale electricity costs. That fact surprised me. So how wise is it to say that addressing climate change is an economic win win? I'm wondering, shouldn't we instead be upfront that there could be necessary costs that we've got to incur in order to preserve our planet for future generations?

Chris Stark

Cost in terms of big questions, that's the biggest, isn't it? We just talked about the work that we're doing now on the next carbon budget, and one of the key aspects of that work actually is the economics of the transition. And we will be reflecting, I'm certain, the ongoing progress in reducing the costs of some of the key technologies that deliver net zero and cut emissions. And that's a very strong story. And it's very nice to have it.

But I don't think we should get too far away from the fundamental economics of this, which is that there is an enormous cost to the global economy, enormous costs. Society in climate change, and that it is worth avoiding that cost. So, you know, looking globally, the issue we want to mitigate, we want to get to net zero because it starts when warning stops and we want to start warning because of the huge, huge impacts that are on people living in the global economy, whole countries. And that is the fundamental nature of the transition. But you're absolutely right to say that we in the CCRC are not alone in uncovering and unpacking a story that I'm certain Chris Skidmore will have spoken to you in a previous version of this podcast, which is that there is this pro-growth story alongside all of this. Now, as we invest for net zero, we are bringing into the economy set of technologies that have low marginal costs in their use. You don't have the kind of commodity costs that come with oil and gas or cool for that matter. And in the end, that should be a cheaper economy if we can bring those costs down as planned.

So I still believe that it's pretty important to see that. But I also believe that it's not that interesting to tell that story, that kind of aggregate level story, you know, investing for net zero, investing in capital assets that deliver US emissions reductions and then using them with cheaper energy costs and cheaper running costs is one that I think most people know understand. But it doesn't get away from the fact that that aggregate story is one that will make you only see if you look across the whole economy in every sector and over time and in the period ahead for this country and others, we are going to have to invest more than we would if we were not trying to hit net zero.

And those investments look like costs over short periods. Some of the payback for those investments is over a long period, and I think we need to be better at talking about this as something that we've got to do for environmental reasons, something that in the end is beneficial to the economy but does carry these upfront costs.

And I think the other thing you could say is that those costs are not distributed equally unless you put policy around it to allow that to happen. So this is going to be an interesting period for all sorts of reasons, because the next parliament, which is shaping up to be a really hotly contested one in the next general election, our job, I think, is to try and shine a light on those distributional costs and benefits.

There are benefits to this transition that if you're rich enough right now, you can really benefit from low carbon technologies and the low carbon transition already. And if you're poor, that's not something you're able to do. You know, investing in a Tesla, you're not buying a heat pump, you know, able to insulate your home. So there's all sorts of ways in which this inequality can play out. And I think interestingly, one of the things that we expect to be able to do in early 2025 with our carbon budget work is present some tools to explore archetypal policy packages that allow you to spread the cost. When you spread that course, the actual GDP cost to the economy is low, so it's still worth doing. And when you throw into the mix the wider growth benefits that come from the innovation investment, the GDP multipliers that come from bringing back some activity that presently report this massive impact to the UK economy that I think is underpriced at the moment. So all of that good stuff is still there, but we're going to have to envisage and illustrate what that energy system looks like.

I'm not afraid of that. You're right. We will have some overprovision of renewables, but we'll be able to store that energy probably using hydrogen particularly. And then the hydrogen economy is based largely on that commodity being used. Then back in the energy system, probably not in gas boilers, in homes, but certainly in power stations. And you can imagine a pretty quickly into the 2030 when that is cheaper for the consumer as well as better for the environment. And I think we can illustrate that model. In fact, we've produced work this year that does just that and it's really appealing. But consumers don't see those positive benefits for some time. And that means we need both policymakers and both governments to see it through.

Jason Mitchell

Yeah, I guess on this topic, how do you view the UK's ability to continue to lead an infrastructure that facilitates the roll out of renewable energy, for instance, long duration energy storage or grid infrastructure? And what is the role of private sector capital here? Should government encourage more private sector capital involvement in these sectors to further, I guess, accelerate the energy transition, especially given the pressure on public sector balance sheets?

Chris Stark

I don't think I can answer that question because it is I think it's a political question more than anything. I think there is a way to do it through solely private markets and private capital, but you need to regulate to make that to happen. And I think broadly that is the present government's view of it. A future government. If it were, Labor might have more interest in some state ownership there and some more state led planning of the of the future energy system. I think what's interesting to me is looking across the Conservatives and the labor prospectus for this, or at least what I know of it, it's difficult to see that much difference between what they're planning except in a couple of areas. I think most obviously the Labor Party have this plan for GB energy, as it's called.

This are state owned. And see entirely sure what it will do, but it will play some sort of role according to the Labor Party. But beyond that, that broadly agreed that we need to have the future system operator laying out a lot of the spatial plans for this and encouraging private capital into the energy system and allowing that infrastructure to be essentially privately led. You know, that seems to be the playbook there are other ways of doing it, but I'm not sure that either of the two political parties is offering that you rightly call it long duration energy storage. That's a very good example of something that private market alone will not deliver. So you've got it. You've got to actually put policy in place to make that happen at a pace and scale that at present it's not delivering and you need some element of spatial planning to allow you to that because there are only so many places that you can store hydrogen, so many places that you can do large scale grid infrastructure. And just to make the point of a grid, this is, I think, going to be the toughest 5 to 10 year period for any government.

Does it matter who they are? Because we know we have to reinforce the grid. We know we have to build new transmission infrastructure. There will be some hydrogen infrastructure required. There will be carbon capture infrastructure required, too. There'll be substations and places of the world where highly litigious lawyers go to go to retire. So this is going to be a tricky thing. And we're going to have to we're going to have to see, again, both governments willing to push it through for the good of the country.

One of the things I've been seeing recently when I've been talking publicly is that we do have some history on this in some form on this in the last major upgrade to our great infrastructure, which took place in the sixties and we had a statehood entity, the C Egbe, doing a lot of that upgrade to 400 KV new pylons in parts of the country that didn't have that infrastructure. One of the things that's really Newspoll, you look back at some of the advertising and the and the PR that was done around that is how upfront they were about the benefit to the country in making these investments, but also upfront about the fact that they're not going to be universally popular and that we need to make tough decisions. And that to me is what's missing. We need to start grown up politics that is willing to acknowledge that, but also present the benefits in the long run to the country. If we make these decisions, if we just allow every local concerned to stop an infrastructure project, I would say the UK is very good at that. We are not going to make the progress that we need.

Regardless of your view on climate change, regardless of whether you care about net zero, we simply are not going to be able to invest and build the infrastructure that the country needs to thrive. And I think that, you know, that upfront grown up conversation is really what we need. And it's not just government needs to have it. If it's going to be a private sector led thing, we're going to need to see those. Private developers also have that discussion and we don't have those trusted state-owned entities that we used to have in the 1960s. So it's doubly difficult, but I would love to see that come back into the public discourse. Why are we doing this? What's the value of it? Yes, acknowledging the benefits, but also acknowledging that this benefits.

And I think my experience at least is when you are transparent and honest about it, that people are more willing to support the overall, they can spot snake oil. And you were the snake oil that we need to be talking about. The reality, this transition is all very achievable. There are huge benefits to the UK in doing this and they're not just claiming benefits, but it does involve tough decisions.

Jason Mitchell

You've talked in the past about the importance of the role of business in enabling an environment where government can push ahead on policy. But let's face it, policy doesn't form in a vacuum and to some degree government follows where business leads. So what specifically can the investment industry do to create the right kind of call it enabling environment for government? Investors faced the dilemma that investing in projects to get us to net zero often are really profitable in the absence of government policies to make them so, which kind of creates a chicken and egg problem. So how can investors help governments within the constraints of their duties to clients to provide best financial returns?

Chris Stark

Well, there's not a simple answer to this, is there? I mean, I think we need the investor community, first of all, to champion strong policies that allow finance to flow. And I think this is the key thing for me. How is policy made? It's not made in a vacuum. So this kind of old model, I was taught this civil service finishing school, the idea that options are put to ministers, ministers make decisions, policies are implemented, and then change happens.

That's not how change happens. Change happens because we exist in a constant environment of interaction between the state and the private sector. And there are actors on both sides constantly exchanging information. And one of the key of strong policy to do anything is the knowledge that there are a set of people ready to respond positively to whatever is put in place. And I think more than anything, I the investment community, are not just a collection of people investing in things. They are also a group of people who give strong signals to government to set the right policies to allow them to do that. And you get this very happy. I would see progressive feedback loop where policy is put in place. Investors react, good things happen, and then we do more of that.

My answer to your question is that's what I would like to see more of actually that we already know have an investment community and indeed a set of regulators for the finance sector that are switched on to the problems of climate change more and more so actually we don't need to make those arguments or win them. But what we lack is policy that allows finance to flow to the real priorities. And actually that is the issue in many cases. And actually we need to look beyond the UK for this. I think we know more and more about how cheap the alternatives to fossil fuels are.

But one of the key attributes of low carbon energy systems almost uniquely are almost always the case is that they tend to be systems that require high upfront capital investment and then the returns come later. Unlike fossil fuel energy systems where the payback to investors comes through the commodity that's being burned in the first place, and that requires policy to spread those costs so that consumers can pay for them.

And I think wherever you are in the world, there is a job to bring down the uncertainty in the policy environment so that you get as cheap as possible finance into those low carbon energy systems to this transition to take place more quickly. And ministers need to hear that message from the investment community. They need to hear that this isn't some sort of eco fantasy that we're looking at straightforwardly a commercial return if that policy can be put in place with lots and lots of public support for these things once are in place because they tend to reveal cheaper cost to the consumer.

Jason Mitchell

Got it. Last question. We're reaching the point in the transition where things are starting to touch people's everyday lives. One of the difficulty areas to crack is home heating. You've talked about this a little bit earlier and the Climate Change Committee has emphasized the need or the view that heat pumps are an existing technology that needs to play a major role in decarbonization of home heat.

The government has softened its targets on heat pumps a bit, although realistically we were so far off anyways, it's not clear what difference it'll make. And anecdotally, people who have installed heat pumps have found it, frankly a painful and expensive process. Although installation costs may come down a little bit over time, there are limits as a lot of that cost is the installer. And with electricity nearly four x the gas price per kilowatt hour, they are a long way from being self-financing and in fact involve major upfront costs to install. So how do we solve the issue of changes that require major capital expenditures that are out of reach for most ordinary people and only pay back in carbon terms at a reasonable carbon price over 20 plus years?

Chris Stark

Well, we've got to change that. The market that we have for energy, the price that consumers pay is partly about the globally traded price for gas, but it is also a substantial forum to do with the policy environment. So I am optimistic about being able to change that and I think none of this will happen if we expect the impossible of people. So I say this regularly, I don't mind. You may have heard me say it before. I don't mean I'll say it again if you can't afford your gas bill, you are not going buy a heat pump. So it is very simple that we need to be progressing along the route to decarbonizing buildings, but doing so in a way that actually allows people to see the benefit of a heat pump.

And that benefit is expressed in the climate benefits. It needs to be a saving, it has to be saving to people. And seeing this replacement of a gas boil over the heat pump as a meaningful, credible option kind of here started approach isn't going to work. So how do you do that? Well, that's the government's present approach, which is essentially to subsidize the capital costs of each unit at heat pump installed. As we talk today, they've just pump more money into that through the boiler upgrade scheme. There are schemes in Scotland in other parts of the UK that is one way into this. A more meaningful and systemic shift would be to address the balance of costs between gas and electricity.

And in the end, that's the only way we will do this. I think you have to make electricity cheaper. You don't even need to achieve cost parity, funnily enough, because heat pumps are so much more efficient, use that one unit of energy much more efficiently if it's electrical. So some shift in the ballot. We call this rebalancing when we think about it, the C, C would I think, achieve a huge amount. It would also drive the transition in electrical transport, electrical industries. So making electricity cheap is the single most important policy when it comes to decarbonization overall. And there is lots of ways in which that could be done with the policy environment. Back to my friends in the Treasury particularly who could do much more on this, but it's much more than that that we are. You're touching on, I think, a more fundamental point about how you this is touching now on people's lives. I think that's what's so interesting, though. We're at a different stage of this transition.

And if I just stick with the heat or the heat story, I have a lot of cause this year to think about transitions of the past. We've done this stuff before, so we've moved off Town Gas, for example. We moved off coal and we did so without this kind of, you know, mean spirited view of how we can do it. We did it because it was a badge of national pride that we could pull it off. And I think there has to be some element of that, too. It's hard for me as an analyst to give you a number for that, but I don't think it's going to be possible to hang our targets on heat or achieve the decarbonization of buildings unless we take some national pride in this and unless we are a bit more Victorian about it and actually view it as a major project that we're doing because it is difficult, because it is worth it in the end, because when we get to the end of it, we won't have to do another one. And that for me means that we don't need to talk just about heat pumps. I mean, who knows what heat pump is?

This is about electrifying heat. This is about having plans for cities across the country that are meaningful to those cities.

I live in Glasgow. I live in a tenement building that is not the same as any other building type anywhere else in the UK. We will need a plan for Glasgow. I think getting back to municipal energy systems is probably part of the story. I think there'll be broad public support for a Glasgow heating plan and I think that kind of stuff has got to come into the mix here. And it's not just about heat. I think the heat is the heat transition is the most interesting and the most challenging. And if we lead into this, there's a host of ways in which we can do it and we should all be proud at the end of it that we've achieved it. But that takes bold, creative political leadership, that points out the benefits to this stuff and doesn't dwell on how hard it is. And that's basically what we have at the moment is a discussion about how impossible these other parts of the world are going much faster and heat pumps than we are because they're not so gummed up and culture wars on it. So I don't know. I think this is the most interesting thing of all, and there are so many different ways to do that.

A really interesting discussion with Kanza Heat Pumps, heat pump manufacturer in the south west of England. They are backed by legal and general legal general ordinance. In the long run, illegal in general are willing to put long term finance into the support for these ground loops that they build, that you take the heat from with boreholes. You know, that is a thing I didn't know enough about until I met them this year. And it's that kind of really creative mixture of public and private that gives you this, I think, appealing future. Where in that world, if you saw heat pumps all day in my building, for example, I wouldn't see that much difference in my energy bill and I would have, you know, disruption essentially over that transition once that heat network is built. So there's still lots to do on this. And I think it would happen unless we get excited about it and start being creative.

Jason Mitchell

Got it. So it's been fascinating to discuss how to think about the implications of COP 28 for UK climate leadership, what the Climate Change Committee is doing to advise the UK government on its climate action and adaptation strategy and why it's vital we stay committed to the net zero transition. So I'd really like to thank you for your time and insights. I'm Jason Mitchell, head of Responsible Assessment, Research and Group here today with Chris Stark, CEO of the Climate Change Committee. Many thanks for joining us on a sustainable future. And I hope you'll join us on our next podcast episode. Chris, thank you so much for this. It's been fantastic.

Chris Stark

Thanks, Jason.

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