'Now or Never': The IPCC report on mitigation

The IPCC Working Group III report. The latest instalment of the Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC) was released on 4th April, focused on climate mitigation. A Summary for Policymakers was also published, as well as a Technical Summary. The report concludes with a “now or never” call to action: that greenhouse gas (GHG) emissions must peak by 2025 if there is to be any hope of capping warming at 1.5 degrees above pre-industrial levels. UN Secretary-General António Guterres said: “It is time to stop burning our planet and start investing in the abundant renewable energy all around us”.

The IPCC. The IPCC brings together almost all the world’s climate scientists, and its reports are approved by 195 national governments, giving it a unique global political authority. IPCC Working Group I focuses on the physical effects of climate change (see our Digest ‘Code Red for Humanity’ for analysis). Working Group II detailed the social, political and economic factors that determine who will be exposed to the effects of climate change (see our Digest ‘An Atlas of Human Suffering’ for analysis).

Key findings. The report’s key findings (‘headline statements’) include:

GHG emissions have continued to rise. From 2010 to 2019 they were higher than in any previous decade, but the rate of growth has slowed.
Emissions have risen since 2010 across all major sectors globally, and an increasing share of emissions can be attributed to urban areas. Reductions in emissions from industrial processes have been outweighed by increases in emissions in other areas.
There are huge regional and wealth disparities in emissions. At least 18 countries have sustained reductions in emissions for longer than 10 years.
Low-emissions technologies have become cheaper and therefore in many cases easier to adopt. However, the adoption of such technologies has been slower in developing countries.
There has been a consistent expansion of mitigation policies but this is uneven across sectors.
Progress on the alignment of financial flows towards the goals of the Paris Agreement remains slow and tracked climate finance flows are distributed unevenly across regions and sectors.
Global warming is likely to exceed 1.5 degrees during the 21st century, and limiting warming to below 2 degrees requires ‘rapid acceleration of mitigation efforts’.

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The scale of the action needed. IPCC Working Group III has modelled over one thousand different potential global climate scenarios, divided into eight broad categories from C1 (below 1.5 C of warming) to C8 (warming of more than 4 degrees), outlining possible 21st century global warming outcomes. Carbon Brief’s Zeke Hausfather explains how each category of scenarios requires peak CO2 emissions and net-zero CO2 to occur by a certain year. C1, for example, requires peak CO2 emissions to occur between 2020 and 2025 and net-zero carbon CO2 to be achieved between 2050 and 2055.

“Rapid and deep” cuts. Carbon Brief’s Simon Evans highlights how achieving C1 scenarios (1.5C with no or limited overshoot) will require "rapid and deep and in most cases immediate" cuts in "all sectors". He notes that: “For the first time, the IPCC has a chapter on demand-side mitigation including shifting diets, transport patterns and material efficiency”.
Solutions by sector. Lead IPCC author Sarah Burch gives a sector-by-sector analysis of emissions and how to cut them. Transport, for example, is responsible for 14% of global GHG emissions and can be mitigated by a shift to “compact, complete communities” in which “active transport” (for example by foot, wheelchair or bike) is accessible. Agriculture, forestry and land use, which account for 22% of emissions, can be made less carbon intensive by a move to more plant-based diets, Burch argues.

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Disparities in emissions by region. Lead IPCC author Sarah Burch notes that this is “the first time we’re seeing evidence of real, sustained decreases in greenhouse gas emissions” in places with the caveat that this is only “from some countries”. About 40% of the last decade’s emissions can be attributed to Europe and North America and only about 12% are produced by East Asia (including China).

Disparities in emissions by wealth. 30-45% of emissions can be attributed to the world’s wealthiest 10% of households. The World Inequality Lab’s latest report argued that we should stop thinking of emission disparities by country, and instead between the richest and poorest within countries. Among the more shocking facts in the report is that Jeff Bezos’ 11-minute flight to space was ‘responsible for more carbon per passenger than the lifetime emissions of any one of the world’s poorest billion people’.
Colonialism. The previous IPCC report by Working Group II was the first to mention the word ‘colonialism’. Atmos’ Yessenia Funes explores the growing conversation around climate change and colonialism.

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Room for hope? Business Green’s Michael Holder highlights the IPCC report’s claim that “The world already has the technologies, expertise, and financial capabilities across every sector of the economy to halve global greenhouse gas emissions by the end of the decade.” Likewise, The FT’s editorial called the report “both stark and compelling” and said that “the good news is that a lot of what is needed is under way.”

Is politics the barrier? However, the FT’s editorial also highlighted that despite the world already possessing the necessary tools, “the larger problem is politics”. With 195 countries needing to approve the report, agreement has been slowed by countries who benefit from fossil fuel production or who lack the resources to make green adaptations. Vox’s Rebecca Leber and Umair Irfan report that the publication of the paper was delayed due to disputes over how seriously its warnings should be worded. ‍
Industry lobbying. Climate reporter Ajit Niranjan highlights how the IPCC report does not cite industry lobbying as a problem in its summary for policy makers and yet makes several references to it in the full report. The full report notes, for example, that climate policy has often been curtailed by industry influence over government action and how lobbyists who are against climate action have been particularly “broad-based, highly organised” and “extensive”.

Weekly Updates

Energy

Expectations for the Energy Security Strategy. The government is expected to release its Energy Security Strategy this Thursday. Business Secretary Kwasi Kwarteng has suggested that the government may tackle energy supply issues by “expanding renewables and… looking at new nuclear” but Cabinet tensions over new energy spending have been well documented. The BBC has written up a summary of what we can expect in the strategy.

Fossil fuels. The government is already planning to ‘fast-track’ six new North Sea oil and gas fields, which Uplift’s analysis shows would produce almost half the UK’s yearly total emissions and wouldn’t lower energy bills. The Telegraph’s Edward Malnick suggests that fracking is unlikely to play a central role in the strategy due to Kwarteng’s own scepticism.
Onshore/offshore wind and solar. BEIS Public Attitudes Tracker has identified very broad public support for all renewables (including both onshore and offshore wind), mixed on nuclear and strong opposition to fracking. Malnick’s Telegraph piece also reports that Kwarteng’s previous enthusiasm for onshore wind has been tempered due to backbench (and Cabinet) concern over community consent, and the strategy is therefore more likely to focus on nuclear energy and offshore turbines. The Treasury reportedly deems onshore wind and solar poor value for money, but Carbon Brief’s Simon Evans calculated that UK gas generation is now around six times more expensive to run than new wind or solar farms. Uplift’s Tessa Khan also highlights the popularity and affordability of wind energy.
The nuclear question. Malnick’s previous Telegraph article reported a “tension” between Boris Johnson, Kwasi Kwarteng and Rishi Sunak over the role of nuclear, as the Chancellor has sought to scale back the ambitions of the PM and Business Secretary due to fears of the costs of “a dramatic scaling up of nuclear energy in the UK”. More recently, the I’s Hugo Gye reported that “the Prime Minister is understood to have won a funding row with Chancellor Rishi Sunak, with the Treasury agreeing to underwrite a £100bn project to develop up to seven new nuclear facilities.”

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Public ownership in the energy sector. Politico’s London Playbook reports that the Business Secretary is setting up ‘Great British Nuclear’, a new government-owned company (akin to HS2 ltd), staffed with nuclear and commercial experts to “identify large sites, cut through planning red tape and raise private finance.”

Gazprom Marketing and Trading. The FT’s Gill Plimmer and Nathalie Thomas reports that the global trading wing of Russian commercial gas supplier Gazprom Energy (based in London) faces “de facto nationalisation” through rescue plans being drawn up by UK officials. Gazprom supplies a round a fifth of all non-household gas to commercial customers who “would face a 10-fold spike in their bills” if it collapses. The Oxford Institute for Energy Studies’ Jonathan Stern argues that the dependency of UK business on Russian gas is the result of the privatisation of the energy market 40 years ago. Foreign private sector investors are taking growing equity stakes in the UK’s energy infrastructure, with the National Grid selling a 60% stake in its UK gas transmission business to a group of Australian investors last week.
Public ownership could be fairer, cost-effective and efficient. Common Wealth’s Mat Lawrence argues this is a “recipe for value extraction”, asserting that “private finance will demand higher returns and prioritise shareholder interests over public needs”. Common Wealth’s previous report argues that taking the energy sector into public ownership instead could lead to “better value for money for consumers, more and better-paid jobs for workers, and an accelerated roll-out of the renewable energy infrastructure that the UK so desperately needs”.

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Changes to energy efficiency schemes. The government released responses to the Warm Home Discount and Energy Company Obligation consultations when the energy price cap increased last Friday.

Warm Home Discount (WHD). Eligibility for the WHD has been expanded to 700,000 more households and the rebate has been increased from £150 to £160 per household per year. National Energy Action’s Peter Smith pointed out that an annual £10 increase on the same day bills increase by ~£700 “will raise eyebrows”.
Energy Company Obligation (ECO). ECO’s funding has been increased by 50% but necessary legislation has been delayed to the summer. National Energy Action’s Matt Copeland has said this delay means that households may miss out on energy efficiency upgrades needed for next winter.
Further expansion blocked by the Treasury. The ECO scheme uses money raised from green levies on energy bills, but the Telegraph’s Ben Riley Smith reports that Boris Johnson and Kwasi Kwarteng wanted the Treasury to fund an extra £200m per year to expand access to the scheme beyond people in receipt of benefits. Rishi Sunak vetoed the extra funding due to not wanting to reopen the Autumn Spending Review, causing further tension amongst the Cabinet.
Targeted support. The Resolution Foundation’s Jonny Marshall argues that “Targeted and accessible grants are essential” for helping families with lower energy bills: “It can’t just be wealthier families who get access to insulation, heat pumps, solar panels. Poorer households just don’t have the money to invest, VAT cuts or not.”

Inflation

Declining trade union power = increased exposure to inflation? Exploring the history of inflation since the 1970s in the UK, James Meadway explains why workers' pay has never been this exposed to inflation; 40 years of declining trade union membership and collective bargaining power means real pay increases will be increasingly harder to secure.

Decade of lost pay in the public sector. After the OBR reported that public sector pay is 2.1% below its 2010 level in real terms, 21 MPs signed an Early Day Motion calling on the government to back an inflation proof increase in the public sector pay.

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Corporate concentration, monopoly profits and inflation. Economist Robert Reich has produced a video explaining how “mega-corporations are using inflation as cover to push prices even higher and reap record-setting profits.”

Problematising record profits with new statistics. Economic historian Eli Cook writes that “the study of profits remains a shockingly neglected subset of the economic discipline” and that economists should focus on the price making ability of large corporations with monopoly power as alternative policy solutions for combating inflation (rather than increasing interest rates which contracts incomes and demand).

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Rising household debt in the cost of living crisis. Due to higher interest rates, the I’s Huge Gye reports that households will spend £1000 more each year (5% of disposable income) on debt servicing repayments as the OBR forecasts household debts to rise by 52% over the next 2 years. Latest polling from Jubilee Debt Campaign’s (JDC) shows 3 million more people (on top of the 11.5 million currently) fear they will be plunged into debt over the next 6 months,

Political implications and solutions. New polling from Ipsos on public perceptions of the economy show that the public are increasingly focused on the cost of living rather than other economic indicators, and trust Labour more than the Conservatives to solve it. The JDC’s Joe Cox argues the Treasury should write off 70% of debts via a ‘debt restructuring fund’ in Tribune.

Local economies and ownership

Asset ownership and a K-shaped recovery. Commenting on Power to Change’s new campaign, ‘Take Back the High Street’, Christine Berry explains how the pandemic has intensified inequalities relating to asset ownership and widened some of the political and economic cracks in the UK’s development model.

A new democratic model of urban development. Using London’s Latin Village as an example of a “growing flower in the cracks”, Berry proposes ‘public-common partnerships’ as an alternative both to the extractive ‘public-private partnerships’ which dominate investment in the UK, and to top-down state-led models which fail to meaningfully involve local communities.

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The housing affordability crisis. Positive Money’s new report ‘Banking on Property’ features polling showing that a majority (54%) of homeowners would be happy with their homes not increasing in value if it made housing more affordable for others (Bloomberg coverage here). The report proposed taxing multiple property owners, more protections for renters, and an updated mandate for the Bank of England to tackle rising house prices. (See their launch video and Twitter thread explainer.)

How we got here. Tribune columnist Joe Bilsborough explains the causes of house price inflation in the UK as a history of failed market-based housing policy.

Fiscal policy

Tax-free allowances are larger than benefit payments for the first time. The Fabian Society’s new report on ‘Shadow Welfare’ argues that high income households have been prioritised in the Chancellor's response to the cost of living crisis, as the decision to raise National Insurance thresholds means the tax-free allowances given to a single working adult will be higher than payments to a Universal Credit claimant. The New Statesman’s Harry Clarke-Ezzidio has the detail.

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Mapping council tax rises. Campaign group Fairer Share have released an interactive tool showing how much Council Tax bills for Band D properties will rise in each local authority area this year.

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Financing public debt. The Institute for Economic Affairs’ fellow Julian Jessop debunked the Chancellor’s claim that the UK government is forecast to spend £83bn on debt interest next financial year. He highlighted that the additional payments were not due to a “higher level of borrowing or debt” but “due to the RPI uplift” and that this makes arguments against immediately lowering public debt much weaker.

Inflation can be good for the public finances. Jessop also reiterates that inflation can be good for the public finances, as “over time, the boost to tax revenues from higher nominal incomes and prices can more than offset the higher cost of servicing government debt…The OBR has revised down its forecasts for borrowing in every year except 2022-23, and for the debt-to-GDP-ratio in every year.”

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HMT vs OBR. Anonymous briefings suggest Rishi Sunak “viscerally hates the OBR” for overstepping its role by making “normative policy judgements” and overly pessimistic economic forecasts which ruined positive media coverage of the Spring Statement. The Institute for Government’s Olly Bartrum defended the OBR’s mandate to forecast the impact of fiscal decisions made by the Treasury, regardless of whether it is politically expedient for the government or not. PEF’s James Meadway reminds us that the OBR actually has a reputation for making particularly hopeful forecasts, consistently making overly optimistic predictions about productivity growth since 2011.