It’s time for an honest conversation

Net Zero: How We Stop Causing Climate Change by Dieter Helm is a must read for anyone serious about tackling climate change. It blows apart the myths and self-delusions that block us from seeing clearly. With laser like precision it presents a clear diagnosis of the problem and sets out a prospectus for change that is actionable immediately.

Preview by Claire Haigh

If we want to be net zero it has to be net zero consumption, not net zero production.

Helm takes issue with the claim by the Committee on Climate Change that by reducing emissions produced in the UK to zero we will end our contribution to rising global temperatures by 2050. This would only be true if every other country we trade with gets to net zero by 2050 as well. It takes no account of the carbon we import which pervades much of our spending. The correct target is net zero consumption, not net zero production.

The politics of lowering consumption will be tough. Focusing on carbon consumption rather than just production puts the spotlight on us all as consumers. Helm brings home the reality of our carbon intensive lifestyles by recommending that we each do a carbon diary. We can make a difference if we change our own behaviour. The transition will require sacrifices. We must end our obsession with GDP and instead pursue sustainable economic growth.

We need an effective price on carbon, and a decarbonisation plan for the environment as a whole

Helm outlines three key principles for a sustainable economy. The polluter-pays principle means that the costs of pollution should be integrated into every decision made by businesses and consumers. Public goods that the market will not deliver unaided should be provided by the State, including crucial low-carbon infrastructures and R&D. Finally, the residual carbon emissions should be offset by more than the expected damage, and most of this should be natural rather than industrial CCS. Net environmental gain means that we should pass on a set of assets at least as good as those we inherited.

Instead of focusing exclusively on carbon emissions Helm urges us to take seriously the other side of the equation – the natural sequestration by the land, trees, soil and peats of those emissions. If protected and enhanced, nature does this for free all the time, and in the process produces all sorts of other benefits for us too. Significant parts of Helm’s plan are no regrets – we should do them irrespective of carbon for cleaner air, water, better health and well-being and a vastly improved natural environment.

There is a big role for the state and for public investment. There is also a big role for the private sector and for the markets. Both must work in tandem.

Our current infrastructures have evolved to serve and facilitate the carbon economy and need to be replaced. Helm is clear that infrastructure comes in systems, and core systems operators should be public. However, rather than replacing the market and losing its inherent incentives and the efficiencies that follow, a pragmatic climate change policy involves the three interventions to correct the market failures. A powerful state is needed to price and regulate the pollution (and hence incorporate the costs), to provide for the public goods, and to enforce compensation through compulsory offsetting.

Massive public investment will be needed in R&D for renewables. Renewables are still only a small part of global energy supplies. Off-shore wind is just 0.3% of global power supply. Far more fossil fuels have been burnt in the last 30 years than in the entire nineteenth century. Economic growth is still powered by coal and we face the enormous challenge of China, India and Africa doubling their GDP every 10 years. We must invest in the next generation of wind and solar technologies.

We can unilaterally decide that we will cause no further climate change.

Helm argues for a bottom up approach. We can unilaterally decide that we at least will cause no further climate change. We must put a price on pollution. Apply a carbon price to imports, both domestically and at the border. Invest in twenty first century infrastructures to facilitate a low-carbon economy, and invest in R&D to bring on the new technologies.

The key to an effective unilateral strategy is the ‘carbon border adjustment’. If countries exporting carbon-intensive goods face a carbon border tax on a level playing field with home producers, this encourages them to introduce their own carbon price and keep the money rather than pay it to our government. Helm argues that this and not the UN-led top down approach might actually broaden and deepen the coalition of the willing.

Net Zero should shake us all out of our complacency.

The past 30 years have been an abject failure in tackling the problem. We have nothing to show for all the earnest effort, time and resource that has been devoted year after year on COP treaties. The brutal reality is that emissions have risen and will continue to rise. Even now in 2020 coal remains the biggest culprit and will be for the foreseeable future.

The world is in a state of flux. The delay to COP26 makes sense while countries are struggling to cope with the COVID-19 pandemic. Helm argues that we should use the pause to address the key flaw in EU and UK net zero ambitions, namely their focus on territorial production targets. The correct target should be net zero consumption.   Encouraging carbon pricing at the border would really make COP26 a game-changing meeting. The pause should also be used to set carbon taxes in the world of low oil prices[1].

The sheer level of state intervention and investment required to tackle the COVID-19 crisis sets a precedent for the level of intervention required to tackle the climate crisis. However, Helm is clear that this investment should be paid for through savings not through borrowing[2]. Revenues from pollution taxes need to be rerouted to the investment needed in new greener architectures, natural sequestration, fibre and communications and R&D. Aggregate demand must go down. The challenge is to get onto a sustainable consumption path.

Net Zero sets out what would have to happen to crack the problem. It calls for a different economic model and a fundamental rethink of our consumption and of our environmental footprint. You may conclude no one will vote for this. Helm’s response is that you may be right, but then you must resign yourself to the conclusion that climate change is not going to be addressed. It is our moral duty to try, and to do the no regrets stuff first.

NET ZERO How We Can Stop Climate Change is now available to pre-order

[1] http://www.dieterhelm.co.uk/energy/climate-change/climate-change-has-not-gone-away-cop26-net-zero-and-the-coronavirus/

[2] http://www.dieterhelm.co.uk/regulation/regulation/there-is-no-money/