Meeting in the Middle on Net ZeroNovember 2023 | Kathryn Whitaker
The push to net zero is well and truly underway. Several hundred councils have declared a climate emergency. More than half of these have produced at least a sketch of a climate action plan for reaching the net zero ambition by some target date between 2030 and 2050. Now comes the much harder work of putting details into those plans, and monitoring their progress. Genecon’s EnviroNav software, built around our Net Zero and Climate Resilience monitoring and evaluation framework, facilitates the detailing, shaping and ongoing monitoring of what will become a suitable climate change response programme, to meet these ambitious deadlines.
The key to success in reaching net zero lies in government staging their actions on the ‘middle ground’ between top-down and bottom-up analysis. Top-down is the policy maker’s path. It begins with grand policy statements (to achieve net zero by 2040), maps these onto areas for action (transport infrastructure, residential retrofits etc), and identifies technologies and behaviours to effect those actions. Bottom-up is the engineer’s path. It begins with technologies, (solar PV, retrofits etc) evaluates how each would change the areas of action if brought to market, then aggregates upwards to the total impact on carbon emissions.
Both are valid paths, but both have pitfalls that can be avoided if confronted directly and planned accordingly. Bottom-up risks the threat of becoming enamoured of the latest technologies without recognising the immense gap between a technology’s stages of research, development, demonstration and deployment. Only that final stage moves the bar on carbon emissions. Top-down runs the risk of becoming satisfied with ambitious public declarations without preparing the ground for policies to take effect. The policy landscape of the early noughties was littered with programmes of pledges to which local authorities and institutions signed up to public fanfare, only to be forgotten a decade later. The trick is to turn public ambition into private action by occupying the ‘middle ground’ of net zero actions.
What exactly is this middle ground? Four factors drive the changes needed to actually achieve net zero rather than simply make it an ambition. Those factors, found within EnviroNav and critical to evaluating likely levels of success of a transition to net zero, are:
- Scope: What percentage of carbon emissions and/or absorption is at least potentially related to the transition? For example, improving the thermal envelope of a home reduces energy use for heating, but not energy from plus load.
- Efficacy: How much reduction is achieved in the emissions falling with the scope of the transition if that transition takes place fully? This factor assumes everyone who might participate in the transition does so. It is the ’theoretical potential’ of a solution in a purely engineering sense.
- Uptake: What percentage of actors in a community join the transition rather than remaining with the old ways? There is an extensive literature on the rates of uptake of technology and policy solutions to problems, and that literature makes it clear that uptake is never close to 100% despite the laudable ambitions of a policy maker.
- Fraction Implemented: How well has the net zero policy been put into action as of any given year? Local authorities have limited resources, especially when climate action is in competition with other community goals such as reliable transport or job creation. Net zero programmes are therefore staged as the necessary resources to increase them flow in.
In the EnviroNav system, the mathematical product of Scope, Efficacy and Fraction Implemented determines the reduction in emissions or increase in absorption, if everyone who can participate in a programme does so to the full extent. It is the theoretical potential of a programme to cause the transition to net zero. The actual transition however will be determined by the value of Uptake, which has never been 100% in any past policy or technology solution. It is often rather low, measured in a few tens of percent. Ignoring Uptake, failing to grapple with what increases its value, and simply assuming it will be 100% is a recipe for ambition running far ahead of achievement. And the climate only knows of our achievements. It has no interest in our ambitions. As St Bernard said a millennium ago: “Hell is filled with good intentions and desires”, often rephrased as “Hell is full of good meanings and wishes, but heaven is full of good works”. What was wise in the twelfth century remains wise today.
Preparing a net zero programme to deliver a high value of Uptake is precisely where the middle ground lies in policy. That middle ground rests on a foundation of understanding how technological and behavioural transitions take place, and the central role of macroeconomics in determining whether transitions reduce emissions or simply move them around inside an economy. To explore these ideas and their effect on Uptake, we use insights developed at the Cambridge Centre for Climate Change Mitigation Research (4CMR) and put into practice by our evaluations supporting pathways to net zero.
Transitions require time and resources. They depend on a range of conditions (the ‘context’ of that transition in the language of Multi-Level Perspective theory as it is used in the policy world) that must be understood and supported by government actions. Imagine a transition to low carbon energy that begins with declaration of net zero ambitions. Investors pile in, bringing wind turbines to market if it makes economic sense in that moment. This sense comes from the Levellised Cost of Energy (LCOE; here, we are considering the LCOE of wind energy) compared against competing technologies such as gas at the moment when an investment decision is taken. The context of that decision is the profitability of these two sources, which is in turn affected by policies such as a carbon tax, and two competing forces related to economies of scale. Learning by doing (the first of these two forces) causes the cost of carbon reduction to go down over time as turbine manufacturing becomes more efficient and the price to produce and install the turbines declines. This is counterbalanced by the rising marginal cost of abatement where the emerging technology is initially placed on more accessible, less costly and wind-blessed sites, followed by progressively less convenient sites where the theoretical potential of wind energy might be greatly reduced compared to that of the first turbines installed. Governments clearly can affect this ‘macro’ context through subsidies or percentage renewables requirements or by shortening the time to planning approval.
Both top-down and bottom-up evaluations tend to focus on scope and efficacy in making grand promises of a rapid transition. But this leaves out the essential middle ground of uptake. There is a strong research literature on rates of uptake slowing as a transition rises up the technology diffusion curve, encountering increasingly recalcitrant actors, and as learning by doing becomes less effective for the reasons we mentioned above. People can be sorted roughly into a few broad categories that determine how quickly they adopt a solution once it is available: Innovators, Early Adopters, Early Majority, Late Majority and Laggards. Innovators might adopt a solution almost immediately (think about the launch of new iPhones every few years) while Laggards might take a decade or more to join in, if they do at all. Overcoming these hurdles of Uptake is where much greater government attention must be directed. It requires policy instruments suited to reducing the time required for a technology to have enough public acceptance, trained installers, material resources, shovel-ready businesses and access to capital to move each solution up the technology diffusion curve.
What of the macroeconomy? Climate policy evaluations tend to focus on microeconomics and risk-cost-benefit thinking. They ask: what is the cost of a retrofit? (capital expenditure, operational and maintenance costs) How much reduction in emissions (or increase in absorption) will be purchased by this cost? If the benefit outweighs the cost, cost benefit analysis suggests the investment is a wise one.
However there are problems with this approach. Firstly, not every action must be justified by a hard cost benefit ration below one. The cost of some actions is the price of use of a shared resource such as the atmosphere to dispose of our carbon waste products. We want to focus here on the role of macroeconomics in an economy that is inextricably linked to carbon emissions. Secondly, money spent on a retrofit is not lost. It is not taken outside and burned. It goes to other sectors in the economy, such as the companies that manufacture or transport retrofit materials. Those other sectors might have higher or lower economic efficiency and carbon intensity than the home energy sector. Similarly, money saved on energy in a home increases disposable income. This might go into the purchase of a larger fridge, an example of the well discussed Jevons Paradox (although we hesitate to call it a paradox as it more akin to a problem). Our modelling shows that these indirect, multiplier effects of investments can either slow or enhance the transition to net zero. Failure to account for them causes a narrative where government must decide how to balance GDP against carbon reduction. Guess which side will win that battle! Policies informed by properly developed macroeconomic models on the other hand, such as the dynamic models developed at 4CMR, demonstrate that this is a false narrative. The transition to a low carbon economy can instead increase GDP. But that will happen only if policy instruments are selected carefully and applied in the right sequence and given stability so the private sector gains the confidence to increase its uptake. It will only happen if those policies prepare the middle ground for increased Uptake of the solutions on offer in a climate action plan.
These pillars of the middle ground are what can cause a transition to take decades longer than promised in a climate action plan based solely on the metrics of Scope, Efficacy and Fraction Implemented. They can be overcome if planned for, but they must first be recognised and quantified, and a portfolio developed of supporting production-based and consumption-based policy instruments that will cause Uptake to rise to close to 100% in a community. It is time for government to spend more time occupying this middle ground and creating the community engagement programmes needed to greatly increase the rate of transition to net zero.
This thought piece was produced by Genecon as part of their public outreach programme. A shorter version of the piece, using some of the materials above, was published in the magazine Public Sector Focus in October 2023. That can be viewed here
< Back to News, Views & Insights
Meeting in the Middle on Net Zero7th November 2023
The push to net zero is well and truly underway. Several hundred councils have declared a climate emergency. More than half of these have produced at least a sketch of a climate action plan for reaching the net zero ambition by some target date between 2030 and 2050. Now comes the much harder work of […]
EnviroNav: Illuminating Local Authorities Path to Net Zero11th September 2023
Over two decades Genecon has earned national regard as a trusted advisor to Local authorities, securing hundreds of millions of pounds for the delivery of transformational capital projects. In this time we have gained a deep insight into the real needs of our clients, and we have witnessed these needs shift and evolve. In 2023 […]
Making the case for a new Eden: Interview with Graeme Collinge16th March 2023
In January 2023, as part of the Governments latest round of Levelling Up Funding, Eden Project North was announced as the flagship project. With an award of £50 million Eden Project North is destined to be a nationally important project that will transform both the landscape and economic fabric of Morecambe and indeed the wider […]