Future Energy Provision: How can the world understand, anticipate and collaborate? A British Academy event

Amber Rudd DECC SOS_Nur Bekri National Energy Administration_China_DECC_Flickr_19_10_15

24 November 2015

Last week, in the in the run up to the Paris Climate Change Conference (COP21), the RGS-IBG Policy Team attended the fourth and final event of the British Academy’s ‘Energy and the environment’ series. Here we heard views from Lord Nick Stern, (President, British Academy), Ed Davey, (former Secretary of State for Energy and Climate Change),  Joan MacNaughton CB (CEO, World Energy Trilemma) and Jeremy Oppenheim (Director, McKinsey and Co) on the political economy of ‘getting things done’ in the transition to a cleaner energy sector.

Understanding current trends in energy

Over the next century, the numbers of people living in cities is expected to rise from 3.5 billion currently, to 6.5 billion by 2050, to 9 billion by 2100. Within this context Lord Stern argued that the next 20 years of energy policy will significantly determine the outcomes of how cities develop over the next 35 years. According to the evidence, he stipulated that if we are on the high side of emissions during this period, we will have to achieve zero net total emissions thereafter before the end of the century to stay below 2°C; the recognised tipping point for major consequences on the planet.

Jeremy Oppenheim echoed these thoughts, going so far as to say that peak emissions in all energy uses including electricity, heating and transport need to be reached within 5 years’ time, followed by a systematic change to clean energy through decarbonisation.

Anticipating Paris COP21

Lord Stern set the tone of the remaining discussion by arguing that the UNFCCC COP21 negotiations taking place in Paris this year are a turning point in climate politics, with much political progress being made since COP15 in Copenhagen (2009), in particular from China and America. Lord Stern warned of the limitations of using the 1990 emissions level as a baseline, since at the time US emissions were double that of China and now it is the opposite. However in Lord Stern’s opinion, Paris presents an opportunity for a credible formal international agreement.

Making reference to the Intended Nationally Determined Contributions (INDCs), the vehicle through which Parties submit their climate commitments for the post-2020 period, Lord Stern argued these represent a credible opportunity for achieving finance coalitions between countries to enable the movement of money from richer countries to poor, most of which would be private sector led.

Joan MacNaughton also agreed that Paris was a tipping point for climate politics, but asked the question, how well do countries translate these commitments into actions?

The politics of energy policy: collaboration and investor confidence

Joan then went on to reference the World Energy Council who spoke this year to leaders in the energy sector about ‘What keeps you up at night?’ , and found that the most frequent responses were around a climate change framework. In Joan’s opinion, while the INDCs will constitute this, more progress is needed and should be backed by a review mechanism to monitor progress on actions to deliver change.

Ed Davey argued that the next challenge is to make sure that those in power read and engage with the energy policy reports produced, one example being the Stern Review (2006) and urged the public to hold to account those politicians who downplay the urgency of climate change. He felt that disastrous steps back had been made since May 2015, referring to a carbon tax on renewables which has led to investors moving away from the UK. In Ed’s words “our politicians ought to know better, and ought to see and acknowledge the science and take leadership on the issue, else we risk undermining global efforts…fortunately the rest of the world is moving in the other direction”.

Focusing much of his discussion on the ‘three themes of British politics’: China, green growth and urgency, Ed argued that it is impossible for climate politics to change without involving China. Speaking in favour of the UK Foreign and Commonwealth Office (FCO) climate diplomats deployed to Beijing under former Foreign Secretary David Miliband, he warned that potential cuts in the Autumn Statement 2015 may lead to a loss of resources in this area which he saw as critical. Since the publication of the Autumn Statement last week, it has been stipulated that the FCO’s budget will be protected in real terms to maintain the UK’s global network of diplomatic posts but with the aim of achieving administration efficiency savings of £53million by 2019-2020.

Joan set out a pragmatic approach to future energy policy. Joan argued that in order to help the energy industry succeed, it is important to identify predictable change points in the policy process that enable businesses to also predict where issues might arise. Policies must be flexible enough to adapt in unexpected circumstances. This would help to instil consumer confidence in what some businesses perceive to be a high risk area due to higher capital investments and greater exposure to policy.

To be effective, Joan argued this should be complimented by collaboration between business and government and efforts should be made to ramp up consumer confidence through high level engagement and consultation. China was referred to again as a positive example for this, through their Clean Development Mechanism review and the successful deployment of technologies through various funding mechanisms. For this to work, Joan suggested that global leaders needed to invest another $53trillion into the energy system, supporting the idea that governments need to facilitate investments flows, not impede them. Furthermore, in her opinion, it is dangerous to think that businesses will resist legislation and felt that governments therefore shouldn’t shy away from implementing statutory requirements.

Jeremy optimistically argued that we have consistently underestimated the progress and speed of technological change. The growth of renewable energy technology  has consistently exceeded market expectations, particularly over the last 20 years, for example the solar industries in Morocco and Saudi Arabia. This may suggest the UK could do the same.

Communication, communication, communication

Lord Stern emphasised the importance of communication. In his opinion, the media has not served to help matters by devising ‘Punch and Judy’ narratives around energy politics which can serve to undermine the complexity and seriousness of the issue at hand. Jeremy agreed, arguing that this can act as a barrier to the public understanding and engagement with the issue. In his opinion, if we want to engage people in climate change, we should allude to the traffic jams and local pollution that individual car ownership means for their daily lives.

To complement this, Ed highlighted the importance of communication and speaking the language of ‘Green Growth’, as a tool for getting the finance and industry ministries on-board with any energy and climate packages. Communications in climate change policy itself was also raised by Lord Stern, who used the example of ‘equitable access to sustainable development’, a term coined in Cancun by the United Nations Framework Convention on Climate Change in 2010, as an attractive way policy-makers are framing the discussions about bridging gaps between developing and developed countries.

Looking to the future…

Whilst reflecting on power and leadership in the climate change sphere, Lord Stern was hopeful about the leadership currently being shown by Pope Francis, but naturally alluded to concerns over government short-termism and the inability of individuals and communities to handle uncertainty. The changes we expect to see to the planet due to climate change are way outside the zone of current human experience, complicated further by a long lag time in the planet’s natural systems. Lord Stern also expressed that it is the sum total of emissions that count, not the actions of one individual, and that those with big stakes in the world energy system have no incentives to de-invest – which must change.

To close, Lord Stern argued that while we are lucky to be alive at this time in history, because we now have the knowledge required to change our energy systems, he emphasised the urgency and weight of responsibility on our shoulders, to avoid negative impacts on our children and grandchildren.

Image credit: Department of Energy and Climate Change (2015)

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