Why green recovery is the best hope
The COVID-19 pandemic has received 24/7 media coverage across the globe, and with good reason. Coronavirus has had a catastrophic impact, claiming the lives of hundreds of thousands of people, devastating our economies and materially changing the lives of millions as we try to adapt to the profound societal changes it has inflicted.
Boris Johnson told the nation on 23 March: “The coronavirus is the biggest threat this country has faced for decades.” Whilst there is no doubt that the particular challenge posed by COVID-19 is unheard of in recent history, and should not be diminished, I would take issue with the Prime Minister’s statement. There is another threat that has been looming for decades, which is exponentially greater than coronavirus and poses an existential threat to humanity. Yet the climate change threat is failing to attract the attention, and action, it deserves.
The coronavirus crisis has highlighted the ability of central banks, governments and agencies in multiple jurisdictions to move quickly, demonstrating that their inherent bureaucracy need not be a barrier to dynamic action when faced with an emergency of this scale. We need to treat climate change the same way.
From a UK business perspective, we need urgent action to get the economy back on track. However, we simply cannot return to life and business as usual. A green recovery is our best hope of rebuilding an economy ravaged by the COVID-19 pandemic and addressing the climate emergency. We must focus on cutting emissions, investing in more sustainable, greener projects, creating jobs and building a fairer and more resilient society. To that end, the First Minister’s announcement last week that the Scottish Government is putting a green recovery at the heart of its programme for government is welcome news.
In the clean energy sector, there is huge appetite (backed up by a fantastic track record) to achieve the targets for offshore and onshore wind, as well as the other renewables technologies that will play a major part in helping us achieve the 2045 and 2050 net zero targets set by the Scottish and UK governments respectively. The potential for job creation is enormous.
In the financial sector, there is a recognition that the funding requirements to achieve net zero are gigantic and that there needs to be a greater focus on investments that help tackle climate change. The Net Zero Investment Framework (designed by 70 pension funds and investment managers representing assets of $16 trillion) provides the first practical blueprint for investors to maximise their contribution to achieving net zero emissions globally by 2050 and focuses on decarbonising investment portfolios and increasing investment in climate solutions. The increasing importance of environmental, social and governance (ESG) factors and disclosure requirements mean that sustainable investments are the way forward.
The oil and gas sector is playing its part too. At the beginning of August, BP announced its new strategy to transition to an integrated energy company and set out its net zero ambition. It is the latest in a long list of oil and gas majors to have recognised that low carbon is the only viable future.
While these examples give cause for optimism, they are the tip of the (melting) iceberg and we still need to do much more. As a minimum, we need:
- greater collaboration between the public and private sectors, the former providing enabling mechanisms to encourage the latter to innovate, accelerate and deploy at scale the solutions we need to tackle climate change in a very short period of time – and with key performance indicators for each;
- recognition and commitment that every part of the economy has a part to play – from forestry and construction to the financial and food and drink sectors, to name but a few;
- to identify the barriers to deployment and agree solutions (now) with a commitment to rapid implementation;
- to recognise that a ‘one-size-fits-all’ solution is not appropriate in terms of technology, financial structuring, expertise and deployment – to achieve net zero we must identify and focus on those solutions that will get us to net zero quickly and sustainably;
- to identify a pipeline of investible projects and quickly engage with developers. Sustainability and low carbon need to be front and centre of decision-making;
- to align the energy and infrastructure markets – leveraging the expertise from both to help in areas such as energy efficiency and district heating. Decarbonising heat and transport are for many cities some of the key challenges, and partnerships can help; and
- to embrace our collective responsibility – as individuals, we need to recognise and act on the important lessons we have learnt from the COVID-19 crisis: driving less, shopping locally, and making choices that are more sustainable.
The UK and Scottish governments have shown that when an emergency presents itself they are able to move at speed. If we are to try to address the climate emergency and the socio-economic effects of coronavirus with any chance of achieving economic growth, employment and a sustainable future, we need to see that type of dynamic action again, not only from government but also from industry and society. As a business, we are working with clients to drive forward clean and sustainable projects, but we are also overhauling our own sustainability policy so we can play our part in the green recovery and the journey to net zero. I am up for the challenge – are you?
Clare Foster is Head of Clean Energy at Shepherd and Wedderburn.