Can the coronavirus crisis help our climate?

The International Energy Agency (IEA) is predicting the biggest annual drop in global emissions in history (8%) for 2020 as a result of actions taken in response to the COVID-19 pandemic.

Energy demand in the UK is down by well over 10% despite the very significant growth in homeworking during the lockdown period and, across Europe, power prices have fallen by around one third.

Some may see these developments as rare glimpses of good news. But it is definitely not a case of ‘job done’.

The climate emergency has not gone away, though it is beyond doubt that following hot on the heels of the COVID-19 public health crisis we face an economic crisis of proportions not experienced in the UK for more than a century. An anticipated fall of 13% in GDP growth in 2020 compares with a drop of around 4% in the most recent 2008 financial crisis and around 5% following the 1929 Wall Street crash.

Best current estimates are that retail price increases will remain below 2% this year, but this is not good news in the face of forecasts of earnings plummeting between 7-8%. The Trussell Trust has already reported an 81% increase in demand for emergency food parcels from food banks in its network. Some economists expect that unemployment will climb to 10%, in no small part from a tsunami of redundancies as the government’s coronavirus support schemes are withdrawn.

What environmental and economic crises have in common is the high cost they exact on welfare and well-being.

This matters to all of us

So, is there a better way forward?

Some commentators take an understandably down-beat perspective, fearing that economic recession will delay government decision-making and hold back investment in low carbon infrastructure. The postponement of the COP26 climate summit until next year may amplify these concerns. However the Committee on Climate Change (CCC) has come out fighting; clearly prioritising rebuilding the economy post-COVID-19 in order to support a Just Transition to net zero carbon emissions and calling on the government to rise to this challenge. Prospect strongly supports this call.

In the energy sector, more so than transport or the wider commercial sphere, there is some progress to build from.

For example, in 2019 wind became the UK’s second largest source of electricity generation, accounting for almost one fifth of the total. In April 2020, solar power broke its peak generation record, providing 30% of the UK’s electricity supply and, at the time of writing, the UK has again broken the record for the period of time generating electricity without coal.

But, we should not be complacent.

Aurora Energy Research has modelled four COVID-19 induced recession scenarios. The best case scenario sees a recovery in power prices during 2022 but the worst case which is still a plausible outcome, does not envisage a recovery until 2025. This is bad news for investment in low carbon energy. The collapse in power prices will make it much harder to get financing for the small number of subsidy-free renewables projects. More broadly it means the cost of subsidies through the Contracts for Difference (CfD) mechanism will skyrocket, potentially exceeding the Treasury cap on low-carbon levies and generating political pressure to limit further subsidy auctions.

So it is clear that a market-driven, business as usual approach, won’t work. This was the mantra prior to the COVID-19 crisis, but there are now signs that a different approach may be possible. The government demonstrated bold, pragmatic thinking in developing the COVID-19 support programmes for jobs and businesses. We need an equally bold and expansive response to the longer-term climate crisis.

A sustainable recovery

These are the six components we need to think about if we want an ambitious and sustainable recovery building out of this crisis:

First, the government should publish the long-delayed Energy White Paper, setting out the roadmap to net zero carbon for the whole economy and thereby putting an end to a major source of investment uncertainty. This should help a number of ‘oven ready’ projects that currently await a final investment decision.

Second, alongside this, we need to develop a real green industrial strategy for the UK, funded by direct public investment. Climate science drives the urgent need for change, but it will be delivered largely (though not exclusively) through engineering and technology-based solutions – some of which are still at a relatively early stage of development. Public investment will be cheaper, fairer, and will deliver a much faster roll-out of new energy infrastructure than private finance can. It must include investment in new nuclear projects, which will be essential to meet the net zero target whilst avoiding a dangerous shortfall of power. It must also include a commitment, as a minimum, to reversing recent cuts to funding for energy R&D while expanding public research capacity in promising new areas like energy storage and carbon capture.

Third, equal attention must be given to maintaining and developing a skilled workforce to develop and deliver the UK’s future energy systems. There are hard lessons to be learned from recent experience in renewables where growth in generation has coincided with a fall in the number of UK jobs in the sector, by around 30% since 2015. This is explained mainly by a lower than expected volume of projects because of the free market approach adopted by successive governments, coupled with a lower than anticipated UK share of value created by the renewables industry, including in the supply chain.

However, there is a broader skills challenge. National Grid’s report ‘Building the net zero workforce’ calculates that the energy industry needs to recruit for 400,000 jobs over the next 30 years in order to achieve net zero carbon emissions. 35% of recruits will replace existing roles  and 65% will be in new functions. 30% of the jobs – 140,000 people – will be needed in the next decade. As National Grid concludes, this will require a single-minded focus and collaborative approach.

Fourth, we need a Just Transition – an objective overwhelmingly supported by Prospect members irrespective of age or the sector they work in. In other words, we need a strategy and a process that ensures fair treatment of workers and communities that are most affected by change as we move to a lower carbon world. This includes fully funded access to quality training and development to take up new opportunities and the creation of high quality employment, commensurate with workers’ skills and experience.

Although well established as a policy concept and included in the language of international climate declarations, Just Transition as an industrial strategy is still in its infancy. Although there are plenty of examples of unjust transition, including the dismantling of the UK coal industry in the 1980s, positive case studies are sparse. There are some good stories of intra-company transfers across business units, conducted in full consultation with Prospect representatives. However, there will be more cases where geographical mismatch between existing energy generation and new industrial opportunities needs to be resolved.

Fifth, we need a comprehensive plan that recognises the public value of nature, not just in economic terms, but also in how it links to well-being, biodiversity and supporting local communities. This is important for Prospect as we represent the nation’s climate and ecological workforces. Our members in the British Antarctic Survey and Met Office are at the leading edge of scientific research. Our members in Natural England, the Environment Agency, Scottish Natural Heritage, Natural Resources Wales, Defra and other environmental bodies work daily to protect and enhance our natural world. By public value this also means investing in these agencies so that we have the workforce and resources nature needs.

Finally, we need the political, economic and industrial infrastructure to work across regions and sectors. Scotland’s Just Transition Commission, which brings together a cross-sectoral group of stakeholders and a focus on practical measures, is worthy of replication, buttressed by multi-agency support and expertise. But there is also a case for an overarching council or commission, bringing together social partners and expert advisers to inform and enable the UK’s path to net zero and to invest in its delivery, possibly through an expansion of the remit and powers of the Committee on Climate Change. This could include thinking about how to adapt the concept of the current income support schemes to facilitate participation in retraining, encourage mobility across sectors, and support relocation where necessary.

The UK did not plan for the public health crisis caused by COVID-19, but of necessity the government has responded quickly to it and largely provided financial support where it is most needed. But we can plan for a sustainable recovery. The climate crisis, by contrast, is well documented and widely debated but has not commanded the same urgency of response. Neither challenge can be effectively addressed through approaches based on business as usual. There is the opportunity now to prove the pessimists wrong and to set a new economic future for the UK. None of us can afford to ignore it.

Sue Ferns is senior deputy general secretary of Prospect and is responsible for Prospect’s energy sector.