CREDS’ researcher, Alice Garvey, reflects on her experience of working with the Climate Change Committee on their 6th Carbon Budget Recommendations.
CREDS researchers at the University of Leeds were recently asked to provide an independent report on industrial decarbonisation policies to help inform the Climate Change Committee’s 6th Carbon Budget Recommendations. This blog outlines my experience of, and the outputs from, a research project conducted remotely with the organisation.
Policies for industrial decarbonisation appear to be much like buses – they seem to all turn up at once. No sooner had we finalised our review on what could constitute ambitious future policy mechanisms for decarbonising UK industry, than a raft of apparently ambitious policies were announced by Government, including a Sovereign Green Bonds scheme, sustainable finance taxonomy, and Green Jobs Taskforce. The publication of the Government’s Opens in a new tabTen Point Plan for a Green Industrial Revolution highlights an apparent increase in ambition and experimentation, and a renewed focus on the industrial sector.
However, the recent announcements suggest a patchwork of funding for selected technologies and sectors without an overarching or strategic framework for how this would collectively meet our net zero commitments. As in the summer 2020 announcement of Opens in a new taba £350m investment in industrial decarbonisation to stimulate a green recovery, the extent to which the funding marks a repackaging of existing initiatives, and what policy mechanisms will be used to deliver the earmarked funds, are both unclear. This is all the more critical since industrial greenhouse gas (GHG) emissions Opens in a new tabmust fall by more than 90% over the next 30 years to be consistent with our economy-wide target for net zero emissions by 2050. Opens in a new tabExisting UK industrial decarbonisation policies are not consistent with this pathway, and there is a clear need for additional policy aligned with this unprecedented level of ambition.
Our aim was to provide a review and evidence base of industrial decarbonisation policies which could be used to deliver net zero consistent emissions for UK industry, but critically, without inducing carbon leakage. As an early career researcher, the opportunity to work with the CCC and engage with varied policy experts provided valuable insight into the policymaking process and how research can inform and interlock with that process. The following provides an overview of the process of and outcomes from the project.
Mapping a complex policy landscape
Before we looked at future mechanisms, the first task was to assess the current UK policy landscape. Perhaps the most surprising element of the research was that, to our knowledge, there was no single resource documenting all current industrial decarbonisation policies in force in the UK. In the course of my research in this area it became clear that a ‘policy database’, documenting existing policies, and capturing detail from recent UK Government Budgets, could have value beyond this particular project.
I documented approximately 40 policies according to evaluation criteria such as policy mechanism, lead time, departmental jurisdiction, linkages to other policies, implementing legislation, the stages of policy delivery, and the policy’s intended evolution over time.
The database, xlsx (40 KB, may not be suitable for users of assisted technology) has proven to be the simplest but perhaps most useful element of the project, even being requested by several people prior to the report’s publication. In the report we recommend that a similar resource is maintained in future, to facilitate assessment and scrutiny by academics, government and other parties.
Stepping onto a path towards net zero
Through extensive literature review I developed a ‘typology’ of potential policy mechanisms that could be used in the future (Figure 1). Industrial decarbonisation policy is complex and continuously evolving, and 2020 has proven to be a dynamic year for environmental policymaking, and some of the policy tools we were discussing as ‘ambitious’ came into (provisional) being in the course of the project.
A key challenge throughout the project was the limited evidence available on the relative effectiveness of different policy options. Where available, this evidence is often highly context-specific. The precise effect of any policy will be dependent on its final design, and the number of possible policy variants to evaluate was in danger of snowballing. A key challenge of the project was to manage complexity, whilst still managing to say something meaningful about future policy options.
We therefore adopted a case study approach to consider how the policy tools had been implemented internationally, and in our qualitative evaluation of the policies used the results of an online expert survey and feedback from three stakeholder workshops to allocate indicative ‘scores’.
Carbon reduction and beyond: Creating policy ‘packages’
Although the self-evident goal of net zero is to rapidly mitigate GHG emissions at scale, a key conclusion of our report was that industrial decarbonisation policy needs to think beyond carbon reduction. Carbon policy alone is insufficient to achieve net zero, without complementary policies being in place to address a number of other challenges for industrial decarbonisation, such as:
- deploying and coordinating infrastructure
- improving the performance of existing technologies
- incentivising innovation and improving the efficiency of material and product use.
Reflexively, policies for innovation, infrastructure and improving efficiency are unlikely to achieve net zero without an accompanying carbon price or regulation.
It became clear that there is a need for long-term strategy to achieve net zero consistent emissions in industry. We therefore identified the need for ‘policy packages’, a group of policy instruments which work together strategically to drive decarbonisation. A package would be comprised of an overarching carbon reduction mechanism (for instance pricing, subsidies, or regulatory tools such as standards), alongside complementary policies addressing the challenge areas and mitigating the negative impacts of the carbon policy.
Since policies will need to adapt over time to changing market conditions and available evidence, we also considered how the policies in any package might evolve over a timeline to 2050. We also thought about how they would need to be sequenced and whether some policies are a priority for early implementation, for instance front-weighting investment for low-carbon technologies with long lead times for commercialisation.
A critical challenge in the project was in considering the policy ‘priorities’ of different actors, for instance industry versus government. The CCC’s ability to convene a wide-ranging group of stakeholders in the form of ‘Working’ and ‘Steering Groups’ gave critical insight into the respective needs of different industrial sectors, government departments, and third sector actors such as think tanks and other academic institutions. The opportunity to work with experts in industrial decarbonisation policy provided a touchstone for the realities of policymaking and the multiple competing needs it must balance.
There is a clear need for further detailed work in this area, given the ‘live’ nature of this policy space. However, we hope that the report provides a useful reference point for considering how to increase the ambition and coordination of industrial decarbonisation policy in the UK. As we concluded, there are certainly no ‘policy panaceas’, but, critically, there is also no time to waste if we are to achieve net zero.
See the full report: Industrial decarbonisation policies for a UK net zero target.
Figure 1: Industrial decarbonisation policies are featured at the centre of a cluster of themes. Theme on regulation has sub-themes of: Mandatory targets / phaseouts, Demand-side which includes Extended Producer Responsibility obligations & Building / planning regulations and Standards which includes Production standard (carbon disclosure, cap, non-carbon specification), purchasing standard & Energy performance standard. The voluntary theme covers voluntary agreements and voluntary disclosure standards. The pricing theme includes sub-themes on carbon-pricing which covers Carbon tax, ETS: National / standalone & ETS: Linked, and tax mechanisms which covers Accelerated depreciation, Material pricing (virgin material levy; price stabilisers), Capital allowances and Corporation tax, business rate, VAT reliefs. The subsidies theme covers Direct funding, Early replacement, retirement, repurposing incentives & Carbon Contracts for Difference. The theme on financial includes sub-themes Alternative business models which focuses on Public ownership & Public-Private Partnerships, Risk reduction mechanisms which covers Loan guarantees; credit lines, Partial risk guarantees & Regulated returns, and Investment instruments which covers Equity funds, Public Investment Banks, Loans; export finance and Green bonds. The information-based theme covers Knowledge sharing; roadmapping, support for IP protection; patent development, Industrial symbiosis schemes, Data infrastructure development & Labelling protocols.
Banner photo credit: Rob Lambert on Unsplash