Should we still care about net zero?

0:00I believe that we have a moral duty to leave this world in a better condition than what we inherited and that's why today we're announcing that we will be ending our contribution to climate change by 2050 and legislating for a net zero emissions target. That's former British Prime Minister Theresa May, making history back in 2019 by announcing that the UK would become the first major economy to legislate for net zero greenhouse gas emissions by 2050. But a lot has happened since then. For starters, we've had another five Prime Ministers since her. Plus, a global pandemic, Russia's invasion of Ukraine, an energy crisis, a cost of living crisis, US attacks on Iran, another energy crisis, and the rise of far-right politicians around the world, keen to roll back on their country's climate change commitments. The seven years later, the world seems to be a very different place. Welcome to LSEIQ, the podcast where research meets real life.

1:03We ask social scientists and other experts one intelligent question and talk to people directly affected by the issues we explore. I'm Anna Bevan and this month I'm asking, should we still care about net zero? I'll find out how China built an export industry from the ground up and reduced emissions on the side. How investing in net zero technologies could earn you money while you sleep. And what an exploding toaster reveals about that manufacturing slogan made in Britain. Net zero. It's one of those buzzwords I feel like I've heard a zillion times before, but I'm still a little foggy on how to actually explain it. So here's Professor Anna Valero, one of LSE's leading voices on the topic, to describe exactly what it means. Net zero is the commitment to rein in greenhouse gas emissions. You bring down all the things you can through renewable energy, moving away from fossil fuels, using electric vehicles to drive, but then you need to basically take out those remaining

2:03emissions from the air. And how can you do that? You can do it with natural methods, planting trees because they absorb CO2, or you can also use these new technologies. So greenhouse gas removals and new technologies that extract carbon dioxide, either from the air or from the source of emissions like think of big factories generating emissions, and then store the CO2 so that it doesn't go out into the atmosphere. So that's what net zero is. It's bringing the net emissions down to net zero. Because if we can do that, the science tells us we can limit the very worst impacts of climate change. Back in 2019, Greta Turnberg was leading a global climate movement. And the campaign group Extinction Rebellion was causing widespread disruption through climate protests. There was broad political agreement about the importance of tackling climate change and the UK reaching net zero. But that's not necessarily the case anymore. Fears about the UK's weak economic growth have largely eclipsed climate concerns, and

3:07some politicians believe that the need to boost economic growth is at odds with reaching net zero. Anna Valero is a professor in practice at LSE's Center for Economic Performance and the global school of sustainability. She's advised the UK government on growth and industrial strategy and disagrees that the costs involved in reducing emissions would slow economic growth. Instead, she views net zero as the growth opportunity of the 21st century. If we think of net zero as a sustainable growth model, if we look over time, it's very unclear that there's any other growth model, because if we just leave climate change to develop at the pace it is, this is very disruptive to economies, it's disruptive to people, to jobs. And so that's not really a growth model. So then the question is the transition. How can we achieve that transition? How can we get to a growth model that is not only superior because we're more comfortable, but also one that actually can generate growth? Large scale investment is required for net zero. And some of our work, the way we've looked at this, is thinking about the investment needs

4:10of a country like the UK, where historically we haven't done much public sector investment compared to some of our peers and private sector investment has also been low. So when we think about net zero, this is sustainable infrastructure and energy, transport in our systems. The way we look at this, we think that around 1% of GDP, extra investment in that kind of sustainable infrastructure is needed. Net has made progress, there is public sector investment committed to things like clean energy projects. And then what we need is the private sector to kind of crowd in, things like the National Well Fund, the government set up to be catalytic in that sense. Let me just jump in here to clarify something. The National Well Fund is an investment bank. It was set up by the UK government to mobilize private investment, create clean energy, and drive regional economic growth. It's owned by the Treasury, but operates at arms lengths, back to Anna. In the transition, because it's the story of innovation, I think powerful forces here

5:14are the creation of those innovations, which countries, which firms can create the technologies where we see growing demand domestically, internationally. And then there's the adoption and diffusion. So being more resource efficient, managing production more effectively and therefore having higher profits. A lot of the work we've done has been trying to inform which technologies, which sectors the UK can compete in because lots of these supply chains are increasingly competitive internationally. China is really leading in a number of areas such as solar, I think over 85% of supply chain is in China, but there are other areas where the UK does have those strengths that can be built on and also in services. So in a recent paper, we looked at adaptation, technologies and services and the UK is a service is super power, we're really good at finance, insurance, professional business services. So we took a kind of case study approach to look at how the UK could leverage those strengths when the demand for these types of services in the UK and internationally is growing.

6:15I asked Anna if there was anything from her research on net zero that it surprised her. When we're thinking about regional growth, we've had very unbalanced growth in the UK. London has been particularly productive versus other big cities. When we think about how to narrow those gaps, it's really, I think, a great finding that a lot of the specialisms and capabilities in clean energy sectors and other clean technologies are actually located outside of London and the South East. And that's because of legacy industries or kind of natural characteristics of places. So that's a nice story not just for growth, but in terms of where growth happens. Some recent work from the CBI has also tried to size the net zero economy, finding its worth over 100 billion currently. And also using different data found this finding that some of the less productive places around the country are more specialized in terms of the net zero economy. So net zero isn't just a way to reduce greenhouse gas emissions. It could also be a way to create more localized growth across the country and in turn respond

7:18to another one of those buzzwords leveling up by creating jobs outside of London and the South East. There's a number that Anna mentioned over 100 billion pounds. That's taken from a recent report by the Confederation of British Industry. They found that the UK's net zero sector, so things like solar panel installation, home insulation, wind turbine manufacturing and electric vehicles, now generates around 105 billion pounds for the UK economy, accounts for more than a million jobs and benefits the whole country. But after a recent tumultuous period of conflicts, increased energy costs and a cost of living crisis, I was keen to ask Anna how these events have impacted net zero. Well, it's really interesting because the economics would tell you that if you have energy price shock, it makes, which is driven by fossil fuels and fossil fuels are more expensive, then it kind of makes sense to look for alternatives and invest in alternatives. And we have actually seen an uptick in things like interest in electric vehicles because

8:19petrol prices are more expensive. But at the same time, given resilience concerns, there have been lots of debates about, well, should we actually be using more of the oil and gas that is available, say, in the North Sea? So I think there are forces both ways. And then, of course, companies facing any kind of shock, it might be that that shock induces them to do a new thing that ultimately can save them money, or it might be that dealing with the shock is kind of leading to acute pressures. And maybe you postpone that clean project or the new technology you wanted to adopt or develop because you're dealing with the kind of acute crisis. So in some of the surveys we've done in collaboration with the Confederation of British Industry, we've asked questions to businesses about, basically, we've called it innovation through crises. We've asked businesses how they've been thinking about innovation both in terms of digital, but also in terms of clean tech and sustainability actions in light of the various crises we've seen. And it's very interesting to see, obviously in 2022, we had an energy crisis which led to

9:20a cost of living crisis driven by Russia's invasion of Ukraine. And actually quite a large share of businesses did say that that induced them to take sustainability actions. So I think it's around 40% of businesses said that there's either accelerated or induced them to do things relevant for net zero. And a key motivation for that was resource efficiency in saving costs. So again, that's consistent with the kind of story that energy costs become higher. And you do make the positive net zero changes. And what type of things did businesses change? Well, sustainability actions in our survey, we ask it quite broadly. And it could just be thinking about their production methods, their energy supply, it could be energy efficiency as well. So energy efficiency is a really interesting one. So it's just not wasting energy through drafty buildings or production processes that aren't as efficient as possible. And we're thinking about digitization for productivity and efficiently running a business.

10:20Actually, how we use energy is part of that. And I think that offers an opportunity because with net zero action, finding the places where it's like a win-win between taking action that's important for the environment, but also for growth is really important. So if net zero is such a win-win, why are so many people so against it? Max Chatrati is an award-winning climate reporter for Bloomberg News. He's the author of the book Climate Capitalism and the host of the weekly climate solutions podcast zero. I asked him why countries aren't moving more quickly if net zero can be so profitable. If only we all balanced our books for decades to come, right? Say you're running your home expenses. You're not thinking decades out, you're thinking day in and day out. And so are economies, so are governments, so are companies. We just know that these studies show that in the long term, the cost will be much higher, but immediate needs are ones that people put their attention towards most, which is why

11:23the cost of living crisis is so up and front in people's mind and why that is the wedge through which you can get more climate solutions deployed. Governments have shown that they do care about climate, but not on top of other priority issues. You know, we are in a period of increasing wars. Lots and lots of governments are increasing their defense spending as a result because they see national security as a higher priority than climate change. Is the same military that is also worried about whether they'll be able to have enough fossil fuels to go to war if they need to, which is why Europe is now spending on creating synthetic fuels that will come from renewables from generating green hydrogen because that will be domestic and it is not controlled by them having to depend on the import of fuels from abroad. So there are reasons which you can think of a national security strategy combining it with a climate technology because that is one that, you know, countries right now want.

12:27And overall, countries aren't doing enough just for climate because other priorities are more important. Do you think public concern over climate is still high or has it been surpassed by cost of living crisis and other issues? So the UK government runs this survey, a long running survey of people's concern on different subjects including on climate change and the UK public, the vast majority, something like 80% and more support action on climate change because, you know, it's really hard to now ignore it. You know, Jeremy Clarkson, for example, you know, popular figure. I'm basically Alan Sugar in Willys. A farmer now. A grown up thing. Look at all that business. Denied climate change for a long time. He's changed his mind because he is farming and he cannot ignore how long droughts have lasted and how much impact that's had on productivity on land. Took me a long time to get my head around climate change. Broadly speaking, the same amount of rain this year as we did last.

13:31I even run. And so is becoming harder and harder to ignore. So the awareness is very much there. Now when it comes to the issues that have eclipsed climate, affordability issues, those are real issues. According to one estimate from the International Energy Agency, the cost of reaching net zero globally is around $4 trillion a year for the next 30 years. So a total spend of around $100 to $120 trillion. That's a huge number. It's the equivalent of every single country's GDP added together. In ActShots book Climate Capitalism, he starts off by saying it's now cheaper to save the world than destroy it. I asked him if he still believed that. 100% so from a proportion of spending as of the global economy, it is a few percentages. And so one, two, three percentage of investments will get us to a stable climate, one that we

14:31need to be able to thrive on this planet. I think there is a way in which politicians who want to attack net zero use that figure, which is to say, isn't that so expensive? We could be putting that to something else. And by God, we need a lot of investment in other things. That is half the fact. It is an investment, yes, but what is it getting you? So they never talk about the cost avoided that would come from the harm that would be avoided by climate change. So climate change in itself, regardless of what you do to tackle it, has a cost to society. We are seeing it in floods. We are seeing it in heat waves. So we know that this stuff is having a real world impact and cost to this country. And what the climate change committee says is that the cost of investing to get to net zero is far lower than the cost of dealing with the climate change if we don't invest

15:31in net zero. So it is all good to talk about the cost of investing in net zero, but not so if you also don't mention the cost of climate change that will be felt that we are feeling if we don't do more to tackle it. In 2015, nearly 200 countries signed the Paris Climate Agreement agreeing to reduce their greenhouse gas emissions. It was the first global treaty aimed at keeping catastrophic climate change at bay. I asked at chat how emissions around the world have been going in the last 10 years since the agreement was signed. And just to note here, ACT chat talks about the end of the century temperature. So the current predictions for the year 2100. What we've seen is rich countries have reduced their emissions. The UK actually is the world leader when it comes to reducing emissions. The US, wherever we have seen presidential changes that have gone to swing between denying climate change and really acting on climate change, has also reduced their emissions, regardless

16:35of the president in power because there are technologies now that can allow us to do that. But the global emissions figures haven't declined. So that's worth noting. But I think the better way to measure it is to measure what the intergovernmental panel on climate change looks at as end of century temperature that the current emissions trajectory would take us to. Before the Paris Agreement was signed, something like a three, four degrees Celsius of warming relative to pre-industrial periods was on the charts, was feasible. Now the worst case scenario is 2.5 to 2.7 degrees Celsius of warming. So below three, still well above the two degrees Celsius target under the Paris Agreement, but we have shaved off some of the worst climate scenarios that we could have been entering. Partly that is thanks to the Paris Agreement because it is the galvanizing force.

17:36You know, one of the reasons why we have reductions in emissions is because China built out a whole large industry building solar panels and batteries and electric cars for very cheap. It didn't do it primarily for climate. It did it because it wanted to create an export industry and make revenues of it, but it also helped reduce emissions. Solar panels and electric cars often dominate conversations about the energy transition and for good reason. They've become some of the most visible and rapidly growing clean technologies in the world. I asked Akshatt what sustainable technology most excites him. The most exciting right now, which you know, people are kind of aware of, but the depth of its impact is still not properly understood is batteries. So one recent example I've been reporting is in Australia where about 40% of all homes have rooftop solar, which means in the daytime when the sun is up in a high, electricity prices are zero or negative sometimes.

18:37And so what did governments do as a result? Well, they incentivized people to get batteries. And so you can store that electricity during the daytime and then consume it when the sun goes down. It seems like an obvious thing, but it's having a dramatic impact on the energy system in Australia. There are all these people who have now become essentially electricity traders at home. And many of them have told me that sometimes they make hundreds of dollars at night while sleeping because they are discharging electricity at a time when electricity is expensive on the grid. So suddenly these technology solutions are becoming democratized and are exciting people in ways that they hadn't thought about electricity and energy in the past. The power of innovation is bringing down the cost for things like wind, solar panels, and batteries. It's making it possible for people to not just benefit from these clean energy technologies but also profit off them.

19:38It's kind of a no-brainer that this approach to utilizing solar power would work in Australia. After all, the country's bathed in sun for more than 300 days a year, which is more than double what the UK usually receives. Utilizing what's around you is often seen as a way to be more sustainable and contribute to net zero by reducing transport emissions, minimizing packaging, and strengthening community supply chains. However, LSE economists, Professor Ricardo Crescenzi, and Oliver Harmon believe it isn't always that simple. I spoke to Oliver in our media studio at LSE while Ricardo dialed in from abroad. Here's Oliver. I remember being down at the Eden Centre and it was showing the energy input that was required for a British tomato versus a tomato built where the climate and the soils made sense for it to be built and it was a much more carbon intensive process to produce something so simple as a tomato in the UK. I'm not going to give Ricardo too much credit but I would dare say an Italian tomato is going

20:40to be tasting better than a British tomato for many of those same reasons because it makes sense for them to be grown there rather than under intense, LED light powered by energy in a greenhouse in the middle and somewhere. There's such a growing appetite at the moment to localize production so to grow more locally, to buy more locally, even in supermarkets you see by British, by British everywhere. People often assume that producing everything ourselves is the most cost effective and sustainable approach. Would you agree with that, Ricardo? Well, we think that the evidence is largely in contradiction with this idea. We definitely have some products for which a particular country might have an advantage but in terms of costs, but also in terms of sustainability, in terms of use of natural resources to achieve that particular production. To generate that particular product but others clearly need to be in part to some components that then lead to the production of that particular product need to come from the complex

21:44web of supply chains that we describe through global value chains. Ricardo and Oliver have spent the past few years analysing how best to boost economic growth and support the move towards net zero, particularly in less developed regions. Their research largely focuses on something called global value chains, which basically refers to how goods are produced globally. And they've recently started exploring green global value chains, so how that global production process can be made more sustainable. Here's Oliver to explain more. We often think about a bicycle as just one good, but actually this Canadian artist took it all apart and found 754. These are different goods that a research developed, designed, produced, then sent around the world and ultimately all brought together in one place, right? We need to think about it as all of those different tasks and activities in the whole global value chain, ultimately producing the one product we receive. So that's the kind of global value chain.

22:44Green global value chain, we can think about it in two ways. One, whether we're greening the product itself, so does that bicycle become an electric bicycle, that's sort of a green global value chain? Or are we going to green the activities that go into that bicycle? Are we going to create tires that have lower rubber input into them? Are we going to create tires where we can certify whether rubber is coming from so that we know that those people who are cutting down the trees are getting a good living wage? Are we going to use steel that's going to be an eco-steel rather than a normally kind of produced carbon intensive steel? These are all what the green global value chain approach can bring, both on the products and the activities. I was first introduced to your research through this viral image of a pair. I think a pot of pairs that had been grown in one country, packaged in another and consumed in another. Can you talk to me a little bit more about that sort of viral image of those pairs, please? And what that means and how efficient that process is.

23:45I really like this tinned pair because I think exactly as you say it's like a paradox and it is slightly counterintuitive. Many of the listeners might have seen this. It was a viral meme, I think, in 2022. It was this packet of pairs that was produced in Argentina, packed in Thailand and then eventually sold in the USA. People kind of look at this product and I think how can this be environmentally efficient or economically efficient. But when you kind of break it down with a bit of a value chain lens, it becomes apparent how it can be so. Argentina, particularly these two regions that have these, basically like the perfect pair producing areas. They have the climate, they have the soil structure, they have this irrigation due to their natural geography, which means they are incredibly efficient or they have what we call a kind of micro-specialism in pair production. So it makes sense for them to specialize and utilize all their resources to do that and then trade that asset.

24:46Now they trade that asset, they ship it across oceans to Thailand where in the regions in the east coast of Thailand have a similar kind of micro-specialism in packaging and producing. It makes sense for that area to do that and then to sell that onwards around the world back to the USA in this case. It also makes it quite interesting I think in this case is, yeah, it is actually more environmentally efficient. Shipping this pair across oceans has a much lower carbon footprint than if for example every country had its own pair producing areas, had its own packaging factories and was transporting all these things to the different markets with via road. And that's notwithstanding of course many of the places around the world, you know, there's not necessarily refrigeration possible to maintain these kind of crops for any length of time. So it's interesting when you unpack this tin pairs with this value chain approach, how it does seem to be, or indeed it very much is environmentally and economically efficient because otherwise people wouldn't be doing it fundamentally.

25:48We also break this down with another example in our work looking at the toaster. So I think back in 2009 this art student decided to think, okay, can I produce a toaster in the UK? What happens if I wanted to produce this in the UK? Forgotten Argos Toaster for £3.94 back then opened it up and found there I think like three, 404 different parts made of 38 different materials. And this person thought, okay, let's see if I can find at least five of these materials in the UK. It's like mica, copper, some plastic. In the end, this individual Thomas Sway, it's had to go up to this rock face in the north of Scotland to mine the mica, had to go to some disused mine that hadn't been used since the 1940s to get, I can't remember what material was down there, but it was very interesting actually across the UK, we don't have any of these materials anymore that are necessary inputs into a toaster. So notwithstanding to impairs, we couldn't actually create a toaster within our own boundaries because so many of those inputs are no longer available.

26:50And I think that's why it's important to think, okay, how does this global value chain all connect with each other? And how do the products that we ultimately use and want require, as Ricardo said, all this different natural capital from all around the world that actually we don't necessarily have in our countries anymore? And what was the result of the toaster, were they able to build it? Just about, I think it managed to turn on heat very aggressively and then kind of self-destructed in a bit of like a smelted mess. It was a lot more expensive, I think it was over a thousand pounds, it ended up costing Thomas to build. So yes, it was produced, but much higher cost and much higher environmental impact. When it comes to the greening of the value chain of regulation that is an important element and all the attempt to build the toaster at home would also be, how to say, unfeasible at scale because the emissions and the pollution generated by that attempt would be prohibited

27:50at scale in the Manchester area. So of course, it is important to keep in mind that for this to happen, it's not a fair italy. We don't go from the self-made toaster into the one for three pounds, some of the much cheaper toaster produced through global value chains without the interaction of fundamental economic integration, geopolitical, but also technological and regulatory forces. So environmental regulation is central for these processes, the one that Oliver mentioned to happen in a cleaner manner. Well, what he said, the noise, control, the environment in a large factory, the relevant raw material being extracted according to rules and procedures that are both environmentally sustainable and socially sustainable. We regard what I often talk about, rather than made in Britain, we need to be thinking about sort of designed in Britain or researched in Britain.

28:50So it's not really about the product being made in the UK or made by UK workers as such is the idea of what type of quality, what type of price, what variety can I choose from, but also what type of jobs were the ones that were sourced in the UK are these jobs, the high quality, high skills one, the one we really want to go for. Looking at global value chains, it is possible to design policies and to orientate the economy in such a way as to be able to profit from all activities pursued in other types of economies while retaining in the UK and focusing on the high quality, high skills jobs, the one that we ultimately want. It's interesting hearing Oliver and Ricardo talk about the possibility of using net zero to create higher quality, higher skilled jobs as the jobs market is often an area where net zero comes under fire.

29:52If industries change or decline as we move away from fossil fuels, what happens to the people who work in them? I asked Anna Valero who we heard from earlier what the impact on jobs would be of the transition towards net zero. So we've done quite a lot of work on what net zero means for the labour market. So one challenge is that there are different ways of understanding what a green job is. So I would say however what the analysis overall has shown is that on net in a country like the UK is expected that net zero would create more jobs than would be lost. A lot of this is to do with upskilling and existing jobs or existing jobs changing. There are also some new jobs that arise, things like wind turbine installers or solar panel installers. And then there are also some jobs that will be lost. So in very high carbon activities or sectors, things like fossil fuels, so oil fields for example in the North Sea. While these are on aggregate not a very large number of jobs, they really matter for particular

30:54places. So what does this mean for policy? Well, I think it means that you need to make sure that the new opportunities in the green transition are available for people through skills, programs, thinking about how to manage job transitions. But for those who are displaced, you need to have active policies to try and manage that as well. This episode was written and produced by me Anna Bevan with script development by Sophie Mallet and editing by Oliver Johnson. If you'd like to find out more about the research in this episode, head to the show notes. And if you enjoy IQ, please leave us a review. In us next month when Charlotte Kellewey asks, is your phone listening to you? Whatever you search for online, whatever you buy online, who you talk with, everything gets collected. And it's not only that data that is sensitive. It's the inferences that you can make from that data. If you like this podcast, you might like the LSE Events podcast, which features talks

31:55by some of the most influential figures in the social sciences. Listen to a recent talk, for example, by climate advocates and musician Adam Met. For more inspiring content, search LSE lectures and events wherever you get your podcasts.