Sensitive intervention points
to achieve net-zero emissions
Report of the Policy Advisory Group* of theCommittee on Climate Change

9 December 2020

Cameron Hepburn, Tera Allas, Laura Cozzi, Michael Liebreich,
Jim Skea, Lorraine Whitmarsh, Giles Wilkes and Bryony Worthington* The Policy Advisory Group of the CCC is an independent group established in 2020 to provide advice
about cross-cutting policy interventions to facilitate the achievement of the UK’s legislated target toachieve net-zero emissions by 2050. All members of the Policy Advisory Group served in their personal
capacities. The views expressed in this report may not represent the views of their respective
organisations. It should not be assumed that all authors agree with all statements in this report.

Context and Purpose
On 27 June 2019 the UK became the first major economy to legislate to achieve net-zerogreenhouse gas emissions by 2050. This followed the Climate Change Committee report in
May (CCC, 2019a) concluding net-zero is necessary, feasible and cost-effective.
However, the CCC report also concluded that a net-zero GHG target is not credible unlesspolicy is “ramped up significantly”, stressing that delivery must progress with “far greaterurgency” and that existing policies and plans were insufficiently ambitious, and proceeding too
slowly, even for the previous target of 80% by 2050. There was a call for clear leadership rightacross government and the conclusion that the economics were moving favourably towards
more ambitious action, with the annual resource costs of achieving net zero equivalent toaround 1-2% of GDP in 2050 (CCC, 2019a).
This year, the CCC’s focus is on advising the pathway to the 2050 net-zero goal, in particular
the emissions cap that UK should set in law for the period of the 6th carbon budget (20332037). The policy advisory group of the CCC is an independent group established in 2020 toprovide advice about cross-cutting policy interventions to facilitate the achievement of the UK’s
legislated target to achieve net-zero emissions by 2050, and the 6th carbon budget. The remitof the advisory group is to think beyond sectoral targets and to suggest cross-cutting, topdown view of changes in politics, business, society and technology that could accelerate
progress towards achieving net zero emissions by 2050. The group had three meetings
between July and September 2020. Its conclusions are summarised in this report.

Acknowledgements
The advisory group are extremely grateful to the CCC secretariat, including Mike Hemsley,
Mike Thompson, Tom Andrew, Jake Langmead-Jones, Marili Boufounou, Chris Stark andDavid Joffe for their input and extremely able support. We are particularly grateful to Jake
Langmead-Jones for his work on Figure 2. Matthew Ives and Penny Mealy provided valuable
input on the concepts and examples of sensitive intervention points, building on research bya wider team at the Oxford Martin School. Sugandha Srivastav and Henrietta Flodell provided
extremely valuable research assistance for sections 2 and 3 respectively, and Philip Wheeler
and Jenny Sabourin provided valued help with references. We also like to thank the chair andmembers of the CCC for their input into our thinking. Additionally, we wish to express our
gratitude to Myles Allen, Peter Bruce, Jonathan Church, Natasha Landell-Mills, Ryan Rafaty,
Sugandha Srivastav, James Thornton, and Thom Wetzer for contributing valuable inputs
and/or background papers to the review. The lead author bears responsibility for errors oromissions.

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Executive Summary
Achieving net zero emissions involves an economic transformation on a scale comparable tothe Victorian era, when the foundations of the infrastructure used in the United Kingdom today
were put in place. The scale of the transformation ahead implies that, if successful, ourgeneration will justly be considered the “Victorians of the 21st century”.
The transition to net zero emissions can and will occur. The international tailwinds arestrengthening, with net zero commitments from the EU, China, Japan, and South Korea by
mid-century. The economics are increasingly positive. The costs of renewables and batteriescontinue to fall. Similar trends are emerging in low-carbon hydrogen and ammonia, which candecarbonise major parts of heavy industry, as well as some long-distance transportation. As
further deployment and innovations cut costs, it is no longer entirely implausible that net zero
emissions could be achieved at net zero cost (even ignoring significant co-benefits and large
benefits from avoiding the worst climate impacts). Net removal of greenhouse gases from theatmosphere, which appears very likely to be required post 2050, is also achievable. Exciting,positive tipping points are being crossed in our socio-technical systems. However, we are alsoreaching alarmingly dangerous tipping points in the physical climate system. The question iswhether we will reach net zero in time.
This report considers this question by examining the UK economy as a complex adaptive
system. We explore sensitive intervention points in nine key areas of our socio-technicalsystem, highlighting recommendations that can accelerate progress and reduce the risks ofunsatisfactory progress. We identify 40 potential sensitive intervention points organised into
the nine categories as follows:
1.
2.
3.
4.
5.
6.
7.

Deepen public engagement, with cross-party communications and monitoring;
Deliver a transition that is just, creating opportunities to level up society;
Reorganise government to lead on net zero from the centre;
Align incentives, through carbon pricing and a carbon takeback obligation;
Leverage global dynamics, with higher UK ambition and carbon border adjustments;
Increase business ambition, with closer engagement with key firms;
Accelerate technological progress, using “pathfinder” cities and regions to test
integrated approaches to achieving net zero;
8. Redirect capital flows, including through accounting and audit interventions;9. Harness the law, with a government legal team to drive legal and regulatory shifts.
Overall, we conclude that the pace of change required is fast but manageable. In many
instances, progress can be made by building on current trends that are heading in the right
direction. Exogenous shocks can and will happen, and these can be harnessed – intelligently
designing the economic recovery post COVID-19 provides one example (Hepburn et al.,2020a; IEA, 2020d). Endogenous dynamics also create opportunities; Brexit offers a rare2

opportunity to transform our food and agricultural system (Helm, 2017). Where key
uncertainties remain, trials or “pathfinders” – specific cities or regions willing to go faster andearlier to net zero – could help establish what works, and what doesn’t.
This transformation is not simple, but failure is not an option, and success will leave future
generations with a set of infrastructures and capital assets at which the Victorians would have
marvelled. Our grandchildren will enjoy low-carbon infrastructure that has all largely been paid
for; our once-in-a-generation push will leave a legacy of an economy that runs on largely freenatural resources – the sun and the wind. Just as “freemium” models illustrate how many
digital and internet services can be provided to billions of people at low marginal cost, ourpost-carbon economy will likely offer energy and mobility services at very low cost. With the‘kicks’ and ‘shifts’ to our economic system set out in this report, the post-carbon economy
could be cleaner, healthier, fairer, and significantly more prosperous.

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Table of contents
CONTEXT AND PURPOSE .................................................................................................................................. 1
ACKNOWLEDGEMENTS .................................................................................................................................... 1
EXECUTIVE SUMMARY ..................................................................................................................................... 2
TABLE OF CONTENTS........................................................................................................................................ 4
1.

INTRODUCTION AND CONTEXT ............................................................................................................... 52.

NET ZERO IN A COMPLEX SYSTEM ........................................................................................................... 8
2.1

DYNAMICS OF COMPLEX SYSTEMS .................................................................................................................. 8

2.2

IDENTIFYING SENSITIVE INTERVENTION POINTS ................................................................................................. 8
2.2.1 System criticality, kicks, and shifts ..................................................................................................................... 9
2.2.2 Interventions .................................................................................................................................................... 10

2.3

APPLICATION TO THE NET-ZERO TRANSITION .................................................................................................. 11
2.3.1 Identifying interventions .................................................................................................................................. 11
2.3.2 Overcoming resistance .................................................................................................................................... 123.

4.

A PORTFOLIO OF INTERVENTIONS ......................................................................................................... 15
3.1

DEEPEN PUBLIC ENGAGEMENT .................................................................................................................... 15

3.2

DELIVER SOCIAL JUSTICE............................................................................................................................. 18

3.3

REORGANISE GOVERNMENT ....................................................................................................................... 20

3.4

ALIGN INCENTIVES .................................................................................................................................... 23

3.5

LEVERAGE GLOBAL DYNAMICS ..................................................................................................................... 24

3.6

INCREASE BUSINESS AMBITION .................................................................................................................... 27

3.7

ACCELERATE CLEAN TECHNOLOGY ................................................................................................................ 30

3.8

REDIRECT CAPITAL FLOWS .......................................................................................................................... 33

3.9

HARNESS LEGAL AVENUES .......................................................................................................................... 35

CONCLUSIONS ....................................................................................................................................... 37
4.1

CONCLUSIONS FOR THE CCC ...................................................................................................................... 38

4.2

RECOMMENDATIONS FOR GOVERNMENT ...................................................................................................... 39

REFERENCES................................................................................................................................................... 40

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1. Introduction and Context
The UK net zero target was enshrined in law in the United Kingdom in 2019. Other countries
are following suit, including China (Chinese Government, 2020), Japan and South Korea (NYTimes, 2020; Financial Times, 2020) and the EU (European Commission, 2020). The
economic case is increasingly compelling. When the CCC first assessed the cost of achieving
the UK’s 80% emissions reduction target in 2008, it suggested a cost of between 1-2% ofGDP. Technology trends meant that by 2019, the more ambitious net-zero target could beachieved at the same overall annual resource cost of the equivalent of 1-2% of GDP in 2050,1
even when including the last 20% of difficult to decarbonise emissions (CCC, 2019a).
There is little doubt that clean technologies will eventually dominate the global energy system.
The foundational step – decarbonising the power sector – is well underway, with the carbon
intensity of the UK’s electricity falling from 500 gCO2/KWh to 220 gCO2/kWh over the last 10
years (CCC, 2019a). Progress on electrifying transport will accelerate, as is necessary, withthe recent ban on the sale of internal combustion vehicles by 2030 as part of the Prime
Minister’s “Ten Point Plan” (HM Government, 2020). The plan for decarbonising buildings,
heating and industry is becoming clearer, and the COVID-19 pandemic has triggered green
recovery investments around the world that will support progress. Food systems are showing
early signs of the transformation ahead, with growth in entrepreneurship and venture capitalin alternative proteins, such as plant-based alternatives to meat and “cultured meat” gown invitro in a lab (Oxford Martin School, 2019; Collett et al, forthcoming). COVID-19 recovery
stimulus packages, such as that of France, could accelerate these trends as government funds
are invested in ‘plant protein’ strategies. So, although we are crossing frightening tipping points
in the physical climate system (Lenton et al, 2019), we are also reaching encouraging positive
tipping points in our socio-technical systems.
While the transitions in energy, transport, buildings, industry and agriculture now all seemcertain, their pace is not. Achieving net zero in the UK within three decades will involve newinvestment of over £50 billion per year in zero emissions electricity generation, networks, lowcarbon heating technologies, electric vehicles and associated infrastructure (CCC, 2019a).
This will create many new jobs in new low-carbon industries, well beyond the jobs that willneed to be phased out in legacy fossil fuelled industries (CCC, 2019a; IEA 2020c, 2020d).
There are several reasons to think that we might just succeed. First, the path ahead is capitalintensive, but private capital is plentiful and public interest rates are still low. The UK can andpotentially will lead the way in establishing the world’s first net-zero financial system (Robins
and Pierfederici, 2020). Second, many new skills and jobs will also be created. For better orworse, the COVID-19 tragedy means that we are in a unique situation of urgently needing to

1 Specifically, the annual resource costs of all abatement measures in place in 2050 are estimated to be equivalent

to 1.3% of GDP in 2050. Note that resource costs are not necessarily the same as GDP impacts.

5find jobs for a workforce, particularly the young, who will otherwise be disadvantaged for their
entire working lives. Third, democratic consent and social licence is vital to achieving a rapid
pace of change. The climate assemblies show that, for the moment, people are hungry for the
clarity of vision and purpose and really want to “get on with it”.
But there are also reasons to think that we could fail. This report identifies and confronts thesechallenges head on, acknowledging that net zero requires more than a continuation of current
trends, but a shift in behaviour and attitudes so significant it will permeate all of society. The
Climate Change Committee has examined the requirements, sector by sector, for net-zeroemissions. Here, we take a complementary lens, seeking out cross sectoral sensitive
intervention points to accelerate, and overcome obstacles, to net zero. We embrace the factthat socio-technical systems are complex adaptive systems that rarely behave instraightforward or linear ways (section 2).
Using our complexity science lens, we isolate 9 categories of interventions to accelerateaction, as follows. First, public engagement on climate
could be stronger. As recently as March 2020, 61% of the
British public were either completely unaware of theconcept of “net zero emissions” (42%) or had heard‘hardly anything about it’ (19%) (BEIS, 2020b). Thesefigures are improving, however. By September 2020, 53%
had heard nothing (30%) or hardly anything (23%) about had heard nothing or
hardly anything about “netnet zero. The announcement of the Prime Minister’s “Tenzero” in September 2020.
Point Plan” in November 2020 has also presumably
increased awareness. Deeper public engagement with the changes ahead is necessary (seesection 3.1). Second, the transition, while net positive, will create winners and losers. The
losers should know that they will be supported through the transition to ensure social justice(section 3.2). Without such support, progress could falter or stop completely. Third, theinstitutions of government are not geared up for such a mammoth effort. Political leadershipcan come and go, bold decisions can be shied away from, and trade-offs made where
achieving net zero is not the top priority. A reorganisation of government is required (section
3.3). Fourth, some of largest polluters do not face the biggest penalties. Following thepolluter pays principle, we recommend continued efforts on carbon pricing, the removal offossil subsidies, and a ‘carbon takeback obligation’ requiring firms who extract or import fossil
fuels to put an increasing proportion of the carbon back in the ground (section 3.4). Fifth, theUK has a role in leveraging global dynamics (section 3.5) in the transition, particularly as
host of COP 26. This means embracing the fact that the UK can affect emissions beyond its
borders, and that action can and should be taken to complement domestic measures. Sixth,
we note the role of business in embracing net-zero and suggest how to build on growing

53%

business climate ambition (section 3.6). Seventh, ongoing global technological advances
are occurring, and we suggest opportunities for the UK to intervene, where appropriate, toaccelerate technological trends, for the UK’s, and the world’s benefit (section 3.7). Eighth,6

we acknowledge the work being done to align the UK’s business and financial systems to theworld’s climate objectives and suggest Paris-aligned accounts as a simple way to accelerate
this (section 3.8). Ninth, but not least, we note how incremental changes to the UK’s legal
frameworks can help unlock faster progress (section 3.9).
The range of insights emerging from the analysis in section 3 are pulled together into a set ofconclusions and recommendations for the CCC and government in section 4, which are also
highlighted in boxes throughout the report. Overall, the portfolio of interventions is likely to add
to more than the sum of the parts because, as described in the following section, theseinterventions will interact and feed upon each other in complex ways to help to shift the system
towards a net zero emissions future.

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2. Net zero in a complex system
2.1 Dynamics of complex systems
A complex system has a multitude of components that interact with one another, often
producing phenomena that are exhibit non-linear dynamics. 2 Feedback loops and evenchaotic behaviour are common in these systems. Earth’s climate is one such system.
Elements including solar irradiation, plant transpiration, cloud formation, ocean circulation,
among many others, all interact to produce weather patterns. Although climatic change
normally occurs on timescales that are hard to comprehend over individual lifetimes, we now
understand that self-reinforcing feedback dynamics can change, and have changed, Earth’s
climate significantly. Higher concentrations of greenhouse gases in the atmosphere contributeto warming, which melts polar ice caps, which in turn leads to lower albedo (reflection ofincoming radiation), thereby further warming the climate (Lenton et al., 2019). The phase ofclimatic stability which saw the rise of homo sapiens is now under threat as we push our
climatic system over irreversible tipping points.
Much like Earth’s climate system, the socio-economic system is also complex and adaptive,
carrying with it the potential for rapid, non-linear change (Geels, 2002; Bentley et al. 2014;
Hepburn and Famer, 2020). This potential can be harnessed for sustainable development. A
critical mass of attitudes, technologies, and actors can lead to system-wide transformation
away from hydrocarbons. Network effects, economies of scale, and bandwagon dynamics cancreate self-reinforcing feedback loops such that a small push in the right direction can haveoutsized impacts (Meadows, 1999). Within this lens, we can identify “sensitive intervention
points” (Farmer et al 2019) – several of which are discussed below – to accelerate thetransition to a net-zero emissions future.
The CCC’s 6th Carbon Budget analysis identifies the need for a scale-up in low-carbon
technologies and behaviours in the 2020s, so that by the early 2030s the low-carbon option isfavoured over the high carbon option across all areas and is being deployed at scale. This
includes making clean power the dominant form of electricity production, increasing energy
efficiency, switching the two million fossil fuelled vehicles and 1 million gas boilers sold every
year to electric alternatives, scaling up new low-carbon industries from scratch – including
CCS, hydrogen and emissions removals – and shifting behaviours towards lower-carbon dietsand connectivity (low-emissions mobility or substitutions towards digital interactions).

2.2 Identifying sensitive intervention points
Identifying sensitive intervention points (SIPs) first requires identifying areas of the system thatare at or near a state of “criticality”, where positive feedback loops or amplification dynamics

2 See https://complexityexplained.github.io for a wonderful introduction.

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imply that a modest intervention can lead to disproportionate effects. Second, once potential
areas are identified, we seek specific interventions (either a “kick” or “shift” as discussed
below) that might produce outsized effects. In complex systems, there is rarely any certainty,
and a portfolio of interventions – many of which may fail but all of which work in the same
direction – is the objective.

2.2.1 System criticality, kicks, and shifts
A system at, or near, a state of criticality will exhibit one or more tipping points. If the system
is nudged over the tipping point it will move to a different regime, or phase, or “basin of
attraction”, which could be very different to the starting point. There are many examples ofsuch dynamics within the physical and social sciences. For instance, in politics, resistance toan incumbent regime can build quietly until the conditions are ripe for a “hero” to emerge andcatalyse the “silent majority” to topple the system. Regime changes around the world tend to
involve system criticality prior to the trigger that led to the change (e.g. decolonisation
movements, the women’s suffragette movement, the end of apartheid and the abolition ofslavery). Arguably, such criticality is also visible in the transition to net-zero emissions: theconditions now exist for Greta Thunberg to galvanize students from around the world to strikefor climate. Two decades ago, the system was not ready for the emergence of such a leader– Greta Thunberg or otherwise. Climate change did not enjoy the salience that it does today,
awareness levels were lower, social media platforms to amplify messages didn’t exist, andfrustration, fear and anger were not bubbling up to critical levels. Popular awareness andengagement creates the space for political and business declarations from the world’s largest
emitters to put the Paris Agreement’s temperature goals within reach.
Other types of systems are in a near-perpetual state of criticality, where a small shift in one or
another direction can create landslides. Stock markets and other financial systems, whereself-reinforcing expectations and animal spirits are strong drivers of change, are examples.
Indeed, one of the background papers to this report argues that a small “shift” in accounting
rules requiring companies to disclose climate risks could massively affect shareholder
behaviour and valuations, and thus corporate decision making (Sarasin & Partners, 2020).
Typically, system criticality involves being in a state where at least one of the following positive
feedback loops can overcome resistance (Arthur, 1988, 1989, 1990):•

Self-reinforcing expectations: where expectations trigger actions that reinforce thetruth of the expectation, triggering the diffusion of the expectation and action;•

Learning effects: where the deployment of a technology reduces its cost, increasing
the net benefits of further deployment;•

Network and coordination effects: where there are greater advantages to ‘goingalong’ with others, the more other economic agents are taking similar action;9•Large fixed costs (economies of scale): where, once the initial fixed costs have been
incurred, low unit costs encourage increased output.

Sometimes preparatory actions are needed to bring a system to a state of criticality. For
example, NASA’s investment in solar panels was necessary for the genesis of the PV industry.
After decades of fundamental research and development, solar technology was in state suchthat a highly targeted intervention such as Germany’s feed-in-tariff (a “kick”, as discussed
below), would be enough to signal widescale uptake and adoption. The feed-in-tariff
encouraged uptake, which reduced costs, which in turn incentivised more uptake. China, uponseeing a growing market, leveraged its manufacturing prowess to make low-cost solar panels.
The story of solar PV encapsulates all four positive feedback dynamics: self-reinforcing
expectations on market size, learning, network effects, and economies of scale. Today, othercomplementary technologies may be on the precipice of a learning curve, which could betriggered with the right intervention.

2.2.2 Interventions
Once a sensitive intervention point (SIP) has been identified, the next question is what type ofintervention will most effectively trigger positive feedbacks? We classify two broad categories
of interventions: “kicks” and “shifts” (Farmer et al 2019) shown in Figure 1.

Figure 1. Kicks and shifts to alter system dynamics (Farmer et al, 2019)
A kick is an intervention that is possible within the paradigm of the status quo, while a shiftchanges the paradigm. For example, a kick might include a subsidy for green products. A kickcould also include salient instances of civil society action such as Greta Thunberg’s
mobilisation of students. A shift, by contrast, requires a fundamental change to institutions
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that govern society. This might include the establishment of an independent body to hold thegovernment accountable to its climate targets (such as the UK Climate Change Committee),
new laws to more stringently monitor the licensing of fossil fuel permits, or mandatory
disclosure of climate risks. An economy-wide carbon price could be seen as a shift in the“fitness landscape” (Richter and Engelbrecht, 2014) for all firms operating in the economy,
shifting the topology of the economy and triggering change across multiple sectors.
While kicks are important, shifts may be more powerful and interesting to understand because
they can create new trajectories for the post-carbon transition; trajectories that might be fasterthan what we already have. Shifts may also unlock new types of kicks. Three centuries offossil fuel ascendance have locked-in institutions that favour incumbent interests and resist
change. Transforming these institutions is a necessary shift in tackling climate change. For
example, obtaining permits for excavating fossil fuels is notoriously easy in many parts of theworld3 and not reflective of the reality of climate change. Revising fossil fuel permitting law
may be an extremely important shift in terms of achieving net-zero emissions (Rafaty andSrivastav, forthcoming). What also makes shifts particularly interesting for a body such as the
CCC is that they can be catalysed by governments, judiciaries and independent commissions.
Kicks and particularly shifts are not always trivial to trigger because of resistance by
incumbents. In section 2.3.2 we discuss strategies to overcome this resistance so that strong
and decisive climate policy can be implemented.

2.3 Application to the net-zero transition
2.3.1 Identifying interventions
The CCC regularly reports on technology and sector-specific policies necessary to meet net
zero emissions by 2050, including 5-yearly sets of advice on carbon budget levels for the UK,
and annual reports analysing historical emissions trends and progress towards future climate
goals. In its work on net-zero in 2019, and its work on the 6th Carbon Budget in 2020, the CCC
has presented a vision of a future net-zero UK, where residual emissions across most sectors
are reduced close to near-zero, and any remaining emissions – likely from animal agriculture
and aviation – are permanently removed from the atmosphere, through enhancing natural
sinks including tree planting or via engineered carbon sequestration.
The analysis in section 3 of this report takes a complementary perspective, taking a view on
how this transition can be achieved, by focussing on sensitive intervention points at a broader
societal level. Rather than examining technologies and behaviours in particular sectors, oreven the policies that can steer technologies and behaviours, here we focus on the deeper
and more fundamental changes in system dynamics. We are looking for system interventions
3 For example, many of Germany’s permitting laws were written at a time when the speedy excavation of coal wasnecessary for economic development and war effort. Safeguards were kept to a minimum. Similarly, in aforthcoming article, Srivastav and Pratap (forthcoming) will show that India’s coal bearing areas act misses
important safety protocol and effectively subsidises coal production.

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(kicks and shifts) which increase the likelihood of a net zero outcome, given the underlying
structure of the socio-technical system and the system responses (self-reinforcing positive
feedbacks on the one hand and resistance (negative feedbacks) on the other). Figure 2 shows
this interconnected socio-technical landscape, where the dynamics include feedbacks within
and across nodes of the system. The development of this socio-technical system affects
physical outcomes, including the climate system, which in turn feeds back to the sociotechnical system as climate impacts occur, shifting beliefs and narratives and costs andbenefits of action.

2.3.2 Overcoming resistance
Identifying the feedback dynamics and triggers to accelerate progress can be powerful, as theideas in this report hopefully demonstrate. But it would be naïve not to expect inertia,
resistance, obstruction, problems and challenges to emerge as the transition plays out that
could delay progress. We employ a framework developed in a background paper for thisreport (Srivastav and Rafaty, 2020) for identifying and surmounting obstacles on the pathahead.
The starting point is that the UK has already reduced emissions by 43% over the last 30 years(HM Government, 2020), but the actions taken to achieve this – switching from coal to gas
and renewable electricity generation, reducing HFCs and diverting wastes from landfill – look
relatively easy compared to the changes ahead. The challenges are significant, and there will
be many decelerating dynamics and obstacles of various forms. The question is, how canthese obstacles be overcome?
First, some large emitters have recognised the necessity of the transition and have embarked
on the process of changing their firms from within. The co-optation of incumbents can emerge
through pressure from shareholders, advisory boards, CEOs and their advisers. Co-optation
can lead to internal carbon pricing, shifts in capital allocation, executive pay tied to emissions
reductions, green bond issuance, zero deforestation supply chains and transparency inreporting and measuring progress. Transparency is key in ensuring that co-optation results inmeaningful change, rather than “greenwashing”.
Second, and most relevant here, new institutions and rules can help overcome blockages.
The Climate Change Committee itself may be one example, providing regular advice andtransparency on the progress to climate stability. Institutional reforms can encode thetransition to net zero and sustainable development more deeply into law. Others include
institutions to oversee the mandatory disclosures of climate risks, and changes in processes
at HM Treasury in the appraisal of public tax, spend and subsidy regimes as well as regulations(especially in relation to fossil fuels). Regulations and policies can drive change in mature
markets, facilitate price discovery and promote cost reductions.

12Figure 2. A complexity economics framework for the transition to net zero emissions44 Contributed by Jake Langmead-Jones (Committee on Climate Change).

13Third, a combination of technological advancement, with supportive private finance and public
policies can combine as a countervailance strategy – where clean alternatives outcompete
dirty incumbents. Government support for green technologies, R&D programmes, innovation
incubators, renewable portfolio standards, green investment banks, clean energy auctions,etc. can help. The financial sector can construct appropriate vehicles to channel more funding
towards green technologies. Countervailance has had successes thus far – solar PV and wind
now outcompete fossil fuels on cost – and electric vehicles are arguably increasingly in asimilar position of outcompeting internal combustion engines.
Fourth, the transition to net zero will inevitably create losers who may need to be compensatedor appeased in some form. For workers, this could involve enhanced social security, reskilling
and retraining programmes. For regions that are highly dependent on fossil fuels, regionaltransition funds that can help the local economy diversify. The UK’s track record here isrelatively poor, but experience elsewhere coupled with more granular data on adjacent clean
industries may help (Mealy and Teytelboym, 2020). For instance, community involvement withand payment from wind and solar farms can increase public acceptability (Azarova et al., 2019;
Roddis et al., 2018; Vuichard et al., 2019). Finally, compensating capital owners is also a tool
to “buy” cooperation. A controversial and questionable historical precedent for this is theabolition of slavery in UK, where slave-owners were paid to forgo their “assets”. While
compensating workers is often considered as fair and just, compensating capital-owners is
morally ambiguous as it may be viewed as “bailing out polluters”. Nevertheless, it is one
method to appease powerful vested interests that may otherwise mobilise against thenecessary transition.
Fifth, if all else fails, resistance to change can be overcome by antagonism. Examples include
protests and lawsuits to damage reputations and increase operating costs, divestment,
naming and shaming, and boycotting companies that fail to take measurable action consistent
with our net zero target (Thornton and Goodman, 2017). As one example, educational
institutions may decide that their careers service will no longer host oil and gas companies
unless they demonstrate a tangible pathway to net-zero.

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3. A Portfolio of Interventions
Rewiring our economies to net zero starts with a realistic understanding of our current
economic system and the underlying socio-technical dynamics. Modern economies arecomplex systems, with many interdependencies and connections. Ideas spread faster thanviruses, and physical supply chains still deliver goods rapidly across national boundaries. The
idea of “net zero” has spread, many nations are now aiming to eliminate net emissions by midcentury. The path ahead won’t be linear, and global trends spanning multiple decades are
difficult to predict. We don’t know with any certainty what the world will look like in 2035 or
2050, or how the systems we have today will evolve. We do, however, know the sources ofemissions today, and we can identify the sorts of changes in technologies and behaviours that
could reduce emissions towards zero. But it is difficult if not impossible to be certain of the
impact of intervention.
Given this irreducible uncertainty, a portfolio of interventions – where some will fail – is an
optimal strategy. This section identifies plausible kicks that take advantage of existing
favourable dynamics, and potential deeper shifts in the underlying system that could
accelerating changes towards net-zero. These shifts and kicks (see section 2.2.1 above) form
a portfolio of interventions, some of which will fail, but all of which are worthy of consideration,
development and possible implementation.

3.1 Deepen public engagement*
3.1.1 Why it matters?
Public engagement with net zero is a critical factor for success (CCC, 2019a). This is because
the changes in behaviour required will be impossible without a reconfiguration of lifestyles andbroader changes in society, which themselves rest upon a shift in associated values andnorms. In 2019, the CCC estimated that over 60% of the emissions reductions in theirscenarios required behavioural and social change (CCC, 2019). The IEA estimated thatbehavioural changes related to energy use could fill 15% of the global emissions gap to netzero (IEA, 2020c).
The food system provides a good example of the importance of public engagement.
Greenhouse gas (GHG) emissions directly or indirectly related to food make up 26% of global
greenhouse gas emissions (Poore and Nemecek, 2018)5 and of this, animal-related products(meat, fish, dairy, eggs etc.) account for almost 60%. Shifts in personal choices and diets
could make significant progress towards net zero as well as achieving other social goals, suchas improved health. Deployment of novel technologies (such as precision fermentation and* Particular thanks to Lorraine Whitmarsh (in her personal capacity) for her input into this section.
5 Note this is on a GWP100 basis, which is controversial.

15

cellular agriculture) in the food system will be limited unless people engage with them andaccept them (Stephens et al, 2019).
Transport provides another good example. Changes in travel modes from driving to walking
can reduce emissions and contribute significantly to public health objectives. The point ismade humorously and powerfully in Figure 3. While some net zero policies may be lessinvasive in the personal sphere – such as supply-side reform or negative emissions
technologies – these also need to be socially robust (Cox et al, 2020) and public support must
be maintained over time.

Figure 3. Clear and memorable messages can help change behaviour6

3.1.2 What challenges need to be overcome?
Citizens’ involvement in decision-making processes and delivering on action are twointerlinked forms of public engagement. A shared national narrative – whether around“remaking Britain”, the “Green Industrial Revolution” or “net zero” – might strengthenconsensus and render desired behavioural changes and actions more feasible. Ensuring
inclusive and participatory engagement in decision-making requires clear and consistentcommunication as well as providing arenas for dialogue. Awareness of the concept of “netzero” is increasing – see Figure 4 – which is welcome, although it may be that a sharednational narrative should be built around a more tangible concept. Action points, like buying a
car or home appliances, reiterate why a shared narrative is key, as these are decisions which
will typically go through intermediaries (businesses), who must also enable action on the same
agenda, as discussed further in section 6. Similarly, engagement in delivery involves a

6 Photo by Peter Drew of Adelaide. See https://www.flickr.com/photos/carltonreid/4646637491/

16

plethora of actors and actions. Technology adoption is important, and so is political andcommunity action, trend-setting or normalising low-carbon lifestyles and infrastructure.

Had not heard about it

Sep 202030%

Jun 2020

33%

Mar 2020

Hardly anything

A little

23%

26%

23%

42%

A fair amount

25%

19%

A lot

13%

5%

12%

4%

20%

10%

3%

Figure 4. BEIS Public Attitudes Tracker: Wave 33-35 (BEIS, 2020b)7

3.1.3 Recommendations
The core recommendation is to deepen public engagement with the challenges andopportunities presented by the transition to net zero. Specific actions are proposed in the Box;
many involve changing public perceptions and narratives. Strategic shifts of a critical segmentof the population may serve to catalyse positive feedback effects. Evidence shows that support
from a small proportion of a population may suffice to overcome the thresholds holding backsuch positive feedback (Chenoweth, 2013; Doyle et al., 2016; Cantola et al., 2018; Otto et al.,2020). Once an idea, such as a society with zero emissions, becomes prevalent and accepted
in a proportion of the population, rapid change can happen driven by amplifying self-reinforcing
expectations. Informing, monitoring and understanding public attitudes will be critical to
keeping the pace of the transition comfortable for the population, and to identify opportunities
to accelerate and to minimise counteracting feedback effects.

7 Totals do not sum to 100% due to the exclusion of ‘don’t know’ responses. From Question 220: “The Government

promotes the concept of “Net Zero”. Before today, how much, if anything, did you know about this concept?”.

17

RECOMMENDATION 1: DEEPEN PUBLIC ENGAGEMENT•

Political Leadership: A cross-party statement by party leaders (Johnson,
Starmer, Davey) that net zero and green recovery is a key priority, with acredible, coherent programme of actions and consistent ‘branding’/vision.

•

Dialogue: A national conversation that provides vertical and horizontalalignment across scales and sectors on the importance of net zero and options
to achieve it. Dialogue would also include community engagement to identify
tailored local solutions and motivate place-based action.

•

Narratives: Media coverage, including by the BBC, can build public support
around an inspiring collective vision (e.g. a “Green Industrial Revolution”) andstrengthening political mandate for bold action.

•

Behaviour change: Investment by government to support visible lifestylechanges (e.g. energy efficiency, ICT to reduce travel, meat alternatives etc) andtargeting interventions more effectively to ‘windows of opportunity’ where habits
are disrupted and to segments who may be most receptive.

•

Share good practice: identifying and disseminating exemplars of net zero
lifestyles, cities, businesses, policies, etc. to increase sense that change is both
possible and desirable.

•

Conduct public information campaigns and monitor public attitudes: Fillgaps in the BEIS Public Attitudes Tracker to cover determinants of the pace ofprogress that is politically possible.

3.2 Deliver social justice*
3.2.1 Why it matters?
Achieving net zero by 2050 will require significant changes across society. Wide social consent
will be necessary. This requires paying consideration to key groups in decision-making andensuring no one is left behind. If critical groups are left behind in the transition, public support for
the transition to net zero emissions is likely to wane. The importance of this is amplified by COVID19, which has exposed our societies and economies to additional stress, amplifying inequalities
and adding complexity.

3.2.2 What challenges need to be overcome?
There are many possible ways to achieve net zero emissions, some more socially just than others.
In lieu of a formal definition, the Scottish Just Transition Commission has identified three guiding
principles of a just transition (Scottish Government, 2020):* Particular thanks to Jim Skea (in his personal capacity) for his input into this section.

18

1. Planning ahead – clear transition plans should be developed down to the sectoral levelso that surprises are minimised. Unplanned transitions tend to be unjust transitions.
2. Engagement – people need to be brought into the decision-making process and derive asense of ownership of the net zero project.
3. Equity – climate policies need to be systematically screened for their impact on vulnerable
and excluded groups and for the opportunity to address existing inequalities.

3.2.3 Recommendations
The decarbonisation of our societies must ensure justice across the many and various processesof the transition, including procedural, distributive, recognition and restorative justice. To deliver,the net zero agenda needs to situate and frame these guiding policies within a UK context.
Investing in skills and labour requires sensitivity to varying needs across sectors and locations.
The fossil fuel industry, as well as the clean energy, agriculture and land use sectors must be
activated, on both the consumer’s and producer’s ends.
Not all green investments generate jobs, and this can cause an avoidable spatial mismatch
between technological growth and local economic activity. It is vital to consider the re-deploymentof skills in the net zero transition. There are also positive multiplier effects between net zero andthe social justice principles – examples of such synergies include energy efficient homes, heatsupply, afforestation and peatland restoration. COVID-19 may offer a window of opportunity tocapture and reconfigure under-utilised skills for a future low-carbon economy.

19

RECOMMENDATION 2: DELIVER A JUST TRANSITION•

Plan ahead. BEIS (Sharma) should develop clear transition plans, especiallyfor deprived regions and sectors, so that surprises are minimised. Unplannedtransitions tend to be unjust transitions.

•

Put equity at the heart of climate change policies. Systematically screen
climate policies for their impact on vulnerable and excluded groups and for theopportunity to address existing inequalities (Sunak).

•Identify opportunities for labour in declining sectors. For instance, oil andgas workers will be needed for offshore decommissioning (plugging andabandonment), building offshore and geothermal renewables, CCUS andhydrogen (Coffey).

•

Procure green technology with local requirements: Jobs in green supply
chains are created locally, where possible, sharing the benefits of the transition.

•

Educate and train the young: There are many more green jobs than fossil jobs
and the Department for Education (Williamson) should ensure that young
people have the skills required to do the many jobs necessary to meet net zero.

•

Reward and recognise positive behaviours: Farmers are often alienated due
to livestock emissions. Defra (Eustice) should recognise and reward them for arange of positive actions, including soil management, redirecting public subsidy
for public goods.

3.3 Reorganise government*
3.3.1 Why it matters?
To deliver net zero, government must aptly manage conflicting interests and ensure consistency
in messaging across all branches. A sense of ownership by the departments is key – net zero
belongs to all and ought not be assigned to one in particular. Sideways guidance by anotherdepartment is likely to be less potent than ‘top-down’ management, in particular when the prioritiesof the department are in conflict with changes required to achieve net zero. Institutionalisation of
the challenge is necessary given the relatively rapid turnover in political leadership, as shown in

Figure 1. Progress can be embedded with legal and administrative mechanisms – the 2008
Climate Change Act and Climate Change Committee provide examples – but political equivalents
are now required.

* Particular thanks Giles Wilkes (in his personal capacity) for his input into this section.

20

Figure 1. Rapid ministerial turnover may be unsuited to meeting long-term challenges(Sasse et al, 2020)
3.3.2

What challenges need to be overcome?

The scale of the task at hand implies that climate objectives can no longer be led by the department
for Business Energy and Industrial Strategy (BEIS) and the Department for Environment, Farming
and Rural Affairs (Defra) alone, but will require all departments to review how their policies interact
with the UK's net zero target. Maintaining governance and guidance centrally in the heart ofGovernment can enable an efficient coordination of net zero, for instance in setting climate targets,
implementing policy proposals, responding to analyses from the Climate Change Committee andin leading international negotiations. The Government’s creation of a Cabinet Committee on
Climate Change is a step in the right direction. However, tools with which to solve conflicting
interests require more than an organisational re-drawing of lines. Regulations and responsibilities
within departments need re-defining, too, but such changes are likely to be met with resistance ifthey are perceived as a threat to existing priorities. For instance, HM Treasury’s concern overemissions constraints must be equal that of its financial obligations. The task to untie such knots
falls to the democratic legitimacy of the political leadership, which must be decisive and committed.
The political whistle must each time blow the final ruling in the same (net zero) direction.

21

Figure 2. Progress has been made following the Climate Change Act (Sasse et al., 2020)

3.3.3 Recommendations
Leadership to achieve net zero is required across four dimensions. It must solve for vertical
distortion of priorities and reach each departmental responsibility and function from top tiers ofgovernment. Similarly, horizontal governance ensures an equal shouldering of responsibility by
the political leadership of departments and portfolios. Consistent leadership must also be
maintained over time. Targets and priorities may be long-term, but they are also vulnerable todepletion by changed mandates and preferences. Finally, as the above sections have outlined, thepolitical leadership must continuously seek democratic legitimacy in the eyes of its citizens. A
dynamic dialogue through existing and innovative information and accountability mechanisms
enables a continued mandate for the net zero agenda.
To satisfy these great demands and to clearly show the way along the levels of government,
leadership must be decisive and committed. It must be well known across the system that the final
vote will favour net zero. The “Task Force Net Zero” announced by the Prime Minister in November(HM Government, 2020) promises a “systems approach at the heart of our thinking”. If thisbody has the resource and political weight in current and future governments, it would be a
step in the right direction.

22

RECOMMENDATION 3: REORGANISE GOVERNMENT•

PM-backed Climate Change Minister: Current and future PMs cannot be theclimate minister but must prominently champion this person who should befeared for their clout. The PM should be actively and visibly involved in climate
decisions.

•Cabinet Office Responsibility: Cabinet should set climate targets in responseto the CCC, making the trade-offs passed up to it by ministers, oversee delivery,
and conduct the international climate negotiations.

•

Vertical alignment: The Cabinet Secretary (Case) must ensure that decisionsof the Cabinet Office are followed by individual ministries and lower-level bodies.

•

Horizonal alignment: Around the cabinet table, agendas come into conflict.
When conflicts occur, the Cabinet Minister (Gove) needs to remind colleaguesof the commitment to net zero that must be achieved.

•

Net Zero Corporate Plans: Require any company meeting with ministers or
secretaries of state to have a plan to reach net zero emissions.

3.4 Align incentives*
3.4.1 Why it matters?
Explicit and implicit incentives to reduce emissions and remove CO2 from the atmospheremust be maintained and broadened if net zero is to be achieved. Carbon pricing in its various
forms – carbon taxation, obligation and trading schemes or implicit prices through related
interventions – can achieve this. A closely-related market-oriented proposal is the Carbon
Takeback Obligation (CTBO), which would require all importers and extractors of fossil fuels
to permanently dispose of one unit of carbon dioxide for every unit generated.8 Something
akin to this obligation is required to achieve net zero: every tonne of carbon extracted for use
as a fossil fuel will need to be offset with a tonne that is permanently captured and disposedof.

3.4.2 What challenges need to be overcome?
The politics of achieving high carbon prices is non-trivial (Klenert et al, 2019) and, in part
because of this, carbon prices alone will clearly not be enough (Hepburn et al, 2020b). A CTBO
might overcome some of these challenges, but faces its own difficulties. Lessons from the EU
Emissions Trading System (ETS) have shown that a carbon market is not able to provide
enough certainty to incentivise capital-intensive climate solutions (Laing et al, 2014). As fossil
fuel industries are weakened, and as new cleaner energy sources become more dominant,* Particular thanks to Myles Allen, Stuart Jenkins, Eli Mitchell-Larson and Stuart Haszeldine for their input into thissection.
8 See https://carbontakeback.org/about/ for more information.

23

the politics of carbon prices and a CBTO should become easier. Introducing high explicit
carbon prices suddenly, however, has rarely been feasible. Starting low and increasing
gradually is more plausible. The equivalent move for a CBTO is to impose a very low initial
proportion of carbon extracted or imported that must be sequestered. In the case of carbon
pricing, the shrewd use of revenues is critical to public acceptability and to the overall impact
and effectiveness (Klenert et al, 2019); some portion of the revenues could be applied to
instruments such as CfDs that will pull down costs, by reducing risk (which reduces financing
costs) and by increasing deployment.

3.4.3 Recommendations
Introducing, broadening and increasing average carbon prices (which can vary significantly
across different sources of emissions) is a standard recommendation from climate economics,
and we repeat that message here. We would also recommend considering the gradualimposition of a Carbon Takeback Obligation (CTBO) that would ramp up to covering 100% of
imported or extracted carbon by 2050 – this is required for net zero. Allen (2020) argues that
the UK could commit to sequestering 1% of its carbon emissions in 2023, and 10% by 2030,
and that such an intervention could help birth an international carbon dioxide disposal industry,
unlock thousands of jobs, protect offshore industry and relieve pension funds of being locked
into investments at risk of being ‘sunk’ in a net zero trajectory.

RECOMMENDATION 4: ALIGN INCENTIVES•

Carbon prices: Carbon prices should continue in the UK economy after Brexit.
Part of the revenues of domestic carbon prices and border carbon adjustments
could be used to fund policies to pull down the relative costs of clean
technologies. This report is agnostic on whether pricing is implemented
predominantly through taxation or a trading mechanism.

•

Carbon Takeback Obligation: BEIS (Sharma) should consider gradually
introducing a CTBO, covering 1% of emissions in 2023, rising to covering 10%
of emissions in 2030 and 100% of emissions in 2050, to ensure that net zero isachieved on target.

3.5 Leverage global dynamics*
3.5.1 Why it matters?
The UK is a relative small emitter compared to many other countries and we can’t solve thisproblem alone. The UK has and can continue to play a significant role on the global stage, forseveral reasons. The scientific and broader academic strengths of the UK are world leading.
The UK retains international clout as a member of the G7, the United Nations Security Council,
and as host of COP26. As part of Europe (if not the EU), it is part of the largest set of economic* Particular thanks to Bryony Worthington (in her personal capacity) for her input into this section.

24

consumers on Earth. The UK also retains a world-leading financial centre, and a degree ofrespect for its governmental institutions and law and policy making expertise.
UK climate legislation for net zero prioritises domestic action, though we have a considerable
overseas impact both in terms of our investments and consumption.9 Helping to reduce global
emissions is therefore a strong necessary complement to domestic efforts.
The UK can and should therefore think about interventions at home and abroad that are likely
to trigger scaled up action internationally. Understanding international dynamics also implies
looking for ways that the UK can take leadership and capture new markets, while also
protecting the small number of industries that might be disadvantaged by the UK pushingharder or faster towards net zero.

3.5.2 What challenges need to be overcome?
The tragedy of the commons (Hardin, 1968) is not insoluble (Ostrom, 1990), and UK
leadership might “tip” an inefficient equilibrium to an efficient one (Heal and Kunreuther, 2010,2011). A global carbon price is unlikely and perhaps even less than optimal (Hepburn et al.,2020b; Cullenward and Victor, 2020), but carbon pricing can be sensibly employed beyond
the existing coverage of the ETS. Taxes could be imposed upon sources of carbon emissions
in the UK that are currently untaxed (e.g. gas use in buildings, agriculture, shipping andaviation) and rationalising the UK’s array of implicit and explicit carbon prices to ensure market
signals align with low-carbon options.10 At the same time, action to reduce emissions taken in
the UK should avoid importation of higher-carbon alternatives from abroad.

3.5.3 Recommendations
Carbon pricing can be complemented with trade regulation policies. Border Carbon
Adjustments (BCAs) aim to ensure that imported goods produced under less ambitious climate
regimes do not negatively harm the industries inside the trade union or country (Helm et al.,2012). This can create positive price signals to producers in such regimes and exposed
domestic industries can be protected, for instance by payment of the carbon price, taxation on
imported goods, or by surrendering appropriate emissions allowances, or through other trademechanisms. They are now a serious possibility, with a public consultation closing in October
2020 an the European Commission expected to publish its proposals in the second quarter of2021 (Morgan, 2020). Faced with a BCA imposed by one country (A), the likely optimal
response a second country (B), rather than engage in a trade war, is to impose carbon pricing
on its own production and/or exports to collect the revenues available, as modelled in Helm etal. (2012) and shown in Figure 3. A domino effects could follow, broadening carbon pricing
globally. However, if countries with net-zero targets follow through with higher carbon prices,
BCAs may in effect apply only to Australia, India, African countries and some least developed
9 According to ONS (2019) in 2016 UK’s territory based greenhouse gas emissions were 473 million tonnes, while

its consumption-based emissions (including aviation, shipping and net imported emissions) were 784 million
tonnes, a difference of 311 million tonnes.
10 See, for example, ESC (2019) Rethinking Decarbonisation Incentives.

25

countries. While Australian coal and gas exports would be rightly in the crosshairs, fairness
and justice considerations might moderate the application of BCAs to the least developed
countries.

Figure 3. A border carbon adjustment could have a domino effectSecond, internationally, action to reorient investments and address the UK’s consumption
emissions could potentially count towards a more ambitious UK NDC and domestic target.
Bilateral and multilateral agreements to invest in international abatement and leveraging
Official Development Assistance (ODA) to support zero carbon transitions could also counttowards the UK’s NDC. Creating markets for zero carbon solutions overseas can also support
UK exports of goods and services.
The UK’s net zero commitment has potential for wide reach and impact. Leveraging these
dynamics requires decisive action on the domestic and international arenas. The UK could
pave the way for both in complementing domestic actions with international emissions
abatement and by 2050, a net zero scenario domestically may well be ‘net positive’
internationally. The Paris Agreement goals will require all countries to reach net zero by the
middle of the century, and for large amounts of removals to continue to happen in the second
half of the century. The UK moving faster to zero, and beyond, will give diplomatic space topressure other countries to make similar commitments by the mid-century mark.

26

RECOMMENDATION 5: LEVERAGE GLOBAL DYNAMICS•

Border Carbon Adjustments: Working with the EU, the Secretary of State forInternational Trade (Truss) and BEIS (Sharma) should consider using trade law
to prevent carbon leakage and to encourage carbon pricing in other countries.

•

Preferential trading arrangements: Consider forming bilateral and multilateralpreferential trading arrangements for environmental goods and services.

•

Stop UK Export Finance loans or guarantees to fossil projects: UK Export
Finance (Taylor) must ensure that UK state or private financial institutions are
no longer financing new projects inconsistent with global net zero emissions by
2050.

•

Support climate-compatible growth in developing countries: The FCDO
(Raab) should work with the COP26 to deploy carrots and sticks to eliminate
fossil subsidies, lift climate ambition and implementation in other nations.

•

Bolder UK targets: By taking bold action, the UK will have to develop effective
policy frameworks which others can copy. More ambitious targets could
comprise a 100% reduction by 2040 (90% domestic, 10% international offsets)
and 120% by 2050 (100% domestic, 20% offsets) (Johnson, Sharma, Raab).
Investments in overseas abatement can be used to catalyse and scale up action
in other countries.

3.6 Increase business ambition*
3.6.1 Why it matters?
Business ambition is integrally linked to a net zero trajectory. Businesses generate emissions
directly, and the products and services they choose to offer have a huge impact on individuals’
and households’ emissions. Consider that the average new car in 2005 emitted 170 grams of
CO2 per kilometre, while the figure in 2015 was just over 120 grams – a reduction of almost
30 percent in 10 years (DfT, 2015). Businesses who lead in developing and adopting
technologies and approaches consistent with net zero make it easier for governments to passlaws and regulations requiring such technologies and approaches to be adopted by all. The
recent surge in business leaders’ and shareholders’ interest in environmental, social andgovernance (ESG) priorities is a valuable intervention point to be leveraged. Creating a “netzero political economy”, where firms will lobby for change, providing a counterweight to otherincumbents lobbying against change, reduces the political cost of action.

* Particular thanks to Tera Allas (in her personal capacity) for her input into this section.

27

3.6.2 What challenges need to be overcome?
In addition to recommendations in other sections of this report – for example, on carbon pricing
and GHG accounting – there are a number of necessary “kicks” and “shifts” required toaccelerate UK businesses action towards net zero.
Effective business-facing interventions will also exploit the highly heterogeneous nature of the
UK’s nearly 6 million businesses, as shown in Figure 8. A mere 300 businesses make up 37%
of total private sector greenhouse gas emissions. Similarly, a relatively small number ofcompanies are likely to be central to the R&D and manufacturing efforts to enable better
commercialisation and deployment of net-zero technologies across all sectors of the economy(HMRC, 2020). Capturing large and innovative businesses’ attention and working together
with them to deliver net zero will be crucial to meeting the UK’s ambition.
In contrast, millions of small and medium sized businesses in the UK are unlikely to be fully
aware of the UK’s net zero agenda, may not respond to higher energy prices or carbon pricing
in rational ways, or may not have access to the financing they would need to make net-zeroconsistent investments. Moreover, a large proportion of the UK’s small businesses operate insectors with limited exposure to energy or carbon prices and limited international competition.
Rather than taking action to improve energy efficiency and reduce emissions, they may simply
pass the marginally higher prices to consumers. SMEs, therefore may need to be treated more
like individuals, accepting their cognitive and behavioural limitations. This may necessitate, forexample, the kind of public engagement efforts described in section 3.1 of this report.
Finally, business attention has been diverted into dealing with the immediate and existential
crisis created by COVID-19. Continued communication, engagement, support andcollaboration will be required to keep net zero high up on businesses’ agendas.

Figure 8. The UK’s GHG emissions come from four types of businesses

28

3.6.3 Recommendations
A portfolio of effective interventions for the business sector can be created by segmenting theactors into four categories: innovators (sophisticated players whose products and services
could significantly reduce emissions across the economy); potential blockers (large, highenergy or carbon-intensive businesses with a lot to lose); influencers (large, trend-setting or
industry-shaping businesses with leaders that others are likely to follow); and followers (therest of businesses that do not have the bandwidth to specifically address climate change but
are also unlikely to swim against the tide if others are adopting a net-zero approach).
For innovators, a set of effective approaches is set out in the next section 3.7, addressing how
to accelerate clean technology development and deployment. Their products and services will
be key “shifts” that will enable others in the economy to “flow towards” net-zero (often withlimited conscious effort).
As for the UK’s large, carbon-intensive businesses (the potential blockers), their small number
makes it possible to understand each of their circumstances, risks and transition issues indetail. They will need to be incentivised, financially and reputationally, to rapidly shift towards
a net-zero-consistent business model – if they are not on that path already. Articulating what
this would look like, and measuring progress, could help build up peer pressure and leverage
shareholders’ desire for managing future carbon risk. Government could engage with each ofthem individually (building on the Net Zero Corporate Plans recommendation in section 3.3).
For less carbon- or energy-intensive large organisations, industry- or nation-wide joint
declarations, within a shared framework, could elevate these issues to board level and ensurethat their strategies are brought to line with net zero. COP26 is a critical opportunity for creatingsuch commitments. In addition, sharing of best practices and positive case studies (along withthe recommendations in section 3.8 relating to Paris-aligned accounts and audits), could be a
sufficient “kick” to build climate awareness into day-to-day decision making. For example,
across all industries, many GHG mitigation actions have a positive NPV. But how many UK
Chairs and CEO’s realise this and strive to capture the win-wins available?
Identifying the influencers among leading UK businesses (whether carbon-intensive or not)should be a priority, in order to create a longer-term movement that is independent of thegovernment of the day. Such businesses, and business leaders, if identified early enough,could play a critical role in coordinating, agreeing, and embedding the actions mentioned in
the previous paragraph. They would also act as important role models for followers.
Finally, for British businesses to transition long-term, it must be made clear from the politicalleadership that net zero is here to stay.

29

RECOMMENDATION 6: INCREASE BUSINESS AMBITION•

Identify and engage with key businesses: Government should identify andname the top 100 businesses that are critical to achieving net zero in the UK.
These businesses should be directly engaged with, using a clear relationshipmanagement approach, to ensure they drive net zero (Sharma).

•

Circumvent resistance: Businesses who lose from the transition will needruthless regulation (and scrutiny) and/or some support for their transition. Oneto-one business negotiations by the government (e.g., to “save” a fossilintensive asset) should have net-zero among their top 3 priorities.

•

Support climate innovators: In addition to recommendations in the next
section, government should use its procurement, convening power andnetworks to secure demand, contracts and credibility for the UK’s climate
innovators.

•

Elevate climate leaders: Identifying businesses that shape industries (due totheir size or leadership) and celebrating and amplifying their successes can help
other businesses understand the urgency and importance of net zero. They canalso provide critical momentum for COP26.

•

Require consistent GHG reporting: All large businesses should be required
to disclose progress towards their business being consistent with a net-zero
future (in line with recommendations in section 3.8).

3.7 Accelerate clean technology*
3.7.1 Why it matters?
Reaching net zero requires a variety of technologies and varying combinations of these acrosssectors. The past decade has witnessed a rapid development and acceleration of low- or zerocarbon technologies. Innovation is path dependent (Aghion et al., 2019) and rates of learningin existing technologies is not completely unpredictable over time (Farmer and Lafond, 2016).
Further, uncertainty over “winning” technologies tends to reduce with more experience.
Combining this fact with classical portfolio theory implies that an optimal technology portfolio
will be highly diverse in the early stages of the transition, with gradual concertation on“winners” as experience accumulates (Way et al., 2019).
Technologies interact, which can be beneficial once the transition is underway. Figure 9 makes
the point that more and cheaper batteries, more and cheaper solar, and more and cheaper
electric vehicles can feed upon each other, with advances in one area accelerating progressin another. However, these interactions can also make technological systems vulnerable tobottlenecks or immature solutions in supply chains. Half of the required emissions reductions* Particular thanks to Laura Cozzi, Michael Liebreich, and Peter Bruce for their input into this section.

30

need to reach net zero require technologies which are “not yet commercially viable” (IEA,
2020a), specifically technologies in land-use, carbon capture, utilisation and storage (CCUS);
clean hydrogen and hydrogen-derived fuels and bioenergy (IEA, 2020a). Bringing thesesolutions to the ‘hardest-to-abate’ sectors and making them viable and accessible is difficult.
Innovation and R&D is also vital to support the commercialisation in processes such as longdistance transport, high temperature production industries and energy storage sectors.

Figure 9. Learning and network effects in clean technologies are powerful amplifiers

3.7.2 What challenges need to be overcome?
A nuanced understanding of the technological maturity of sectors – and the technologicalpossibilities yet to mature – is required inform government. Currently, the CCC provides
advice based on technologies available today to reduce emissions, considering a range ofcosts and efficiencies based on projected technological progress. More could be done andthere are four key challenges to overcome.
First, identifying key unsolved problems, and bottlenecks involved in developing and deploying
technologies, is important to devise policy to improve efficiency and performance, scalability
and to reduce cost. Problems (or opportunities) might arise when various technologies are
combined – until particular neighbourhoods or towns go fully net zero and are forced to solve
various technological challenges simultaneously, such knowledge is not available.
Second, uncertainty around the optimal energy mix – for instance the respective roles ofnuclear and renewables – may slow progress (Schneider and Froggatt, 2020). Nuclear energy
may be suitable in sectors which require constant power access and can make use of residue
heat. Intermittent renewables need to be paired with energy storage if dispatchable power isrequired. They may or may not sit comfortably together, depending on the flexibility of nuclear
and the ability to store and dispatch renewable energy at short, medium and long durations.
Another example is the precise niches that hydrogen and ammonia (or similar molecularenergy carrier) are likely to occupy in a net zero economy.
31

Third, industries will achieve net zero at different rates. Negative emissions in one sector could
be used to offset emissions in others which may require more capital-intensive reform, but the
precise role and extent of negative emissions remains uncertain.
Fourth, the workforce to deliver on today’s targets are currently being educated and trained,
and must be equipped with appropriate skills if key technologies are to be employed.
Investments into skills and supply chains are critical to enable the needed scale and speed ofaction in many areas, including decarbonising heating (Killip et al., 2018; Wade et al., 2016).

3.7.3 Recommendations
There are four main recommendations. First, greater intellectual effort should be invested incharting the course for plausible mixes of net zero technologies, with an understanding ofwhen key choices need to be made. It is pleasing to see that some of this is already occurringin the HM Treasury Net Zero Review. The UK also has a strong asset in its learned societies– not least the Royal Society and the Royal Academy of Engineering – to help understandhow the existing ecosystem of fossil technologies can be transformed to an ecosystem ofclean technologies.
Second, and relatedly, a set of “pathfinder” projects in specific regions or cities should be
supported, perhaps akin to the “Hydrogen Neighbourhood” to be scaled up to a “potential
Hydrogen Town” announced in the Ten Point Plan (HM Government, 2020). Piloting selectcities or regional actors that leap ahead will enable solutions and barriers to be identified early,
providing lessons for others. The pathfinders would seek to identify which technologies areworking, which are not, which combinations of innovations provide synergies and which are
not complementary.
Third, the UK should prioritise technologies where learning rates appear high, where the UK
has a comparative advantage, and in a manner that is coordinated with efforts in othercountries. The UK will rely on global innovation to achieve its net zero target, and the speedwith which the above technologies are developed and deployed is therefore partially outside
its direct control. The COP26 presidency is of particular interest as an arena in which
innovation alliances and agreements can be promoted. There are also innovation gaps which
the UK can shoulder an international role where it has advantages, for example in floating offshore wind, nuclear small modular reactors (SMRs), CCUS and hydrogen.

32

RECOMMENDATION 7: ACCELERATE CLEAN TECHNOLOGY•

Strategically support key clean technologies. Some technologies havepredictably higher learning rates than others, even based on limited early data.
This can be used to bet on a portfolio of technologies, noting that half of theemissions reductions will come from heating and transport, CCUS, hydrogenand bioenergy, where key technologies are not yet commercial. Globally, wind,
nuclear SMRs, CCUS and hydrogen are areas of interest for the UK.
Procurement policies and R&D subsidies could be aligned to net zero.

•

Share reliable and up-to-date technology cost information. Often key
institutions are several years behind in their understanding of the costs ofdifferent technologies. 2-3 years of progress in wind has been equivalent tomore than decades of progress in coal. Making this information available quickly
and credibly would reinforce the fact that clean technologies are cheaper andhelp redirect investment.

•

Fund pathfinder projects in specific regions or cities. These pathfinders
would enable us to learn about what is actually required to make net zero areality, including the roadblocks and other likely stumbles. They could also help
us understand synergies between technologies.

•

Identify key technology ecosystems: Technologies interact, and key to theshift to net zero is to ensure that the entire ecosystem of technologies iscommercially viable. There is value in identifying critical vulnerabilities in aquickly changing global environment post-COVID.

•

Use the UK’s COP26 presidency to coordinate innovation leadership.
Collaboration could accelerate the transition through international institutions(IEA, the Clean Energy Ministerial and Mission Innovation) and/or throughbilateral partnerships.

3.8 Redirect capital flows*
3.8.1 Why it matters
Inevitably, the more profitable an asset is perceived to be, the more investments it will attract.
Existing investments in carbon-intensive assets remain significant, though spending has taken
a downturn during COVID-19 (IEA, 2020b). As long as assets are valued without consideration
to material climate risk or the emissions they are associated with, incentives to direct capitalwill be incorrect, with too much capital flowing to fossil assets. Changing accounting
requirements is likely to cause a price adjustment of carbon-heavy assets and level the playing
field for renewable energy sources.

* Particular thanks to Natasha Landell Mills and the CCC’s Advisory Group on Finance for input into this section.

33

3.8.2 What challenges need to be overcome?
A future low-carbon economy will require capital-intensive investments, but its operationalcosts are expected to be smaller than those of today’s industries. However, market, policy andinstitutional failures limit access to and delay capital flows needed to stimulate the transition(Robins and Pierfederici, 2020).
One way to target the inertia is to increase transparency and ensure access to information small yet potentially powerful policy interventions. For instance, the expected life span andfuture profitability of carbon-intensive assets and the depreciation of value following increased
carbon taxes and CCUS expenses, or the competitive advantages of accelerated
developments of renewable alternatives, are cause for the readjustment of value. Accounting
for these considerations would also change companies’ financial statements and provide amore reliable view of entities’ profits and capital. This is vital since these financial statements
are used by management and investors in their capital deployment decision-making. Where
the accounts fail to reflect these material climate risks, capital will be misdirected.
An existing approach to promote better climate risk reporting is the Task Force for Climaterelated Financial Disclosures (TCFD, 2020). The TCFD sets out guidelines for the
management and disclosure of material climate risk, but not financial statements themselves– and it is these that direct incentives to invest.
Financial statements will not be adjusted to reflect a net zero pathway, and capital will not be
redirected, if political leadership on net zero is not perceived as credible (see sections 3.1 and
3.3). Though there are examples of large listed companies acting (see, for instance, BP, 2020;
Shell, 2020; Total, 2020; National Grid, 2020), the pace of change is slower than the need.
Improving climate risk management is important but likely insufficient for net zero (Caldecott,2020). By making it mandatory for companies to produce Paris-aligned financial statements,
supported by Paris-aligned audits, capital flows will be redirected and companies incentivised
to adopt transitions plans.

3.8.3 Recommendations
The CCC’s Advisory Group on Finance makes several recommendations with a view to the
UK becoming the first “net-zero financial system”. We complement those recommendations
with consideration on audit and accounting issues. The credibility of our commitment to net
zero is related to the alignment of financial statements with that objective. Business leaders
can be requested to confirm in their accounts that they have accounted for material climate
risk or explain why they have not. Auditors could likewise provide a statement of affirmationthat they have considered the Paris Agreement when reviewing company accounts, and havecalled out any misalignment.

34

RECOMMENDATION 8: REDIRECT CAPITAL FLOWS•

Mandate Paris-aligned accounts: Asset and liability values should be basedon scenarios that are consistent with net zero emissions by 2050. Investors
need to ensure that their capital is directed towards businesses that are
profitable as the global economy transitions to net zero.

•

Mandate Paris-aligned audits: Auditors should be required to consider theParis Agreement and net zero commitments when reviewing company
accounts. They should sound the alarm where the accounts are not consistent
with these targets, or where they fail to reflect material climate risks.

3.9 Harness legal avenues*
3.9.1 Why it matters?
Legal avenues – legislation, regulation and the courts to judge compliance – have teeth that
other interventions do not have. For instance, the UK Supreme Court ruled against a third
runway at Heathrow Airport because of a failure to consider the Paris Agreement (Taylor,2020).

3.9.2 What challenges need to be overcome?
The UK is in the process of drafting its sixth carbon budget – a five-year cap on permissible
emissions for the period of 2033-2037. It will be the first carbon budget set within thegovernment’s net zero target. However, estimates from the CCC show that the government ison track to breach both its fourth and fifth budgets (2019b).

3.9.3 Recommendations
Government could establish a team of government lawyers to identify and shape the mostsignificant legal and regulatory interventions to accelerate progress to net zero. This might
include consideration of regulation and laws outside the usual territory of climate change. For
instance, might a limited ‘climate defence’ be established by the Competition and Markets
Authority to protect agreements made in good faith to accelerate net zero from the full weightof competition law? Or should all regulators to regard the Paris Agreement, 6th carbon budget
and 2050 net zero target in their duties?
Legislation and the courts can also be employed to reduce emissions. Lawyers within civilsociety might choose to strategically identify and pursue well-founded legal actions toaccelerate change towards net zero.

* Particular thanks to James Thornton, Jonathan Church and Thom Wetzer for their input into this section.

35

RECOMMENDATION 9: HARNESS THE LAW•

Climate laws: The Attorney General (Braverman) could establish a small teamof lawyers to identify and shape the most significant legal and regulatoryinterventions to accelerate progress to net zero.

•

A climate defence: The Competition and Markets Authority (Coscelli) might
consider a limited ‘climate defence’ to protect agreements made in good faith toaccelerate net zero from the full weight of competition law.

•

Regulator duties: Require all regulators to regard the Paris Agreement, 6thcarbon budget and 2050 net zero target in their duties.

•

Strategic litigation: Lawyers within civil society should strategically identify andpursue legal interventions to accelerate change.

36

4. Conclusions
The pace of change required to achieve net zero emissions in the UK by 2050 is fast but
manageable. In some areas, action builds on current trends and investments where
momentum is good and strengthening. Energy and transport provide two examples. In otherareas, uncertainty remains and requires resolution as swiftly as possible. The decarbonisationof heat is one such area. Finally, in some areas that are necessary to achieve net zero, action
globally has barely begun, such as in CCUS and the harder to abate sectors. It is possible inthese areas the UK could be an early mover.
The economics of the transition to net zero has moved in a positive direction and is moreadvantageous than is widely appreciated. The costs of clean technologies have fallen fast andwill most likely continue to do so. The cost of capital is already low, and as risks involved inzero carbon technologies will fall as those technologies mature, as familiarity with theecosystem of new technologies increases, and as government policy risk fades. Once thetransition is complete, the legacy will be a set of clean infrastructures that will offer coreservices within energy and mobility at very low cost, potentially boosting prosperity andincreasingly the inclusivity of society. There is a real sense in which this generation will be theVictorians of the 21st Century.
This report has identified a portfolio of 40 different sensitive intervention points across nine
categories, namely:
1.
2.
3.
4.
5.
6.
7.
8.

Deepen public engagement;
Deliver a just transition;
Reorganise government;
Align incentives;
Leverage global dynamics;
Increase business ambition;
Accelerate technological progress, using “pathfinders”;
Redirect capital flows, through accounting and audit interventions;9. Harness the law, with a government legal team to consider legal and regulatory shifts.
These “kicks” and “shifts” are largely modest interventions that have been included in thisreport because they could produce disproportionately large impacts. The themes of the “Ten
Point Plan” (HM Government, 2020) are harmonious with those developed here, and several
further points in the plan will be needed to get to net zero. There is no certainty that each of
the “sensitive intervention points” advanced here will have large effects. But our view is thatwithin this portfolio of cross-cutting recommendations, lie some big opportunities to accelerate
progress at relatively modest cost.

37

4.1 Conclusions for the CCC
The Climate Change Committee plays a central role in the transition to net zero. While manyof the recommendations in this report are for government, as a Policy Advisory Group to the
CCC, we highlight four recommendations specifically for the CCC:
1. The CCC, joint with BEIS, plays an important role in aggregating indicators of progressand ensuring the public is aware of progress so that democratic institutions can be
employed to hold the government to account. The CCC and BEIS could do more tomonitor public and business beliefs, narratives and attitudes. This should go wellbeyond surveying for awareness of (arguably) technocratic concepts such as “netzero”, to understanding of which technologies or behaviour changes are sociallyrobust. The rapid pace of change required will only be feasible if it progresses at a ratethat is acceptable to communities around the nation.
2. The CCC has an important role in shaping beliefs and narratives, ensuring that they
are based on facts, and upon plausible and transparent visions of the potential net zero
futures that are publicly available for scrutiny. The CCC scenarios contribute to thisalready, but the scenarios could be more publicly available and digestible, with clearer
implications for different communities and households across the country. Scenarios
might also highlight where there is genuine uncertainty and set out how and when thisuncertainty might be resolved.
3. Fairness and distributional implications should be assessed and presented by the
CCC; proposals to government must be advanced with a close eye on achieving a justtransition. While the political implications of specific alternative pathways to net zeroare not a core consideration for a technocratic body, the political and public
acceptability of each element of the transition is of immense importance to its feasibility– such considerations must also, therefore, be in scope.
4. Drawing upon the Royal Society and Royal Academy of Engineering and other relevantbodies of experts, the CCC should deepen its understanding of the palette of different
detailed technological possibilities that are not yet near to market. While time isshort, research can further pull down the costs of technologies that we know arerequired for success, and of course it is also possible that a “Green Swan” or two
could emerge within the next decade. It is worth the CCC having a deeper
understanding of the technological landscape so that advice to government can
maximise the probability of a positive “surprise” occurring.

38

4.2 Recommendations for Government
As we emerge from the second set of lockdowns with the prospect of the wide distribution of
COVID-19 vaccines in 2021, the emphasis of economic policymaking will move toimplementing a jobs-led recovery and then, in due course, to restoring public balance sheets.
It is worth remembering that there are more jobs available in this huge, and necessary,transition than there are in the continuation of the status quo, which could see us “leap fromthe COVID frying pan into the climate fire” (Hepburn et al, 2020a). When the time comes toraise public revenue, the role of carbon pricing should not be forgotten.
Much of this report is not about specific sectors, or detailed policy recommendations for BEIS
alone to implement. Rather, the 40 cross-cutting interventions recommended in this report
are relevant multiple Secretaries and Ministers of State, as noted in the relevant boxes. We
highlight the three overarching recommendations as follows:
1. Visionary Leadership. Achieving net zero will be extremely difficult, if not impossible,
without a clearly communicated vision from successive Prime Ministers. Prime
Ministers must provide leadership that informs and inspires the public, with the
magnanimity to pass the baton in a manner wholly dissimilar to the current transitionof power in the USA, so that subsequent leaders can stand on the shoulders of giants.
2. Inspiring Narratives. The narratives constructed about achieving net zero must be
shared, broad and malleable enough that they can be “owned” by relevant politicalparties during their term of office. They can accurately point to the meaningful work
created by the transition, the huge benefits for health, productivity and well-being of acleaner and cheaper economy, and the specific place-based opportunities from net
zero emissions.
3. Organised Government. Achieving net zero is a major managerial challenge.
Government is not currently well-organised to deliver. New institutions, teams andstructures need to be put in place so that government can take the necessary decisions
at Cabinet, engage strategically with the private sector, including key innovators andemitters, and to “get climate done”.

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