Hosting COP26 is creating a strong focus on climate issues at home. What does making the most of this opportunity look like? For many Utility Week readers, this might be clearer plans for electric vehicle charging and new technologies. These are vital for UK delivery of net zero. But if our national action on climate doesn’t also deliver a socially ‘just’ transition, its success risks being undermined at home, and abroad. The Energy White Paper has recognised this, highlighting the importance of fairness and affordability in energy policy. But why is this important and what can be done to turn rhetoric into reality?
Sustainability First has carried out extensive work on fairness in utilities. Most people would recognise what isn’t fair; getting agreement on what is fair is harder. The social issues that underpin fairness tend to be qualitative and entail judgements. And questions of fairness go way beyond traditional customer protection requirements to include global, national, regional and intergenerational impacts (ecosystems, adaptation, supply chains, structural employment etc). They transcend the boundaries of consumer concerns and raise significant community and citizen issues.
Given this complexity, why not keep things simple and ensure UK climate action focuses purely on carbon? The moral case is crucial here. If the UK government wants to be a true climate leader, and also be at the forefront of the green industrial revolution, the risks and opportunities around climate adaptation and mitigation need to be shared fairly. There are clearly deep and long-standing global fairness questions here that the COP will need to address. And in our inter-connected world, these issues speak directly to the lived experience of many UK citizens.
More parochially, if UK utilities (particularly monopoly networks) want to be trusted to use private capital to deliver public value, they need to think about how the benefits of the energy transition are shared in a fair way. A situation where only the well-off can afford electric vehicles or heat pumps, for example, would be deeply unethical. If this happened, the affordability of climate policies could detract from decarbonisation. By widening inequalities, it could drive political instability, making the implementation of net zero even more of a challenge. And it’s important to recognise that climate impacts are already with us and influencing our lives. These issues are current and growing.
There’s another reason, however, why a just transition is important. To reach net zero by 2050, all of us need to play a part. For the UK, the Sixth Carbon Budget makes it clear that over 40 per cent of the carbon reduction in the scenarios to 2035 is from consumers adopting new low-carbon technologies. And a further 15 per cent requires consumer choices; both to reduce demand and improve efficiency. To change how people use energy in their daily lives you have to start from where they are and take them with you; not ‘do’ change to them. In basic terms, understanding the lived experience of those you need to influence is crucial to get heat pumps installed in homes.
The need for innovation, not just in technology but also in processes and business models, is another compelling reason for taking social issues into account when considering domestic climate action. By not reaching out into the wider and diverse communities of which they are part, utilities will miss out on talent and ideas. Getting the right skills, insights and perspectives around the table to become more creative, resilient and people centred businesses requires a re-evaluation: of the role of utilities in their local communities; how they deliver co-benefits; and their potential to promote social mobility.
Many utility companies are already acutely aware that to recruit millennials, they need to have both a good environmental story but also to act, and be seen to act, as socially responsible businesses. However, fairness also requires a wider and very different policy, regulatory and company response than that which has been the hallmark of utilities since privatisation. A response that challenges the boundaries of existing decision making and cries out for brave leadership on all sides. Increasing numbers of young people expect this, are hungry for change and are all too aware of the global big picture.
Getting a fair transition to net zero in the UK may indeed be more complicated than laying new pipes and wires. There are three things that sectors like energy, water and communications can do at home to ‘mind the gap’ between environmental and social agendas.
Firstly, deliberative citizen engagement can help navigate the difficult waters of what fairness looks like for the UK in the transition. This can open up and give people a stake in the process, enable them to share their experiences (including of flooding and other climate impacts), priorities and ideas for change, and can help utility companies and others form partnerships for delivery. Engagement can also give decision-makers the confidence to boldly lead through difficult times. The UK’s Climate Assembly and the Scottish Government’s Just Transition Commission have started to pave the way here. To build legitimacy, these approaches need to link into the engagement activity that utility companies, local authorities and mayors, regulators and policy makers carry out.
Secondly, what gets measured counts. Utilities need to get much better at measuring their social impacts. It is no surprise, that whilst the investment community has woken up to the ‘E’ in Environmental, Social and Governance (ESG) reporting, ‘S’ issues are lagging behind. In a recent study of 56 companies, whilst 86 per cent were measuring environmental impacts, only half were estimating employment or social impacts. Sustainability First’s work with utility companies shows that many struggle in this area. Whilst some are at the forefront of techniques such as ‘six capitals’ reporting others are still not systematically recording their wider social and community impacts.
For policy makers and regulators too, there are gaps in basic data on the potential spatial and intergenerational social impacts of climate change. Existing econometric models need to look more broadly and longer-term if they are to provide frameworks which encourage companies to deliver a wider range of social outcomes and not just focus on a series of one-shot ‘games.’ Aligning investor, company and regulatory reporting with the UN’s Sustainable Development Goals is also important to demonstrate moral leadership on fairness issues.
Last, there needs to be a recognition that whilst there are many ‘win wins’ that better engagement, metrics and models can create, delivering on both the social and environmental agendas can entail real costs and trade-offs. Sustainability First considers that in the UK the time has come for a fundamental discussion about who pays for decarbonisation: bill payers or taxpayers – and how these costs are recovered via different charging mechanisms. Without such a debate, in our view, nature and the next generation will keep picking up the tab.
These are fundamental questions but ones that can’t be avoided if all sides are going to come ‘Together for a Fair Climate Future’ and make the UK’s climate action, spurred on by COP26, a real and enduring success.
‘Together for a Fair Climate Future’ is a series of six open discussion events on how action for the climate crisis and social justice can come together as we recover from the pandemic. The next event ‘What do we value in society?’ will be on YouTube on 9 March 2021 between 1pm and 2.15 pm. These events are part of a wider programme that Sustainability First is working on with National Grid in the run up to COP26.