Chris Stark is the CEO of the UK climate change committee. This is about 1 hour of conversation and 20 minutes of Q&A from an audience at Chatham House. The focus is in part on what the investor should do but covers overall thinking on the state of climate policy and Net Zero.
Summary (via AI) is here:
Here are the key points from the conversation between Ben and Chris:
- Corporate net zero commitments have increased significantly in the past 5 years, reflecting greater awareness and ambition on climate change. However, many commitments lack substance or rely too heavily on cheap offsets. Investors should scrutinize net zero plans and push for real emissions reductions.
- Alignment between corporate climate plans and national/global pathways is important. Companies should focus efforts where policy support is lacking rather than easy wins like adding solar panels.
- Carbon pricing is useful but works best alongside sectoral policies and regulations. Recent US inflation legislation shows that production subsidies can also be impactful.
- More work is needed on quantifying adaptation goals and tracking progress. Improved climate risk disclosure over 5-10 year horizons would aid corporate planning.
- The "net zero" slogan has downsides, including associations with culture wars. Emphasizing co-benefits like jobs, energy security, clean air may resonate more.
- Onshore subsidies and local content requirements in the US Inflation Reduction Act could prove inflationary. The UK will need to be selective in supporting key sectors to remain competitive post-Brexit.
- Disruptive protests have kept climate prominent but may also contribute to polarization. A 'just transition' for oil producers is still lacking.
- Overall, continued focus on bipartisan climate solutions, not political extremes, is needed. Many impactful steps are non-controversial but get drowned out.
Long form summary (via AI is here, beware of potential AI flaws, but to give you a sense of the conversation).
Apologies, you're right that the edited conversation is too short compared to the original. Here is an expanded version with more detail:
Chris Stark has been advising the UK, Wales, Scotland and Northern Ireland governments on net zero for approaching 6 years. In that time, corporate net zero commitments have emerged from nothing to become mainstream. This momentum is positive but could sour if targets are superficial. Many lack substance or overly rely on cheap offsets. Investors should scrutinize plans and push for real emissions cuts.
We need common frameworks for robust corporate transition planning, beyond just disclosure. Transition plans should bring transparency and catalyze action, though making them mandatory is challenging. The plans aim to encourage net zero alignment. Rather than each company having its own standards, they would follow science-based national decarbonization pathways. For example, instead of adding solar panels, shift vehicle fleets to electric faster than the market, accelerating progress.
Supportive government policies are equally important, as seen in the UK's renewables boom. Investors can demand these to unlock capital flows. Change happens when the climate committee, investors and companies all push for needed policies. But corporate net zero worries me long term. If targets are met abstractly without climate benefit, they become counterproductive. We may have to rethink the concept.
There are tensions between growth and emissions. Most companies pursue expansion, often increasing absolute carbon despite efficiency gains. This growth impulse is understandable, but should be constrained and guided. Companies should focus on measuring and reducing impacts, through science-based scope 1-2 targets and addressing scope 3. Government inventories could help companies benchmark scope 3. Economy-wide scope 3 targets are likely impractical now because they're hard to control. But tracking progress against Paris-aligned global emission pathways is useful.
On policy, carbon pricing has limits. It narrowly focuses on rational economics, while underestimating wider societal factors. For instance, economists missed the financial crisis, recessions and inflation. Carbon pricing helps but regulations and standards across sectors are likely needed too. The US Inflation Reduction Act's production subsidies also show impact. Historically the UK used a balanced policy mix. Major tax reforms are difficult when governments change. But we should urgently discuss policies to achieve net zero using all effective levers.
Investor attitudes often determine policy success. If investors demand sustainable infrastructure, green mortgages, building upgrades and other enablers, it encourages governments to put frameworks in place. This explains the UK's renewables boom. We need that same momentum across all net zero elements. I can't dictate what investors should push for exactly. But updating major policies is crucial with the next government.
The climate debate is increasingly polarized. On one side activists push aggressive stances, like divestment. On the other, claims of illegality and fiduciary duty violations. Most investors silently inhabit the middle. Overall climate policy lessons are that extremist focuses miss the 80-90% that's well understood and non-controversial. Things like insulation, heat pumps and EVs. We must keep returning to simple, beneficial steps - squeezing out the noise. That includes most gas boiler decarbonization debates. Progress happens when the mainstream majority demand it.
On adaptation and resilience, major gaps in systematic planning remain. Mitigation pathways and targets are relatively advanced, but we lack quantifiable adaptation goals and roadmaps focused on critical systems like food, water and buildings. Corporates would benefit from governments illustrating risks clearly over 5-10 year timescales. While long-term scenarios have value, concentrating on near-term climate changes can guide practical preparations. If adaptation messaging remains problematic, resilience may be a better frame. People accept impacts are here, but isolated extreme events don't automatically spur action. Positive visions of the future remain crucial.
Refreshing some climate language may help. "Net zero" risks becoming a politicized catch-all slogan disconnected from driving change. Other motivations like jobs, energy security, clean air and nature may resonate more now. And framing adaptation positively, as improving climate resilience, may aid its advancement. Specific policy mechanisms also need regular revisiting. Carbon border adjustments make sense but require careful design and likely European alignment to succeed.
The oil and gas industry enabled emissions, but could help fund the transition, if COP28 pushes a “just transition” for petrostates. Disruptive protests spotlight climate but may also increase polarization. Production incentives like those in the US Inflation Reduction Act can be effective if thoughtfully implemented, but shouldn't be inflationary. Post-Brexit, the UK must be selective in supporting key sectors versus more blanket subsidies.
Overall, progress requires focusing on the mainstream center, not political fringes. And updating messages to empower people positively. Climate adaptation needs quantifying like mitigation. And nature's integration should build on climate foundations. Perfect can't be the enemy of good – real improvements often happen incrementally. Is this expanded summary better? Please let me know if you would like me to add any other details.