2050Vision

HowcantheUKplayitspartinavoidingdangerousclimatechange?
MatthewLockwoodandJennyBirdwithRaquelAlvarez
WWW.IPPR.ORG
ENVIRONMENT
2 2050Vision|Aboutippr

Aboutippr

TheInstituteforPublicPolicyResearchistheUK’sleadingprogressivethinktank,producingcutting-
edgeresearchandinnovativepolicyideasforajust,democraticandsustainableworld.

Since1988,wehavebeenattheforefrontofprogressivedebateandpolicymakingintheUK.Through
ourindependentresearchandanalysiswedefinenewagendasforchangeandprovidepracticalsolutions
tochallengesacrossthefullrangeofpublicpolicyissues.

WithofficesinbothLondonandNewcastle,weensureouroutlookisasbroad-basedaspossible,while
ourinternationalandmigrationteamsandclimatechangeprogrammeextendourpartnershipsand
influencebeyondtheUK,givingusatrulyworld-classreputationforhighqualityresearch.

Trustees
MrChrisPowellChairman
MrJeremyHardieTreasurer
DameJaneRobertsSecretary

ProfessortheLordKumarBhattacharyya
LordBrookeofAlverthorpe
LordEatwellofStrattonStMargaret
LordGavronofHighgate
LordHollickofNottingHill
ProfessorJaneHumphries
ProfessorRogerJowell
LordKinnockofBedwellty
MsFrancesO’Grady
MsKateParminter
DrChaiPatel
SirMichaelPerry
MrDavidPitt-Watson
MrDavePrentis
LordPuttnamofQueensgate
LordReesofLudlow
BaronessWilliamsofCrosby
BaronessYoungofOldScone
 3

Abouttheauthors

MatthewLockwoodisaSeniorResearchFellowintheclimatechangeteamatippr.Heisco-authorof
ippr’srecentreportonbehaviourchangeandenergyuse,PositiveEnergy(2007).Priortojoiningippr,
MatthewactedasanadvisertothedeputymayorofLondonandtheLondonClimateChangeAgency.
HehasalsoheldseniorpolicypositionsinseveralinternationaldevelopmentNGOs,andworkedasan
academic.HehasanM.PhilineconomicsfromtheUniversityofOxford.

JennyBird isaresearcherintheclimatechangeteamatippr.Sheistheco-authorofippr’sreportson
attitudestowardsroadpricing,SteeringThroughChange(2006)and ChargingForward(2006).Priorto
joiningippr,JennyworkedfortheEnvironmentAgency.ShehasaMastersdegreeinSustainable
DevelopmentfromForumfortheFuture.

RaquelAlvarezwasaninternatipprin2007.ShepreviouslyworkedfortheenvironmentgroupE3G,and
isnowattheEuropeanCommission.
4 2050Vision|Executivesummary

Executivesummary

In2000,theUKGovernmentadoptedarecommendationfromtheRoyalCommissiononEnvironmental
PollutionthattheUKshouldcutitscarbonemissionsby60percentfrom1990levelsby2050.The
Governmentnowproposestomakethisgoallegallybinding,bywritingitintothedraftClimateChangeBill.

However,climatesciencehasmovedonsubstantiallysince2000,andnowsuggeststhatcountrieslike
theUKshouldbeaimingtomakecarbondioxideemissionsreductionsofatleast 80percentfrom1990
levelsby2050,ifwearetoavoida2°Cglobalwarmingabovepre-industriallevels–athresholdbeyond
whichthereisasharpincreaseintheexpectedimpactsofclimatechange.

Asaresult,anumberofvoicesarenowcallingfortheGovernmenttogobeyondthe60percenttarget,
toadoptalong-termcarbonemissionsreductiongoalof80percentintheClimateChangeBill.Ina
speechinSeptember2007,PrimeMinisterGordonBrownopenedthedoortoareviewoflong-term
emissionsreductionsobjectives,sayingthatoneofthefirsttasksoftheproposedClimateChange
CommitteewouldbetorevisitthetargetsintheBill.

Butisan80percentreductioninUKemissionsevenremotelypossible?Howwouldwegenerate
electricity?Howwouldindustrymanage?Wouldweneednuclearpower?Wouldweallhavetostop
flyingandgiveupourgameconsolesandgadgets?Howwouldweheatourhomes?Whatwouldfuel
ourcarsandlorries?Andaboveall,whatwoulditallcostandcanweaffordit?

Thereiscurrentlynorigorousassessmentofthefeasibilityandcostsofreachingan80percentcarbon
emissionsreductionintheUK,agapthatthisstudyaimstofill.InpartnershipwithWWF-UKandthe
RoyalSocietyfortheProtectionofBirds(RSPB),ipprcommissionedmodellingworkfollowingtwo
approachesthatproducetechnologyscenariosandcostestimatesforachievingcarbonemissions
reductionsofthisorder.

Whileinpracticesomeofthisreductionmightbemetthroughpurchaseofcreditsfromabroad,herewe
lookatthelimitingcasewhereallthereductionsaremadewithintheUK,inordertoexplorefeasibility
andcostsunderthemostdemandingscenario.Wealsoexploresomeofthepoliciesthatwillbeneeded
totransformourenergyandtransportsystems.

Itisimportanttoclarifythenatureoftheapproachtakenhere.TheSternReviewof2006producedafull
cost-benefitanalysisofactiontotackleclimatechange,andcametotheconclusionthatbenefits
exceededcostsforstabilisinggreenhousegasconcentrationsintherangeof450to550partspermillion
(ppm)CO2 equivalent–givingaveryhighchanceofexceeding2°Cwarmingabovepre-industriallevels.

Suchanapproachisbeyondthescopeofthisreport.Rather,herewetakethe2°Ctargetasagiven,and
effectivelyexplorecostsofactionatthelowerendoftherangepresentedintheSternReview(and
beyond).

Modellinganillustrativeemissionsreductiontrajectory
Wehaveadoptedanillustrativeemissionsreductiontrajectoryof:

• a30percentreductionincarbonemissionsfrom1990levelsby2020
 5

• a60percentreductionby2030,and

• an80percentreductionby2050.

Ourstudyincludesemissionsfrominternationalaviation,whicharenotcoveredbytheGovernment’s60
percenttarget,butwhichovertimewillformanimportantelementofemissionsascribabletotheUK.

Bothofourcommissionedmodellingapproacheshavebeendevelopedbyauthoritativesources.One–a
modeldevelopedbyProfessorDennisAndersonatImperialCollege,London–wasusedintheStern
Review.Theother–theMARKAL-MACROmodel–hasbeenusedbytheUKGovernmentinthe
productionofWhitePapersonenergy.

Itisimportanttoemphasisethattheapproachesusedherearenotforecastingmodels.Theyarenotused
totrytopredictthefutureenergysystemoftheUKin50years’time.Insteadtheyofferwaysof
exploringthetrade-offsandtippingpointsbetweendifferentcombinationsoffuelsandenergy
technologiesovertime,andthecostandemissionsimplicationsofthesedifferentoptions.

Someassumptionsabouttechnologiesandenergydemandwereappliedtobothmodellingexercises.Due
toconcernsaboutthepotentiallynegativesocialandenvironmentalimpactsofexcessivebiomass
production,aWWFinternationalstudyofsustainablebiomasspotentialwasusedasabasisforplacinga
limitonbioenergyimports.Becauseofquestionsaboutwastemanagementandthecostsofinsurance,as
wellaspublicacceptability,thestudyalsolooksattheoptionofexcludingnewnuclearbuild.Finally,the
futuregrowthofaviationdemandinthebaselineisassumedtobenohigherthanefficiencygains,
effectivelykeepingemissionsfrom(andenergyusein)aviationconstantfrom2010onwards.

TheAndersonmodelhasaprobabilistictreatmentofcostsandothervariables.Formanyemerging
technologies,suchascoalwithcarboncaptureandstorage1 orhydrogenfuelcellvehicles,wedonot
knowforcertainwhatcostswillbe,sothemodelassumesarangeofpossiblecosts,witheachcostwithin
thatrangeassignedaprobability.Theresults,intermsoffutureportfoliosoftechnologies,andcosts,are
thenproducedthroughmultiplerunsofthemodel,andareexpressedintermsofaprobability
distribution.Theresultsreportedherearetheaveragevalues.

TheMARKAL-MACROmodelhasadifferentapproach.Ratherthanarangeofpossiblecostsforeach
technology,themodelworkswithasingleestimate.Uncertaintiesaboutthefutureareexploredthrough
sensitivityanalyses,forexamplewithdifferentassumptionsaboutoilprices,orlearningratesfornew
technologies.Withtheexceptionoftheassumptionsmentionedaboveaboutbiomass,nuclearand
aviationemissions,theanalysishereemploysthesameassumptionsasusedbytheGovernmentin
calibratingthemodelforthe2007EnergyWhitePaper.However,fortechnicalreasons,weimposed
additionalstoragecostsonintermittentrenewablesabove25percentofthetotalelectricitygeneration
threshold.

Technologyscenarios
Bothmodelsimplythatan80percentreductionincarbonemissionswouldbefeasiblewithtechnologies
knownabouttoday,butwouldbeverychallengingtoachieve,andwouldrequireurgentandradical
changesinpolicy.

1.Carboncaptureandstorage,orCCS,isatechnologyinwhichthecarbondioxidefromfossilfuelscanbeextractedbefore,
duringoraftercombustion,andthenstoredunderground,typicallyindepletedoilorgasfields.
6 2050Vision|Executivesummary

Inbothmodels,tomeettherapidemissionsreductionrequirementsintheperiodto2030,theelectricity
sectordecarbonisesfirstandtothegreatestextent.Wind(especiallyoffshorewind)andcarboncapture
andstorage(CCS)playamajorroleinbothmodels,becausetheyarethecheapestwaysofreducing
emissionsintheshorttomediumterm.

Atthemoment,windgeneratesaround3terrawatthours(TWh)ofelectricityayear,lessthan1percent
ofUKsupply.AccordingtotheMARKAL-MACROmodel,thatwouldhavetoincreaseto20TWhby
2020,requiring6gigawatts(GW)ofinstalledcapacity(forcomparison,theplannedLondonArrayinthe
ThamesEstuaryhasacapacityof1GW).ThisiswithintherangeofRound2ofoffshorewind-farm
development(5.4–7.2GW).However,by2030capacitywouldhavetoriseto33GW,andtosome48
GWby2050.

IntheAndersonmodel,whereelectricitytakesupmostofthedecarbonisationstrainuntil2025,therate
ofinvestmentwouldhavetobeevenfaster.AccordingtoourcalculationsbasedontheAndersonmodel,
upto20GWofwindpowermaybeneededbyassoonas2015.However,thisisofthesameorderas
estimatesofwhatcanbeachievedfromthewindpowerindustry.

ThemodelsalsocallforaveryrapiddeploymentofCCStechnologiesbyasearlyas2020,tocover
around5.5GWoffossil-fuelcapacity,equivalentto11medium-sizedpowerstations.By2050,between
50and110powerstationsofthissizewouldneedtohaveCCS.Currentlythereareplansforjustone
demonstrationplantbythemiddleofthenextdecade.

TheMARKAL-MACROmodelseeksoutthelowestcostsolutions,andmaywellunderestimatethe
contributionofdecentralisedrenewablessuchassolarpower.TheseplayagreaterroleintheAnderson
model,wheretheaverageportfolioalsoincludessomeofwhatisknownas‘domesticcombinedheatand
power’(thesimultaneousgenerationofheatandelectricityfromasingleunitinthehome).

Roadtransportalsoseesamajorrestructuring,firstwithamovetomuchgreaterefficiencyincar
engines,andbythewidespreadintroductionofelectrichybriddrivesinvansandbuses.Biodieseluse
(especiallysecond-generationbiodiesel)beginstotakeofffrom2010acrossallvehicleclasses,andby
2030conventionaldieselhasbeenlargelyphasedout.

However,therearelimitstotheuseoffirst-generationbiofuels,especiallyincars.IntheMARKAL-
MACROmodelonlyaround1milliontonnesofoilequivalent(Mtoe)(around4percentofcurrentuse)
ofbiofuelisusedinthecarfleet,risingto4Mtoein2050.Themostimportantfuelsourceforcarsby
2050(providingabout70percentofenergy)isso-calledsecond-generationFischer-Tropschdiesel,
producedfrombiomass.Itshouldbenotedthatdespitethetightcarbonconstraint,themodeldoes
allowforanincreaseinmileage,withthedistancecoveredbyvehiclessome50percentmorein2050
thanin2005.Thefleetofheavy-goodsvehiclesconvertstohydrogen(mainlyfromelectrolysisusing
zero-carbonelectricity)by2030.Railswitchesoverentirelyfromdiesel(whichcurrentlyaccountsfor60
percentofenergyuseinrail)toelectricity.

Thesectorthatdecarbonisesleastisaviation.Despitethis,intheMARKAL-MACROmodelthenumberof
airpassengerkilometrestravelledstillincreasesbyaround30percentbetween2000and2050.

Costestimates
ThecostsofreducingcarbondioxideemissionsintheUKby80percentfrom1990levelsby2050on
theassumptionsabovewouldbe2.1percentofGDPperyearby2050,accordingtotheAnderson
model,and2.8percentaccordingtotheMARKAL-MACROmodel.
 7

Bycomparison,a60percentreductionunderthesameassumptionswouldcostaround1percentof
GDP.Theestimatedcostsofa60percentreductioninthe2007EnergyWhitePaper,notincluding
internationalaviationemissionsandwithoutconstraintsonbiofuelsandwithoutbuildingnewnuclear
installations,areintherange0.3–1.5percentofGDPperyearby2050.

Thesearesignificantcosts,ascanbeseeniftheyareexpressedinabsoluteterms,amountingtobetween
£50billionand£70billionat2007prices.ThisisroughlywhatiscurrentlyspenteachyearontheNHS.
However,evenwiththedeepcarbonemissionsreductioninthemodels,theUKeconomywouldstillbe
expectedtogrowtoaround2.5timesitscurrentsizeby2050.Thedeepemissionsreductionscenariois
notananti-growthscenario.

Itshouldalsobenotedthatneitherofthesemodelsincludesinteractionswiththewiderglobaleconomy.
Someoftheseincluderisksforenergy-intensive,andthereforecarbon-intensive,industriesthatare
exposedtointernationalcompetition,andthesemayneedextrasupportindecarbonisingifproduction
andjobsarenottobemovedabroad.

However,therearealsohugepotentialopportunitiesforUKcompaniesintheglobalmarketsforlow-
carbonandhigh-efficiencytechnologyandservices.Forelectricityalone,theInternationalEnergy
Agencyestimatesthatcumulativeglobalinvestmentinlow-carbonelectricitytechnologiescouldbe
worthUS$13trillionby2050.DeepdecarbonisationcouldgiveUKfirmsalargerdomesticmarketon
whichtobuildanexportbase,particularlyinareassuchasoffshorewindandcarboncaptureand
storage.

Thecostestimatesaboveareaverages.Subjecttodifferentassumptionsabouttechnologycosts,demand
growth,oilandgasprices,andenergyefficiencypolicies,theycouldrangefromunder1percentto
above3.5percentofGDP.Increasingenergyefficiencyiswhatmakesthemostdifferencetocosts,
especiallyintheshortterm.

Andersonanalysesthecostsofachievingthe80percentemissionsreductiontrajectorywithandwithout
newnuclearinstallations.Thecostdifferenceissmallbutsignificantin2025(atsome0.4percentof
GDPperyear),butinsignificantby2050,asthecostofalternativetechnologieshascomedown.

Thecostsofactionalsoneedtobeplacedagainstthecostsofinaction,whichwillfallonboth
householdsandbusinesses.TheSternReviewestimatestheglobalcostsofunmitigatedclimatechange
atbetween5and20percentpermanentaveragereductioninconsumption.Thenetcostsofdoing
nothingtopreventclimatechange(overmitigatedclimatechange)intheUKarenotfullyknown.
However,estimatesofpotentialflooddamage,makinguppartofthosecosts,areverylargeby2080,in
theregionof£40billionayearin2005prices.

Beyondfossilfuelprices,themodelledcostsofmakingdeepcutsarereducedsubstantiallybyspeeding
upprogresstowardsmoreefficientuseofenergy.Policiesthatbringdowntheexpectedfuturecostsof
low-carbontechnologiesthroughaccelerateddeploymentandR&Dwouldalsohelp.

Policiesoflow-costmeasuresthatdrivetowardsgreaterenergyefficiencyandinnovationinlow-carbon
technologiesarethereforecentraltogettingtheUKontoanemissionsreductiontrajectorythatis
consistentwithavoidingdangerousclimatechange.

Targetsandthecredibilityofinternationalleadership
Thescientificimperativeforan80percenttargetisstrong.Themodellingpresentedinthisreportalso
suggeststhatachievingsuchatarget,whilechallenging,istechnologicallyfeasibleandinthesamerange
8 2050Vision|Executivesummary

ofcostsasa60percenttarget.

However,therearequestionsaboutthedesirabilityofadoptingan80percenttargetfortheUKinthe
absenceofaninternationalagreementfortacklingclimatechangepost-2012.Thepointisoftenmade
thatUKemissionsareonly2percentofglobalemissions,sowhatevertheUKdoesintermsofemissions
reductionswillonlyhaveamarginalimpactonglobalclimatechange.

Againstthisistheviewthatinternationalcollectiveactionisitselfmorelikelytoemergeifcountriessuch
astheUKdemonstrateleadership(demonstratingsuchleadershipisoneoftheexplicitobjectivesofthe
ClimateChangeBill).Toexplorethisargument,weexploredthenatureofUKleadershiponclimate
changethroughaseriesofinterviewswithinfluentialstakeholdersingovernments,academiaandcivil
societyfrom13countriesaroundtheworld(includingtheUS,China,India,FranceandGermany).

Settingambitiouslong-termtargetswasidentifiedasanelementofleadership,particularlywithinthe
EU,wheretheUKisalreadyakeyactorinshapingEuropeanpolicy.However,therewasalsoanemphasis
onmedium-termtargetsandconcernaboutsettingunachievablegoals–ifthesearenotmet,evenin
theshortterm,theUKwillrapidlylosecredibility.

Inthiscontext,theadoptionofan80percenttargetbytheUK,alongwithcrediblepoliciesforgetting
ontoapathtowardsthattarget,wouldsendastrongsignaltoatleastsomepartsoftheinternational
communitythattheUKiscommittedtoactionconsistentwithavoidingdangerousclimatechange.This
signalwouldcomeatacrucialtimeasinternationalnegotiationsgatherpaceonthetargetforcutting
carbonemissionsafter2012.

SuchatargetfortheUKwillalsobemoreconsistentthana60percenttargetwithanyfuture
internationalagreementthataimstominimisetheriskofexceedinga2°Cwarming.Ifsuchaglobal
agreementisreached,itisalmostcertainthata60percenttargetwrittenintoUKlegislationwillhaveto
bechanged.

Overall,an80percentlong-termtargetandsupportingmedium-termpoliciesandtargetsaretherefore
bestunderstoodnotasunilateralgestures,butratherasameanstowardsamultilateralgoal,andas
aboutmakingtheUK‘climate-treatyready’.

Finally,therearelikelytobepositivespin-offsfromafar-reachingdecarbonisationfortheUK,inthe
formofimprovedenergysecurity.

Policyrecommendations
Targets
TheGovernmentshouldproposeadoptingatargetofreducingcarbondioxideemissionsbyatleast80
percentby2050from1990levels,withappropriateintermediatetargets.However,thisproposalshould
beopentofullpublicdebate,partofwhichwilltakeplacethroughscrutinyanddiscussionofthedraft
ClimateChangeBill.

TheproposedCommitteeonClimateChangeshoulddeterminethedegreetowhichthepurchaseof
creditsfromabroadshouldbemade(andhencetheambitionofdomesticpolicies).Tobeabletotakeall
therelevantfactorsintoconsideration,thecommitteeshouldhaveexpertiseandexperiencein
internationalclimatenegotiationsrepresentedwithinit.

Low-carbonelectricity
Bothmodelssuggestthattheelectricitysectorshoulddecarbonisefirstandmostextensivelyinthe
 9

mediumterm(whilealsoindicatingtheimportanceofmakingastartontransport).Theextentwill
dependonhowmucheffortistakenupbythetransportsector,butgettingontothepathtowardsan80
percentreductionwillalmostcertainlyrequiremajorinvestmentsinlow-andzero-carbonpower.

Giventhelongevityofpowerplant,andthetimescalesfordecarbonisingelectricity,thisisashort-term
policyissue.TohelptheUKavoidbuildingnewpowerstationsthatgeneratehigh-carbon,coal-fired
electricity,theGovernmentshouldimmediatelystarttodevelopaframeworkforinvestmentincarbon
captureandstorage(CCS),anticipatingthesuccessfuldemonstrationofthetechnologyearlyinthenext
decadeandsettingatargetforCCScompliance.

Innovationinlow-carbontechnologies
Theroleoflow-carbontechnologiesiscrucial.Iftechnologiessuchasoffshorewind,hydrogenstorage
andcarboncaptureandstoragearenotdevelopedandcommercialised,thentheonlywaytoradically
reduceemissionswouldbethroughamuchreduceduseofenergyandbyhavingasmallereconomy.
Suchavisionislikelytobepoliticallyunattainable.

Moreresourcesshouldbegiventosupportresearchonlow-carbontechnologies.Governmentshould
increaseannualsupportfromaplanned£60millionperyeartoatleast£100millionayearby2010.
Furtherexpansioncouldbefundedoutofrevenuefromenergycompaniespurchasingcertificatesto
meettheirtargetsforrenewableelectricityundertheRenewablesObligation.ThenewEnergy
TechnologiesInstituteshouldfocusprincipallyonresearch,ratherthandevelopment,withan
appropriatelyopenintellectualpropertyregime.

TheRenewableTransportFuelObligation,whichrequiresfuelsupplierstoensurethat5percentofthe
fueltheysellcomesfromrenewablesourcesby2010,shouldbeextendedto2020andbanded,togive
incentivetothedevelopmentofsecond-generationbiofuels.

Governmentshouldcontinuetopressforlong-termtargetsforemissionsfromnewcarsacrosstheEU,
withagoalofvehicleshavingzeroemissionsby2030.Thisapproachshouldbeextendedtoaviation.
Governmentshouldproposealong-termmandatorycarbonemissionsstandardforaircraftthatlandat
EUairports,andconsideradoptingastandardforUKairports.

Systemsofcertificationforproductstandardsshouldbeamendedtoprovidealow-costrapid‘innovation
assessment’fornewlow-carbontechnologies,especiallyforbusiness-to-businessmarkets.

TheGovernmentshouldworkattheEUleveltoprovideaframeworkforinvestmentinroadtransport
refuellingstations,helpavoidincompatibilitybetweencountriesorevenregionswithincountries.

Speedingupprogresstowardsenergyefficiency
Inbothmodelspresentedinthisstudy,speedinguptherateofchangeatwhichwemovetowardsmore
efficientuseofenergywilllowerthecostsofreducingemissions.Thecostreductionswouldbe
substantial,oftheorderofone-third.Theseeffectsarefarlargerthanthedifferencesthatwouldbe
madebyrulingoutanewgenerationofnuclearpowerstations.

Governmentshouldplaceagreaterfocusonapproachesinformedbybehaviouralpsychologyin
designinginterventionstospeeduptheintroductionofenergyefficientbehaviourandnewproductsin
thehouseholdsector.Inthecommercialandretailsectorinterventionsshouldfocusmoreonregulation
andcorporatesocialresponsibilityasthekeydriversofbehaviour.

Thereisalsoaneedtokeepenergyefficiencyapriorityinthemindsofthepublic.Thereisatendencyto
10 2050Vision|Executivesummary

talkaboutenergyefficiency,butrapidlymoveontosolutionsthatfocusonsupply,includingnuclear
power.Forelectricityinparticular,themorethatdemand-sideefficiencyandmanagementsolutionsare
broughtintouse,thelessthegapingenerationonthesupply-side.Intermsofshort-termstrategy,
governmentshouldensurethatenergyefficiencyandconservationisthepriorityforenergypolicy.

Thepaceandambitionofchangeshouldalsobesteppedup.Policiestospeedupenergyefficiency,
especiallyanobligationonenergysuppliers,shouldbebroughtforwardandadoptedmorequicklythanis
currentlyplanned.Theearliermeasuresareintroduced,themoreeffectivetheywillbeinloweringcosts.

Policiestohelpthevulnerable
Low-incomehouseholdswillfacedifficultiesinmeetingthehighercostsassociatedwithcuttingcarbon
envisagedinthemodels.‘Carbonpoverty’willreplacefuelpovertyasamajorsocialpolicyproblemand
politicalissue.

Tacklingcarbonpovertywillrequirethesamerangeofpoliciesasthosededicatedtoaddressingfuel
poverty.Therewillneedtobeamixofwell-targetedprogrammestoimprovetheenergyperformanceof
thehousingoflow-incomehouseholds,directpaymentsforwinterfuel(andpossiblyinfuture,fuel
paymentsinsummer,forcooling).Mostimportantofallwillbetoraisetheincomesofthemost
vulnerablehouseholdsthroughtargetedbenefitandtaxcreditmeasures.

Inaddition,newapproaches,suchasrequiringenergysupplierstoadoptsocialtariffsorstep-uptariffs,
orbulk-buyingofenergyatadiscountforlow-incomehouseholdsbygovernment,shouldalsobe
considered.

Policiesforenergy-intensiveindustries
Someenergy-intensiveindustries(especiallythoseopentointernationalcompetition)willalsohave
concernsabouttheimpactsoftightercarbonconstraintsandhigherpricing,withthefearthat
productionandjobswillmovetoothercountries.Infact,relativelyfewindustriesintheUKareboth
energy-intensiveandexposedtoahighdegreeofinternationalcompetition.Aluminium,ironandsteel
arelikelytobethemostaffected.

Globalsectoralagreementsareoftenseenasthebestwayofreducingemissionsinenergy-intensive
industriesopentohighlevelsofinternationalcompetition.However,sectoralagreementswillbeeasierto
negotiateinsomesectorsthanothers.

Intheabsenceofsuccessfulglobalsector-specificagreements,governmentshouldworkwithcompanies
withenergy-inefficientplanttoreducetheircarbonfootprintbyreachingindustrybest-practicelevels.
Taxesonimportscouldalsobeconsidered.

Conclusions
Climatesciencesuggeststhatfortheworldtohaveagoodchanceofavoidingdangerousclimate
change,theUKneedstoreduceitscarbonemissionsbyatleast 80percentby2050from1990levels.

Themodelspresentedheresuggestthatachievingtheseemissionsreductionsthroughdomesticaction
aloneistechnologicallyfeasible,basedonacombinationofincreasedenergyefficiencyandinvestment
intechnologiesknownabouttoday.Thisisthecaseevenifnewnuclearpowerstationsareruledout.

However,thescenariosarehighlychallenging,andwouldrequireradical,almostimmediatechangesin
policy,andinvestmentintheelectricitysectorinparticular.

Thecostsofachievingan80percentemissionsreduction,atanestimated2–3percentofGDPperyear
 11

by2050,arelargerthantheestimatedcostsofachievinga60percenttarget,butareofroughlythe
sameorder.

Inadditiontobeingnecessary,technologicallyfeasibleandaffordable,amoreambitiousemissions
reductiontarget,alongwithcrediblepolicies,wouldalsobedesirableintermsofdemonstratingUK
leadershiponclimatechange,andsohelpingtomakeaglobalagreementmorelikely.Energysecurity –
makingsuretheUKdoesnotrelytoomuchonothercountriesforitsenergysupplies– wouldalsobe
improved.

ThemodelsofferedheredonotpresenttheonlywaysofreducingUKcarbonemissionsby80percent
by2050from1990levels.Inevitably,forexample,theycannotanticipatefuturetechnologies.However,
thesetwomodelsdoincorporatealargeamountofwhatweknowaboutcurrenttechnologies,andthey
investigatebothplausibleandlowestcostpathstothataim.

Achievingan80percentreductionincarbonemissionsintheUKinthistimeframewouldbeamassive
undertaking.Thescaleofthechallengeshouldnotbeunderestimated.Suchareductionwouldrepresent
atotaltransformationofthewaysweuseenergyinourhomes,inbusinessandintransport.The
technologiesweusetogenerate(andinmanycases,use)energywouldhavetochangecompletely
withinthespaceofthenextfewdecades.

However,thetechnologicalchallengesareprobablynotasgreatasthepolicychallenges.Wealready
havemanyofthetechnologiesthatthesemodelssuggestwouldbeneeded,andsomeofthemare
alreadybeingbroughtintouseonasignificantscale.Othersareatanemergingstagebutarerelatively
welldeveloped.Butboththemodelssuggestthatthepaceofinvestmentinthesetechnologieswillneed
toincreasebothurgentlyandradically.
Underlyingthepolicychallengesaretheeconomicandpoliticalchallenges.Accordingtoourcosting
exercises,theoveralleconomicimplicationsofdecarbonisationwouldnotbeenormousintermsof
impactsonlong-termgrowth.Thismakessense,sinceenergymakesuponlyarelativelysmallpartof
theeconomy.Nevertheless,theeconomiccostswouldbelargeenoughtohavepoliticalsignificance.