John Campbell

Columnist

John Campbell

Economics & Business Editor, BBC Northern Ireland

A Hero in Zero

BBC NI’s Economic & Business Editor, John Campbell, discusses what it means to get to the goal of “net zero” by 2050.

With the pandemic and Brexit continuing to dominate the conversation about our economy, you can be forgiven if you missed the publication of Stormont’s energy strategy consultation. But it could turn out to have the greatest economic consequence, as it gives us the first real sense of how the Executive is planning to get to net zero carbon emissions by 2050.

That will mean, within the span of a single generation, fundamental changes to housing, transport, industry and agriculture.

With the UK about to host a major summit on climate change the phrase “net zero” will be heard a lot in the coming months, but it’s worth reflecting on what it means.

The UK, like most countries, has signed up to the Paris Agreement – a legally binding international treaty that aims to tackle climate change. The goal of the agreement is to limit global warming to below 2 degrees Celsius, but preferably below 1.5 degrees Celsius, compared to pre-industrial levels. Doing this will involve a rapid and significant reduction of greenhouse gas emissions, primarily carbon dioxide.

Net zero means reducing those emissions as much as possible and then using a variety of technologies and techniques to remove any residual emissions from the atmosphere. Essentially that will mean a radical transformation of the energy platform on which our economy and society has been built over more than 200 years.

Since the first Industrial Revolution, around 1800, our economy has become increasingly reliant on burning carbon-dense fossil fuels – first coal, then oil and gas. That must stop almost entirely within 30 years if the net zero ambition is to be realised. That means no gas or coal-fired power stations, no petrol or diesel vehicles, no oil or natural gas home heating.

That is an awesome ambition and Northern Ireland will have to play its part in the broader UK strategy.

We don’t start with a completely blank sheet of paper. For example, there has already been considerable success in decarbonising electricity generation. In 2005, just 3% of Northern Ireland’s electricity came from renewable sources. Now it’s almost 50%.

There is an interim target of getting to 70% by 2030. But that can’t just involve doing more of the same. It will need new policies and substantial investment in the grid. And that very quickly brings us to the realities of net zero – it will involve massive upfront investment and an open political debate about who pays for it. The grid operator SONI has published its own consultation paper on getting to the 70% target, with four options requiring grid investment of between £113m and £535m. One of the options assumes that 700 megawatts of renewable energy comes from offshore wind. Northern Ireland currently has no offshore wind infrastructure despite it being talked about for 20 years.

This interim grid investment is just a tiny fraction of what will be required in total. The Climate Change Commission (CCC), the UK’s statutory independent advisor on tackling climate change, has estimated that Northern Ireland will need to invest £10bn in energy supply to get to net zero.

“Net zero means reducing those emissions as much as possible and then using a variety of technologies and techniques to remove any residual emissions from the atmosphere. Essentially that will mean a radical transformation of the energy platform on which our economy and society has been built over more than 200 years.”

Other parts of the economy present even bigger challenges. Compared to electricity generation, transport is basically nowhere on decarbonisation. It is the largest emitter, responsible for 36% of total energy-related carbon emissions in Northern Ireland; it is also the only sector where carbon emissions have increased – by 30% from 1990 levels.

There can perhaps be some confidence that a combination of regulation and investment by the automotive industry will see electric cars supplant petrol and diesel vehicles by the end of the decade. But again, the investment requirement for this sector is huge – £11bn by the CCC’s estimate.

Housing also presents a major challenge, with our poorly insulated housing stock requiring a vast programme of retrofitting. This is also likely to be an area where questions of fairness and burden sharing are acute.

With transport we can already see the private sector, in the form of car companies, making investments based on commercial decisions and regulatory realities. With power generation the decarbonisation costs can be shared across the energy system – consumers will be paying but not necessarily in a way they will directly notice.

Housing is different. If individual homeowners are told they need to spend between £6,000 and £16,000 to retrofit their house, they will sit up and take notice. Telling people that this will pay for itself over a 10 or 20-year period in reduced heating bills is not necessarily an easy sell.

It may be that governments here and elsewhere will have to set aside notions of moral hazard and provide some extremely generous grants across the board if they wish to avoid undermining support for net zero policies.

The Stormont consultation is alive to this. Its first principal is that “affordability and fairness will be key considerations in all our policy decisions.” But it is waiting to be guided by Westminster on exactly what this will mean.

It notes that the Treasury is carrying out a review into how the transition to a net zero economy will be funded, including an assessment of the different options.

It is important to note that the CCC estimates that the vast investments required will start to deliver net financial savings for Northern Ireland from 2040 onwards. But getting to that point will require careful political management.