Net zero

Net zero

Reported by Ryan Francis, CSaP Policy Intern

The final panel session of the Centre for Science and Policy’s (CSaP) annual reception 2021 discussed net zero ambitions. It was chaired by Dr Rob Doubleday, the Centre’s Executive Director with panellists; Dr Christina Peñasco, Lecturer in Public Policy, Cambridge and Dr Matthew Agarwala, Economist at the Bennett Institute for Public Policy, Cambridge.

Dr Peñasco began the session by providing an insight into decarbonisation from a policy perspective, this was followed by Dr Agarwala’s economic analysis of the effects of global warming on the UK and global financial systems.

Click on the image below to listen to the discussion

Dr Peñasco introduced her current research project, which consists of building a decarbonisation policy evaluation tool. In short, there is a lot of evidence on the effects of decarbonisation policies on the economy, innovation, environment, and competitiveness, however this information is not easily accessible nor available in one location. Dr Peñasco’s project aims to compare, share, and centralise all of this evidence by creating an open access platform to keep decision-makers, academics, and the public informed about the technological and environment impact of net zero carbon policies.

She highlighted that from an environmental perspective, decarbonisation policies have a positive impact on their primary goals; reducing emissions, and improving technologies. However, the picture is very different with low-income households and small and medium-sized enterprises (SMEs); for these, decarbonisation policies are perceived negatively due to economic factors. Dr Peñasco argued the design of the polices is crucial in turning these negative feedbacks into positive environmental impacts. She expressed that public and society must be at the centre of decarbonisation policy making, which is particularly pertinent considering the United Nations Climate Change Conference (COP26). She said there are more benefits from bottom-up, as opposed to top-down approaches to decarbonisation and tackling climate change.

How can we reconcile the short-term financial costs of policies with the long-term environmental benefits?

The second half of the session began with Dr Agarwala’s presentation of The Bennet Institute’s Wealth Economy project. By producing a core economic analysis of the interaction between assets in the economy, his project aims to assess wellbeing on various scales of a country, individuals, and local communities. Dr Agarwala’s research aims to produce a public sector balance sheet, which is a complete set of fiscal accounts of a country. He emphasises their usefulness and finds it surprising that the UK government doesn't have or use one. Dr Agarwala stated that public balance sheets allow one to forecast the fiscal future of a country; and with this, he argued, the future effects of decarbonisation policies can also be made more cogent and clearer. For example, the introduction of electric vehicles cars will result in the government receiving less tax revenue from fuel duty. With a public balance sheet, economists can predict the future monetary shortfall, allowing the treasury to proactively anticipate, and respond to this change.

How much is the UK debt going to cost us per degree of global warming?

Dr Agarwala and his team created the world’s first carbon-smart credit rating. Without substantial and rapid investment into decarbonisation, this model predicts that 63 countries (including the UK) will lose at least a notch off their sovereign credit rating, making it more costly to borrow. Significantly, this has a cascading effect: when a country’s cost of borrowing increases, so does cost of borrowing for banks, financial institutions, and businesses within that country. This has a negative effect on competitiveness and innovation, as businesses need capital to grow and invest, to develop new technologies, and meet net zero carbon emission targets.

Other sessions at the annual meeting included: Levelling up and Child development, learning, and mental health.