When it comes to much of the policy discussion surrounding net zero (including a Resolution Foundation event on the subject yesterday), it is important to recognise that the focus is normally on a definition of emissions that does not include those embedded in the imports of goods and services.
This, as we will show later, is a very important omission for an open economy like the UK, where emissions embedded in imports now comprise over 50% of the carbon footprint.
Moreover, the focus on net zero on the so-called territorial definition enshrined into law misses the bigger point that even if UK emissions continue declining, they are rising elsewhere; as more importantly are CO₂ gases in the upper atmosphere (see chart).
This all makes more frequent and potentially worse climate related events more likely, almost regardless of what happens in the transition to net zero in the UK.
Logic would dictate that there should be much more discussion in the UK about managing the risks associated with climate change, than anchoring on a narrow measure of net zero. This also requires investment and a very much joined up long-term regional policy response, if the UK is to more successfully adapt to climate change.
A recent column published on VoxEU/CEPR also highlighted that when it comes to the economic and social costs associated with climate change, much conventional analysis was underestimating the risks because it only focused on what was happening at a local level, or comparing one economy with another. In fact, the authors concluded that the costs could be five or six times higher than is often suggested (see here).
To quote the authors (Adrian Bilal and Diego Känzig), “But local temperatures and global temperature are not the same things. For instance, global temperature includes ocean surface temperatures, while local temperatures do not. When the oceans warm, evaporation, air humidity content, and precipitation regimes can change in much more dramatic ways than when a given country happens to be a little warmer in a specific year.”
To put numbers on it, the authors suggest that a 1°C increase in global temperature could lead to a 12% decline in output at its peak, not the 1.5% decline in output suggested by a 1°C increase in local temperature by more conventional analysis.
All such figures come with a large margin of uncertainty, but the point remains that for any government wanting to remain in office for more than one or two Parliaments, there should be much more focus on adapting to, and managing the risks associated with climate change, not simply net zero. Ultimately, this is not just a story about managing risks and reducing costs, but potentially boosting productivity.
What then of the UK’s carbon footprint? Please consider becoming a paying subscriber to continue reading on, where we summarise a much more detailed note on UK emissions that we published last week.