Utility Week

16 | 27TH SEPTEMBER - 3RD OCTOBER 2019 | UTILITY WEEK Policy & Regulation Market view T he path from the United Nations Gen- eral Assembly (UNGA) to the fate of individual utility companies may not be an obvious one. But it exists. The headlines will tell us next week that Boris Johnson is in New York to discuss Brexit and the US free-trade deal that is so totemis- tic to Leave cheerleaders. So much is true. But he will also be talking climate change. As an occasional historian it will not escape Johnson's notice that this is an auspi- cious year for him to be doing so. Thirty years ago almost to the month, Margaret Thatcher devoted her annual UNGA address entirely to global environmental perils. In the pro- cess she became the first leader of any major nation to call for a UN climate treaty (which came to pass three years later). What Thatcher started, Johnson is set to continue. For the first time, Britain will next year host the annual UN climate summit. It is the most important since the Paris gathering of 2015, at which for the first time all nations pledged to constrain their greenhouse gas emissions (and by implication their fossil fuel use). They also pledged to bring green- house gas emissions to net zero in the sec- ond half of the century; and since then, they have all accepted that climate science now means doing so faster, by 2050. It will not come as a surprise that the extent of governments' collective talk has so far been bigger than their action. Greenhouse gas emissions are rising when, according to the Intergovernmental Panel on Climate Change, governments should be halving emissions by 2030 en route to net zero. And oil companies, and indeed the International Energy Agency, continue to predict that when 2050 comes around, net zero will still be decades away. Nevertheless, history shows that energy utilities carry no immunity to decisions made inside the UN climate process. With- out the agreement of Thatcher's treaty at the Rio Earth Summit, we would not have had the Kyoto Protocol. Without the Kyoto Protocol the EU would not have set up an Emissions Trading System, nor would the UK have implemented a carbon floor price (CFP) to make up for the scheme's deficiencies. And without the CFP, British energy utilities would be burning a lot more coal than they are now. True, it has typically taken years for implementation of UN agreements to trickle down into practice-shi˜ing economic sig- nals. But two factors mean that the speed of change is likely to speed up. Growing visibility of the problem The first is the growing visibility of climate change impacts in all corners of the world, not least in the UK. Last summer's heatwave was made signif- icantly more likely by global climate change; in other words, by the fossil fuels that utili- ties burn. Although some governments pre- tend this is not so, people are smarter than that. So it is that a whopping 85 per cent of Britons now profess themselves concerned about climate change. Streets are regu- larly blocked by climate activists aged nine to 90. And the head of Opec, no less, has described a movement started by a single Swedish schoolgirl as the biggest threat to his business. To believe that this increasingly boister- ous concern will not translate to policy- making is surely as blinkered as denying climate change itself. Technological change The second factor is that the transition to a clean economy is more affordable than ever. The fast-falling costs of renewables, batter- ies and electric vehicles will not be news in these pages – neither is it news to most governments. With these technologies come huge disruption of business models. Take a look at the South Australian electricity sys- tem, where a grid powered by 100 per cent renewable generation looks an increasingly likely destination – and that is happening in a country that is basically without a climate change policy. These two trends – necessity and feasibil- ity – are intertwined like the dual strands of DNA. That is why the UK is now committed to reaching net zero carbon emissions by 2050, with France, Norway, Sweden, Iceland, Denmark already in the same camp and the entire European Union likely to join soon. Which brings us back to next week, and Boris Johnson's first big climate change set- piece on the world stage. Johnson goes to New York as the leader of a nation with a world-leading net zero target and the means to deliver it, which wants to put its name to a summit that will mark a major milestone in efforts to halt climate change. His citizens are making increasingly vociferous demands, and yet his govern- ment's policies are not currently going to deliver net zero or anything close. Unless he squares this circle, and quickly, the green approval engendered by the net zero target and the successful summit hosting bid will have turned to street-occupying opprobrium by the time the Glasgow summit actually opens. Squaring the circle can only mean policies that accelerate the national energy transition from brown to green. So Johnson's words in New York next week and those that follow in the coming 14 months absolutely matter to anyone whose business involves either burning fossil fuels or clean alternatives. Mrs Thatcher warned 30 years ago that the world was "conducting an uncontrolled experiment with the atmos- phere"; Boris Johnson leads a government committed to ending that experiment, and his is not the only one. Richard Black, director, Energy and Climate Intelligence Unit Boris Johnson must put net zero on his US agenda Next week the prime minister travels to New York to talk Brexit and trade. Will he also be talking about emissions? Richard Black argues that it is an opportunity that should not be missed.

• Cover