The complex reality of reducing emissions

The recent decision of a Dutch Court to force Shell into a mammoth 45 percent reduction in its emissions in less than nine years would have been unthinkable a decade ago. In 2021 however, there were few who were genuinely shocked.

The truth is that the climate change message is no longer merely a slogan on a placard, a hashtag or a vague bullet point in a political manifesto. Legal precedents are being set right now. Decisions of this magnitude will soon become the norm rather than the exception.

While the plan for the first deep mine in decades (in Whitehaven, UK) was approved by Cumbria County Council in October 2020 it was subsequently reversed, despite coking coal being the only currently viable means of manufacturing steel.

Shell’s mandated reduction equates to roughly four times Britain’s annual emissions. This is just the latest in a series of landmark rulings that have the potential to create significant change in our industry and society. The same can be said of the recent decision in an Australian Federal Court where the government were ruled to have a legal duty not to cause harm to young people when approving mining projects.

Outside the courtroom, pressure is mounting on banks around the world to sever ties with fossil fuel investments. While the plan for the first deep mine in decades (in Whitehaven, UK) was approved by Cumbria County Council in October 2020 it was subsequently reversed, despite coking coal being the only currently viable means of manufacturing steel.

Clearly, nobody could deny that the growing green consensus is a bad thing. Far from it. The climate emergency is very real, and action has to be taken. However, in an environment where the government has provided no specific guidance and legislation, there is a risk that the vacuum is being filled by those who do not understand the complexities of the challenge ahead.

In turn, this rhetoric and the action that it prompts is creating an environment where it could become harder for us to meet our goal of becoming a net zero economy within less than 30 years.

Solving the image problem

Smart metering, the government’s Green Deal and the Green Investment Bank are all well meaning initiatives that have enjoyed varying degrees of success, but none have proved truly transformational.

What we need now is an implementation strategy, not just high-level aims and objectives.

The UK government’s ten-point plan provides a real framework for change. It could be said that it lays out the monopoly board for what must play out. However the government is not merely there to provide the board; it needs to set the rules too. This requires leadership, some risk taking, and some coordinated thinking.

Our research shows that only 45 percent of the British public feel that governments are doing enough to help us meet our net zero obligations by 2050. This is a genuine problem.

Without government leading from the front, the weight will fall on the hydrocarbon majors’ shoulders. We must ask if this is entirely fair? Yes, they have a big role to play, but we must also remember that this industry is one of the primary reasons why our society enjoys the prosperity we share today (for right or wrong). To foist the need for accelerated change solely at their door will not work, as this is a multitiered and highly complex challenge.

Our research shows that only 45 percent of the British public feel that governments are doing enough to help us meet our net zero obligations by 2050. This is a genuine problem.

Governments need to create contemporary regulatory systems that set the rules for energy transition, giving businesses and consumers clear expectations for what needs to happen and when. Without this framework, the accountability or ownership for delivering the required change in our energy behaviours will fall flat.

The Public (voters, consumers, change agents) need to know which technologies, laws and incentives are available to them and how they are going to help solve the problem of climate change. When people better understand the rules, they are playing by and the outcome sought, making it much easier to manage expectations and drive the behaviors that have the greatest impact.

Attracting the right investment

The same can be said of the investment community. For far too long, investors have been flying relatively blind when it comes to the regulatory framework in which they are supposed to be working. As we all know, a key to attracting funding is certainty and there is too little of that around at present.

A strong regulatory framework paired with a clear vision will not only attract public support but will also encourage funding. Foreign direct investment for the projects needed to get us to ‘net zero’ is out there. However, without surety as to whether or not projects are bankable now and secure into the long term, attracting the enabling investment will always be a struggle.

If we are to correct the climate path we are on, everyone has a part to play. Shell and their counterparts are certainly part of this but arguably more so are governments and the public. Our governments should lead in setting the pathway to a new future, acting as an example for the public and organisations to follow. This way, we can all adapt our behaviours to drive change in the energy transition and make sure we find the right path towards solving this global issue.