The government must step up support for renewables after new forecasting revealed 2°C warming would reduce GDP by 1% a year by 2045, the Association for Renewable Energy and Clean Technology (REA) has said.
This forecast is part of the government’s Third Climate Change Risk Assessment, which assessed dozens of impacts the UK might face due to global temperature increases through to 2050 and 2080, detailing the likely risks in warming scenarios of 2°C and 4°C.
These risks included water scarcity, loss of agricultural productivity, risk to health and wellbeing, coastal erosion and flooding and risks to finance, investment and insurance.
For eight of the risks assessed, economic damages will exceed £1 billion each year by 2050, even if warming is limited to 2°C.
The REA said that the report underlines the substantial economic hit that will happen if key net zero targets aren’t met, adding that measures such as six monthly CfD auctions therefore need to be quickly implemented.
This follows the trade body calling for six monthly CfD auctions with a clear rolling timetable and sufficient budgeting in July 2021.
Additionally, the government should bring forward the current target of 5GW of hydrogen production capacity by 2030 and step up plans for industrial and non-domestic heat decarbonisation.
“The report is clear – the size of investment needed to safeguard our future is modest in comparison to the damage caused by the worst climate change scenarios should we fail to reduce emissions,” said Dr Nina Skorupska CBE, chief executive of the REA.
The costs of transitioning to net zero have been the subject of much discussion, with HM Treasury claiming in 2019 that it would cost over £1 trillion, 40% more than the costs estimated by the Climate Change Committee the same year.
While both figures were well within the Climate Change Act’s economic cost of 1 – 2% of GDP, the Treasury estimates led to the BEIS Select Committee to request details about the sums and Ed Miliband – currently shadow climate change and net zero secretary – to label the sums as “slightly disturbing”.
However, in the Treasury’s Net Zero Review – released in October 2021 – the main theme to emerge was the difficulty of forecasting the costs of decarbonisation.
Overall, the review came to the conclusion that the costs of global inaction significantly outweigh the costs of action, with higher temperatures and an increased prevalence of extreme weather events potentially leading to reduced productivity growth in the UK and significant damage to UK capital stock.
