CCC: UK must leverage up to £10bn of climate adaptation investment each year
The UK’s independent climate advisors have rapped the Government for failing to show leadership on climate adaptation and, by extension, leverage private investment in improvements to infrastructure and housing.
The Climate Change Committee (CCC) has today (1 February) published a new briefing paper to policymakers on ‘investment for a well-adapted UK’ in terms of climate change. The body has repeatedly warned that a certain level of change is already ‘baked in’ for the UK, with risks to become more severe and frequent in any emissions trajectory but the most severe impacts expected at levels exceeding the Paris Agreement’s 1.5C and 2C trajectories.
The new report states that, by some estimates, at least half a billion pounds, and up to £1bn, will need to be funnelled into adaptation in the UK each year during the coming ten years. A far higher figure of £10bn is floated by the CCC itself.
CCC Adaptation Committee chair Baroness Brown has warned that “adaptation in the UK remains chronically underfunded and overlooked”.
The starting point for unlocking more funding from public and private sources, the new CCC paper argues, would be the Government “clearly defining its priorities” – as it has with climate mitigation in the long-term through its legally binding net-zero target. The UK Government is due to publish an updated National Adaptation Programme this summer and the CCC says this is an opportunity to set clear goals along with associated sub-targets and metrics.
To ensure that the goal is converted into action, the CCC is recommending that increased government spending is paired with climate adaptation being embedded within the mandates and strategic priorities of regulators and used as a filter for major policy decisions. Regulators named include Ofgem (power and utilities) and Ofwat (water). Ministers are, notably, currently rowing about whether Ofgem’s climate mitigation remit should be aligned with the UK’s updated climate targets.
The CCC is also recommending that public financial institutions, such as the UK Infrastructure Bank and UK Export Finance, are given an adaptation remit and requested to draw up adaptation finance strategies. Strategies should include measures for working alone and collaboratively, with the overarching aim of ensuring that “no viable UK climate adaptation project fails for lack of finance or insurance”. They should also be backed with additional funding.
Private sector involvement
The CCC warned in 2021 that all climate risks it measures for the UK have increased in urgency since 2016. It classes some 60% of the risks assessed as requiring the highest level or urgency.
Then, in late 2022, the Joint Committee on the National Security Strategy accused the UK Government of a “severe dereliction of duty” due to a lack of responsibility for improving the climate resilience of critical infrastructure like power distribution networks, transport networks and communications infrastructure.
Both reports pointed to a lack of leadership from the Government, which, in turn, was leaving private sector entities unsure of the role they have to play.
The CCC’s new paper states that the Government must invest in flood defences, transport infrastructure and public buildings like schools and hospitals. It states that private investment “may be more appropriate” in other places, but that it still faces barriers such as a lack of blended finance from the Government and a focus on short-term profits rather than wider benefits which come to being over the longer term.
The paper calls on the Government to commission a full review of how climate impacts in the UK will impact the nation’s macroeconomic performance and public finances, giving the private sector a clearer picture of the risks of inaction.
Also raised is the need for increased public-private finance blending for innovation in adaptation and the potential for the Government to consider mandating high-quality adaptation plans from larger businesses – as it will be doing for climate mitigation plans through the Just Transition Plan mandate.
Another key focus of the paper is the forthcoming Green Finance Strategy. The CCC would like to see the Strategy clarifying where the Government expects adaptation actions to be funded through public sources and where private investment is expected, over a five-year period. It also wants the Green Taxonomy, which will categorise investment activities, to do so on an adaptation basis as well as looking at mitigation. The Green Finance Strategy is due later this year.
Summarising the CCC’s report, adaptation committee member Ben Caldecott said: “The UK faces growing climate impacts and needs to rapidly increase public and private investment in climate resilience. These investments will reduce future economic damage caused by floods and heatwaves, and can enhance growth and improve the sustainability of the public finances over time.
“Government funding and public financial institutions have a critical role to play in unlocking private investment but we also need others to play their part. Regulated industries, like the railways and water sector, need to have updated mandates so they can increase investment in climate defences. Financial regulators and government policy must push companies and financial institutions to do much more, including through mandatory adaptation planning and enhanced supervision.
“Integrating climate risk into economic and financial decision-making across society is essential for urgently needed investments in our national climate resilience to materialise.”
The report from the CCC comes shortly after the World Economic Forum (WEF) named natural disasters and extreme weather events the second-biggest global risk for the next two years, with only the rising cost of living outdoing this risk. The WEF also ranked failed climate adaptation as the seventh-biggest risk for the near term and the second-biggest risk for the coming 10 years.
Hear from CCC chair Lord Deben at edie 23
Taking place in London on 1-2 March 2023, edie’s biggest annual event has undergone a major revamp to become edie 23, with a new name, new venue, multiple new content streams and myriad innovative event features and networking opportunities.
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CCC chairman Lord Deben will be speaking on Day 1 of edie 23 ( March 1) to deliver a keynote speech on ‘delivering net-zero in a time of crisis’, with a focus on the Government’s need to update its ‘unlawful’ Net-Zero Strategy at this challenging time economically. Click here for more details on his speech.
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