Climate crisis could wipe out 1% of GDP by 2045, UK Government admits
The UK Government is forecasting that, without better plans to improve climate resilience, billions of pounds will be wiped off of national GDP in the coming decades, with the costs of inaction set to outweigh the cost of action by 2045.
The forecast is a headline finding of the UK’s Third Climate Change Risk Assessment, which has been published today (17 January) by the Department for Food, the Environment and Rural Affairs (Defra).
Building on the forecasting and advice on climate risks and resilience published by the Government’s advisors, the Climate Change Committee, last June, the new report assesses dozens of risks the UK could face due to the global temperature increase and related changing weather patterns through to 2050 and 2080. It outlines likely risks in two warming scenarios of 2C and 4C.
For eight of the risks assessed, economic damages will exceed £1bn each year by 2050, even if warming is limited to 2C. A further 36 risks will bear annual When all risks are assessed, the total hit is likely to be at least 1% of GDP in a 2C scenario.
2C is notably the less ambitious pathway detailed in the Paris Agreement. Island States and other most-affected nations and regions have stated for years that it is not ambitious enough, and that 1.5C should be the absolute limit. The agreements made at COP26 are estimated to be aligned with a temperature pathway in the region of 1.8C to 2.4C.
Risks classed as very high in terms of cost include the loss of natural carbon stores; water scarcity; the risk to agricultural productivity; coastal erosion; risks to infrastructure networks and water services; risks to health and wellbeing from high temperatures; risks to buildings and communities from flooding and risks to finance, investment and insurance.
The report also notes that the UK will be exposed to risks from the climate crisis overseas, as a net importer of goods including food, and as home to a major international investment community. Risks affecting international trade routes are forecast to grow more severe with each passing decade and the report also notes risks from potential international, violent conflict due to the climate crisis reaching new highs from 2050 onwards. This would be worse in a 4C world than a 2C world, with risks of wars over resources exacerbated.
The UK has often been accused by green groups of failing to account for emissions generated by its international activities, and the climate risks facing international supply chains and investment portfolios.
According to the new report, some of the UK’s most pressing challenges to effective climate adaptation are a lack of awareness on climate risk; disagreements over who is responsible for responding to risks and “the complexity” of adapting when the future is not certain. It also recognises the need to avoid a piecemeal approach, instead applying solutions across the whole system.
The report has already been presented to senior policymakers at other Government departments, including the Department for Business, Energy and Industrial Strategy (BEIS), the Department for Education (DfE) and the Department for Levelling Up, Housing and Communities (LUHC).
The report commits Defra to laying a new National Adaptation Programme in Parliament in 2023. This report will build on its two predecessors, as well as the UK’s first Climate Adaptation Communication and England’s current £5.2bn flood defence spending plan.
Little has been given away about what the Programme is likely to include at this stage. Climate Adaptation Minister Jo Churchill said Defra recognises the need for a “significant increase” on current levels of action, underpinned by “ambitious and robust policies”.
Green economy reaction
Reacting to today’s report from Defra, the Aldersgate Group’s head of public affairs and communications, Signe Norberg, said: “The report rightly emphasises the need for urgent and coordinated action to both reduce emissions and adapt the UK’s economy and infrastructure to the levels of climate change we are already locked into. In practice, this means that the Government’s work on implementing the Net Zero Strategy, enacting long-term nature improvement targets under the Environment Act, and creating the next National Adaptation Plan all need to be carried out at pace and in a joined-up way.
“Investing in a healthier natural environment is key to making the UK more resilient to the impacts of climate change and it will be critical that the Government puts forward ambitious and credible targets under the Environment Act as well as a new and comprehensive Environmental Improvement Plan later this year. The UK must also continue its efforts to deliver rapid emission reductions across the economy and beyond just the power sector. As set out in the Aldersgate Group’s Net Zero Strategy Policy Tracker, key policy gaps remain in crucial areas, such as energy efficiency, agriculture and land use and skills.
“The Government is right to want to increase awareness of climate risk at the local level in future assessments but this ambition must be paired with further financial and policy support for local authorities, so they can play a significant role in tackling climate change.”
Research by the Trades Union Congress (TUC) in 2019 revealed that the average council in England was able to spend £7.8bn less annually on key services than it would have been in 2010, primarily due to real-terms cuts in central Government funding. Regarding net-zero specifically, the Government’s approach to providing funding and open-source tools – and to opening communication – has been slammed by the National Audit Office (NAO) and LUHC Committee.
Adding to Norberg’s comments, the Energy and Climate Intelligence Unit’s (ECIU) lead for climate and land programmes Matt Williams said: “The damage caused to the UK by climate change will be greater than the investments needed to avoid harmful levels of warming. This will include impacts on our British countryside, the carbon locked up in trees and peatlands, and on food production with potential rises in food prices. Agriculture and land have been singled out as the weak link in the Government’s net-zero plan. It’s clear that farmers and the natural world need help not just in cutting emissions, but in adapting to the impacts of climate change too.”
The Net-Zero Strategy provided no new mandates or policy supports for farmers. Defra has begun implementing the new payment schemes promised under the Agriculture Bill, but is behind in publishing a new Land-Use Sector Deal. The CCC estimates that land use accounts for around 12% of the UK’s annual emissions.
The CCC has also issued a response to the report. The chair of the organisation’s Adaptation Committee Baronness Brown said: “We strongly welcome the Government’s Climate Change Risk Assessment which is based very closely on the CCC’s independent view of UK climate risk.
“But agreeing on the risks is one thing – taking action to address them is another. Building resilience to a cocktail of climate impacts facing our country, including flooding, drought, heat exposure and extreme weather events, is a mammoth task and we’re falling well behind. We look forward to seeing the Government’s action plan to shift the dial and deliver a well-adapted UK.”
Defra has laid in Parliament the UK’s third climate change risk assessment, drawing on our advice and the #CCRA3 analysis.
— Chris Stark (@ChiefExecCCC) January 17, 2022
The Association for Renewable Energy and Clean Technology’s (REA) chief executive Dr Nina Skorupska said: “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. Rapidly accelerating the energy transition isn’t just an environmental imperative, but an economic one too.”
“We need to urgently see a new raft of measures to help accelerate the energy transition, such as the adoption of six-monthly CfD auctions for all pots, bringing forward the 5GW hydrogen production target, and stepping up plans for industrial and non-domestic heat decarbonisation.”
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