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SteelZero: Major users unite to boost demand for net zero steel

SteelZero: Major users unite to boost demand for net zero steel

Eight leading companies sign up to new initiative from The Climate Group designed to accelerate the transition to a cleaner steel industry

A group of construction, engineering, and energy companies have today come together to launch a major new initiative designed to boost fledgling demand for low carbon steel.

Dubbed SteelZero, the new programme has been developed by certification body ResponsibleSteel and NGO The Climate Group with a view to emulating the success the latter has enjoyed with its RE100, EV100, and EP100 campaigns, which encourage corporates to source renewable power, electric vehicles, and energy efficiency improvements.

SteelZero aims to take a similar approach with signatories to the initiative making a public commitment to transition to procuring, specifying or stocking 100 per cent net zero steel by 2050.

The campaign is the first of its kind to bolster the demand-side of the emerging green steel market and is designed to provide a clear signal to the growing number of steel manufacturers working on decarbonisation projects that there is significant pent up demand for zero emission steel.

The founding members of SteelZero include renewables powerhouse Orsted, property giants Grosvenor Britain and Ireland and Lendlease, and engineering and construction specialists WSP UK, Mace Group, and Multiplex Construction Europe. They are joined by steel fabrication and construction firm BHC Ltd and leading UK constructional steelwork company Bourne Group Ltd.

In addition to the net zero procurement target, members of SteelZero will also be invited to join working groups to assist them and their suppliers in developing a roadmap to fulfil commitments to develop net zero steel.

Jenny Chu, head of energy productivity initiatives at the Climate Group, said the new group could have a significant impact on global decarbonisation efforts.

"The steel industry is one of the largest contributors to climate change," she said. "We need to see much greater investment and progress to cutting emissions, but steelmakers also need to know their customers will buy new, cleaner products. By harnessing the collective purchasing power and influence of major steel-using organisations, SteelZero will send a critical demand signal that can shift global markets and policies towards sustainable production and sourcing of steel."

Her comments were echoed by Alison Lucas, Executive Director at ResponsibleSteel, who argued that "corporate and public sector demand for responsible, zero emissions steel has a critical role to play in reducing global emissions, encouraging decarbonisation technologies and driving lower emissions from recycled steel and the re-use of steel-based products".

A growing number of steel and metals companies have set net zero emissions targets in recent months, with many stepping up investment in lower carbon manufacturing techniques such as the use of renewable power to undertake steel recycling.

However, despite technologies existing for production to be decarbonised, steelmaking remains one of the biggest emitters of CO2 globally. Total greenhouse gas emissions from the sector alone account for between seven and nine per cent of direct emissions from the global use of fossil fuels and experts fear emissions from the sector could continue to rise as demand increases over the coming decades.

At the same time a recent report from investor-backed NGO CDP estimated that 14 per cent of steel companies' potential value is at risk if they are unable to decrease their environmental impacts, while investors are already raising concerns about how the steel industry can become compatible with the goals of the Paris Agreement. 

Building on the Ten Point Plan

Building on the Ten Point Plan

Eliot Whittington of The Prince of Wales’s Corporate Leaders Group presents a new analysis that suggests the government's welcome plan to accelerate the Green Industrial Revolution will not yet put the country on track to meet its net zero goals

Can Britain - home of the first industrial revolution - also play host to a second, 'green' industrial revolution? This is the question that the Prime Minister sought to answer with the announcement of his Ten Point Plan setting out measures to transform swathes of the UK economy. With this announcement, Boris Johnson unveiled a clear commitment to the green economy that is virtually unprecedented in its scale and breadth. Covering the whole economy, and providing billions in public funding, this plan promises to support British innovation, unlock investment and deliver better homes, cleaner air and a stronger economy. Founded to communicate the case that climate action is not only essential for security and stability, but also can and should be well aligned with future economic opportunity, The Prince of Wales's Corporate Leaders Group (CLG) has positively welcomed the Prime Minister's plan as an essential step forward. The CLG believes it provides firm foundations on which to continue to build a stronger, greener and more inclusive UK economy. This is why we wanted to understand the full implications of the plan, and so commissioned Cambridge Econometrics to explore the economic, employment and emissions impacts of the policies within it. Their analysis shows that, just as the government says, the Ten Point Plan will create jobs and save emissions, while growing the economy. They also show that while the Ten Point Plan will put the UK on track for its current 2030 climate target, more will need to be done to reduce emissions further and put the UK on track to meet its 2050 target of net zero emissions. Firstly, it is worth looking at the impact on the whole economy of the Ten Point Plan. By supporting private investment and reducing the UK's dependence on fossil fuel imports, the policies contained in the plan clearly generate additional economic growth - delivering an economy that is almost 1.8 per cent bigger than baseline expectations, or more than £40bn larger that it would be otherwise. Unsurprisingly, this increased economic activity also translates to increased employment. Cambridge Econometrics' modelling effectively bears out the government's analysis of around 250,000 new jobs being created over the next ten years, and also shows that these jobs are not going to disappear - but will remain over the following decade. On emissions there is also great progress. The analysis shows that the Ten Point Plan will deliver significant emissions savings over the next decade and beyond, cutting over 420 million tonnes of CO2 by 2032 - significantly more than the 180 million tonnes the government estimates. The most effective policies and measures are the increased commitment to offshore wind, and the ban on internal combustion engines, both of which will dramatically reduce UK emissions. Currently we believe the UK is on track for a less than 50 per cent cut in emissions from the 1990 levels in 2030. The UK currently has a 2030 target of a 57 per cent cut. The policies in the Ten Point Plan alone clearly put us on track for this target, delivering cuts that by 2030 would deliver a nearly 60 per cent reduction from 1990 levels. Unfortunately, as the CLG has argued recently, the UK's current 2030 target is insufficient to put us on track to achieve net zero by 2050. Our analysis is that a target of at least 70 per cent would be needed if the UK is to match the global ambition of halving 2018 emissions by 2030 which would be in line with keeping 1.5C of warming in reach. In any case the signs are good that the Prime Minister is about to commit the UK to a stronger 2030 target as he announces the new UK Nationally Determined Commitment (NDC) as required by the UN climate change process. As the Prime Minister does so he can feel confident based on this analysis that his Ten Point Plan has gone a long way to delivering on that new, stronger target. He can also feel confident that those measures and actions will support the UK economy, driving investment and innovation while creating jobs. As the government builds on the Ten Point Plan with other policies and measures it has promised to deliver - such as the Energy White Paper, the Transport Decarbonisation Plan, the Heat and Buildings Strategy, the Tree Strategy and more - it will need to go further and build on its existing announcements. Industrial revolutions take more than a single set of policies, no matter how impressive. But as it does so it will continue to receive strong support from the business community that knows that the UK can and must be a leader in the zero carbon economy of the future. A new green industrial revolution is very much within reach, and while business is working hard to deliver it, it will look to see the same clear and ongoing commitment from government. Eliot Whittington is director of The Prince of Wales'' Corporate Leaders Group.

Corporate giants urge Prime Minister to boost UK's 2030 climate target this year

Corporate giants urge Prime Minister to boost UK's 2030 climate target this year

Appeal from Tesco, Heathrow, BT, others comes as fresh modelling highlights how government’s 10 Point Plan fails to deliver emissions reductions required to meet net zero goal

More than 75 of the UK's leading businesses are lobbying the Prime Minister to substantially enhance the UK's existing 2030 climate target to align it with a net zero pathway before the end of the year, warning the current carbon budget falls short of the emissions reductions required to meet global climate goals.

In a letter sent to Prime Minister Boris Johnson this morning, the bosses of Heathrow, Unilever, Coca-Cola, BT, and Tesco have urged the government to establish an enhanced 2030 climate goal as part of a new national climate action, or Nationally Determined Contribution (NDC) in the UN jargon, ahead of a major climate summit set to be held in mid-December.

The UK government has maintained that it expects world leaders to bring forward plans to cut carbon emissions and set net zero targets at the forthcoming Climate Action Summit it will host alongside France and the UN on 12 December - the date of the fifth anniversary of the Paris Agreement. All signatories of the landmark treaty have been invited to attend the virtual event and the hope is that significant numbers of governments will present updated decarbonisation plans.

Today, leaders from some of the UK's largest businesses argued the UK should lead the way and set an example to other nations by building on the country's long term net zero goal and unveiling a medium term target that aligns with the Paris Agreement's more ambitious goal of limiting temperature rise to 1.5C.

"As we stand a year away from the start of the COP26 Climate Summit, and five years on from the Paris Agreement, we believe there is an opportunity for the UK to demonstrate the right level of ambition to guide a green recovery and secure international momentum," the letter coordinated by the Prince of Wales's Corporate Leaders Group (CLG) states. "As the UK calls on other governments to set their own increased NDCs, it has a unique opportunity to catalyse action globally and lead the way for other countries to reflect this level of ambition. We hope you will announce an ambitious UK NDC before the end of the year."

As with all countries signed up to the Paris Agreement, the UK is expected to prepare and communicate a new, more ambitious 2030 climate goal by the close of this year, as current pledges under the treaty are not strong enough to keep the world within 2C global warming limits, let alone 1.5C. 

Today's appeal from business is the latest in a flurry of recent calls from health professionals and academicsbusiness groups and backbench MPs for the government to deliver on its commitment to the treaty by setting out an enhanced NDC before the end of the year.

The government is widely expected to submit a new plan, but concerns remain as to whether or not it will set out a decarbonisation trajectory that is in line with the UK's net zero target.

The business alliance, which also includes Zurich, BT, Sky and ScottishPower, has warned that the UK's current 2030 goal is not aligned with the 2050 net zero ambition enshrined into UK law more than a year ago, and that the Prime Minister's recently launched Ten Point Plan for a Green Industrial Revolution also falls short of delivering the emissions reductions required to meet net zero.

The plan - which sets out how the government intends to ramp up low emission solutions such as hydrogen, carbon capture and offshore wind while slashing emissions from road transport by banning the sale of new diesel and petrol cars by 2030 - is expected to result in emissions reductions of nearly 60 per cent on 1990 levels by 2030, rising to 70 per cent by 2035, according to modelling from Cambridge Econometrics published as part of a new briefing by the Prince of Wales's Corporate Leaders Group.

While the anticipated decarbonisation trajectory would meet the UK's existing 2030 target of a 57 per cent reduction on 1990 levels, it would fall short of putting the UK on track to meeting net zero by mid-century, the analysis warns, and as such the experts suggest the UK set a fresh 2030 target of at least a 70 per cent emissions reduction on 1990 levels to accelerate climate action.

Eliot Whittington, director of the CLG, emphasised that a "substantial and realistic" 2030 emissions target would not only generate jobs, boost the economy, and chart a pathway to net zero, it would establish the UK as a global climate leader.

"The Prime Minister's recent Ten Point Plan has set out an unprecedented set of measures to credibly drive change across the economy towards decarbonisation, building new industries and restoring our economy," he said. "To secure the UK's leadership position on climate change the government can build on these actions to set us on the right path to achieving climate neutrality in the next 30 years."

Meanwhile, Keith Anderson, chief executive of ScottishPower, said that a 70 per cent 2030 reduction target would galvanise business action in support of the longer-term net zero goal. "Setting an ambitious target of 70 per cent by 2030 would be a clear signal to investors that the UK is ready to build back greener and that it's happening now," he said. "This level of ambition would not only inject real leadership in the build-up to COP26, but also reflect the high levels of public concern on climate change, something that has only grown stronger over the course of this challenging year."

In the letter, the businesses have called on the Prime Minister to ensure that any new target is accompanied by "a comprehensive, just and inclusive delivery plan supported by all parts of government", in addition to initiatives that shore up the UK's resilience to future climate change impacts.

'Turning point': Global climate pledges could put world on 2.1C warming pathway, analysis suggests

'Turning point': Global climate pledges could put world on 2.1C warming pathway, analysis suggests

Paris Agreement climate goals now 'within reach' thanks to US, China, Japan, and South Korea joining net zero club, Climate Action Tracker estimates

Should the US, China, Japan, and South Korea deliver on net zero emission targets announced by their leaders in recent months, then the global climate change goals of the Paris Agreement could be "within reach", potentially putting the world on track to avoid the most catastrophic global warming scenarios during the second half of the century.

That is the conclusion of expert analysis today by the Climate Action Tracker (CAT) group, first seen by the BBC earlier, which underscores the huge implications that arise from the recent wave of net zero commitments from some of the world's biggest economies.

If the impact of all climate pledges made to date by global governments are totted up alongside those made by President-elect Joe Biden to put the US on a path to net zero by 2050, the average rise in global temperatures could be limited to 2.1C by the end of the century, CAT estimates.

The new trajectory would significantly close the gap towards meeting the global warming targets in the Paris Agreement to limit average temperature rise worldwide to 1.5C or 'well below' 2C by 2100, and would mean a massive recalibration of the global economy over the coming decades in favour of low and zero carbon infrastructure.

However, observers were quick to note that the projected temperature increases would only be realised if the world's largest economies deliver on their pledges to fully decarbonise within three or four decades - targets that require an industrial and technological transformation unprecendented in its pace, scale, and reach. Others also noted that national net zero goals frequently rely on the use of negative emission projects and technologies that have not been tested at scale and which some critics fear are currently unviable.

Previous recent estimates from CAT, based on contemporary global climate commitments, suggested the world was on a path to 3C by the end of the century, a level of warming which would have devastating ramifications for communities, economies, and biodiversity right across the planet. As recently as September, the group estimated the world was on course to warm by 2.7C above pre-industrial levels by 2100.

But in recent months China has pledged to achieve carbon neutrality by 2060, shortly followed by commitments from the leaders of Japan and Korea to reach net zero emissions by 2050, commitments that have provided a significant boost to decarbonisation efforts globally. Moreover, President-elect Biden has promised to put the US on a path to net zero emissions by 2050 following his election victory over Donald Trump last month, in what has been a galvanising moment for climate action worldwide.

Achieving such climate pledges made by world leaders remains a tall order and detailed decarbonisation plans for many of the countries to have set net zero targets have yet to be drawn up and given the green light. But if all the countries and states that have publicly committed to get net zero emissions formalise their targets it would mean over half of global greenhouse gas emissions would be covered by net zero goals.

"When you add all that up, along with what a whole bunch of other countries are doing, then you move the temperature dial from around 2.7C to really quite close to two degrees," climate scientist Bill Hare - who worked on the analysis - told BBC News. "It's still a fair way off from the Paris Agreement target, but it is a really major development."

Nevertheless, as a landmark UN report by the world's top climate scientists in 2018 made clear, even 2C of global warming by the end of the century would have dangerous ramifications for the planet, leading to volatile weather patterns, rising sea levels, and the likely extinction of many species.

There are also uncertainties as to when so-called 'tipping points' could occur as the planet warms - such as the melting of permafrost leading to the escape of long-dormant greenhouse gases into the atmosphere - which could lead to a further escalation of global warming.

Even so, CAT's latest analysis offers a glimpse of how the global climate could be stabilised at a time when governments are face growing pressure to come forward with more ambitious climate pledges in the run up to next year's crucial COP26 UN climate summit, which is set to be hosted by the UK in Glasgow.

Richard Black, director of the Energy and Climate Intelligence Unit (ECIU) think tank, said the rapid acceleration in climate action pledges from major global governments in recent months was "incredible".

"The scale of change in the last few months has been incredible, with pledges from the likes of China and Japan and the incoming Joe Biden team basically halving the gap between where existing policies were taking us and the 1.5C Paris Agreement target," he said. "The big caveat of course is that the majority of countries' pledges are just that, and delivering them means starting soon to implement policies that will cut carbon in the next few years.

"As countries prepare to publish new carbon-cutting proposals in time for the fifth anniversary of the Paris Agreement next week, this analysis should give added confidence that the world is heading increasingly swiftly towards a low-carbon economy, and that nations embracing the transition are more likely to prosper in this new world."

'Astongate': Aston Martin and Bosch accused of using controversial report to downplay EVs' environmental benefits

'Astongate': Aston Martin and Bosch accused of using controversial report to downplay EVs' environmental benefits

Green experts hit out at data underpinning industry-backed EV lifecycle CO2 assessment report which was widely covered by national press over the weekend

A car industry-commissioned report on the CO2 impact of electric vehicles (EVs) has courted criticism, following allegations it overstated the emissions impact of EVs compared to internal combustion engine cars and was produced by a PR firm run from an address allegedly owned by Aston Martin's director of government and corporate affairs.

The report, which lists Aston Martin, Honda, Bosch, and McLaren among its contributors, was covered by a number of major newspapers over the weekend. It claims that when full lifecycle emissions are taken into account an EV has to be driven for 48,000 miles before it starts to deliver lower emissions than a petrol car - meaning that it would take EV owners roughly six years before their zero emission vehicle was 'greener' than a fossil fuel alternative. 

However, the report's analysis and conclusions were quickly challenged by Auke Hoekstra, senior advisor on electric mobility at the Eindhoven Technical University in the Netherlands, who dubbed it a "misleading brochure" that underestimates combustion engine emissions, excludes petrol supply chain emissions from the analysis, fails to adequately take future reductions in the carbon intensity of electricity mix into account, and takes a lifecycle study of a single car manufactured in China - the Polestar 2 - and applies it to all EVs. The correct figure for emissions breakeven for the EV and internal combustion engine cars analysed is closer to 16,000 miles, he calculated.

Hoekstra suggested that UK media outlets that ran the story - including the Daily Mail, the Telegraph, the Sunday Times, and Metro - had been misled by a "carmaker-paid attack on Boris Johnson's green plans".

"There were no 'researchers' involved in this 'study' as far as I can see and there are no original 'recorded results'," he wrote. "It looks like some lobbyists and a PR firm produced a brochure for their list of sponsors: a who's who of anti-EV organisations."

The report then attracted further controversy when an investigation by BloombergNEF founder Michael Liebreich revealed Clarendon Communications - the public relations firm that worked on the report - is registered to an address owned by James Stephens, Aston Martin's director of government and external affairs.

The firm, which was set up in February 2020 and has a thin online presence, claimed Bosch and Aston Martin as clients but listed no staff members on LinkedIn.

In an article posted to LinkedIn, Liebreich derided the report as "written by a sock-puppet PR company" and said it appealed to Conservative MPs displeased with government's climate agenda. "There is a reason why the '50,000-miles-to-emissions-breakeven' story (and all the others like it) was taken up so gleefully by the UK press," he wrote. "The traditionalist wing of the Conservative Party is deeply unhappy with the leadership's lurch towards Net Zero and the Green Industrial Revolution - it rubs their libertarian and corporatist tendencies the wrong way in equal measure."

In a statement, Bosch admitted to commissioning the report "alongside Honda, Optare, Aston Martin and McLaren with industry members including LowCVP and the RTFA, to help policy makers to adopt a range of technology solutions to support a more rapid drive towards net zero for the industry".

"We fully support the report which has been drawn from independent, referenced data and we call for greater transparency on the total carbon footprint of vehicles," Bosch added. 

The firm said it believed decarbonisation of transport was "vital" to reaching climate goals and that it supported the UK government's ambition, but that "at the same time, we believe that technology must be at the heart of this change and support finding practical solutions to the challenges that we face, with an open mind".

Approached by BusinessGreen about the allegations, Aston Martin Lagonda said the firm had no "formal links" with the PR agency that worked on the report.

"Aston Martin Lagonda supports UK governments ambition to decarbonise road transport and as such, we regularly engage with government and parliament on this subject to ensure the opportunities and challenges are both understood and addressed," the company said in an emailed statement. "Prior to the government's recent announcement around phasing out the internal combustion engine in 2030, Aston Martin Lagonda contributed to a report with a number of other industry members including Bosch, LowCVP and the RTFA to emphasise how best to achieve the governments stated aim.

"Aston Martin Lagonda have no formal links with Clarendon Communications, who are contracted to another report contributor to support on Public affairs and stakeholder management."

Clarendon Communications had not responded to a request for comment at the time of going to press.

Report co-sponsor McLaren referred BusinessGreen to Aston Martin Lagonda and emphasised that the contested figures had been drawn from a lifecycle assessment (LCA) report published by EV manufacturer Polestar.

But Polestar has been quick to distance itself from the report, with the firm's chief executive Thomas Inglenlath arguing the analysis had been guilty of a limited interpretation of the figures provided by his firm's lifecycle assessment tool, which the company made public earlier this year in a move it had hoped would encourage other auto companies to disclose their own lifecycle emissions.

"In a new report, released on Friday Honda, McLaren, Aston Martin, and Bosch have... requested greater transparency over vehicles' total CO2 footprints," Inglenlath said. "The paper quotes Polestar's LCA report but information on the CO2 impact of the original equipment manufacturers behind the report is completely absent."

The 48,000-mile breakeven figure for EV lifecycle emissions touted by the report - and reported widely by the media - is also disingenous when not placed adequately in context, Inglenlath argued, given the figure assumes the EV in question is being charged with the current average blend of electricity sources on the UK's grid. With most EV charging network providers in the UK securing their electricity from clean power sources, the figure needs further qualification, he said.

"It is important to note that number comes down to 50,000 km (31,000 miles) if the car is charged with wind power, equivalent to about two years of driving," Inglenlath argued, adding that "Polestar 2 clearly has a lower carbon footprint than a comparable ICE when considering its whole life cycle, regardless of how it is charged".

Meanwhile, the Renewable Transport Fuel Association, a UK trade group dedicated to sustainable renewable transport fuels, and LowCVP, a public private partnership focused on driving the zero emission vehicle transition, told BusinessGreen their involvement in the report was minimal and they had been listed as contributors after providing information to it.

"As our name suggests, our focus is in accelerating the move to cleaner fuels," said Gaynor Hartnell, chief executive of RTFA. "We welcome electrification, but it doesn't address the vehicles on the roads today. We want the government to show as much appetite for decarbonising fuels as it does for electrification, as both approaches are needed. If there are factual errors in the report, the authors need to address this."

In a separate statement, the LowCVP said "recent media interpretation of the report Decarbonising Road Transport - There is no silver bullet by Clarendon Communications does not in any way reflect the position of the Low Carbon Vehicle Partnership (LowCVP)".

"LowCVP provided some specific information and was asked to comment on the report prior to its publication but was not a co-sponsor of it," it added. "LowCVP fully supports the government's proposed 2030 phase-out date for conventional ICE vehicles and believes electrification of road transport is a critical element of the transition to zero emissions... LowCVP supports the decarbonisation of road transport by using 'all the tools in the box'. While the vehicles are still on the road, emissions from the legacy ICE fleet, as well as hybrids sold between 2030 and 2035 should be minimised alongside wider vehicle electrification. Consequently, LowCVP also supports the introduction of verifiably sustainable, lower carbon and renewable fuels."

The agency added that the lifecycle analysis featured in the report had "not been properly contextualised in several media reports". "As stated in the report, energy grids in UK and elsewhere are rapidly decarbonising and EV battery and associated production processes are also improving so the lifecycle impacts of electric vehicles are on a sharply improving trajectory," it said. "LowCVP has been a lead proponent of efforts to incorporate the full lifecycle analysis of road transport CO2 emissions and other sustainability factors into policy decisions and will continue to do so. However, this is a complex area and analysis of lifecycle impacts should be seen as a key part of the process towards achieving zero emissions transport and not - as in this case - as a misleading tool to undermine progress."

Speaking to BusinessGreen, Liebreich argued the report offered an outdated critique of EVs and reiterated his call for its backers to clarify their precise their involvement.

"In his foreword to the report, Matt Western MP, chair of the All Party Group on Electric Vehicles, wrote that the report is "aimed at informing the debate on emissions reduction so that policy makers can make the right decisions", but it does the exact opposite," he said. "It gives a false sense that there are multiple ways to power road transport with equal chances of being economically viable, and that EVs have very significant challenges in terms of delivering emissions reductions. If this were 2015, you could just about argue that, but not in 2020.

"As for the way the report was produced and distributed, it is deeply problematic. If automotive players want to be part of a discussion about the pathway to net zero, they have to act like responsible citizens. Working through 'sock-puppets', hiding the authorship of reports, propagating figures twisted to their advantage - none of that is acceptable. So we need to see answers to a number of questions: Who paid for the report? Who did the actual writing? Who distributed it? And what will Aston Martin's institutional investors - who all want to be seen as leaders in ESG - do about it?"

Positive tipping points to net zero and how to finance them

Positive tipping points to net zero and how to finance them

The finance sector has the means, and the scientists have the data, to model interventions with much greater impact than we see today, explain Federated Hermes' Eoin Murray, and Tim Lenton from the Global Systems Institute

Of President-elect Joe Biden's many campaign commitments to address the climate crisis, the most significant is the United States re-joining the Paris climate agreement. Climate change is a global issue and requires an international response, and American leadership is critical to success. Biden's win may therefore come to be seen as a tipping point in the history of action on climate change. 

Tipping points are normally used in climate science to describe small changes in the earth system that result in much broader, often damaging impacts that accelerate climate change. Well-known examples including sea level rise resulting from the disintegration of the Greenland and West Antarctica ice sheets, or the release into the atmosphere of climate-warming methane deposits from thawing Siberian permafrost. 

For many years, researching and understanding these tipping points underlined the urgency of climate action. Today it is widely understood that we need to decarbonise the economy, and to do this rapidly. Right now, we need tipping points in the other direction - small interventions that accelerate large-scale reductions in greenhouse gas emissions.  

We have already witnessed many of these positive tipping points and have learned much about how they function. So far, it is the governments who have produced the most effective ones. Section 172 of the UK's updated Company Act, for example, requires businesses to disclose material risks from the long-term impacts of their activities on the environment. An escalating tax on carbon emissions has brought about a collapse in coal's share of the UK power mix, from 40 per cent to just three per cent in six years. 

These policy interventions are important, but we cannot regulate our way out of the climate emergency. Unregulated positive tipping points are also necessary. 

The transformation of the power sector is taking place due to the economics of technological innovation. The first tipping point arrived when renewable energy started producing electricity more cheaply in some places than fossil fuel-burning power plants. The next will come when the costs of building new wind or solar capacity become cheaper than a new coal or gas plant. The entire power sector will have tipped towards full decarbonisation when the cost of new renewable power becomes cheaper than maintaining existing hydrocarbon power plants.  

Tipping points can also occur with changes in people's behaviours. The trend towards plant-based diets in the food sector is one example, or the collapse in demand for air travel that could potentially outlast coronavirus travel restrictions. Changes in public opinion however can be much more difficult to orchestrate than policy or economic interventions.

This is why the finance sector is critical to action on climate change. Since capital touches every facet of economic decision-making, from project finance to portfolio allocation, the quickest route to success is the greening of money. 

More and more shareholders recognise their role in shaping these public goals. They actively engage with management on corporate climate strategies. Institutional investors, who have a responsibility to mitigate systemic climate risk, increasingly back climate-related shareholder resolutions. One pension fund was mandated by the courts to consider climate risks in its investment strategy. It responded by setting a net-zero target for financed emissions by 2050. 

But are these really tipping points? Could the finance sector deliver more for climate action? If bankers and fund managers knew where and when to invest to tip the low-carbon disruptors businesses towards exponential growth, then finance could have a key role in accelerating climate action. Understanding these tipping points, and engaging with companies to capitalise on them, would bring outsized returns to both shareholders and citizens.  

The reality of day-to-day business may prove more challenging to predict than the future of the climate. But the finance sector has the means, and the scientists have the data, to model interventions with much greater impact than we see today. Given the limited time available to stop climate change, we must all work together to prioritise these new models. 

 

Eoin Murray is head of investment at Federated Hermes International, and Professor Tim Lenton is director of the Global Systems Institute at the University of Exeter 

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