COP27: The (so far) missed opportunity to protect the UK economy

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With COP 27 not far over the horizon, IF researcher Sylvan Lutz considers the implications of the UK government’s current climate policy. Assessing the UK government’s negotiating power at COP27, the broader environmental impact of its policies, and the long-term consequences for future generations, he argues that COP27 is an opportunity to speed up the process of decarbonisation, both at home and abroad, which should not be missed.

What is a COP?

Almost every year since the 1992 Rio Earth Summit, countries and other interest groups have met to discuss global progress on reducing greenhouse gas emissions. These events are centred around the countries (also known as parties) that are a part of the United Nations Framework Convention on Climate Change.

These events operate to develop and implement international climate agreements like the 2015 Paris Agreement and pave the way for future success in limiting the negative consequences of climate change. They provide a critical platform for addressing the climate crisis because it cannot be solved by any single country alone.

COP27

In one month from now, world leaders, diplomats, scientists, policymakers, activists, and citizens from around the world will converge in Sharm El-Sheikh, Egypt, in the annual meeting key to determining the future habitability of the world. 

Climate negotiations have been much further from public attention than they were a year ago in Glasgow due to inflation, geopolitical tensions, and the rising energy crisis. While these multiple crises can be used to minimise the importance of the climate crisis, UK policymakers must see that they only magnify the importance of successful negotiations and collaborations at the forthcoming 27th Conference of the Parties (COP27).

The importance of international climate policy

In 2021, the UK Government recognised that global action on climate change “is essential to long-term UK prosperity.” Due to the energy crisis, current policy is being proposed to reframe the UK’s commitment to net zero by 2050 and the government is moving away from renewables and towards increased fracking and natural gas exploitation. 

This is misguided domestic industrial policy; it will reduce the negotiating power of the UK at COP27 and could have cascading effects that reduce global ambition to cut greenhouse gas emissions. 

Climate policy is being cast as a cost that we cannot afford to pay because there are too many other pressing concerns. Unfortunately, the cost of aggressively reducing our greenhouse gas (GHG) emissions pales in comparison to the costs of climate change. The UK government needs to realise that it cannot afford to backtrack on the international climate leadership it showed in Glasgow.  

Intergenerational costs of climate change in the UK

Climate change and fossil fuel-driven economic expansion is equivalent to a massive wealth transfer from future generations to our own. While we gain the benefits of both cheap and easy-to-access energy, young people today and future generations will be forced to deal with the increasing environmental, fiscal, and social costs of climate change. 

A recent paper from the UK-based Grantham Research Institute on Climate Change estimated that if greenhouse gas emissions are rapidly reduced (high mitigation) and warming was limited to about 2.1°C these environmental changes would only cost 2.4% of annual GDP in 2100. When current policies were modelled, global warming is expected to reach an estimated 3.9°C by 2100, and result in GDP losses of at least 7.4%. 

A paper examining the long-run losses to labour productivity, savings and investment from climate change found the real cost of not rapidly reducing our carbon emissions could be 37% of global GDP by 2100. The greatest threat to the UK economy is the “catastrophic disruption” of the global economy caused by unaddressed climate change. This will only serve to increase the cost of living across the UK and exacerbate geopolitical tensions. 

Climate change will also pose serious health costs if left unmitigated. In 2015, 4.5 in every 1000 people in the United Kingdom died from a pollution-related illness. If the UK delays the implementation of its climate plan, air pollution mortality will not slow and the health effects of extreme weather events like the heatwave this summer will continue to increase. While UK figures have not been published, Portugal has attributed more than 1000 excess deaths to the same heatwave. Every year that strong international climate action is delayed, these numbers will increase.   

Small actions create huge savings for future generations

COP27, the largest annual climate conference will set the standard for turning climate pledges into climate action here in the UK and around the world. The example set by the UK will have important implications for how the rest of the world decarbonises. Therefore, relatively small actions from the government could result in huge savings for future generations.

In 2020, the Government laid out its Ten Point Plan for a Green Industrial Revolution which, while needing additional details, provided a clear framework for strong employment growth, a strong energy sector, and the rapid decarbonisation of the UK economy. Unfortunately, the government has reversed its direction since then. 

For example, overturning the fracking ban in the UK is not an effective energy policy and sends the wrong signal to other countries. Instead, the UK government should be sending the signal that they care about the well-being of future generations and secure energy supply, not fossil fuel executives. 

At a time when many developing countries are looking to exploit their fossil fuel resources, the UK must show that the future is low-carbon and provide financial support to developing countries to create low-carbon energy infrastructure and industry.

Creating intergenerational climate policy

According to the OECD, this is the critical decade for the delivery of climate policy. The government should immediately focus on creating programs to reduce energy consumption at home through home insulation and transportation improvements. 

In the medium term, it must improve the quality of the National Grid and add significant energy storage infrastructure. On the international stage, it is time to coordinate with other developed countries to provide a bare minimum of US$100 billion a year in financing to the decarbonised developed countries. The UK’s share of this would be far less than 7.4% or even 2.4% of GDP. 

However, if the government is really concerned about the well-being of young people and future generations, or simply the future growth of the UK economy, it could use COP27 as an opportunity to coordinate a global system of financial support for decarbonisation.