11 April 2020

Cutting carbon through individual behaviour is possible, but can't be the whole answer

Almost exactly a year ago I posted an article called A Middle Class Approach to Decarbonisation, outlining our commitment to reduce our family's carbon footprint by half in ten years. This remains my most read blog on LinkedIn (admittedly a low bar). It started me off on a personal exploration that has brought about some significant lifestyle changes. And taught me something of the complexities of the wicked problem that is climate change.

Although it seems hard to give attention to anything that isn't COVID-19 at this time, climate change will still be with us when we're through all this. While some aspects of the lock-down-enforced behaviour change may endure and be helpful to the climate (all those flights to meetings suddenly seem less essential), governments' desperation to get their economies moving again may act in the opposite direction.

The purpose of this blog is to take a step back and share what we've learned.

A year ago I set out eight steps we were going to follow.

1. Calculating our current footprint

This was more difficult to do than I had expected. It required a lot of work piecing together insight from different calculators in order to get a fix on it. Although it was extremely enlightening, I'm pessimistic about how many people will go through the pain of doing this. On the flip side, perhaps it isn't necessary - the top five steps to reduce footprint are likely to be reasonably common across the population. Noting the general success of the public information campaign relating to COVID-19, you could envisage a simple message relating to carbon footprint reduction:

• Fly less

• Eat less red meat

• Insulate your home (and turn down your thermostat)

• Buy experiences not things

• Make your next car electric

The vested interests that would line up against some of these messages are obvious just from writing them down. But the current messages on climate are deeply confusing, including some that are at best second order and at worst counterproductive (for example relating to paper versus plastic bags for shopping). Agreeing on a simple set of first order messages to promote could be better than trying to develop ever more sophisticated footprint calculators.

2. Domestic heat and power

Here I feel we've had something of a success. I learned a lot about the complexities of domestic energy transition, in particular the fact that going electric cannot be an economy-wide answer given the unmanageable peak energy demand that this would place on the grid on cold winter days. This issue also introduced me to the beauty of hybrid solutions during the energy transition.

We now have a scoped plan for installing an air source heat pump to provide our heating for most of the year our existing gas boiler remaining to provide hot water and also central heating on those particularly cold days when the heat pump is inefficient. This approach will cut our home energy footprint by 80% (based on my perhaps optimistic assessment that our electricity is carbon neutral) At the same time the solution could in principle scale-up across the population given the ability to switch to gas at times of peak electricity demand - this meets one of our core principles of any solutions we adopt. Once we're out of lock-down we will go ahead with this.

My main observation on this was how much I had to make the running myself to get to this hybrid solution. Providers tend to want you to use the heat pump for heating and hot water and to rip out your existing hot water system and boiler. The Government's Renewable Heat Incentive encourages this outcome, despite the fact that it is unsustainable at scale. On the one hand this demonstrates the power of Government incentives. On the other it shows how important it is to get them right.

3. Travel

Studying our footprint has impressed on us the need to ration our air travel, and we've implemented our rolling average budget of 1 Tonne per year per head of household. Current events have helped with this, and for 2020 our air travel footprint will be close to zero. I had also experienced some success at work in avoiding unnecessary air travel through challenging clients about whether remote solutions for my attendance could be sufficient. The COVID-19 experience will certainly accelerate this. I've now attended countless board meetings by video, and even presented at the Council for Institutional Investors conference in Washington by video, which worked surprisingly well.

It was instructive to investigate the carbonomics of electric cars. In my view the calculus comes out firmly in their favour, but in general only for new cars rather than replacing existing stock. Set against this, replacing a petrol car with electric is probably broadly neutral from a carbon perspective and has a positive signalling effect and encourages broader market and infrastructure change. Therefore, rather than waiting until we naturally next replace our cars (probably around 8 to 10 years' time) we may move early on this one to help the market develop.

4. Consumption

The big eye-opener for me in this process has been the impact of diet. Had I known this at the outset, I would have highlighted it as a step in its own right, as it is the closest thing you get to a free lunch in the area of climate change. Eating less red meat, and more vegan and vegetarian food (as well as wasting less) has significant and almost entirely beneficial impacts and no negative feedback loops. We have taken big steps towards this, although have to confess that lock-down has set us back a bit. With dinner time providing one of the main things to look forward to, shopping for interesting ingredients more complex, and with children's spirits to lift, our meat consumption has drifted up again. But this will change when some semblance of normality returns.

Beyond diet, the carbon cost of broader consumption, which drives much of the UK's exported carbon footprint, is also salutary. With consumption choices having an impact of up to a factor 10x on carbon impact, this broader dimension of our footprint cannot be ignored. As I have written elsewhere for the Initiative for Financial Wellbeing, the COVID-19 lockdown creates a unique experiment (for the more fortunate of us) in doing without things we have come to consider essential. As we come out of this phase we surely have an opportunity to assess which of these expenditures we wish to reinstate. The time when we are doing without them is the moment to reflect on the extent to which they are essential, enhance our fulfilment and life satisfaction, and support us in living our life in line with our most deeply held values and purpose. Wellbeing and climate are likely both to point to more expenditure on experiences and time, and less on material possessions.

5. Offsetting

Offsetting remains a snake-pit. Assessing the extent to which offsets are additional (in other words would not have happened anyway), effective, and immune from rebound effects (whereby efficiency leads to greater consumption) is incredibly hard. We do still offset. To address the potential limitations of offsetting we choose to offset 4x our footprint. This allows for 75% of the offset's impact to be lost through lack of additionality, inefficiency and rebound effects. It results in an effective carbon price of £40-£50 per Tonne, which seems more realistic than the absurdly low c. £10 retail value of offsets. But proving additionality remains a concern. I will write more on this topic separately. In conclusion, offsetting seems to me to be part of an authentic attempt to reduce one's carbon footprint, but cannot be used as an excuse for inaction.

6. Investments

Investments will also be the subject for a future blog. Navigating the quagmire of 'responsible funds' has tried my patience, but there are some good products out there. Rather than seeking a single silver bullet solution we've taken a three-pronged approach:

• Index trackers that tilt away from companies with a high carbon impact;

• Index trackers that tilt away from companies with a high carbon impact and towards ones that are part of the solution, including a commitment to engagement with more problematic actors;

• Impact funds that have a concentrated holding in companies that are contributing to solving the world's most pressing climate and development problems (which are frequently interlinked).

We've taken a multi-line strategy to enable us to learn as we go and in the likelihood that there is not a single optimum solution. Although it won't be perfect, our investments are now much more closely aligned with our values when it comes to climate.

7. Work

I had some success last year in reducing unnecessary travel. I estimate that I saved two long-haul and several short-haul return flights by convincing clients that technology could enable my remote attendance at business meetings. I found the conversations surprisingly constructive, especially when framed in the context of footprint reduction. Beyond that, as I leave PwC this summer, I am looking at how I can deploy my skills in areas of work that directly support the development of solutions to climate problems. In this way at least part of my portfolio of work can make a direct contribution to meeting the climate challenge.

8. Citizenship

Over the last year I have found that behaviour change can lead to significant carbon savings. I'm confident that we will halve our carbon footprint in ten years, albeit from a very high baseline. But it has become equally clear that we will only achieve this as the result of a very significant amount of research, time, money, and effort put into addressing the problem, coupled with some reduction in our material standard of living (particularly in relation to travel). Voluntary action seems unlikely to be a scaleable solution.

I have become more than ever convinced that voluntary change by companies and citizens will only scratch the surface of what is required. Large scale state intervention is needed in terms of:

• Product standards and regulation to encourage high levels of product efficiency;

• Carbon pricing to create economic incentives to optimise use of whatever carbon budget remains;

• Allocation of investment in development of new technologies such as carbon capture and storage which seem to be essential for any part of the solution;

• Public education.

The experience of COVID-19 shows what can be done quickly when circumstances demand it. Perhaps there will be greater acceptance of the need for the state to set a framework for action in the face of an economy-wide crisis. But the virus is an immediate and present danger, while climate change burns slow. And while it has shown what is possible, there is a risk it may lessen appetite to act with similar decisiveness on climate change, if this requires further sacrifice. While there are win-win solutions in cutting carbon, we shouldn't expect that weaning ourselves from the great economic gift of the black-stuff will be easy.

And this is why personal, and public, action on climate change remains so important. Long-term, it cannot of itself be the answer. But, if sufficiently widespread, it can create the context in which the necessary political change becomes achievable.