The Role of Entrepreneurs in Combatting Climate Change

The Committee on Climate Change (CCC) has just released its Sixth Carbon Budget. It’s a sizable report, which will be influential – not least because it is the CCC’s job to advise government – in setting out the UK’s approach to combating and coping with climate change.

We recently released a report of our own on Green Entrepreneurship, supported by the Enterprise Trust and written by Eamonn Ives. Both reports have some overlap in policy recommendations that are worth reflecting upon.

For example, the CCC report calls for the government to incentivise the continued roll-out of zero-emission buses and coaches to ensure that new sales of diesel vehicles end by 2040 at the latest. While the wide-ranging report doesn’t specifically suggest how to do this, Eamonn does:

“The government currently subsidises bus operators to the tune of around £250 million a year through the Bus Service Operators Grant (BSOG). The BSOG pays bus operators a set amount per litre of fuel their buses consume. Strictly speaking, therefore, what the subsidy incentivises is fuel consumption. This model has come in for criticism of late, because it puts newer, more fuel-efficient models at a relative disadvantage. A more appropriate funding approach might be a distance-travelled model, perhaps with a passenger number multiplier, as this is fundamentally what the government is seeking to encourage.”

These reforms would incentivise research and development into zero-emission powertrains (which aren’t actually trains) – such as hydrogen, or even batteries if they can advance enough to cope with the particular demands of heavier vehicles.

Green Entrepreneurship and the CCC report both call for reforms to Energy Performance Certificates (EMPs), with the former citing research suggesting that perhaps up to 62% of EPCs contain errors. More broadly, EPCs fail to show benefits of decarbonising electricity or savings possible from smart tariffs. Government has recognised the urgent need to improve EPCs, with the CCC recommending the introduction of green building passports, which would document a full record of a building, showing upgrades and improvements throughout its lifetime, as recommended elsewhere by the Green Finance Institute, to “unlock green finance at scale by providing a robust, quality source of information to raise finance against, track progress and help make standards enforceable.”

The last of the 20 recommendations in our report called for the government to examine how it can stimulate demand for more environmentally sustainable foodstuffs. Similarly the CCC calls on the public sector to take a lead in providing plant-based options with all meals. Green Entrepreneurship specifically suggests promoting clean meat and dairy and other animal produce substitutes, or instigating initiatives such as ‘meat free Mondays’, as other governments around the world already have, including in Tokyo.

In Green Entrepreneurship we call for the Government to commit to simplifying, standardising, and broadening carbon pricing. This is also a significant strain of the CCC report.

Economists mostly favour carbon pricing to cut carbon. The key advantage of pricing over targeted subsidies or regulation is that the government doesn’t need to try to work out which technology to bet on. Instead, the tax will spur entrepreneurs and investors with local knowledge to focus on where they can make the biggest gains – they would also bear the risk of picking the wrong solution.

With this year’s COP postponed until 2021, there’s time for the UK to ensure it has a clear set of policies. The EU and the Biden Administration are drawing up plans to introduce border carbon tariffs – the border element combats carbon leakage – so this is an issue in which the UK set out a clear set of proposals, worthy of the effort of bringing the world’s leader together to solve climate change.