The challenges of 2020 are far from over, but 2021 is still set to be a transformational year for the future of green business, explains Low Carbon Lead Amy House.
2020 may finally be past us, but it’s impact on society will be felt long into the future. This year could have a similar effect when it comes to our transition to a low carbon economy. Here are six key reasons why we have a lot to look forward in 2021:
All eyes are on the UK
In November – coronavirus allowing – the UK will host one of the most important UN climate summits since they first began in 1992. The COP26 summit in Glasgow is crucial because it’s the first since the Paris Agreement of 2015 came into force last year. The Paris Agreement committed nearly all countries worldwide to joint action on climate change for the first time ever. The international community set an ambitious goal to limit global warming to 1.5°C above pre-industrial levels and agreed to review and strengthen their individual contributions every five years. COP26 will be the first of these reviews.
Science shows that almost every country is well behind where it needs to be, so the importance of COP26 cannot be understated. A good outcome could collectively raise ambitions to put us on a path to safety. That’s why all eyes will be on the UK as hosts to ‘walk the walk’ and encourage action through its own example in the lead up to the summit.
In other words, the climate emergency will be at the top of the national agenda over the coming months, despite the ongoing COVID-19 crisis. Expect new policies, funding pledges and an increasing focus on ‘building back greener’.
The Biden effect
It won’t just be the UK who the global community will be looking to for leadership. President Joe Biden is bringing the US back into limelight of the climate agenda after four years lurking in the dark under Donald Trump.
One of Biden’s first acts as President was to re-join the Paris Agreement and his influence will be hugely welcome as we build up towards COP26 in November. With the US on board, it’s much more likely that other big hitters like China will also up their game.
The fact that the Democrats control both the White House and Congress means the Biden administration has the ability to press on with more ambitious plans than they might have expected. Biden has already cancelled the controversial Keystone XL pipeline – a strong message to the fossil fuel industry – appointed political heavyweight and one of the architects of the Paris Agreement, John Kerry, as his UN climate envoy and pledged $2 trillion to deliver a clean electricity system by 2035. Compared to that, the Prime Minister’s £12 billion Ten Point Plan for a Green Industrial Revolution will need beefing up if the UK is to hold onto its leadership position on the global stage.
Net zero will be the phrase on everyone’s lips
The push for countries, regions and organisations to set out plans for reaching ‘net zero’ emissions gained significant traction in 2020 and we’ll be hearing a lot more of it this year.
Around 70 per cent of the world’s economy, and countries representing two thirds of global carbon emissions and over half the global population, have now committed to net zero or have plans to do so in the near future. The Race to Net Zero, a global UN-led campaign to mobilise net zero targets from regions, cities and organisations, now has thousands of signatories.
Reaching net zero by 2050 is considered the minimum level of ambition, but many large corporates and forward-thinking small businesses are moving far faster. According to a recent poll of 1,000 UK businesses by HSBC, 73 per cent plan to introduce new net zero goals this year, despite the ongoing difficulties caused by COVID-19. SMEs can formally join the Race to Net Zero through the recently launched SME Climate Hub.
Clean tech continues to break records
Amid all the politics and economic wrangling, green technology has quietly been getting on with the job of transforming society over the last 12 months. 2020 was the greenest year on record for Britain’s electricity system – solar and wind energy enjoyed their highest ever share of the electricity grid, with coal accounting for just 1.6 per cent of our power. To put that into perspective, coal made up around a quarter of our power just five years ago.
Wind outstripped nuclear and is fast approaching gas as our largest power generator, while solar capacity grew by 27 per cent in its first full year without subsidies – far exceeding the government’s own estimates. Despite the economic turmoil, 40 per cent of the growth in solar last year was due to rooftop installations, mostly on commercial buildings. Things are moving so rapidly that the National Grid is now planning for a ‘carbon-free’ electricity system as early as 2025. This will bring with it a wave of further innovation in areas such as smart tariffs and battery technology.
It’s not just the power sector where clean tech is making waves. Electric vehicles are another example of a technology that’s accelerating faster than anyone previously expected. UK market forecasts put 2021 registrations of electric vehicles as high as 200,000 – nearly double the number registered in 2020, which itself was a record-breaking year. Elsewhere, new research suggests that by 2030 low and zero carbon solutions will be able to outcompete conventional technology across multiple sectors accounting for over 70 per cent of global emissions. Change is coming faster than we think.
Green finance going mainstream
Backing these clean technologies is the rapidly growing green investment movement. Under investor pressure to ‘divest’ from fossil fuels, money is fast accumulating in greener sectors of the economy. So-called ‘ESG’ (Enviromental, Social and Governance) investing has proliferated during the COVID-19 crisis. The issuance of green bonds, which raise capital for low carbon infrastructure and other environmental projects, hit a record high of nearly £200 billion in 2020 and could surpass £300 billion in 2021, according to experts. Meanwhile, 30 of the world’s largest investment firms with combined assets of over £2.2 trillion have joined forces to align their investment portfolios with the Paris Agreement.
A stark example of the changing financial landscape is the fortunes of electric car manufacturer Tesla versus the fossil fuel giant Exxon. Tesla has now become the world’s most valuable car company, while Exxon’s share price has fallen so low that it’s been removed from the US Dow Jones Index altogether. With the introduction of mandatory environmental disclosure standards for large companies in the UK by 2023 to support investors’ decision making, the corporates that are failing to keep up will be found out.
Underpinning everything that happens this year will be the change in outlook that occurred in 2020. As I wrote in my blog looking back on 2020, the COVID-19 pandemic has given us an opportunity to re-think how we do business. The concept of purpose-led business is gaining in popularity, and companies are looking to their social and environmental credentials like never before.
The stakes are high
These positive trends give us a huge amount of ammunition as we head into 2021 and the monumental task ahead us. Scientists have now confirmed that 2020 was the joint hottest year ever recorded, and levels of CO2 in the atmosphere have continued to grow despite the dampening effect of COVID-19.
The fully-funded support available through our Resource Efficiency and Green Technologies & Services advisors has never been more important, so I encourage every business in Greater Manchester to make the most of them.
This post was originally published on the GC Business Growth Hub website here.
Posted under General Interest on 27 January 2021