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You have probably already heard a lot about ‘net zero’, but what exactly is wrapped up in this phrase?
‘Net zero’ is a term that refers to efforts to bring greenhouse gas emissions from human activities down to a neutral level. Put simply, ‘net zero’ means that greenhouse gas emissions = greenhouse gas removals. Given the difficulty of removing greenhouse gasses from the atmosphere, the most effective way to reach net zero is to eliminate emissions. So when governments or corporations talk about ‘net zero’, they are talking about reducing and eventually eliminating greenhouse gas emissions.
In June 2019, the UK became the first major economy in the world to pass a net zero emissions law. The target requires the UK to bring all greenhouse gas emissions to net zero by 2050 relative to 1990 levels. It is one of the most ambitious targets in the world and reaching it will require all organisations and individuals to play their part in reducing emissions.
In order to move towards net zero, we need to establish a baseline of current emissions against which we can measure reductions. This requires emissions reporting. But first, what are emissions, where do they come from, and how do we measure them? To understand what emissions are, we can turn to the Greenhouse Gas Protocol. By now, most organisations measure and report their emissions according to the Protocol, which breaks down emissions into Scopes 1, 2 and 3. The three scopes are defined as follows:
Scope 1 emissions covers emissions from sources that an organisation owns or controls directly – for example burning fuel in a boiler or in a fleet of vehicles.
Scope 2 emissions are emissions caused indirectly by an organisation’s activities and come from how the energy it purchases and uses is produced. For example, the emissions caused when generating the electricity used in an organisation’s buildings.
Scope 3 covers emissions that are not produced by an organisation itself or assets owned or controlled by them, but by assets or activities up and down the value chain for which the organisation is directly responsible. An example would be the emissions resulting from goods purchased from a supplier.
The Greenhouse Gas Protocol is the most widely used global standard for measuring and reporting emissions.
Greenhouse gasses act like a blanket around Earth. The higher the concentration of greenhouse gasses in the atmosphere, the hotter the planet becomes. The primary aim of achieving net zero is to keep Earth’s average temperature increase below 1.5°C relative to pre-industrial levels because global warming beyond this point fundamentally changes Earth’s climate, impacting our way of life as we know it today.
The planet is already showing symptoms of a warming climate through irregular rainfall patterns, floods, heatwaves, sea level rise, wildfires, powerful storms and biodiversity loss. The effects of a warming planet come at the cost of human well-being and have the potential to displace millions.
The financial cost of inaction is great, too: Investing in climate measures over the next 25 years has the potential to reduce financial losses by 50% over the next 75 years versus doing nothing. Put another way: Doing nothing will double financial losses versus taking action now.
Measures to eliminate emissions from the UK’s built environment – that is, from buildings, transportation, and electricity generation, will require an estimated £1.15 trillion to 2050. About £500 billion of these measures fall within the purview of local authorities, representing an investment requirement of £20 billion per year to 2050.
PwC estimates that about 50% of this investment will need to come from the private sector. The existing squeeze on local authority budgets means that attracting private investment to net zero projects is more important than ever. Yet, 9 out of 10 councils do not believe there is a sufficient financing plan in place to reach net zero by 2050, and 73% say the bureaucracy and uncertainty of government funding is unattractive to private investors. The Net Zero Delivery Vehicle has been specifically developed to address these challenges.
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