A record 512bn of work hours were lost around the world in 2023 because of the risk of heat exposure, says a new report from the Lancet Countdown on Health and Climate Change.
Agricultural workers in low-income countries were disproportionately affected, the authors say, costing countries around 8% of their GDP in 2023.
The findings are part of the ninth iteration of the annual report, which features indicators of climate change and human health, such as heat mortality, air pollution exposure and how countries are adapting.
The report highlights the many health inequalities in how energy is used around the world. According to the report, the number of deaths caused by fossil fuel-derived air pollution decreased by 7% over 2016-21 – mainly due to wealthy nations phasing out coal.
However, the vast majority of low-income countries still rely heavily on biomass and other “dirty” fuels in their homes. Dr Marina Romanello, lead author and executive director of the Lancel Countdown, added that women and children are usually in charge of sourcing and burning the fuel, making them particularly vulnerable.
The authors also call out governments and fossil fuel companies for “fuelling the fire” through continuing investment into oil and gas assets that are likely to push the world past key warming targets. The study notes that fossil fuel subsidies exceeded national health spending in 2022 for more than 20 countries around the world.
Romanello told journalists her “concern” that governments and companies “keep on promoting fossil fuel expansion, to the detriment of health and survival of people worldwide”.
Extreme heat
The impacts of extreme heat are “insidious”, Prof Ollie Jay, director of the Heat and Health Research Centre at the University of Sydney and author on the report, told a press briefing.
He explained that certain groups of people are more vulnerable to heat – including infants, the elderly, pregnant women and people with pre-existing medical conditions.
In 2023, infants and adults older than 65 faced a new record high of 14 days of heatwaves per person, the report finds. This value exceeds the previous record, set in 2022, by more than 20%.
The combination of a warming and ageing world is putting more people at risk, the report says. For example, in 2023, demographic changes alone would have driven a 65% increase in heat-related deaths among over-65s, compared to the 1990-99 average. The addition of global warming pushes this percentage up to 167% – the highest highest level recorded.
Across the whole population, the authors find that people were exposed to an average of 50 more “health-threatening heat days” in 2023 than they would have been in a world without climate change. (These are defined as days when the daily average temperature exceeds the 84.5th percentile of the 1986-2005 daily regional average.)
Beyond this global average figure, less-developed countries are much more likely to see such health-threatening days. For example, 31 such countries experienced at least 100 more days of health-threatening heat due to climate change.
The map below shows the average number of days with health-threatening temperatures attributable to climate change per year, over 2019-23, by country. Darker colours mean more health-threatening days.
Heat stress is particularly dangerous for outdoors workers, who are often directly exposed to the heat while undertaking manual labour. In 2023, around one-quarter of the world’s population worked outdoors.
The report finds that countries with the lowest human development index (HDI) – a measure of a country’s development – have the highest proportion of outdoors workers, largely due to their reliance on the agricultural sector.
The report measures the number of “potential work hours lost” due to heat exposure, by considering temperature, humidity and “typical metabolic rate of workers in specific economic sectors”.
It finds that heat exposure drove a record high of 512bn potential work hours lost in 2023 – around 1.5 times the 1990-99 average. Approximately two-thirds of this loss was in the agricultural sector, mainly in low and medium HDI countries. In total, the global potential loss of income due to extreme heat reached a record high of $835bn in 2023, the report says.
Wealthy countries were generally the least impacted by heat stress. Very high HDI countries only saw around 41 lost hours per worker due to heat, causing an economic loss of around 1% of their GDP. Meanwhile, low HDI countries lost more than 200 hours per worker, and saw almost an 8% loss in their GDP.
The graph below shows percentage GDP loss due to heat stress in low, medium, high and very high HDI countries, in agriculture (light green), construction (dark green), manufacturing (orange) and services (purple).
This year’s report also introduces a new indicator assessing how night-time heat affects sleep loss. The authors estimate that high night-time temperatures led to 5% more sleep hours lost in 2019-23 than in 1986-2005.
The authors say that air conditioning is an “effective technology for reducing heat exposure”. However, they say that it can also be an example of “maladaptation”, as it is “expensive and energy-intensive, overwhelms energy grids on hot days, and can contribute to greenhouse gas emissions”.
They note that emissions from air conditioning increased by 8% over 2016-21. However, access to the technology is not universal. In 2021, 48% of households in very high HDI countries had air conditioning compared to only 5% of those in low HDI countries.
Malnutrition and disease
The report also unpacks how climate change is exacerbating food insecurity and malnutrition.
It finds that the total proportion of global land area affected by extreme drought for at least one month per year increased from 15% in 1951-60 to 44% in 2013-24.
The authors warn that “the higher frequency of heatwave days and drought months in 2022, compared with 1981-2010, was associated with 151 million more people experiencing moderate or severe food insecurity across 124 countries”.
This year, the authors also introduced a new indicator tracking changes in rainfall events. The authors divide up the world into 80km grid squares and monitor the number of rainfall events that exceed the 99th percentile of 1961-90 rainfall.
Over the last decade, extreme rainfall events increased in more than 61% of grid squares, the report finds. The authors warn that high rainfall can drive an increase in flooding, which can lead to a range of negative health incomes including outbreaks of certain diseases.
For example, Vibrio bacteria in coastal waters can cause “severe” gastrointestinal infections and “life-threatening sepsis”. The study finds that the length of coastlines with suitable conditions for the bacteria reached a new record high of more than 88,000km in 2023 – 32% above the 1990-99 average.
In addition, the total population living within 100km of coastal waters with conditions suitable for Vibrio transmission has reached a record high of 1.42 billion.
The authors also find that the climatic conditions for mosquitoes to transmit dengue, malaria and West Nile virus have increased between 1951-60 and 2014-23 as the world has warmed.
Fossil fuels
On energy use, the study notes that, “given the high greenhouse gas and air pollution emission intensity of coal, its phase-out is crucial to protect people’s health”.
Over 2016-21, very high HDI countries have seen a reduction in the share of energy that comes from coal. (The UK became the first G7 country to phase out coal power in September 2024.)
However, the report highlights that all low HDI countries are still very dependent on coal. Over 2016-21, the share of electricity that comes from coal in low HDI countries increased from less than 1% to 10%.
According to the report, the number of deaths caused by fossil fuel-derived air pollution – specifically, tiny particulate matter known as PM2.5 – decreased by 156,000 over 2016-21 – a drop of 7%. This is mainly due to reduced pollution from coal burning in high and very high HDI countries.
Dr Marina Romanello, the lead author of the report and executive director of the Lancet Countdown, told the press briefing that this an important result as it shows the “enormous potential of coal phase-out to improve health”.
However, the report also warns that biomass burning caused 1.24 million deaths in 2021 – an increase of 135,000 from 2016 levels.
For example, the report finds that 2.3bn people still cook using biomass. In low HDI countries, around 92% of countries use solid biomass for their household energy needs. Conversely, in very high HDI countries, this number is around 10%.
Romanello explained that biomass is “very unreliable, very unstable and particularly polluting”. She added:
“When households rely on biomass, it is often women and children that are in charge of sourcing the fuel, so it also generates disproportionate impacts on these groups.”
The authors also call out fossil fuel companies for “fuelling the fire”. One of the report’s indicators assesses the compatibility of fossil fuel company strategies with the Paris Agreement. It says:
“As of March 2024, the strategies of the 114 largest oil and gas companies have put them on track to exceed their share of greenhouse gas emissions consistent with limiting global heating to 1.5C by 189% in 2040, up from the 173% excess projected in March, 2023.”
The report analyses 86 countries that are collectively responsible for 93% of global CO2 emissions. They find that, in 2022, these countries awarded a record $1.2tn in fossil fuel subsidies. This funding exceeded 10% of national health spending in 47 countries and 100% in 23 countries.
Romanello shared her “concern” with the press briefing that “governments and companies keep fuelling the fire, keep on promoting fossil fuel expansion, to the detriment of health and survival of people worldwide”.
Adaptation
Finally, the report assesses countries’ preparedness for the health impacts of climate change. This section presents a mixed picture.
The report finds that, as of February 2024, fewer than half of the most recent country climate pledges made under the Paris Agreement mentioned a “health keyword”.
However, the report also finds areas of progress. For example, at the end of 2022, only four countries had put forward health national adaptation plans (HNAPs) outlining how they will plan for and adapt to the impacts of climate change on health. Just one year later, this number had jumped up to 40 countries.
Furthermore, the authors find that scientific engagement into the links between climate change and health is increasing. The number of scientific papers investigating the link between climate change and health reached a record high in 2023, with the vast majority of papers focusing on impacts, rather than mitigation or adaptation.
The graph below shows the number of academic papers published each year over 1990-2023 on climate change and health, focused on mitigation (orange), adaptation (green) and impacts (purple).
The report finds that some countries are already implementing successful adaptation measures. For example, it explains that countries with health early warning systems saw a 73% decrease in the number of people killed per extreme weather event between 2000-09 and 2014-23. In countries without such early warning systems, the decrease was only 21%.
The authors note that “the reduction cannot be directly attributed to the implementation of health early warning systems”, but suggest that countries that implement these systems likely have higher “engagement with climate change adaptation efforts”.
The positive news in this report is “not enough to tip the balance” or to “secure a healthy future”, Romanello told the press briefing. However, she said it is “meaningful progress” which can be “built on”.
Dr Jeremy Farrar served as chief scientist of the World Health Organisation, and was previously the director of the Wellcome Trust – the main funding body behind this report. He told journalists at the press briefing that despite the “incredible evidence base” available, the health community “have been too slow to make the case that climate change is a health crisis”.
However, he praised the intersectoral collaboration between health and climate experts, and said he hopes we are “turning a corner” on making sure that climate change is seen as a “health issue”.
The post More than half a trillion hours of work lost in 2023 due to ‘heat exposure’ appeared first on Carbon Brief.
More than half a trillion hours of work lost in 2023 due to ‘heat exposure’
Greenhouse Gases
DeBriefed 12 December: EU under ‘pressure’; ‘Unusual warmth’ explained; Rise of climate boardgames
Welcome to Carbon Brief’s DeBriefed.
An essential guide to the week’s key developments relating to climate change.
This week
EU sets 2040 goal
CUT CRUNCHED: The EU agreed on a legally binding target to reduce greenhouse gas emissions by 90% from 1990 levels by 2040, reported the EU Observer. The publication said that this agreement is “weaker” than the European Commission’s original proposal as it allows for up to five percentage points of a country’s cuts to be achieved by the use of foreign carbon credits. Even in its weakened form, the goal is “more ambitious than most other major economies’ pledges”, according to Reuters.
PETROL CAR U-TURN: Commission president Ursula von der Leyen has agreed to “roll back an imminent ban on the sale of new internal combustion-engined cars and vans after late-night negotiations with the leader of the conservative European People’s Party,” reported Euractiv. Car makers will be able to continue selling models with internal combustion engines as long as they reduce emissions on average by 90% by 2035, down from a previously mandated 100% cut. Bloomberg reported that the EU is “weighing a five-year reprieve” to “allow an extension of the use of the combustion engine until 2040 in plug-in hybrids and electric vehicles that include a fuel-powered range extender”.
CORPORATE PRESSURE: Reuters reported that EU countries and the European parliament struck a deal to “cut corporate sustainability laws, after months of pressure from companies and governments”. It noted that the changes exempt businesses with fewer than 1,000 employees from reporting their environmental and social impact under the corporate sustainability reporting directive. The Guardian wrote that the commission is also considering a rollback of environment rules that could see datacentres, artificial intelligence (AI) gigafactories and affordable housing become exempt from mandatory environmental impact assessments.
Around the world
- EXXON BACKPEDALS: The Financial Times reported on ExxonMobil’s plans to “slash low-carbon spending by a third”, amounting to a reduction of $10bn over the next 5 years.
- VERY HOT: 2025 is “virtually certain” to be the second or third-hottest year on record, according to data from the EU’s Copernicus Climate Change Service, covered by the Guardian. It reported that global temperatures from January-November were, on average, 1.48C hotter than preindustrial levels.
- WEBSITE WIPE: Grist reported that the US Environmental Protection Agency has erased references to the human causes of climate change from its website, focusing instead on “natural processes”, such as variations in the Earth’s orbit. On BlueSky, Carbon Brief contributing editor Dr Zack Labe described the removal as “absolutely awful”.
- UN REPORT: The latest global environment outlook, a largest-of-its-kind UN environment report, “calls for a new approach to jointly tackle the most pressing environmental issues including climate change and biodiversity loss”, according to the Associated Press. However, report co-chair Sir Robert Watson told BBC News that a “small number of countries…hijacked the process”, diluting its potential impact.
$80bn
The amount that Chinese firms have committed to clean technology investments overseas in the past year, according to Reuters.
Latest climate research
- Increases in heavy rainfall and flooding driven by fossil-fuelled climate change worsened recent floods in Asia | World Weather Attribution
- Human-caused climate change played a “substantial role” in driving wildfires and subsequent smoke concentrations in the western US between 1992-2020 | Proceedings of the National Academy of Sciences
- Thousands of land vertebrate species over the coming decades will face extreme heat and “unsuitable habitats” throughout “most, or even all” of their current ranges | Global Change Biology
(For more, see Carbon Brief’s in-depth daily summaries of the top climate news stories on Monday, Tuesday, Wednesday, Thursday and Friday.)
Captured
The years 2023 and 2024 were the warmest on record – and 2025 looks set to join them in the top three. The causes of this apparent acceleration in global warming have been subject to a lot of attention in both the media and the scientific community. The charts above, drawn from a new Carbon Brief analysis, show how the natural weather phenomenon El Niño, sulphur dioxide (SO2) emissions from shipping, Chinese SO2, an eruption from the Hunga Tonga-Hunga Ha’apai volcano and solar cycle changes account for most of the “unusual warmth” of recent years. Dark blue bars represent the contribution of individual factors and their uncertainties (hatched areas), the light blue bar shows the combined effects and combination of uncertainties and the red bar shows the actual warming, compared with expectations.
Spotlight
Climate change boardgames
This week, Carbon Brief reports on the rise of climate boardgames.
Boardgames have always made political arguments. Perhaps the most notorious example is the Landlord’s Game published by US game designer and writer Lizzie Magie in 1906, which was designed to persuade people of the need for a land tax.
This game was later “adapted” by US salesman Charles Darrow into the game Monopoly, which articulates a very different set of values.
In this century, game designers have turned to the challenge of climate change.
Best-selling boardgame franchise Catan has spawned a New Energies edition, where players may choose to “invest in clean energy resources or opt for cheaper fossil fuels, potentially causing disastrous effects for the island”.
But perhaps the most notable recent release is 2024’s Daybreak, which won the prestigious Kennerspiel des Jahre award (the boardgaming world’s equivalent of the Oscars).
Rolling the dice
Designed by gamemakers Matteo Menapace and Matt Leacock, Daybreak sees four players take on the role of global powers: China, the US, Europe and “the majority world”, each with their own strengths and weaknesses.
Through playing cards representing policy decisions and technologies, players attempt to reach “drawdown”, a state where they are collectively producing less CO2 than they are removing from the atmosphere.
“Games are good at modelling systems and the climate crisis is a systemic crisis,” Daybreak co-designer Menapace told Carbon Brief.
In his view, boardgames can be a powerful tool for getting people to think about climate change. He said:
“In a video game, the rules are often hidden or opaque and strictly enforced by the machine’s code. In contrast, a boardgame requires players to collectively learn, understand and constantly negotiate the rules. The players are the ‘game engine’. While videogames tend to operate on a subconscious level through immersion, boardgames maintain a conscious distance between players and the material objects they manipulate.
“Whereas videogames often involve atomised or heavily mediated social interactions, boardgames are inherently social experiences. This suggests that playing boardgames may be more conducive to the exploration of conscious, collective, systemic action in response to the climate crisis.”
Daybreak to Dawn
Menapace added that he is currently developing “Dawn”, a successor to Daybreak, building on lessons he learned from developing the first game, telling Carbon Brief:
“I want the next game to be more accessible, especially for schools. We learned that there’s a lot of interest in using Daybreak in an educational context, but it’s often difficult to bring it to a classroom because it takes quite some time to set up and to learn and to play.
“Something that can be set up quickly and that can be played in half the time, 30 to 45 minutes rather than an hour [to] an hour and a half, is what I’m currently aiming for.”
Dawn might also introduce a new twist that explores whether countries are truly willing to cooperate on solving climate change – and whether “rogue” actors are capable of derailing progress, he continued:
“Daybreak makes this big assumption that the world powers are cooperating, or at least they’re not competing, when it comes to climate action. [And] that there are no other forces that get in the way. So, with Dawn, I’m trying to explore that a bit more.
“Once the core game is working, I’d like to build on top of that some tensions, maybe not perfect cooperation, [with] some rogue players.”
Watch, read, listen
WELL WATCHERS: Mother Jones reported on TikTok creators helping to hold oil companies to account for cleaning up abandoned oil wells in Texas.
RUNNING SHORT: Wired chronicled the failure of carbon removal startup Running Tide, which was backed by Microsoft and other tech giants.
PARIS IS 10: To mark the 10th anniversary of the Paris Agreement, climate scientist Prof Piers Forster explained in Climate Home News “why it worked” and “what it needs to do to survive”.
Coming up
- 15-19 December: American Geophysical Union (AGU) annual meeting, New Orleans
- 15-19 December: 70th Meeting of the Global Environment Facility (Gef) Council, online
- 16 December: International Energy Agency: Future of electricity in the Middle East and North Africa webinar, online
Pick of the jobs
- Natural Resources Wales, senior strategic environmental policy specialist | Salary: Unknown. Location: Wales (hybrid)
- The Nature Conservancy, director of conservation – Mata Atlântica | Salary: Unknown. Location: São Paulo, Belo Horizonte, Rio de Janeiro and nearby cities, Brazil
- Barcelona Supercomputing Centre, postdoctoral researcher – downscaling for climate services | Salary: Unknown. Location: Barcelona, Spain
DeBriefed is edited by Daisy Dunne. Please send any tips or feedback to debriefed@carbonbrief.org.
This is an online version of Carbon Brief’s weekly DeBriefed email newsletter. Subscribe for free here.
The post DeBriefed 12 December: EU under ‘pressure’; ‘Unusual warmth’ explained; Rise of climate boardgames appeared first on Carbon Brief.
DeBriefed 12 December: EU under ‘pressure’; ‘Unusual warmth’ explained; Rise of climate boardgames
Greenhouse Gases
‘Cali Fund’ aiming to raise billions for nature receives first donation – of just $1,000
A major biodiversity fund – which could, in theory, generate billions of dollars annually for conservation – received its first donation of just $1,000 in November.
The Cali Fund was created under the UN Convention on Biological Diversity (CBD) at the COP16 nature negotiations in Cali, Colombia, last year.
On 19 November, nine months after the fund officially launched, UK start-up TierraViva AI put forward the first contribution.
The $1,000 payment is an “ice-breaker”, the company’s chief executive tells Carbon Brief, aimed at encouraging others “who may be hesitating” to pay in.
The fund is designed to be a way for companies that rely on nature’s genetic resources to share some of their earnings with the developing, biodiverse countries where many of the original resources are found.
Companies use genetic data from these materials to develop products, such as vaccines and skin cream.
One expert describes the $1,000 as a good “first step”, but says it is “time for larger actors to step forward”. Another says it “squarely points the finger to the profit-making enterprises that are not contributing”.
The CBD is “pleased” about the first payment, a spokesperson tells Carbon Brief, adding that “many discussions” are ongoing about future donations.
Funding biodiversity action
Companies all around the world use genetic materials from plants, animals, bacteria and fungi often found in biodiversity-rich, global south countries to develop their products.
There are existing rules in place to secure consent and ensure compensation if companies or researchers travel to a country to physically gather these materials.
Today, however, much of this information is available in online databases – with few rules in place around access. This genetic data is known as digital sequence information (DSI).
The Cali Fund is part of an effort to close this loophole.
The COP16 agreement on the creation of the fund outlined that large companies in several sectors, including pharmaceutical, cosmetic, biotechnology, agribusiness and technology, “should” contribute a cut of the money they earn from the use of these materials. (See: Carbon Brief’s infographic on DSI.)
The money is intended to fund biodiversity action, with 50% of resources going to Indigenous peoples and local communities who protect vast swathes of the world’s nature and biodiversity.
These contributions, however, are voluntary.
The fund officially launched at the resumed COP16 negotiations in Rome in February 2025, where a spokesperson for the CBD said that first contributions could be announced in spring.
However, Carbon Brief reported in August that the fund was still empty.
On 19 November, the first contribution was announced during the COP30 UN climate summit. At $1,000, the amount was significantly lower than the potential millions that larger companies could pay in.
A UK government press release described it as a “major milestone” that will “pav[e] the way for others to do the same and mobilise private sector finance for nature at scale”.
The payment was an “expression of our commitment to the objectives of the Cali Fund”, TierraViva AI chief executive Dr Paul Oldham wrote in a letter to the executive secretary of the CBD, Astrid Schomaker.
The $1,000 is an “initial contribution”, Oldham said, and the company plans to give more “as our business grows”. Based in the UK with a team of programmers in Nairobi, TierraViva AI was set up in 2023 and uses AI to support conservation.
An anthropologist who worked on Indigenous peoples’ rights in the Amazon, Oldham’s research helped inform the list of sectors most likely to “directly or indirectly benefit from the use of DSI”, including “generative biology” and AI companies.
Oldham noted in a speech at the sidelines of COP30 that although the company’s earnings are not large enough to meet the contribution thresholds set out in the Cali Fund agreement, its contribution showed that companies “of any size” can pay in.
He tells Carbon Brief that while “some” companies “are not serious about contributing and are seeking to delay” paying into the fund, others have different concerns, including the “need for a level playing field” and positive incentives to contribute:
“This will be hard-earned company money, so it’s reasonable enough to imagine that one of the first questions companies will want an answer to is: ‘well, what is this actually going to be spent on?’ And: ‘what is the benefit of this to us’, which is likely to vary by sector.
“In my view, the best way forward would be for companies that can to make contributions. That would give everybody, including governments, confidence that there might be constructive ways to address difficult topics.”
Future contributions
A spokesperson for the CBD tells Carbon Brief:
“We are pleased that the Cali Fund is not only ‘open for business’, but that this first contribution also demonstrates it is fully operational. We thank and congratulate TierraViva AI for being the first company to step up.”
“Many discussions” are ongoing around future donations to the fund, the spokesperson says, and the CBD is “hopeful that further announcements can be made soon”, ahead of the next UN biodiversity summit, COP17, in October 2026.
Asked whether the CBD was expecting more contributions at this stage, the spokesperson says the fund was set up in “very short order” and that the first payment shows that companies are “able to contribute”.
US biotechnology company Ginkgo Bioworks was the first to pledge to contribute to the fund earlier this year, but has so far not put forward any money. The company did not respond to Carbon Brief’s request for comment.
Carbon Brief reported earlier this year that at least two companies were contacted by a UK department with opportunities to be involved in the Cali Fund before its launch in February, but no company took up on the offer.
The first contribution coming from a “startup that has just begun operations squarely points the finger to the profit-making enterprises that are not contributing”, Dr Siva Thambisetty, associate professor of law at the London School of Economics, tells Carbon Brief. Thambisetty adds:
“Strident cries of lack of legal certainty, unfairness or stacking obligations [combining responsibilities from different agreements and laws] would be more credible if industry organisations encouraged large firms that use DSI to begin contributing, instead of denying the last 20 years of multilateral [negotiations] that have led to this point.”
Dr June Rubis – Indigenous peoples and local communities (IPLC) lead from Asia on the Cali Fund’s steering committee – welcomes TierraViva AI’s “first step”, but tells Carbon Brief that the “real test lies ahead” and that it is “now time for larger actors to step forward”.
She says the Cali Fund offers “clarity” on how the private sector can directly increase support to UN-backed funds at a time when “states are retreating” from their climate and biodiversity finance obligations:
“It’s not a voluntary offsetting scheme or a…risky or fringe fund; it’s a multilateral mechanism designed to meet the highest fiduciary and equity standards. We invite companies to see this not as philanthropy, but as participation in a globally endorsed system where trust is institutionalised, benefits are traceable and equity is operationalised.
“Contributing to the Cali Fund isn’t just ethical, it’s strategic. [But] It’s about more than funding: it’s about trust, power-sharing and making sure IPLCs are part of the decisions, not just the outcomes.”
The post ‘Cali Fund’ aiming to raise billions for nature receives first donation – of just $1,000 appeared first on Carbon Brief.
‘Cali Fund’ aiming to raise billions for nature receives first donation – of just $1,000
A scenario that meets the “net-zero by 2050” goal would be the “cheapest” option for the UK, according to modelling by the National Energy System Operator (NESO).
In a new report, the organisation that manages the UK’s energy infrastructure says its “holistic transition” scenario would have the lowest cost over the next 25 years, saving £36bn a year – some 1% of GDP – compared to an alternative scenario that slows climate action.
These savings are from lower fuel costs and reduced climate damages, relative to a scenario where the UK fails to meet its climate goals, known as “falling behind”.
The UK will need to make significant investments to reach net-zero, NESO says, but this would cut fossil-fuel imports, support jobs and boost health, as well as contributing to a safer climate.
Slowing down these efforts would reduce the scale of investments needed, but overall costs would be higher unless the damages from worsening climate change are “ignored”, the report says.
In an illusory world where climate damages do not exist, slowing the UK’s efforts to cut emissions would generate “savings” of £14bn per year on average – some 0.4% of GDP.
NESO says that much of this £14bn could be avoided by reaching net-zero more cheaply and that it includes costs unrelated to climate action, such as a faster rollout of data centres.
Notably, the report appears to include efforts to avoid the widespread misreporting of a previous edition, including in the election manifesto of the hard-right, climate-sceptic Reform UK party.
Overall, NESO warns that, as well as ignoring climate damages, the £14bn figure “does not represent the cost of achieving net-zero” and cannot be compared with comprehensive estimates of this, such as the 0.2% of GDP total from the UK’s Climate Change Committee (CCC).
Net-zero is the ‘cheapest option’
Every year, NESO publishes its “future energy scenarios”, a set of four pathways designed to explore how the nation’s energy system might change over the coming decades.
(Technically the scenarios apply to the island of Great Britain, rather than the whole UK, as Northern Ireland’s electricity system is part of a separate network covering the island of Ireland.)
Published in July, the scenarios test a series of questions, such as what it would mean for the UK to meet its climate goals, whether it is possible to do so while relying heavily on hydrogen and what would happen if the nation was to slow down its efforts to cut emissions.
The scenarios have a broad focus and do not only consider the UK’s climate goals. In addition, they also explore the implications of a rapid growth in electricity demand from data centres, the potential for autonomous driving and many other issues.
With so many questions to explore, the scenarios are not designed to keep costs to a minimum. In fact, NESO does not publish related cost estimates in most years.
This year, however, NESO has published an “economics annex” to the future energy scenarios. It last published a similar exercise in 2020, with the results being widely misreported.
In the new annex, NESO says that the UK currently spends around 10% of GDP on its energy system. This includes investments in new infrastructure and equipment – such as cars, boilers or power plants – as well as fuel, running and maintenance costs.
This figure is expected to decline to around 5% of GDP by 2050 under all four scenarios, NESO says, whether they meet the UK’s net-zero target or not.
For each scenario, the annex adds up the total of all investments and ongoing costs in every year out to 2050. It then adds an estimate of the economic damages from the greenhouse gas emissions that primarily come from burning fossil fuels, using the Treasury’s “green book”.
When all of these costs are taken into account, NESO says that the “cheapest” option is a pathway that meets the UK’s climate goals, including all of the targets on the way to net-zero by 2050.
It says this pathway, known as “holistic transition”, would bring average savings of £36bn per year out to 2050, relative to a pathway where the UK slows its efforts on climate change.
The overall savings, illustrated by the dashed line in the figure below, stem primarily from lower fuel costs (orange bars) and reduced climate damages (white bars).
Note that the carbon pricing that is already applied to power plants and other heavy industry under the UK’s emissions trading system (ETS) is excluded from running costs in the annex, appearing instead within the wider “carbon costs” category.
This makes the running costs of fossil-fuel energy sources seem cheaper than they really are, when including the ETS price.
Net-zero requires significant investment
While NESO says that its net-zero compliant “holistic transition” pathway is the cheapest option for the UK, it does require significant upfront investments.
The scale of the additional investments needed to stay on track for the UK’s climate goals, beyond a pathway where those targets are not met, is illustrated in the figure below.
This shows that the largest extra investments would need to be made in the power sector, such as by building new windfarms (shown by the dark yellow bars). This is followed by investment needs for homes, such as to install electric heat pumps instead of gas boilers (dark red bars).
These additional investments would amount to around £30bn per year out to 2050, but with a peak of as much as £60bn over the next decade.
These investments would be offset by lower fuel bills, including reduced gas use in homes (pale red) and lower oil use in transport (mid green).
Notably, NESO says it expects EVs to be cheaper to buy than petrol cars from 2027, meaning there are also significant savings in transport capital expenditure (“CapEx”, dark green).
Again, the biggest savings in “holistic transition” relative to “falling behind” would come from avoided climate damages – described by NESO as “carbon costs”.
Net-zero cuts fossil-fuel imports
In addition to avoided climate damages, NESO says that reaching the UK’s net-zero target would bring wider benefits to the economy, including lower fuel imports.
Specifically, it says that climate efforts would “materially reduce” the UK’s dependency on overseas gas, with imports falling to 78% below current levels by 2050 in “holistic transition”. Under the “falling behind” scenario, imports rise by 35%”, despite higher domestic production.
This finding, shown in the figure below, is the opposite of what has been argued by many of those that oppose the UK’s net-zero target.
NESO goes on to argue that the shift to net-zero would have wider economic benefits. These include a shift from buying imported fossil fuels to investing money domestically instead, which “could bring local economic benefits and support future employment”.
The operator says that there is the “potential for more jobs to be created than lost in the transition to net-zero” and that there would be risks to UK trade if it fails to cut emissions, given exports to the EU – the UK’s main trading partner – would be subject to the bloc’s new carbon border tax.
Beyond the economy, NESO points to studies finding that the transition to net-zero would have other benefits, including for human health and the environment.
It does not attempt to quantify these benefits, but points to analysis from the CCC finding that health benefits alone could be worth £2.4-8.2bn per year by 2050.
Investment is higher for net-zero than for ‘not-zero’
It is clear from the NESO annex that its net-zero compliant “holistic transition” pathway would entail significantly more upfront investment than if climate action is slowed under “falling behind”.
This idea, in effect, is the launchpad for politicians arguing that the UK should walk away from its climate commitments and stop building new low-carbon infrastructure.
As already noted, the NESO analysis shows that this would increase costs to the UK overall.
Still, NESO’s new report adds that “falling behind” would “save” £14bn a year – relative to meeting the UK’s net-zero target – as long as carbon costs are “ignored”.
Specifically, it says that ignoring carbon costs, “holistic transition” would cost an average of £14bn a year more out to 2050 than “falling behind”, which misses the net-zero target. This is equivalent to 0.4% of the UK’s GDP and is illustrated by the solid pink line in the figure below.
Some politicians are indeed now willing to ignore the problem of climate change and the damages caused by ongoing greenhouse gas emissions. These politicians may therefore be tempted to argue that the UK could “save” £14bn a year by scrapping net-zero.
However, NESO’s report cautions against this, stating explicitly that the “costs discussed here do not represent the cost of achieving net-zero emissions”. It says:
“Our pathways cannot provide firm conclusions over the relative costs attached to the choices between pathways…We reiterate that the costs discussed here do not represent the cost of achieving net-zero emissions.”
It says that the scenarios have not been designed to minimise costs and that it would be possible to reach net-zero more cheaply, for example by focusing more heavily on EVs and renewables instead of hydrogen and nuclear.
Moreover, it says that some of the difference in costs between “holistic transitions” and “falling behind” is unrelated to climate action. Specifically, it says that electricity demand from data centres is around twice as high in “holistic transitions”, adding some £5bn a year in costs in 2050.
In addition, NESO says that most of the “saving” in “falling behind” would be wiped out if fossil fuel prices are higher than expected – falling from £14bn per year to just £5bn a year – even before considering climate damages and wider benefits, such as for health.
Finally, NESO says that failing to make the transition to net-zero would leave the UK more exposed to fossil-fuel price shocks, such as the global energy crisis that added 1.8% to the nation’s energy costs in 2022. It says a similar shock would only cost 0.3% of GDP in 2050 if the country has reached net-zero – as in “holistic transition” – whereas costs would remain high in “falling behind”.
The post Net-zero scenario is ‘cheapest option’ for UK, says energy system operator appeared first on Carbon Brief.
Net-zero scenario is ‘cheapest option’ for UK, says energy system operator
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