Cutting emissions from buildings and transport across the UK could yield billions of pounds in economic “co-benefits”, leaving people healthier and better off, a new study finds.
The research calculates that meeting sectoral climate targets out to 2037 could result in at least £164bn worth of benefits in six UK urban centres, from Belfast to Manchester.
The UK-wide figure is likely to be far higher, say the authors, because this analysis only covers a handful of regions and does not account for all the co-benefits, including the impact cutting emissions would have on climate change.
Some right-leaning politicians and media outlets like to claim that the UK’s net-zero policies should be abandoned due to “excessive” costs. This has led to many inaccurate claims about the “cost of net-zero”.
Yet official analysis for the UK government has repeatedly concluded that the lower costs of running clean technologies and cutting reliance on fossil fuels will likely save money, offsetting much of the upfront investment costs.
The new study, published in the Journal of Environmental Studies and Sciences, argues that while such running cost savings are significant, they are dwarfed by the “social benefits” of net-zero. These include the economic benefits of improved air quality, less congested roads and warmer homes.
The researchers calculate that around four-fifths of the economic gains from cutting building and transport emissions over the next decade will be social benefits. This is mostly due to fewer people driving cars, with far-reaching consequences for everyone’s health.
‘Cost’ of net-zero
Climate sceptics and some right-leaning politicians have seized on the “cost of net-zero” as an argument to weaken climate policies or abandon the target altogether.
This rhetoric cut through when the previous Conservative government rolled back core climate targets, citing the burden on “hard-pressed British families”.
The recent election saw both the Conservatives and Reform UK spreading misleading messages about the cost of net-zero. Typically, they chose to ignore the cost of business-as-usual, plus cited costs but not benefits or omitted the costs of failing to tackle climate change.
Achieving the UK target of net-zero emissions by 2050 will require significant investment in low-carbon infrastructure. Government advisors at the Climate Change Committee (CCC) place the figure at £50bn a year by 2030 – mostly delivered by the private sector.
Yet the CCC and others have also stressed that these numbers do not account for the financial benefits of net-zero. Ultimately, the lower costs of driving electric cars, heating well-insulated homes and cutting reliance on gas are expected to save people money, offsetting most of the cost of net-zero investments.
But even this is only part of the story. Moving to a low-carbon economy is also set to bring all sorts of other benefits, including cleaner air, less traffic and improved health.
These “co-benefits” of climate action have been “side-lined in many economic analyses”, according to the new study. This is partly because it is hard to place a value on things that lack data, are difficult to quantify or vary depending on location and context.
Amid pushback against net-zero, the paper argues that it is essential to quantify these co-benefits. Study co-author Ruaidhrí Higgins-Lavery, a senior carbon analyst at the Edinburgh Climate Change Institute, tells Carbon Brief:
“At the end of the day, we need to decarbonise – we have a legal commitment – and the way we do that will have massive implications across economic and social barriers…If you incorporate co-benefits into the decision-making process, we can have a more balanced deployment of measures.”
Among Higgins-Lavery’s six co-authors, two have affiliations at the consultancy PwC and two at the consultancy Your Climate Strategy. The latter describes its focus as “designing and delivering ambitious climate strategies” for local authorities, businesses and other organisations.
Case for action
The study focuses on six major urban regions – three in England, one in Scotland, one in Wales and one in Northern Ireland – which are home to 13% of the UK population. They are Belfast, Cambridgeshire and Peterborough, Glasgow, Greater Manchester and Liverpool.
It assesses policies that would allow the UK to meet “sixth carbon budget” targets for transport and buildings in these areas, out to 2037. (The CCC says nearly half of the emissions reductions required over this period will need to come from these two sectors.)
The analysis covers around 750 measures that would collectively help curb emissions by the sixth carbon budget target of 78% by 2035, compared to 1990 levels.
In total, the researchers find that this programme of action for achieving the sixth carbon budget would generate £179bn in total benefits in these regions. Accounting for investment costs, this amounts to £164bn in net benefits.
These benefits are made up of three components. First, the researchers use “best-practice UK government methods” – including the Treasury’s own “green book” – to assess the financial costs and benefits of investing in low-carbon homes and transport.
Their assessment finds that the investment required to electrify transport, build charging stations and replace gas boilers with heat pumps is significantly offset by the energy savings and lower costs of running these technologies.
Overall, the analysis concludes that these regions would need to invest £14.5bn, but would save £23.2bn – meaning a saving of £8.7bn over this period.
Second, the researchers assess the “carbon case for action” by converting the emissions savings from policy interventions into monetary values.
They use the UK’s own “carbon value” calculations, which are the costs the government says are associated with cutting a tonne of carbon dioxide (CO2), and are used to gauge the impact of climate policies. This results in savings of £13.6bn.
However, while the financial and carbon benefits are substantial, the study concludes that £142bn – or 79% of the total benefits – are “social”.
In order to arrive at this figure, the team uses a range of well-established methods to convert everything from warmer homes to reduced traffic accidents into monetary values.
The chart below shows how the social benefits of the transport and building policies set out in the new study far exceed the investment needs over the sixth carbon budget period. It also shows that social benefits are significantly larger than financial and carbon benefits.
Higgins-Lavery notes that while they attempted to be as comprehensive as possible, the team’s calculation of total benefits is likely an underestimate. This is because many major benefits that could arise from cutting emissions, including avoided harm to food supplies and lower heat stress, were “beyond the scope” of their analysis.
Cutting cars
The study concludes that by far the biggest co-benefits come from reducing the number of cars on the roads. Instead, people would depend more on public transport, walking and cycling.
The resulting dip in congestion and increase in physical activity accounts for 86% of the social benefits identified. Among other things, cities would see lower healthcare costs due to fewer car accidents, less air pollution and fitter populations.
The researchers note that their estimate of per-capita health improvements resulting from transport sector policies is between four and 13 times higher than previous studies.
This is largely due to their optimistic estimates of how much people will choose to walk or cycle. The authors defend this assumption on the basis that it is still lower than the active transport rates seen in the Netherlands and Denmark, and similar to those seen in Paris.
Higgins-Lavery tells Carbon Brief that all of this highlights the importance of different policy decisions made on the path to net-zero:
“If we don’t prioritise things like active travel – if we instead prioritise switching to electric vehicles – we could miss out on a lot of social benefits.”
As it stands, the UK’s highest-profile net-zero transport policies have focused on electric cars. The government has a target to deliver a “world-class cycling and walking network in England by 2040”, but this has been hampered by years of underinvestment.
Citing this as a key example, Higgins-Lavery and his colleagues write that co-benefits are “significantly affected by value-based decisions” made during the policymaking process.
With this in mind, they call for organisations such as the CCC to be clearer about the assumptions that inform their advice to the government.
(The research group’s work will inform the CCC”s upcoming seventh carbon budget, which will include an assessment of “non-monetary benefits and costs”.)
‘Lopsided picture’
Overall, the authors argue that accounting for co-benefits can help to make the economic case for net-zero and “overcome ideological barriers” to climate action.
Prof Sam Fankhauser, a climate change economist at the University of Oxford who was not involved in the new study, welcomes the new paper. He tells Carbon Brief:
“Most net-zero cost studies acknowledge [co-benefits], but don’t actually quantify them. This produces a lopsided picture since the qualitatively assessed benefits get forgotten and the focus is on the hard cost numbers.”
He notes that focusing on transport and buildings alone means the authors “chose sectors where the indirect benefits of action are particularly pronounced”, compared to other sectors such as power and industry.
However, Fankhauser says this is “swings and roundabouts”, considering that, for example, the direct costs of decarbonising buildings are higher than for the power sector.
Dom Boyle, study co-author and director of net-zero policy and economics at the consultancy PwC, notes that the public is “not particularly aware” of the co-benefits of net-zero. He tells Carbon Brief:
“There has been a reticence from previous governments to communicate these benefits to the public, which has not been matched by the relish the right-wing press show in communicating the dis-benefits.”
This is despite the CCC estimate that nearly two-thirds of the emissions cuts required to meet the UK’s net-zero target will depend on individual choices and behaviours.
Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change and the Environment, who was not involved in the study, says co-benefits should not be viewed as merely “coincidental” by-products of climate policy. He tells Carbon Brief:
“It is far more accurate to talk about the multiple benefits of smart policies that address the great environmental crises, and these should be central to any cost-benefit analysis.”
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