LAB ACCOUNT

RESEARCH SUMMARY

CONFRONTING
CLIMATE CHANGE

ABOUT THIS PUBLICATION
This research summary is based on a full report commissioned by NESTA
from CRed, the Tyndall Centre for Climate Change Research and the Norwich
Business School, all based at the University of East Anglia. It describes the
challenge of climate change, assesses the role that innovation is currently
playing in meeting this challenge, and identifies where innovation needs to
be harnessed more fully. It covers two broad areas: transport (from changes
to vehicles and fuels to infrastructure and planning); and energy and energy
efficiency (from generation, including renewable and microgeneration, to
energy efficiency and demand). The full report is available on the NESTA
website at www.nesta.org.uk
Acknowledgements
The original research was conducted by the University of East Anglia. This
summary was written by Dr Michael Harris at NESTA. The views expressed in
this publication are those of NESTA only.
02 CONFRONTING CLIMATE CHANGE
Climate change is a grave danger to human society. There is a clear and
urgent need to reduce greenhouse gas emissions significantly in the
short term – within the next 5-10 years – and then keep them down.
Innovation is crucial to meeting this challenge. This will have to range
from new technologies for generating and supplying power, to new
behaviours for work and travel. Fundamentally, if we are to reduce
emissions dramatically, our focus needs to shift from doing things better
to doing things differently.
A large number of measures have been introduced by UK government
to reduce emissions. But these do not yet amount to a comprehensive
strategy for a low carbon economy and society. Existing efforts are
heavily reliant on the success of a relatively small set of measures.
Instead, we need a broader and more radical approach to deliver the
economic and social transformation we require.
This means a more balanced system of support that promotes social
as well as scientific innovation. Technology is unlikely to deliver all of
the reductions we need. It means recognising the role that the users
of energy – such as households and businesses – can play in reducing
emissions. Local rather than national initiatives will be increasingly
important in this respect. And it means acting with a greater sense of
urgency, increasing the pace at which financial and practical barriers
to innovation are addressed. Energy efficiency and microgeneration in
homes and businesses are just two areas that require faster progress.
There are no historical precedents for the changes we must achieve. Our
response must be equally unprecedented.
CONFRONTING CLIMATE CHANGE 03
 The challenge of The costs of complacency

climate change Remaining above a 2°C rise in temperature will likely

cause three billion people to experience water shortages
and leave up to 220 million more people short of food.
At 3°C, a further 400 million people would be at risk of
hunger.

Figure 2: Predicted consequences of climate change by temperature increase

0°C 1°C 2°C 3°C 4°C 5°C

Climate change is a grave danger to human society. It to cut emissions by 50 per cent by 2050 (the UK has Food Falling crop yields in many developing regions
results from emissions of CO2 and other greenhouse established its own target of 80 per cent). The longer
gases. Avoiding its worst consequences requires very we leave it, the deeper these cuts have to be. Figure 1
Rising number of people at risk from hunger
significant reductions in these emissions on a global illustrates the annual rate of reductions necessary to Serve impacts
(25-60 per cent increase in the 2080s in one
Entire regions experience
in marginal major decline in crop yield
scale – but every country and community will need to achieve certain levels of lower emissions (‘GtCO2-e/ Sahel region
study with weak carbon fertilization), with
(e.g. up to one third in Africa)
half of the increase in Africa and West Asia
contribute. yr’ refers to gigatonnes of carbon dioxide equivalent
emissions per year). Emissions need to be radically
We have probably already crossed a ‘tipping point’ for reduced as soon as possible – and then kept down. As Rising crop yields in Yields in many developed regions
high-latitude developed decline even if strong carbon fertilization
dangerous climate change (commonly thought to be noted in the Stern Review on the Economics of Climate countries if strong fertilization
an increase in global average temperature of 2°C above Change, there are no historical precedents for the
pre-industrial levels). Starting now, the world needs reductions in emissions we need to achieve.
Water
Significant changes in water availability
(one study projects more than a billion people
suffer water shortages in the 2080s, many in
Africa, while a similar number gain water)
Small mountain glaciers
disappear worldwide – Sea level rise threatens
potential threat to water major world cities, including
supplies in several areas London, Shanghai, New York,
Figure 1: Required levels of emissions each year to avoid dangerous climate change... Greater than 30 per cent decrease Tokyo and Hong Kong
in runoff in Mediterranean
and Southern Africa

...with peak in 2016 ...with peak in 2028

Ecosystems Coral reefs ecosystems Possible onset of
70 70 extensively and eventually collapse of part or all of
irreversibly damaged Amazonian rainforest

60 60
Large fraction of ecosystems unable to maintain current form

50 50
Many species face extinction
(20-50 per cent in one study)
40 40
GtCO2-e/yr GtCO2-e/yr
30 30 Extreme
Rising intensity of storms, forest fires, droughts, flooding and heat waves
weather
20 20 events
Small increases in hurricane
intensity lead to a doubling of
10 10 damage costs in the US

0 0
2000 2050 2100 2150 2200 2000 2050 2100 2150 2200 Risk of rapid Risk of weakening of natural carbon absorption and possible increasing
Year Year climate change natural methane releases and weakening of the Atlantic THC
and major
2016: 1.5% 2016: 3% 2016: 3% low 2016: 4% low 2028: 1.5% 2028: 3%
irreversible
Increasing risk of abrupt, large-scale shifts in the
impacts Onset of irreversible melting
climate system (e.g. collapse of the Atlantic THC
of the Greenland ice sheet
and the West Antarctic Ice Sheets)
Source: UK Committee on Climate Change.

Source: The Stern Review.

04 CONFRONTING CLIMATE CHANGE CONFRONTING CLIMATE CHANGE 05

 INNOVATION FOR
climate change
‘Innovation’ used to mean just brand new technology.
Now we understand it much more broadly. It can range
from new products to new services, business models or
organisational structures – anything that better meets
people’s needs in a distinctively new way.
This broad range of innovation will be crucial to meeting
the challenge of climate change. In particular, given the
requirement to reduce emissions dramatically, we need
much more radical innovation (doing things differently)
Examples of innovation
1 Wave power
Ocean waves are increasingly being viewed as a viable
source of renewable energy. It is estimated that waves
could provide 15–25 per cent of the UK’s current
electricity demand. Scotland, which has 10 per cent of
the EU’s potential wave power, is building the Pelamis
Wave Farm two kilometres off the west coast of the
Orkney mainland. When completed this will be the
biggest wave farm in the world.
3 ULTra
ULTra is a potential revolution in low-cost, sustainable
public transport. It is an advanced form of Personal Rapid
Transit (PRT), providing on-demand driverless travel, and
is ready for application right now in cities and other major
infrastructure such as airports. Electrically powered
and operated by computers, it creates zero emissions at
the point of use, with significantly reduced energy usage
overall. Each vehicle does the job of about 40 cars.
06 CONFRONTING CLIMATE CHANGE
rather than incremental innovation (doing things better).
This innovation will have to encompass how we generate and
supply power, to how we travel and shop. In other words, it
will have to range from new technologies to new behaviours.
But, because of the need to make deep cuts in emissions
as soon as possible, we also need to harness the full
potential of existing examples of innovation in response
to climate change.
2 Geo-pressure
Geo-pressure is a proven technology, used in Europe
and North America, to generate carbon-free electricity.
Natural gas emerges from the ground under intense
pressure, which is reduced using pressure reduction
stations before being distributed to consumers. The
energy company 20C is promoting the installation of
turbines at over 2,000 stations in the UK, which could
reduce emissions by at least one million tonnes a year –
equivalent to the annual emissions from the NHS.
4 Transition Towns
The idea of Transition Towns, developed in Ireland,
aims to equip communities to respond to climate
change and declining oil. Local communities use
varying methods to raise awareness of sustainable
living and to encourage reduced energy usage, such as
community gardens to produce food and repairing old
items. Totnes Transition Town group have created the
Totnes Pound, a local currency to encourage the use
of local trade to reduce food and trade miles.
Barriers to radical innovation in climate change
To meet the challenge of climate change, we first need to recognise some of the current barriers to radical innovation.
The full cost of emissions aren’t counted
In common with a number of social problems, climate change represents a kind of ‘market failure’, where there exists another,
better outcome to the present result. This has happened because the full (economic and social) cost of greenhouse gases has not
been accounted for historically. The consequence is that the full benefits of innovations that could reduce emissions are also not
recognised.
Not all emissions are treated equally
Government is the main actor that could act to resolve this market failure. However, a number of goods and services that produce
significant emissions are deemed essential to our existing way of life, or at least taken for granted. Governments tend to try
and protect such goods and services, for obvious reasons. This unwillingness to question the status quo inhibits more radical
innovations that challenge this status quo.
Users are often neglected
There is a particular unwillingness to examine the role of users, such as households and businesses. But focusing only on the
producers of greenhouse gases (such as energy producers) results in a narrow view of emissions. Households are responsible for
nearly a quarter of emissions in terms of end use, and transport another quarter. In other words, just two areas where the public’s
behaviour could make a major difference are responsible for nearly half of all emissions. Incorporating the users of energy into
our understanding of the challenge produces a more accurate picture and also points to the importance of these users in helping to
reduce emissions.
Policy and support can be fragmented
The success of any particular innovation is affected by a range of policy, regulatory and funding measures that together define the
overall ‘innovation system’ (see the next page). However, due to policy being developed by different government departments and
agencies, overall support for innovation can sometimes be fragmented and contradictory rather than representing a coherent system.
Lack of funding, planning regulations and slow decision-making are common complaints from innovators. This fragmentation
particularly disadvantages more radical innovations, which need the greatest support if they are to overcome the status quo.
Existing approaches are self-reinforcing
As a result of these barriers, our existing high carbon society is ‘locked-in’. The infrastructure of society (for example, in transport)
reinforces a set of activities and behaviours (frequent car or airplane journeys), which in turn reinforce the ‘need’ for more of the
same infrastructure (more roads and airports). Radical innovations, which by definition challenge some of the assumptions behind
this infrastructure and behaviour, are locked-out. They struggle for support.
The overall innovation challenge in climate change is
to create and sustain the most positive environment
These innovations will need to provide for fundamental
changes in the way we live, work and travel. We need
possible for radical innovations that can produce to develop a vibrant and competitive market for such
significant reductions in emissions. innovations through a coherent system of policies,
regulations, funding and support.
CONFRONTING CLIMATE CHANGE 07
 The innovation system
in climate change
Key: Strong Medium Weak
The majority of investment in low carbon
technologies and services is focused on
relatively near-market, mature ideas. There
remains a significant gap in early-stage
funding for low carbon innovation, despite
the Environmental Transformation Fund, the
Energy Technologies Institute, and the
Technology Strategy Board
Investors
The innovation challenge for energy
(compared with transport) is more
oriented towards deploying existing
sustainable energy generation and
energy efficiency measures, as
opposed to development of
new-to-the-world technologies
Financial assistance and advice to save
energy have focused on households in
fuel poverty (despite this, awareness
remains low), and there are few
incentives to encourage individuals to
choose more sustainable travel options
08 CONFRONTING CLIMATE CHANGE
About this diagram
A range of policy, regulatory and funding measures together
define the overall ‘innovation system’. These measures ‘push’
and ‘pull’ the market in a particular direction, influencing the
levels of investment made in developing and implementing
innovative solutions and the extent to which these solutions
can penetrate and transform markets. This diagram illustrates
the strength of aspects of this system (with particular
reference to transport and energy), based on the more
detailed mapping work carried out as part of this research.
The Climate Change Act 2008 includes legally
Producers of goods and binding targets for emission reductions of at
services least 80 per cent by 2050, supported by a
Product and carbon budgeting system
technology
‘push’
R&D In transport, measures focus on incremental
changes in vehicle emissions through
reform of company car taxation, graduated
Low carbon excise duty, the fuel duty escalator and the
Government
Renewable Transport Fuel Obligation
‘fixes’, new Demonstration
(RTFO) – as opposed to provision and
solutions and (policies,
uptake of alternative forms of transport
technologies incentives,
regulation)
Commercial
deployment
Some measures appear to act against
government targets, for example, the
Market Department for Transport’s (DfT)
‘pull’
methodology for appraising transport
schemes (NATA, recently revised), or the
Consumers of goods and introduction of the car scrappage scheme
services which failed to include rules or incentives
for emissions from replacement vehicles
CONFRONTING CLIMATE CHANGE 09
 Gaps and weaknesses in
the innovation system
in climate change
Optimising each aspect of the
system is crucial to ensuring that
innovation can be harnessed
to respond effectively to the
challenge, but there are some
significant weaknesses.
10 CONFRONTING CLIMATE CHANGE
A large number of measures have been introduced by
UK government to reduce emissions and move the UK
towards a low carbon economy. More measures are being
introduced all the time.
However, this does not mean that we have a fully-
functioning system for innovation. Current measures,
whilst essential, do not amount to a strategy to promote
and deliver the radical economic and social change we
need. These measures are unlikely to deliver the scale of
transformation that is required.
Existing efforts are heavily reliant on the success of a
relatively small set of measures
Any failure of these measures will therefore have a very
substantial impact on our overall success in reducing
emissions. 75-80 per cent of the intended CO2 emissions
reductions for 2010-2020 set out in the Government’s
Climate Change Programme are dependent on only ten
measures. These range from the Renewables Obligation
and the European Union’s Emissions Trading System,
to the work of the Carbon Trust and domestic building
regulations.
For example, in transport, target emissions reductions
are highly dependent on measures geared towards small
incremental changes in vehicle emissions through reform
of company car taxation, graduated vehicle excise duty,
the fuel duty escalator and the Renewable Transport
Fuel Obligation (RTFO). Similarly, in the domestic sector,
reductions are heavily reliant on the Carbon Emissions
Reduction Target (including the obligation on energy
suppliers to promote reductions including through
microgeneration) and regulations for new buildings.
The danger of relying on a small number of measures
is already being borne out. UK central government has
abandoned its previous and long-standing target of a 20
per cent reduction by 2010 (the most recent figure for
2007 suggests that UK CO2 emissions were down only
8.2 per cent from their 1990 level).
Longer-term investment in new technologies
remains below what is needed
The majority of existing investment in low carbon
technologies and services is focused on relatively
mature ideas that are near-to-market. There is
a bigger gap than ever between venture capital
investment and the outputs from research.
There are a number of measures (such as the
Environmental Transformation Fund, the Energy
Technologies Institute, the Technology Strategy
Board, and the Market Transformation Programme)
that seek to address some of these issues. But more
early-stage funding for low carbon innovation is
required to bridge this gap. The assumption that – at
current levels of support – venture capital will pull
low carbon innovations through the research and
development process is misplaced, particularly given
the wrong signals that reduced oil and gas prices
are currently providing.
However, overall the system is too-weighted
towards technological rather than social innovation
Both are important, but the scale of the challenge we
face means that technological innovation is, in itself,
unlikely to deliver the necessary reductions. Technology
in, for example, the generation of sustainable energy,
may put us in a position of being able to make deep cuts
in emissions in the medium to long term. However, if we
are to stabilise emissions so that they peak in 2015-2020
there is also a need for much more radical and rapid
innovation to promote sustained behavioural and lifestyle
changes.
This involves not just simple changes we can all make to
reduce the carbon intensity of our lifestyles (switching
off lighting and appliances or driving more carefully),
but also developing more positive outlooks and attitudes
concerning the need for, and benefit of, more radical
fundamental social change.
Along with this comes acceptance of the necessary large
scale technological adoption of, for example, renewable
energy and other changes such as electric vehicles, the
use of new forms of communication to reduce the need
for travelling, and changes to work traditional practices
such as working from home.
Yet initiatives to promote and support behaviour
change have not yet made a major impact
The main measures in behavioural and lifestyle change
are more geared towards a trickle of emissions cuts over
time from ‘business as usual only better’ measures.
In transport, the focus of behavioural change is fairly
Credit: Pelamis Wave Power Limited
limited in scope to the choice of which car, as opposed to
uptake and provision for alternative forms of transport.
Similarly, while greener regulations for new buildings are
important, nearly 90 per cent of existing buildings will
still be here in 2050, so there is a need to improve the
energy efficiency (and related individual behaviours) of
the current stock.
Defra’s Behaviour Change Unit and also the new joint
Defra/ESRC Centre for Sustainable Behaviours represent
efforts to develop policies to promote behavioural
change, but these are unlikely in themselves to provide
results over a sufficiently short timescale to deliver the
radical shift that is required. ‘Act on CO2’ is an example
of an attempt to improve carbon literacy, but neither the
Carbon Trust (for business) and Energy Saving Trust (for
households) are yet having the impact that is required to
reduce emissions quickly and dramatically. Behavioural
change tends to be stimulated more by local influences;
national schemes and measures may not succeed by
themselves.
Overall, the system is weighted towards incremental
change (‘doing things better’) rather than radical
innovation (‘doing things differently’)
The current package of core measures, while essential
to the delivery of the required reductions in emissions,
does not in the main deliver or promote radical change.
They are unlikely to deliver the scale of social and market
transformation that is necessary – either to achieve the
targets we have already committed ourselves to, or to
avert the impact from climate change that we are likely
to experience otherwise.
CONFRONTING CLIMATE CHANGE 11
 Strengthening the
innovation system
in climate change
We need a much stronger and
more diverse market in new
approaches – products, services,
organisations and initiatives –
if we are to respond to climate
change. To build such a market,
a number of changes are needed.
12 CONFRONTING CLIMATE CHANGE
Most fundamentally, government needs to develop a
much bolder strategy to stimulate and support radical
technological and social innovation. Such a strategy
needs to build confidence in a future low carbon
economy and society. This would encourage businesses
and individuals to look beyond short-term factors (such
as the price of oil), to focus on the longer-term need to
invest in new sources of energy and ways of living that go
beyond oil and other fossil fuels.
This new strategy needs to incorporate a more balanced
approach to innovation. This should encompass not
only the development and deployment of technological
innovation but also social innovation and behavioural
change. Encouraging social innovation and behavioural
change is a fundamental part of delivering deep
emissions cuts. A new strategy needs to be supported
by a strong and consistent communications message for
all of us to ‘do things differently’. Because more radical
change is required – and because this change needs to
include behavioural change – this new strategy needs to
emphasise the opportunities and benefits of moving to a
low carbon society.
Encouraging behaviour change requires a coherent and
coordinated approach – spanning legislation, regulation,
taxation and revenue, and grants, as well as better
communication of the compelling arguments for change.
Efforts to encourage and support behaviour change
need to be local as well as national. Community
initiatives such as NESTA’s Big Green Challenge provide
examples of how to promote change at a local level.
The Scottish Government’s £20 million Climate
Challenge Fund, to support work that builds capacity in
communities to respond to climate change, is another
example of an initiative that is helping to generate
innovative local approaches.
Travel and behavioural change is an area that requires
much greater emphasis. The strategy in this area needs
to challenge the need for travel, as well as the mode of
travel, purchasing choices and driver behaviours. This,
in turn, calls for greater innovation in the workplace
and working practices such as home working, flexible
working and use of new and existing communications
technologies.
This new strategy needs a greater sense of urgency, to
increase the pace at which financial and practical barriers
to innovation and the deployment of technologies and
solutions are currently being addressed. A number of
measures are already being applied but more radical and
more rapid progress is required. For example, efforts
to deploy existing and new technologies for energy
efficiency and microgeneration in homes and businesses
need to be both more inventive and aggressive,
particularly in addressing obstacles such as the initial
capital costs of financing of installation.
CONFRONTING CLIMATE CHANGE 13
 Opportunities of responding
to climate change
A bolder strategy for innovation in response to climate change would emphasise the
opportunities of moving to a low carbon society. It would move beyond the widely-held view that
a low carbon society represents only a threat to current lifestyles. Innovation means change, of
course, which can be difficult and disruptive. This is why we need to promote the benefits of low
The Big Green Challenge
carbon living and working. Developing more positive attitudes to a low carbon society will be
crucial to making it a reality.
The Big Green Challenge, launched in October 2007, is a £1 million challenge
As has been argued by many observers, the current efforts by policymakers in the UK and around prize designed to stimulate and support community-led responses to climate
the world to ensure that we emerge as quickly as possible out of the recession also represent an
opportunity to make a major step towards low carbon living and working, to:
change. From over 350 entries, 100 were supported to develop their ideas
into detailed plans. Ten finalists were selected and are now implementing
•• remove some of the bureaucratic and institutional barriers to radical innovation their plans as part of their challenge year. £1 million will be allocated to
•• promote energy efficiency and low carbon technologies successful finalists based on five criteria: CO2 emissions reduction; innovation;
long-term impact; potential for growth, replication and transferability; and
•• reinforce the cost of carbon in pricing measures
community engagement.
•• invest in existing and emerging low carbon innovation sectors

•• train and re-educate workers for these sectors and others

•• harness a wider collective desire for change, and

•• build confidence in a long-term commitment to reducing emissions across our economy and
society.

14 CONFRONTING CLIMATE CHANGE CONFRONTING CLIMATE CHANGE 15

 NESTA
1 Plough Place London EC4A 1DE
research@nesta.org.uk
www.nesta.org.uk

Published: July 2009

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