Environment

The United Kingdom is among world leaders in reducing domestic greenhouse gas emissions, and a broad political consensus supports the target to reduce net emissions to zero by 2050. The UK’s strong institutional framework is an inspiration to countries around the world, and the country is pioneering work to embed climate considerations in the financial sector. Achieving carbon neutrality will require policy to match ambition. Emission reductions so far were largely driven by electricity generation, a sector targeted by explicit pricing instruments and a cost efficient renewables auction-design subsidy scheme. Expanding pricing instruments across the economy is an essential building block to reach targets. Such measures will be more effective if complemented by well-designed sectoral regulation and subsidies, and more acceptable if implemented once energy prices have started to come down from historically high levels. Britons are conscious of the need to act. However, winning their acceptance of the needed policies may require targeting carbon revenue to compensate low-income households and investments in green infrastructure and new technologies. A mechanism defusing fears that effective policies undermine competitiveness, preferably internationally agreed, would facilitate effective policies towards emission intensive trade exposed industries.

This paper presents new simulation results for the UK combining macroeconomic simulations in ThreeME, a computable general equilibrium model, with household-level micro-simulations with the aim to provide consistent estimates of macroeconomic and distributional consequences of policy action to curb greenhouse gas emissions. One main and overarching result is that if an economy-wide and significant carbon price is introduced it leads to large emission reductions. Macroeconomic and distributional consequences are very limited in comparison. Redistributing 30% of total tax revenue as a lump-sum transfer to households would ensure that a majority of income deciles in most regions increase their disposable income, with gains notably in the lower part of the income distribution.

The paper is the first in a series of two papers mapping young people’s environmental sustainability competence in EU and OECD countries that were prepared as background for the forthcoming OECD Skills Outlook 2023 publication. The papers are the results of a collaboration between the OECD Centre for Skills and the European Commission - Joint Research Centre (Unit B4) on students’ environmental sustainability competence. The second paper is titled: ‘The environmental sustainability competence toolbox: From leaving a better planet to our children to leaving better children for our planet’.

The paper is the second in a series of two papers mapping young people’s environmental sustainability competence in EU and OECD countries that were prepared as background for the forthcoming OECD Skills Outlook 2023 publication. The papers are the results of a collaboration between the OECD Centre for Skills and the European Commission - Joint Research Centre (Unit B4) on students’ environmental sustainability competence. The first paper is titled ‘Young people’s environmental sustainability competence: Emotional, cognitive, behavioural and attitudinal dimensions in EU and OECD countries.

Over the past decade, the United Kingdom has reduced several environmental pressures while growing its economy. Ahead of its presidency of the 2021 UN Climate Change Conference of the Parties, it has led the way by raising its national ambition. However, air pollution, deteriorating natural assets and missed biodiversity targets are all concerns. Further efforts are needed to achieve net zero greenhouse gas emissions by 2050, prepare for climate change, reverse biodiversity loss and ensure a more resource-efficient circular economy. Strengthening co‑ordination between the United Kingdom and devolved governments, as well as enhancing coherence between sectoral and environmental policies will be key. This is the third Environmental Performance Review of the United Kingdom. It evaluates progress towards green growth, with a special chapter focusing on waste, materials management and the circular economy.

This report provides an assessment of the use of, and recommendations for scaling up, Nature-based Solutions to address water-related climate risks. The analysis is based on two country case studies carried out in Mexico and the United Kingdom. On the basis of a previously developed policy evaluation framework, the analysis identifies existing challenges as well as highlights emerging good practices with regard to policy design and implementation, governance, regulatory mechanisms, and technical and financial arrangements. The report’s findings support policy makers and practitioners in strengthening the use of Nature-based Solutions to tackle climate risks, with a special focus on water-related risks.

This paper explores data and methods to assess the alignment or misalignment with climate mitigation objectives of investments in the construction and refurbishment of residential and non-residential buildings. It takes the United Kingdom (UK) as a case study, where such investments reached GBP 162 billion (EUR 184 billion) in 2019 or 39% of UK gross fixed capital formation. The analysis trials different reference points that lead to varying results and each currently come with limitations in terms of coverage or granularity. Sector-level greenhouse gas (GHG) trajectories indicate that, in aggregate, investments in UK buildings have been insufficient, delayed or not aligned enough with caps set by UK Carbon Budgets, but such trajectories currently lack disaggregation for a more granular and insightful matching with investment data. Energy performance certificates (EPCs) allow for asset-level analyses: for instance, 79% of 2010-2019 investments in new built residential were in relatively energy efficient buildings but only 1% were consistent with more demanding recommendations towards the UK’s objective of reaching net-zero GHG in 2050. The coverage and reliability of EPCs, however, needs to be improved for older buildings, whose deep retrofitting is a major financing challenge. Applying Climate Bonds Initiative criteria for low-carbon buildings identifies investments eligible for green bond financing, but such criteria have partial sectoral coverage and are based on currently most efficient buildings within the existing stock, which makes them relatively easy to meet for investments in new built. Producing more complete and policy relevant assessments of aligned and misaligned investments at national and sectoral levels requires the availability of and access to comparable and granular data on decarbonisation targets and pathways consistent with the Paris Agreement temperature goals, GHG performance of assets, corporate and household investments, as well as underlying sources of financing.

There is an urgent need to ensure that coastal areas are adapting to the impacts of climate change. Risks in these areas are projected to increase because of rising sea levels and development pressures. This report reviews how OECD countries can use their national adaptation planning processes to respond to this challenge. Specifically, the report examines how countries approach shared costs and responsibilities for coastal risk management and how this encourages or hinders risk-reduction behaviour by households, businesses and different levels of government. The report outlines policy tools that national governments can use to encourage an efficient, effective and equitable response to ongoing coastal change. It is informed by new analysis on the future costs of sea-level rise, and the main findings from four case studies (Canada, Germany, New Zealand and the United Kingdom).