For many years we have been engaged in a debate about the balance between the economy and addressing the threat of climate change. With one or two notable exceptions, there has been an acceptance that ‘something must be done’ but the debate has raged as to what, when and how much. We could have been accused of have been fiddling while our global Rome has burnt. But this may be about to change, and the key may be a lesson that Hollywood nailed a few years ago.


For a long time, the zero carbon agenda was seen as a cost to the economy and this was one of the strongest arguments against taking action – or at least the one used as the strongest argument against.  From the Stern Report in 2006[1]  through to the most recent Climate Change Committee report[2], we have been trying to find that sweet spot between investment, expenditure and impacts to reduce climate change.  

We have been locked in a view of the world that is a zero sum game, where all we could see was one side’s gain matched by the other side’s loss - economic gain = environmental loss and vice versa.  The concept of zero sum is to be found in game theory, often the darling, or justification, of the financial and futures markets. It hooks into a very human characteristic that loves to see the thrill of the high stakes in games like poker; the uber zero sum game.


It was also the thread that ran very strongly through the Brexit debate and the political shorthand of ‘no deal is better than a bad deal’. Despite humanity’s ability to deal with huge complexity, it also tends to find comfort and a sense of strength in binaries – good and bad, hero and villain, winner and loser. It is simple, it is neat and of course we all think that we will be on the side that is the hero/good/winner. 


There is now growing evidence that this might change as a direct result of C19 and in particular the unemployment tsunami that is just over the horizon and will hit the UK between August and October as the furlough scheme is unwound. With 9.1 million on furlough and 2.1 million already unemployed, we could see numbers we haven’t seen since the 1980’s. Some are even predicting it could be worse. The good news is this may have created the circumstances where our old game plan might change.  In fact, we’re already seeing compelling evidence a new approach;  a non-zero sum game.


A non-zero sum game is one where both sides get something out of the deal. Most transactions are non-zero sum, because the end result can be beneficial to both sides. I buy a product and get the utility of the product; the manufacturer gets paid for it. It’s an important way of seeing the world and leads to a radical shift in thinking.


I was reminded of this as I sat down to re-watch of the film ‘Arrival’. It’s safe to say there’s a lot going on in this film.  Set against beautiful musical back drop from Max Richter and Jóhann Jóhannsson, there is one pivotal scene where the main character played by Amy Adams is trying to answer a question from her daughter; a daughter she is remembering from a future yet to happen. She is asked  ‘what is the term when we try to make a deal when both sides get something out of it – it’s a competition but both sides end up happy’. Caught up in the middle of an acute case of global brinkmanship, Adams is able to work out the answer for her daughter and the solution for the planet – it’s a non-zero sum game.


I know that’s Hollywood and this is real life, but for once real life has outstripped anything that Hollywood has come up with. The last few months has seen humanity face one of its biggest threats in C19 and still has to deal with the even bigger threat of climate change, yet we have begun to see the evidence of a shift to a non-zero sum game. 


We have seen a flurry of requests from government keen to gather information on what retrofit energy efficiency and renewable energy projects that can be delivered urgently in order to get the economy going again. Whilst requests do not amount to a funding commitment from Treasury, it is clear government see this as an opportunity to invest in projects that create tens of thousands of jobs AND can reduce the impacts of climate change.


I want to see this happen and I will do everything to encourage government to get on with this. However, there are two things they need to take in to account – both are easy, and both will help them deliver their newfound desire to play a non-zero sum game.


The first: government must properly engage with the social housing sector. The sector wants to tackle climate change and have 4 million+ homes that could not only massively reduce CO2 emissions and deliver the jobs needed NOW, but also help to protect those households on the lowest incomes by reducing energy costs. But the government has not been asking the social sector directly for its turnkey projects. In the last few weeks, government has engaged with the retrofit market through the Energy Hubs, but they in turn have not engaged widely with the social sector. I know this simply because clients across the UK have not received the requests: they have had to rely on contractor or personal contacts. The social sector is one of the easiest sectors to engage with – just pick up the phone to NHF and the CIH and its sorted. 


Secondly, many housing providers in the sector are now putting their plans together for delivering both Band C and zero carbon. We have been undertaking detailed analysis of their stock data, their business as usual investment and looking at what is needed to deliver the new targets. The numbers needed are scary (we recognise from our own work the numbers in a recent article in Inside Housing[1]). Our analysis for many in the sector is that a phased approach will deliver the maximum benefits and ensure that the sector takes advantages of new developments as they come through including the new funding and financing mechanisms needed. Funding from government can play an important role in multiplying up this investment, but it must not derail long term carbon reduction plans by creating market distortions and funding rabbit holes people chase down. Smart investment is needed, not just spending money. We must learn the lesson from 2009/10 when throwing money at the problem failed to deliver the long term results.


So now is the time for us change the nature of the game. We have been given a unique and challenging set of circumstances that create an opportunity to rebuild the economy and deliver the low carbon future we all need. It’s time to stop playing a dumb zero sum game and start playing a smart non-zero sum game. 


Postscript – Following the work done by the Green Finance Initiative, housing providers are now starting to look at new financing mechanisms to deliver zero carbon homes, both new and existing. This time we need mechanisms by and for the sector and not done to the sector. If you want to know more or to get involved drop us a line - info@adecoe.co.uk

[1] http://www.lse.ac.uk/GranthamInstitute/publication/the-economics-of-climate-change-the-stern-review/

[2] https://www.theccc.org.uk/2020/06/25/covid-19-can-be-an-historic-turning-point-in-tackling-the-global-climate-crisis/

[3] Inside Housing 18th June 2020 ‘Housing association says zero carbon will cost £20,000 per home’