Britain's Economy Is Already Seeing a Rapid Shift Due to Climate Change

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Climate change could spark major shifts in British produce in the coming decades as the country attempts to avoid a "catastrophic" environmental fallout, experts have said.

At the end of July, the U.K.'s Royal Meteorological Society published its State of the U.K. Climate 2020 report, with the authors noting that last year was England's third warmest year since records began in 1884.

Meanwhile, the U.K. Met Office predicts that the country is set for warmer and wetter winters, hotter and drier summers and "more frequent and intense weather extremes" because of climate change.

Michael Christie, professor of environmental and ecological economics at Aberystwyth Business School in Wales, told CNBC in a phone call that unless drastic measures were taken in the U.K. and internationally, temperature rises would have "more and more catastrophic effects."

"And those effects will be irreversible," he added, noting that certain industries were at greater risk.

"For agriculture, for example, there will be risks in terms of potential impact on what crops can grow," he said. "There are also issues in terms of livestock and methane emissions, so farmers might not be able to have [as much] livestock in the future. But there are maybe some benefits in that warmer temperatures in the U.K. might actually lead to increased yields."

Impact on agriculture

Last year, 71% of land in the U.K. was actively being used for farming. Agriculture made up 0.5% of the country's gross domestic production in 2020, and the industry was the source of 1.4% of all British jobs.

Martin Lukac, professor of ecosystem science at the University of Reading, told CNBC that some British farmers were already feeling the impact of more frequent extreme weather events, specifically flooding and dry spells.

"In areas where a lack of grass biomass to feed the cattle had never been an issue, all of a sudden, this was on everyone's agenda, because there was no pasture to be had," he said.

What happens overseas also affects British agriculture, Lukac pointed out.

"A greater impact will be felt in other parts of the world, but agriculture has become globally integrated," he told CNBC. "For example, a failure of yield in Brazil will be felt by the U.K. livestock industry, because we buy soya from Brazil and feed it to the cows in Britain."

Issues with water availability could also bring new challenges in the future, Lukac predicted.

"The cost of water is minimal right now — it's not really costed into farmers' business models. But I suspect at some point, when farmers will be competing directly with the general population for drinking water because of supply limitations, this will become an issue," he explained.

In recent years, Lukac added, Britain's changing climate had altered what was being grown locally. For example, more areas had become capable of growing maize. Meanwhile, government policies aimed at reducing emissions had had what he called a "cascade effect."

"Some years back there was a drive to biodiesel," he said. "Some agricultural policy in the U.K. changed and started to subsidize rapeseed a little more than other crops. This has been a sizeable change in the type of crops we grow, and in fact, we had to change the agricultural policy a little again [to encourage] diversity of crops."

British wine boom

Elsewhere, the U.K.'s warming climate has been encouraging an expansion of the country's wine industry.

"Here in Great Britain, the wine sector has been growing rapidly over the last 10 to 15 years," Steve Dorling, director of innovation at the University of East Anglia's School of Environmental Sciences, told CNBC.

Dorling, who sits on industry body WineGB's research and development working group, added that the industry's "great success" was partially down to the average growing season — April to October — seeing temperatures above 14 degrees Celsius. This has made it possible to more reliably grow marketable grape varieties.

Although the climate had become more suitable for wine production in certain areas of the U.K., Dorling noted that a natural variability in Britain's climate could still lead to production shocks.

However, as wineries continue to plant more vines year-on-year, WineGB anticipates production increasing to around 40 million bottles by 2040. Last year, British vineyards produced 8.7 million bottles of wine, the organization's data shows.

Industries adapting

Companies and investors outside of land-dependent industries are also changing the way they operate.

England's high-speed HS2 railway development will use 3D-printed graphene-reinforced concrete, which is more environmentally friendly than traditional concrete. Elsewhere, a hybrid aircraft took its maiden 37-mile flight between Orkney and Wick in Scotland earlier this month.

Andrew Wordsworth is managing partner and CEO of Sustainable Ventures, a British VC firm that invests in companies working to combat climate change. The organization, founded in 2011, has started 8 companies, invested in 27 and supported the development of a further 250.

"A key feature of the innovations [we support] is that they allow people to continue enjoying consumer goods and experiences but in a more sustainable and often lower cost way," Wordsworth told CNBC.  "We don't believe that there needs to be a trade-off between commercial success and a sustainable future."

Businesses unprepared

While some businesses are attempting to mitigate climate risk and become more sustainable, others are falling behind.

In 2008, British lawmakers overwhelmingly passed the Climate Change Act, which aims to cut emissions by 100% by 2050 relative to 1990 levels.

Part of the strategy has been the introduction of "carbon budgeting," which sees limits set on the country's emissions for five-year periods. In April, the government announced that its sixth Carbon Budget — covering 2033 to 2037 — would "set the world's most ambitious climate change target into law," aiming to reduce emissions by 78% by 2035 compared to 1990 levels.

The U.K. is currently in its third carbon budget period, which ends in 2022.

According to the Climate Change Committee — an independent advisory body established under the 2008 legislation — the U.K. is currently "off track" for its fourth, fifth and sixth budgets.

Speaking to CNBC via email, a spokesperson for the CCC said there was a lack of evidence businesses were taking action to prepare for climate risks such as flooding, coastal change, extreme weather events and supply chain disruption.

"Without action on climate adaptation we will struggle to deliver key government and societal goals, including Net Zero itself," the CCC spokesperson warned.

Earlier this month, the U.N. published a landmark report which warned that without immediate, extensive reductions in greenhouse gas emissions, capping global warming to 1.5 or 2 degrees Celsius would soon be "beyond reach."

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