Critical national infrastructure and climate adaptation

The evidence is overwhelming that the effects of climate change on our critical national infrastructure are already significant, and are set to worsen substantially under all reasonable climate change scenarios. Buckling train lines, flooding of major infrastructure sites, landslides and power outages are all realistic outcomes. They may also happen simultaneously, causing multiple cascading effects across different infrastructure sectors. The scale of the challenge facing Government, operators and regulators is clear: there is an urgent need to adapt our infrastructure to the potentially rapid effects of climate change.

When we launched this inquiry, climate adaptation had been described as the ‘Cinderella’ of climate change, compared with climate mitigation and the path to net zero. Approaching the vital COP26 summit, we saw much-needed discussion about actions to decarbonise the UK economy and cut greenhouse emissions for the future, but little attention was paid to the effects of climate change already incurred. During the course of our inquiry, however, the UK experienced major weather events such as Storm Arwen, including extensive power outages and a knock-on effect on communications. We concluded our inquiry in the midst of an unprecedented heatwave, taking evidence from Government Ministers and officials while the country faced significant rail disruptions, flight delays and power cuts. These events have moved climate adaptation more firmly into the public eye and demonstrated that poor adaptation poses a threat to UK national security, but they have also shone a light on an alarming lack of Government action in this vital area. (Paragraph 19) Key adaptation challenges: interdependencies and information-sharing

The UK’s critical national infrastructure (CNI) is fundamental to the smooth running of the economy and of society. It is becoming increasingly interconnected, and all CNI sectors are heavily reliant on a stable energy supply. The Covid-19 pandemic demonstrated how rapidly the impact of a hazard can spread—or cascade—from one part of society to another. The same is true of the effects of climate change, as extreme weather events in the past year have shown. Yet we have found very little join-up between CNI sectors, with no formal mechanism for collaboration or information-sharing on interdependencies. This has resulted in some worrying near misses and an apparent lack of planning and foresight.

The Government has begun to recognise the risks posed by the extensive interdependencies between CNI sectors. There is some promising work underway on the development of ‘digital twins’ to model climate-related infrastructure interdependencies, on which we would welcome further Government investment. The new CNI Knowledge Base is also a very positive development. It remains to be seen, however, how the Government will connect this vital analysis to infrastructure operators and regulators, whether operators will be held to account on their responses, and how the Knowledge Base will inform policy-making on climate adaptation. The 50 Readiness for storms ahead? Critical national infrastructure in an age of climate change Government also has unique powers to establish other mechanisms to improve oversight of interdependencies overall—such as through joint reporting under the Adaptation Reporting Power—but it has so far failed to use them.

We recommend that the Government formalises collaboration between CNI regulators on climate adaptation, through a statutory forum chaired by a senior Government official (at Director General level), with key operators invited to meetings. This forum should publish an annual report to Parliament on key actions to address interdependencies and to enhance CNI resilience to climate change and extreme weather, utilising data and intelligence from the CNI Knowledge Base. The Government should also make use of the power granted by the Climate Change Act 2008 to require CNI operators and/or regulators to report jointly under the Adaptation Reporting Power.

The transition to net zero is vital, but it will result in the UK becoming increasingly reliant on electricity and renewable energy sources, which are more vulnerable to extreme weather than gas and other fossil fuels. Meanwhile, all other forms of CNI are heavily reliant on their energy supply, meaning that power outages have the potential to cause widespread economic and societal damage. Climate adaptation must be central to the Government’s efforts to transition to low-carbon energy sources, and to enhancing the resilience of the UK’s energy supply to global shocks.

It is welcome that the Government undertook extensive work on energy resilience in the wake of Storm Arwen, but this was a reactive response to a national crisis resulting in widespread power outages lasting over a week, and necessitating military deployment. Ministers should have anticipated and been better prepared for such an event, through proactive adaptation efforts and proper crisis planning. This is demonstrative of wider shortfalls in Government risk management—as we outlined in our previous reports during this Parliament, on Biosecurity and the UK’s national security machinery. We will return to this topic in Chapter 4.

The Energy Bill is a vital opportunity to improve the resilience of the UK’s energy supply, so we are concerned by reports that the legislation may be dropped—even as reports suggest that the UK could face energy shortages this winter. If the Bill is passed, the Independent System Operator and Planner (ISOP) would be tasked with carrying out strategic planning and forecasting in relation to electricity and gas transmission. We would welcome the Government’s assurances that the ISOP’s mandate will include planning for the impact of the changing climate on the UK’s energy supply. The Government’s recently-announced review of energy regulation must also consider the extent to which the current regulatory regime allows for sufficient investment in resilience and adaptation, in line with the recommendations outlined in the final chapter of this report.

We welcome the development of the Cabinet Office’s ‘National Situation Centre’ (SitCen), which gathers and generates real-time data to inform the Government’s crisis and emergency response work—including on weather patterns. We recommend, however, that the Government explores the potential for SitCen to generate longer- term climate data and analysis for CNI operators, to inform their climate adaptation planning efforts. This should be drawn from a wide range of sources, in light of the Readiness for storms ahead? Critical national infrastructure in an age of climate change 51 significant uncertainties inherent in longer-term climate modelling. In the context of an open market for climate services, in which vital infrastructure operators could be relying on suboptimal weather and climate reports, this could ensure that operators and regulators are working to the same, quality-assured assumptions. It could also enhance their ability to collaborate on addressing cascading risks and interdependencies. (Paragraph 46) Regulating CNI: resilience standards and stress testing

The regulatory landscape of CNI is extremely fragmented, with a variety of different approaches to climate adaptation and resilience. There are worryingly low levels of activity in some sectors, and some clear regulatory gaps, such as the fact that there is no oversight of the continuity of nuclear energy supply. We acknowledge that different sectors have different adaptation needs; nevertheless, this scattergun application of regulatory responsibilities is no longer tenable.

In 2020, the National Infrastructure Commission (NIC) made strong, evidence- based recommendations to improve CNI regulation in relation to resilience, which would have been highly applicable to CNI operators’ preparations for climate change. Unfortunately, the Government has delayed implementation of these reforms until its National Resilience Strategy (NRS) is published. The NRS itself has been delayed several times, despite being a key commitment of the Integrated Review over 18 months ago. The costs of failure are extremely high, as demonstrated by the fatal rail accident near Stonehaven in 2020; these ongoing delays to implementation are therefore extremely unfortunate.

We note the Government’s concerns about the complexity of the regulatory landscape and the difficulty of imposing a more uniform regulatory regime. We agree with the NIC, however, that resilience cannot be left entirely to the market. Indeed, our survey found that only a third of responding organisations planned more than a decade in advance for the effects of climate change. We suggest that the Government undertakes more detailed work on international comparators in relation to regulatory regimes. In addition, in line with the NIC’s 2020 report on resilience, we recommend that: • The Government should publish a full set of resilience standards every five years, for the sectors under the NIC’s purview at a minimum (energy, water, digital, road and rail services); it should also examine how these could apply to other CNI sectors. • CNI regulators should require their operators to develop long-term resilience strategies; • Recognising that CNI should be tested regularly against a wide range of stresses, including interdependencies, regulators should oversee a programme of stress testing against a range of risks that might affect critical services; and • These resilience standards and stress tests should specifically address the effects of climate change in the short, medium and long term, to ensure that CNI operators are planning for a range of potential scenarios. 52 Readiness for storms ahead? Critical national infrastructure in an age of climate change Ministerial oversight and cross-Government action

Having received two pieces of written evidence from the Minister for the Cabinet Office, then Michael Ellis, we were astounded when he subsequently refused to give evidence to us on a topic of such importance to the UK’s national security and prosperity. We note that the then Defra Minister, Steve Double, stepped in at very short notice, having been in post for only ten days. We are also very grateful to Roger Hargreaves for providing helpful and informative oral evidence on the Cabinet Office’s behalf. Their actions only serve to underscore what a dereliction of duty it was for Mr Ellis to refuse to appear before us—not only in relation to his willingness to be accountable to Parliament, but also in what it suggests about his commitment to deliver for the public that he serves. We can only hope that his successor will take more interest in this vital topic.

It appears that there has been no single Minister taking responsibility for the immense challenge of adapting CNI to the effects of the changing climate, which has been falling through the cracks between Government departments. Despite chairing the Climate Action Implementation Committee, which was tasked with “building the United Kingdom’s resilience to climate impacts”, Alok Sharma felt unable to give evidence on this topic. Mr Ellis admitted to us that he was not overseeing a central programme of work, but rather played a “convening role” in relation to the Government’s written evidence. He also disclosed that he had never met the Defra Minister for Climate Adaptation to discuss CNI resilience to climate change, which may reflect the lack of any Ministerial forum to discuss this issue.

The Government has rightly focused extensive efforts on the path to net zero, but the irreversible effects of climate change are already with us, and are set to worsen significantly. This requires prioritisation at the highest levels of Government. Defra told us that its team of officials are responsible for “picking out the interdependencies” between CNI sectors in relation to climate adaptation, and referring them to other departments. Critical vulnerabilities require more than just information-sharing between civil servants, however—they require clear ownership by Ministers, and the coordination and oversight that the Cabinet Office is usually expected to provide. It is hard to imagine this approach being applied to any other national security risk.

We recommend that the Government establishes a Minister of State for CNI Resilience and a team within the Cabinet Office to focus on this issue, across a range of national security threats and hazards. To drive forward this work across departments, the Government should also re-establish a Ministerial committee on resilience, following the recent abolition of the National Security Council and its sub-committees (including the Resilience sub-committee of National Security Ministers). This group should regularly consider both climate adaptation and CNI interdependencies, reporting to the Foreign Policy and Security Council on an annual basis.

In a theme becoming far too recurrent in JCNSS reports, we have found that the Government has very little grip on a critical national security risk. Climate risks have previously been categorised as Tier 1 national security risks, but a grave lack of ministerial responsibility and accountability has left a gaping hole at the centre of Government on this pressing future risk to UK CNI. The Government has broadly Readiness for storms ahead? Critical national infrastructure in an age of climate change 53 accepted that these shortfalls exist, with its latest climate change risk assessment finding that its actions on climate adaptation have not been sufficient, and that a “lack of clarity on ownership of risks and responses” has exacerbated this situation.

We expressed serious concerns about the previous Prime Minister’s more casual approach to national security, which included stepping back from regularly chairing the National Security Council. Through her new Foreign Policy and Security Council, we sincerely hope that the new Prime Minister will get a much better grip on the UK’s national security, empowering the Cabinet Office to play a stronger role in coordinating cross-government action, including on climate adaptation and CNI resilience.

We recommend that the Prime Minister wastes no time in publishing the crucial and long-awaited National Resilience Strategy (NRS), which has the potential to ‘mainstream’ climate adaptation planning across Government, and to improve central Government oversight of risk assessment and risk planning more broadly. In the context of recent moves to disband the Civil Contingencies Secretariat, she must also ensure that the Cabinet Office has the proper resources and structures to implement the NRS effectively.

The next National Adaptation Programme is also a critical opportunity to enhance the resilience of UK CNI to the effects of climate change. To improve join-up between the Government’s parallel programmes on resilience and adaptation, we recommend that the new Minister for CNI Resilience and Defra’s Minister for Climate Adaptation meet on a regular basis—every six weeks at a minimum—to ensure that the NAP delivers a clear programme of activity to enhance the resilience of UK CNI to the effects of climate change and extreme weather. The 2023 NAP should draw strongly on the recommendations made in this report, and on those generated by the National Infrastructure Commission and the Climate Change Committee. The two Ministers should report to us jointly by the end of March 2023 on progress against this recommendation. (Paragraph 93) Local resilience forums

Local resilience forums (LRFs), which are essential to the local response to extreme weather events, have been inadequately resourced for too long. The findings of the Government’s recent review of the Civil Contingencies Act (CCA) are therefore welcome, along with its recent recognition that unprecedented demands have been placed on LRFs in recent years. We also welcome the additional funding provided to LRFs over the next three years by the Department for Levelling Up, Housing and Communities (DLUHC). We will follow up with LRF representatives in six months’ time, to establish whether this has been sufficient to address the significant challenges that they face.

When critical national infrastructure is impacted by extreme weather, the actions of local responders are absolutely vital for maintaining the health and security of local people. We welcome the Government’s recognition of the need for reform, under a specific programme led by DLUHC. However, we recommend that the LRF reform programme considers specifically the role of LRFs in overseeing local CNI 54 Readiness for storms ahead? Critical national infrastructure in an age of climate change vulnerabilities to extreme weather and other effects of climate change, including the likely impact locally of extreme weather events. As recommended by the Lords Risk Assessment and Risk Planning Committee, the Government should also establish a much clearer statutory remit for LRFs, via reforms to the Civil Contingencies Act. Finally, we expect to see clear join-up between the DLUHC programme and the Cabinet Office’s new emergency response and resilience structures; the Government should outline to us, in its response to this report, how the Cabinet Office will remain engaged in local emergency planning.

The Government’s review of the CCA recognised the need for greater clarity on the roles and responsibilities of LRFs. We recommend that the Government oversees a programme of ‘exercises’ to plan for major regional extreme weather events with multiple cascading effects. It should involve local and regional actors in these exercises, including key CNI operators, and use them to clarify and communicate roles and responsibilities at a national, regional and local level. When it responds to this report, the Government should also outline, in confidence if necessary, its plans for CNI- related exercises involving local actors. If necessary, we will follow up with LRFs in six months’ time, to establish whether such a programme is underway. (Paragraph 109) Funding climate adaptation and resilience

The establishment of the UK Infrastructure Bank is a welcome development, given its specific mandate to help the UK to adapt to climate change. It is vital that this remains at the forefront of the Bank’s investment decisions, with adaptation projects prioritised as much as those targeted towards mitigation and/or regional economic growth. We recommend that the UKIB’s annual report outlines specifically how the Bank has met its adaptation objectives, including projects that will enhance UK CNI’s resilience to the effects of climate change and extreme weather.

The Government’s Growth Plan commits to accelerating the construction of a large number of critical national infrastructure projects, including by “reducing the burden of environmental assessments”. Given the shortfalls outlined in this report, it is essential that the Growth Strategy does not reduce investment in—or requirements for—proper adaptation planning. In that context, we welcome the Plan’s commitment to producing National Policy Statements for significant sectors, which must include a consideration of adaptation requirements. The Government should also commit to us, in writing, that its planned acceleration of infrastructure investment and approvals will not be to the detriment of improvements to climate adaptation planning and investment.

The current price review mechanisms for utility companies may be unsuitable for ensuring investment in long term resilience. We welcome the Prime Minister’s recently- announced review of energy regulation, but we recommend that the Government goes further, undertaking an urgent review of price control mechanisms across all relevant infrastructure sectors. This should consider specifically their suitability for ensuring investment in CNI resilience and climate adaptation, in time to inform the next set of price reviews.

In light of the cost-of-living crisis and the increasing impact of climate change on CNI, it is essential that the Government, regulators and operators consider carefully Readiness for storms ahead? Critical national infrastructure in an age of climate change 55 how to spread the costs of adaptation, ensuring that it does not affect financially vulnerable customers. There is nevertheless a grave risk that these shorter-term affordability pressures result in inadequate longer-term investment in resilience and adaptation, incurring far greater costs later on. There are difficult trade-offs to manage between affordability and resilience, but with no central oversight at present, and very little public awareness of the risks that are being taken.

The Government’s own climate change risk assessment notes that early adaptation efforts deliver high value for money. We recommend that the Government undertakes a more detailed cost-benefit analysis of climate adaptation for every CNI sector, using the results to inform the resilience standards recommended in Chapter 3. It should also consider a more wide-ranging review into the economics of adaptation, as recommended by the Environment Agency.

The Government works in partnership with the insurance industry to ensure cover for terrorist attacks, with an unlimited guarantee from HM Treasury. A percentage of this insurance pool—managed by Pool Re—is invested in resilience measures. This could serve as a model for an insurance-based scheme to encourage CNI operators to invest in resilience to the changing climate, as another major systemic risk. We recommend that the Government engages with insurance providers to explore options for a public-private insurance partnership to incentivise investment in climate adaptation measures, in conjunction with resilience standards and other forms of central Government oversight. It should report back to us with its findings in six months’ time.

Our previous reports have found significant problems with the Government’s preparations for risks that have the potential to wreak havoc on the UK economy and society. While we are acutely aware of the very difficult fiscal climate, it is high time that the Government learned that prevention is better than cure. We can already see the significant effects of climate change; if we do not invest time, efforts and resources in climate adaptation—particularly to enhance the resilience of our critical national infrastructure—then there will be an enormous price to pay in future, and that price will not only be paid in money. (Paragraph 132) 56 Readiness for storms ahead? Critical national infrastructure in an age of climate change