- UK government is expected to release a suite of Net Zero strategies on Monday 18th of October, setting out its plan of action to finance the decarbonisation of the UK economy. This will include a Net Zero Review by the Treasury which will set out the costs of the net-zero transition. However, it is likely it will fail to assess the economic benefits.
- In its economic analysis, the UK government must consider the immense value a strategic and proactive approach to investing in net zero can bring. A blinkered focus on upfront costs risks derailing the growing support for investment in net zero and levelling up.
- The analysis to be published on Monday is not expected to be fully fit for purpose, but instead, to take a half baked approach that ignores the cost of inaction and the economic benefits of the transition.
Ahead of the upcoming COP26 climate summit, on Monday next week, the UK is expected to launch a series of major strategies on how it will decarbonise the economy. These strategies will be critical to ensuring the UK gets on track to net-zero.
This will include the launch of the long delayed Net Zero Review by The Treasury. The review should quantify the costs of net-zero and address the question of ‘who pays’. Additionally, it should consider ‘who benefits’ and quantify the economic return from net-zero investment. However, E3G has learnt that covered of these crucial parts of the assessment should not expected. As a result, the Net Zero Review may provide a one sided and distorted picture which could exaggerate the costs of the climate transition.
The most critical failure expected is that the review will not articulate the return on investment in net zero. The return on net zero investment is significant – including creating real jobs, warmer homes and cheaper power to level up across the whole of the UK. It is important that the Government considers these in full alongside the upfront capital costs. Failure to do so paints a highly unbalanced view of the economic impact of reaching net zero. Therefore, this analysis alone is insufficient to inform government policy.
Equally, the analysis fails to consider the cost of inaction. Without immediate and substantial investment in net zero, the costs of unmitigated climate change will be increasingly disruptive to the British economy. The UK’s one-sided approach is in contrast with the approach of the US government. For instance, on Friday, the US government published a Roadmap to Build an Economy Resilient to Climate Change Impacts. This set out a broad suite of reforms to public finance management and budgeting in order to reduce the costs and impacts of climate change.
Heather McKay, Policy Advisor (Sustainable Finance)
“Nobody would make a big spending decision without weighing up all of the pros and cons – and this is exactly what the government should be doing when considering its investment in net zero. Happily, the sums add up. The considerable benefits from net zero far outweigh the upfront costs – including creating clean jobs, warmer homes, and cheaper bills across the whole of the UK.”
Ed Matthew, Campaigns Director (Net Zero Review)
“The transition to net-zero is the biggest investment the UK will make this century in building future prosperity. You can’t review the economic impacts of that investment without considering the benefits. That is a half baked assessment. The Treasury needs to put it back in the oven and complete the analysis. It should set out in detail the benefits to households and the country of getting on track to net-zero and avoiding the massive costs of climate inaction, which would devastate the global economy.”
Kate Levick, Associate Director, (Sustainable Finance)
“There is something very wrong when the UK, which has led the world on so many aspects of climate change policy, is being outshone by the United States in terms of communicating an understanding of the economic costs and implications of inaction on climate change and putting policies in place to address them. We can do better than this.”
Available for comment
Heather McKay, Policy Advisor, Sustainable Finance, E3G
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Ed Matthew, Campaigns Director (Net Zero Review), E3G
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Kate Levick, Associate Director, Sustainable Finance, E3G
email@example.com | +44 (0)7860 861225