Government ‘doesn’t know’ what net-zero goal will cost or how to pay for it, MPs warn

Report comes as IPCC warns of potential for “irreversible” damage over next 20 years
Photo: andreas160578/Pixabay

By Jim Dunton

02 Mar 2022

More than two years after the UK commited to becoming a net-zero carbon emissions economy by 2050, the government still cannot explain what the cost of the overarching policy will be or how it will be paid for, parliament’s Public Accounts Committee has warned.

PAC members said evidence from the Department for Business, Energy and Industrial Strategy and the Treasury  revealed there was “no reliable estimate of what the process of implementing the net zero policy is actually likely to cost British consumers, households, businesses or government itself”.

MPs said previous work on green taxation did not provide confidence that there was a clear plan, while the Treasury and HM Revenue and Customs had taken a “very limited view” of the contribution that tax could play in achieving the government’s environmental goals.

The committee's latest report, published today, said the government’s net-zero strategy relied heavily on leveraging billions of pounds in private investment to spur innovation to drive down costs, but it noted the government had a poor track record of providing investor confidence. It said the debacle surrounding the scrapped Green Homes Grant voucher scheme was the latest example of “stop-start decisions on green schemes that erode investor confidence”.

PAC chair Dame Meg Hillier said government was relying heavily on consumer behaviours changing rapidly and technological innovations to drive down the costs of green options, but that it was not clear how to support consumers and businesses to drive change.

“Every government department has a responsibility for delivering policies towards the target of net zero,” she said.  

“But two years after enshrining the ‘net zero’ by 2050 target in law, the government has unveiled a plan without answers to the key questions of how it will fund the transition to net zero – including how it will replace significant income from taxes such as fuel duty.”

Hillier said the net-zero strategy required national and local government, regulators, businesses and consumers to work together to deliver its targets.

“A top-down strategy from government won’t deliver on its own,” she said. “There is a risk that a series of disconnected initiatives announced by central government will not bring about the changes that are now set out in law.”

MPs acknowledged that BEIS faces an increasing challenge to separate the cost of delivering net zero from other costs,  but they said it was not a reason to “shy away” from tracking and reporting public money spent on achieving the government’s net zero objectives and the outcomes achieved. They pointed to the National Audit Office’s Covid Cost Tracker as an example of what could be done.

In their recommendations, PAC members called on BEIS and the Treasury to set out in detail the progress being made in creating metrics for the effects of net-zero tax measures, such as vehicle and fuel related duties.

They also called for BEIS to provide annual information on take-up of key net-zero measures, like introducing heat pumps to replace domestic boilers, and conduct scenario-planning for situations in which adoption of new technology falls behind schedule.

The committee said BEIS also needed to work with the Cabinet Office  on a “comprehensive analysis” of the skills needed in the civil service to deliver net zero and fill gaps through increased cross-departmental working, training or recruitment.

A BEIS spokesperson said the department would consider the MPs’ recommendations carefully, but pointed out that at a time when gas prices were at a record high, there was a “clear need” to find alternative fuels.

“The more clean, cheap and secure power we generate at home – like renewables and nuclear – the less exposed we will be to expensive gas prices set by international markets,” they said.

IPCC flags risk of ‘irreversible’ damage

On Monday, the Intergovernmental Panel on Climate Change said the world faced “unavoidable multiple climate hazards over the next two decades” with global warming of 1.5°C, and that even temporarily exceeding that level would result in additional and “irreversible” severe impacts.

The UN body said climate-resilient development was “already challenging” at current global-warming levels and would become “more limited” if warming exceeds 1.5°C and “impossible” in some regions if warming exceeds 2°C.

IPCC chair Hoesung Lee the panel’s latest report contained stark findings that underlined the urgency for climate action, supported by “adequate funding”, technology-sharing and political commitment.

“This report is a dire warning about the consequences of inaction,” he said. “It shows that climate change is a grave and mounting threat to our wellbeing and a healthy planet. Our actions today will shape how people adapt and nature responds to increasing climate risks.”

The report also said there was increasing evidence of adaptation to climate-change that had caused unintended consequences, such as destroying nature, putting peoples’ lives at risk or increasing greenhouse gas emissions.

It said such consequences could be avoided by involving everyone in planning, attention to equity and justice, and drawing on indigenous and local knowledge.

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