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HM Treasury net zero review to pursue ‘fair balance’ of decarbonisation costs

Image: HM Treasury.

Image: HM Treasury.

A review into Britain’s net zero target is to assess how the government can deliver economic growth and a fair balance of cost as it decarbonises.

On Saturday (2 November 2019) the chancellor officially announced the net zero Review, which will look at how the UK can meet its 2050 emissions goal and maximise the opportunities for economic growth within this.

The review is to look at the best way for the UK to meet its pledge, whilst ensuring a fair balance of contributions from all those that will benefit. This will include provisions to ensure those with lower incomes benefit.

Central to the review is how the cost of the transition is to be shared between households, businesses and other tax payers, and the creation of new mechanisms to “create and equitable balance of contributions”.

Chancellor Sajid Javid said that the UK was leading the way in the fight against climate change with its goal and that “we must all play a part in protecting the planet for future generations.”

“This review is a vital next step in delivering that commitment, ensuring that we can end our contribution to global warming, while supporting growth and balancing costs, to avoid placing unfair burdens on families or businesses.”

A final report will be published in Autumn 2020 the government has said, before the UN climate change conference in Glasgow in November.

Exchequer secretary to the Treasury, Simon Clarke said that it was “humbling to launch this unprecedented review.”

“Until recently people said that net zero was impossible, but this work is a giant step towards making it happen, enabling us to set out a roadmap for an economy that is cleaner, more efficient, and works for everyone, while preserving our planet.”

The report follows the UKs historic commitment to achieve net zero greenhouse gas emissions by 2050, which was signed into law in June. Since then, much speculation has surrounded the path forwards, including which renewables will play the most prominent roles, the increase in electric vehicles needed and challenges associated with the evolution of transmission and distribution grids.

The cost of the net zero transition has been the subject of much debate, prompting the launch of an inquiry into decarbonisation launched by the UK Treasury Committee in June this year.

That was followed swiftly by the then-chancellor Philip Hammond claiming that the transition would cost £1 trillion, far greater than the cost estimates put forward by the Committee on Climate Change. Those sums were then branded “slightly disturbing” by former Labour leader and Climate Change Act champion Ed Miliband.

The review has been broadly well received, with Committee for Climate Change CEO Chris Stark saying he “strongly welcomed” it.

“We recently called on the Treasury to ensure the distribution of costs for businesses, households and the Exchequer are fully assessed, so we’re pleased that this is the central thrust of what the Treasury will consider. The terms of reference look comprehensive. We look forward to engaging with the Review as it develops.”

Others have been more hesitant, with UK energy company Anesco welcoming the report but encouraging further action.

“Without a clear strategy and importantly accountability, we will not meet the original clean growth targets – let alone net zero.

“At the present rate of growth, it’s simply not going to happen. It’s time for government to show its teeth and pursue positive action, not just give lip-service to this vital issue.”

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