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PAC slams government for lack of ‘reliable’ net zero cost estimates or funding plan

The PAC has recommended the government writes to explain how it will report progress in implementing its net zero policies. Image: Getty

The PAC has recommended the government writes to explain how it will report progress in implementing its net zero policies. Image: Getty

The Public Accounts Committee (PAC) has said that the government has “no clear plan” for how the transition to net zero will be funded, nor a reliable estimate of what net zero will cost consumers, businesses or the government itself.

While the government published its plan for achieving net zero by 2050 in October 2021 – two years after the target was enshrined in law – the PAC said it has unveiled a plan “without answers to the key questions of how it will fund the transition”.

This includes a lack of how it will deliver policy on and replace income from taxes such as fuel duty, as well as a general direction of travel on levies and taxation.

The Department for Business, Energy and Industrial Strategy (BEIS) alongside HM Treasury should therefore write to the PAC setting out in detail how it will report progress in implementing its net zero policies, including specific metrics such as the effects of tax measures such as vehicle and fuel related duties.

This should also include how it will use these metrics to track progress against long-term targets and what it will do if progress demonstrates underperformance.

Indeed, the PAC detailed how the government lacks reliable estimates for the costs of net zero, stating that HM Treasury witnesses questioned by the Committee were reluctant to be drawn on what the future costs of achieving net zero would be.

The Treasury's spending review - published the same week as the Net Zero Strategy - highlighted the difficulty of forecasting the costs of decarbonisation, finding that there is significant uncertainty over the precise mix of technologies and costs that will make up the transition, with the eventual net impact of the transition on output being “highly uncertain and challenging to estimate”.

The PAC also found that the government’s Net Zero Strategy relies heavily on private investment and innovation driving down cost, however it said the government has a “poor track record” of providing investor confidence, pointing to several stop-start decisions on green schemes such as the Green Homes Grant - which it described as a “debacle”.

The Green Homes Grant provided vouchers to households for the installation of energy efficiency technology. It closed early after a string of administrative issues, including delays to payments, with the National Audit Committee finding that just 20% of the £1.5 billion initially allocated to the scheme would be spent, with millions of the total expenditures also being spent on administration costs.

The PAC said that BEIS should monitor how quickly technology costs are falling and the levels of private investment it is attracting and set clear triggers for interventions such as new policies and regulations for when things go off course.

The PAC also said it is “disappointed” by a lack of urgency from the government in clarifying how it will work with local government to achieve net zero, while it also expressed its concern that neither the private sector nor the civil service yet have the skills needed to deliver the Net Zero Strategy.

This has been highlighted previously by a number of organisations, including the Energy Systems Catapult, which found that there is currently a retrofit skills gap, while the Environmental Audit Committee found that government departments “lack a central coordination function to deliver green jobs”.

BEIS should therefore set out its strategy for encouraging the private sector workforce to develop said skills, drawing on the recommendations of the Green Jobs Taskforce.

BEIS should also work with the Cabinet Office to perform a comprehensive analysis of the skills needed in the civil service to deliver net zero and fill gaps either through increased cross-departmental working, training or recruitment.

Dame Meg Hillier MP, chair of the Public Accounts Committee, said: "The government’s Net zero Strategy requires government, local government, regulators, businesses, and consumers working all together to deliver its targets. A top-down strategy from government won’t deliver on its own.

"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.”

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