The UK’s Treasury Committee has launched an inquiry into HM Treasury’s role in the decarbonisation of the country’s economy, just a day after reports suggested it was ready to “fiddle” with binding climate targets.
Today the Treasury Committee, which scrutinises the work of the chancellor’s department, revealed it had launched an inquiry to examine how HMT, regulators and financial services firms are supporting the government’s climate change commitments, while also looking into the inherent economic potential of decarbonisation.
The inquiry is to have three main strands, examining the economic opportunity for the UK, HMT’s strategy and green finance. Its terms of reference are more detailed, revealing that the inquiry will examine the economic costs and benefits of decarbonisation, and how a ‘just’ transition is to be delivered regionally.
When scrutinising HMT’s decarbonisation strategy, the inquiry will look to clarify if it is fit for purpose, how the Treasury is working across Whitehall, and how its strategy should evolve to ensure government can meet its carbon budgets.
Nicky Morgan, Conservative MP and chair of the Treasury Committee, said the issue of climate change had “shot up the political agenda”.
“Whilst decarbonising the UK economy presents significant challenges, it also provides an opportunity for the financial services sector to unlock its green potential.
“This inquiry will examine how HM Treasury and financial sector firms can support the UK to lead the way in green finance and environmental innovation.
“Decarbonising an economy doesn’t mean it has to stop growing. The time is ripe to explore how we can make sure that the UK gets this right.”
Launched on World Environment Day, the inquiry’s unveiling also coincides with the government receiving considerable criticism for a rumoured move to use over-performance in previous carbon budget periods to justify reducing forthcoming targets.
Yesterday the FT reported that both chancellor Philip Hammond and BEIS secretary Greg Clark had agreed to use the so-called flexibilities, rejecting advice from the Committee on Climate Change that doing so would undermine the UK’s emissions reduction programme.
In a statement to Current±, a BEIS spokesperson said that the department was “working closely with the Committee on Climate Change on how we best deliver against our world-leading carbon targets”, including on any technical changes to carbon emissions accounting, but refused to confirm whether or not it had come to a specific decision regarding the use of flexibilities.