The government should cost the decarbonisation of the UK when it publishes the long-awaited final report of its net zero review, the Treasury select committee has urged.
In a new report on ‘Net Zero and the Future of Green Finance’, published today (22 April), the heavyweight committee urges the Treasury to outline a range of scenarios on how net zero might be achieved, and the cost associated with each one, when it publishes its final report.
The review should also include the government’s own methodology on costs and outline the principles upon which the UK will fund its transition to net zero carbon emissions by 2050, the committee said.
Noting there are a number of different estimates of the cost of achieving net zero by 2050, the select committee said the review report should set out clearly where these uncertainties lie.
The MPs recommended that the government should use the review’s final report to set out the mechanisms it will put in place to integrate the net zero target within departments’ spending review commitments, and how they will be held accountable if they fail to meet their targets.
And the select committee said the net zero review final report should include clear sectoral pathways towards decarbonisation. Policy decisions about the future of high carbon industries should pay particular attention to potential regional impacts with a framework and strategy for supporting those communities.
The government published the interim report of its net zero review, which has been set up to examine the costs of the 2050 target and how they will be distributed across society, before Christmas.
The Treasury select committee report also urged chancellor of the exchequer Rishi Sunak to publish the government’s wider net zero strategy, which is due out before the COP26 summit later this year, “as soon as possible”.
It said the government must set out in this strategy the minister who will be responsible for delivering net zero, coordinating the roles of different departments, and ensuring that the UK remains on track to meet its 2050 target in a cost-effective way.
Turning to finance, the report warned that the UK is “lagging behind” other countries in the issuance of environmentally friendly sovereign bonds despite the announcement in the 2021 Budget of a timetable for the issuance of the UK’s first “green gilt”.
While concerns exist about the potential for green bonds to be a relatively expensive way of debt for servicing the public finances, the report says the government should set out its tolerance issuing for such bonds to be more expensive than other forms of government debt.
Commenting on the report, Dr Jonathan Marshall, head of analysis at the Energy and Climate Intelligence Unit, said: “Seeking clarity on the total cost of net zero is fair, but any projections are highly uncertain and more than likely overestimates, as repeatedly seen in years gone by.
“Recreating policy successes that have slashed the cost of wind turbines and solar panels could make heat pumps and electric vehicles more affordable, addressing market failures would ensure clean industry is no longer held back, and funds to kickstart a home efficiency upgrade programme could keep a lid on long-term costs. These relatively simple actions from Treasury could ensure that UK Plc reaps the rewards of taking a global lead on climate action by locking in jobs and industries for decades to come.”