Reducing greenhouse gas emissions to net zero by 2050 as recommended by the Committee on Climate Change will cost the UK “well in excess of a trillion pounds”, Philip Hammond has warned in a letter to Theresa May.
According to an article in the Financial Times, the chancellor says the target would also make some industries “economically uncompetitive” without financial assistance from the government and would leave less money available to spend on public services such as education, healthcare and policing.
“The challenge of transitioning to a zero-carbon economy is wholly unprecedented in both its scale and complexity,” the letter states. “It will have profound and far-reaching implications for every sector of the economy, disrupting existing business models and transforming the foundations of our modern economy.
“While I agree that the government should legislate as soon as possible for a net-zero target, it is essential that the government fully considers the implications of adopting a more ambitious target before setting it in law.”
Hammond says the £1 trillion figure is based on estimates from the Department for Business, Energy and Industrial Strategy (BEIS) which put the annual cost of meeting the target at £70 billion – around 40 per cent higher than the Committee on Climate Change (CCC) forecast of £50 billion per year.
Nevertheless, he adds, this is still within the committee’s “cost envelope” of 1 to 2 per cent of the UK’s economic output by 2050.
The chancellor notes that the UK is already forecast to miss its existing targets and says there would need to be an “ambitious policy response” for the policy to be taken seriously. He calls for an “explicit review point” or a get-out clause to allow the government to reconsider if similar targets are not adopted by other countries.
A number of people took to twitter to respond, including Chris Stark, the chief executive of the CCC:
There’s (understandably) a lot of speculation about this story in the FT today, but we’ve had no official announcement from the government on the decision they were required to make last Friday. I’m sure @theCCCuk will have a view when we see that. https://t.co/yT57pxyEHf
— Chris Stark (@ChiefExecCCC) June 4, 2019
This HMT letter looks like a calculated attempt to delay or halt this process by certain senior treasury officials based on a fundamental misreading of the costs of climate action against benefits, or indeed impacts of inaction. (2/3)
— Alan Whitehead (@alanwhiteheadmp) June 6, 2019
UK Chancellor Hammond warns that UK net zero target in 2050 will cost over £1 trillion and mean there’s less money for schools and hospitals
— Doug Parr (@doug_parr) June 5, 2019
So the Chancellor has written to the PM saying that the UK net zero emissions target will ‘cost more than £1tn’. But the FT piece fails to draw any distinction between INVESTMENT (ie something which creates an asset and generates a return) and SPENDING!!! https://t.co/R3x4woSJiZ
— Michael Liebreich (@MLiebreich) June 6, 2019
This is the key distinction. Reaching net zero will undoubtedly involve an enormous amount of upfront capital spending. But this is offset by monetary benefits (eg less fossil fuel spending) and externalities (improved air quality, health etc) https://t.co/g9SuJkRbQ1
— Richard Howard (@UKenergywonk) June 6, 2019
Earlier this week, the government was accused of trying to “fiddle” the targets following reports in the Financial Times that cabinet ministers had decided against the explicit advice of the CCC to roll over 88 megatonnes of a 384 megatonne surplus from the second carbon budget to future accounting periods.