HM Treasury review says tackling climate change could benefit economy - make UK leader in clean technologies

Thu 17 December 2020 View all news

HM Treasury has published a Net Zero Review which is describes as an 'interim report to inform the next steps in the green transition'. Government says it is the first of its kind from a finance ministry anywhere in the world. The Review says that the transition could boost - or only slighly damage - the economy. It also flags up the challenge of the loss of revenue to the exchequer arising from the move to electric vehicles.

The Review says: "Overall, in the context of the rest of the world decarbonising, the net impact of the transition on growth to 2050 is likely to be small compared to total growth over that period. It could be slightly positive or slightly negative."

It goes on to say: "Climate change is an existential threat to humanity. Without global action to limit greenhouse gas emissions, the climate will change catastrophically with almost unimaginable consequences for societies across the world."

The Review is intended to support the Government’s work in maximising opportunities and benefits for the UK over the next 30 years as we transition to net zero, and help to ensure an equitable balance of contributions between households, businesses and the taxpayer.

A BBC report about the Treasury Review says that the Treasury has acknowledged the problem of falling fuel duty revenues as EV uptake grows "in a way that will spark a debate about how driving should be taxed in the future".

Kemi Badenoch, the Exchequer Secretary to the Treasury, said: "We are determined to achieve a cleaner, green future, and cutting our emissions to net zero by 2050 is crucial to this.

"This valuable piece of analysis will help inform our next steps as we work to build back better and greener."

The interim report contains initial analysis, rather than policy recommendations, which will guide further work ahead of the publication of the Review’s final report next year. This follows a recommendation from the independent Climate Change Committee.

The final report will build on this analysis, looking at how the Government can encourage innovation, technological development and investment in green technologies the UK; address risks to competitiveness; and manage implications of the transition for households. 

The Net Zero Review is part of a government-wide effort to achieve net zero and address wider environmental issues, including the Prime Minister’s Ten Point Plan for a Green Industrial Revolution.

BBC reports that environmentalists have welcomed what they say is a dramatic change in tone from the Treasury,

Doug Parr from Greenpeace told BBC News: "Finally the Treasury has admitted that tackling climate change could actually be good for the economy.

"For years it's been a total drag on climate policies - it used to get in the way of any good proposals."

Nick Mabey from the think tank e3g told BBC News the document raised false fears that the UK would lose industries to nations with dirty economies if the UK decarbonised.

He said: "This report shows the Treasury still has a lot of homework to do to understand the full implications of the clean energy revolution for Britain.

"The report talks about the opportunities of moving to net zero but still underplays the benefits of cleaner air and healthier cities.

"[The Treasury has] still not grasped that British industry is not at risk from dirty imports but from industries powered by cheap solar power in Tunisia, the Gulf and Australia."

"The obvious implication of this report is that the UK can afford to move faster to reduce climate risks."

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