OBR says investment needed to deliver net zero is falling while costs of inaction are rising
Wed 09 July 2025
View all news
A new report from the Office for Budget Responsibility (OBR) says that the cost of cutting emissions to net zero is significantly smaller than the economic damage that will be caused by failure to act.
The OBR report 'Fiscal risks and sustainability' includes five chapters with one focusing on climate change.
The report says that the size of the UK economy could be reduced by 8% by the early 2070s, if the world warms by 3C this century. The OBR says that the increase in its estimate of climate damage costs is a result of using "a more comprehensive and up-to-date analysis". The economic damage, it says, would be a result of lower productivity and employment and, therefore, lower tax receipts.
Meanwhile, estimates of the investment needed to cut UK emissions in order to reach net zero has been reduced by half compared with the OBR's projections from four years earlier.
The OBR bases its forecasts on the investment needed to meet net zero on the most recent report from the Climate Change Commitee. It says that the expected net cost to the economy of reaching net zero emissions by 2050 is now £116bn over 25 years, some £204bn lower than previously thought. (According to Carbon Brief, in approximate terms, this figure – which excludes health co-benefits due to cutting emissions and avoided climate damages – is equivalent to less than £70 per person per year.)
The OBR says, however, that it still does not include costs associated with adapting to climate change, or the impact this could have on reducing the cost of damage.
The report also acknowledges that it does not factor in technological advances that are likely to reduce the investment costs of reaching net zero, nor the risk (and implied costs) of breaching tipping points, which could cause “large and irreversible changes” to the global climate.
Related Links
< Back to news list