The combined effect of UK and global climate action on UK economic growth is likely to be ‘relatively small’, the HM Treasury states in its interim Net Zero Review.
The scale, distribution and balance of new growth opportunities and challenges will depend on how the economy and policy respond to the changes required, the report continues.
Stated to be the first report of its kind from any finance ministry in the world, the interim report explores how people’s lives, businesses and the economy will adapt to the shift to net zero, and lays out some of the choices the government will consider during the transition.
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.
Kemi Badenoch, the Exchequer Secretary to the Treasury, commented on the announcement: “We are determined to achieve a cleaner, green future, and cutting our emissions to net zero by 2050 is crucial to this.
“We are already making good progress and have set out billions of pounds in green investment, including decarbonisation and greener homes, electric vehicle charging infrastructure, walking and cycling infrastructure, flood defences and backing enough offshore wind to power every UK home by 2030.
“This valuable piece of analysis will help inform our next steps as we work to build back better and greener.”
Findings of the report include:
- The costs of the transition to net zero are uncertain and depend on policy choices.
- Government needs to use a mix of policy levers to address multiple market failures and support decarbonisation.
- Well-designed policy can reduce costs and risk for investors, support innovation and the deployment of new technologies.
- The risk of carbon leakage will increase with efforts to reduce emissions.
- Households are exposed to the transition through their consumption, labour market participation and asset holdings. Government needs to consider these patterns of exposure in designing policies for the transition.
The government’s Net Zero Strategy is due to be published next year.
The full interim report can be read on the government website.
