Costing the Earth

This report from the UK think tank Onward looks at how to decarbonise the UK without undermining competitiveness, hitting consumers or overburdening taxpayers.

The UK has decarbonised further and faster than any other developed economy and it was the first to legislate for a net zero emissions target by 2050. Now, this needs to be followed up with a bold and practical plan to achieve this without undermining competitiveness, hitting consumers or overburdening taxpayers. This report is that plan. We base our solutions around six pillars of centre-right thinking: use the market where possible; foster innovation; maximise synergies; ensure a fair transition; build efficient institutional frameworks; and set and example on the world stage. Alongside these recommendations, this report lays out the dangerous costs of earlier 2025 and 2030 net zero emissions targets which include an absolute minimum cost of £200 billion and £100 billion respectively. A 2025 target would also mean almost tripling the current workforce of plumbers and three times the current global capacity of electric vehicles to be sold in the UK a year. We have at most three decades to deliver the wholesale decarbonisation of the UK economy.

The landmark net zero target, signed into law in June, legally commits the Government to reduce net Greenhouse Gas emissions from 448.5 million tonnes carbon dioxide equivalent (MtCO₂e) today to zero by 2050 in order to limit the UK’s contribution to global warming to 2 degrees or less. The scale and pace of change required is eye-watering. Thankfully we do not begin from a standing start. The UK has reduced domestic emissions further and faster than any other developed economy. Total Greenhouse Gas emissions have been cut by 44% even as the economy has grown. Power sector emissions have more than halved since 1990. The UK has successfully led international action on climate change for thirty years and continues to be well placed in the development of innovative clean technologies. In particular, the UK’s hosting of COP26 in 2020 provides an opportunity for Britain to lead the charge and set out an ambitious policy programme for the future. But policymakers, industry and consumers have a long way to go – and voters, especially younger voters, are demanding they start acting fast.

In recent years, some have seized on environmental reform as a vehicle for radical state expansion and intervention. Political parties in the UK and US have used “Green New Deals” as cover for nationalisation, state subsidy and heavy regulation of corporate and individual behaviour. Beyond complaining about the fallacy of these ideas, the centre right has failed to put forward a positive programme of bold reforms based on market economics, fiscal prudence and concern for the bills of hardworking households and taxpayers. This is the purpose of this paper. We deliberately base our proposals around six core principles for reform.

First, use markets where possible: we will only achieve net zero by harnessing the scale and power of competitive markets. Second, use the state to foster innovation: the UK needs to catch up on R&D and focus public funding on areas where there is the greatest disruptive potential. Third, maximise synergies with other societal challenges to ensure we deliver multiple benefits at once. Fourth, ensure a fair and just transition for the poorest in society and future generations. Fifth, build efficient institutional frameworks that reduce inconsistency and build common endeavour. Sixth, set an example on the world stage to lead the world in climate action. These principles directly counter the weaknesses of the UK regime at present and should guide any centre right approach to climate and wider environmental policy. The recommendations they guide – summarised in the following pages – are distinctive from the high taxing, heavy spending and state-centric approach of the Left. They would set the UK on a path not just to net zero but to strong clean growth, a prosperous economy, lower cost households, efficient carbon pricing and innovation. As international experience and our own history demonstrates, such a seismic shift in behaviour will only be possible with a strong economy, willing consumers and the benevolence of taxpayers.

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