On borrowed time

Think tank: Social Market Foundation

Author(s): Bill Anderson-Samways; John Hobby

June 14, 2022

This report from UK think tank the Social Market Foundation looks at future generations and the Net Zero transition.

This report from Social Market Foundation think tank looks at intergenerational fairness when paying for net zero. The transition to a net zero economy raises questions about when costs should be paid, and by whom. This paper aims to set out a plain-language summary of how to think through two questions with critical implications. How much should we pay now, to avert future costs? And how should we pay, given a choice between carbon pricing and borrowing? In exploring the assumptions made in HMT’s Net Zero Review regarding future generations and the difficulties they may face, it finds that government policy is frequently contradictory. To correct the discrepancy and meet Net Zero 2050 without passing on burdens to future generations, SMF’s recommendations to Government are: 1. Lower the discount rate, and update the methodology used to calculate it 2. Ensure that the UK ETS is strengthened to achieve a truly “Net Zero consistent” price trajectory 3. Use higher carbon pricing to substitute for borrowing from the future The report was launched at our panel event featuring Wera Hobhouse MP, and can be viewed on our YouTube channel.