Submission to the UK Government Review of Net Zero call for evidence
This is a joint submission to the UK Government made by the Grantham Research Institute on Climate Change and the Environment, the Centre for Economic Performance, the Programme on Innovation and Diffusion, the Centre for Climate Change Economics and Policy and the Place-based Climate Action Network.
It is a response to the call for evidence made as part of the Independent Review of Net Zero commissioned by the Secretary of State for Business, Energy and Industrial Strategy, launched on 26 September 2022 and led by Chris Skidmore MP, to ensure that the delivery of the target is pro-growth and pro-business.
- With the right set of coordinated policies in place, delivering net zero and achieving economic growth can be complementary.
- The UK is specialised in clean technologies overall and in some specific technologies within that category for which the estimated returns to public investment in innovation are especially high, such as offshore wind, tidal stream and carbon capture, usage and storage (CCUS).
- UK businesses can benefit from the shift to low-carbon energy, which reduces exposure to volatile fossil fuel prices, in turn having the potential to reduce costs and uncertainty.
- The costs and benefits of the transition to net zero need to be distributed fairly across society in order to maintain public support in challenging times.
- Carbon pricing complemented with a broader package of policies and smart regulation to address the different challenges faced across sectors can enable the UK to meet its net zero target in a more economically efficient manner.
- Significant fiscal rethinking is needed to respond to the current economic climate and to proactively manage the implications of the longer-term transition to net zero on the tax system, including the expected loss of revenue from fuel duty.
- Maintaining energy security and delivering net zero by 2050 are complementary rather than conflicting priorities.
- The ongoing support to households and businesses through the current period of high energy prices needs to be targeted and linked to incentives to decarbonise.
- An overall systematic approach to finance from the Government is needed for the UK to deliver the investment in net zero at the pace and scale required.
- There is a disconnect between the UK’s highly global capital markets and the bottom-up needs of its localities and regions.
- Net zero requires an all-of-government effort to drive increased and well-targeted investments across innovation, infrastructure and skills.