London, 19th October 2021
Research and campaign group Positive Money has today criticised the government’s long-awaited Net Zero Strategy as falling short ahead of crucial climate talks in Glasgow.
The strategy, which builds on the Prime Minister’s ‘10 point plan’, sets out the government’s approach to ‘building back greener’ and ‘levelling up’ the country by supporting up to 440,000 jobs and catalysing £90 billion of private investment by 2030.
In a review of the costs and benefits of a transition to a low-carbon economy, the Treasury has warned against government borrowing to finance the transition, to protect “future taxpayers” from footing the bill. The review suggests that the biggest impact on the economy will be reduced tax revenue from “fossil fuel-related activity”. It also notes that “the costs of global inaction significantly outweigh the costs of action”.
Danisha Kazi, Senior Economist at Positive Money, said:
“As the country hosting this year’s crucial COP summit in Glasgow, the UK government’s approach to net zero falls short on many fronts.
“Relying on the private sector to raise £90 billion by 2030 – the same amount that has been invested in renewables over the last nine years – simply amounts to business as usual. Given the scale of the crisis, with the International Energy Agency saying that investment in clean energy needs to more than triple to around £3 trillion by 2030, the figures announced by the government today are a drop in the ocean.
“Huge levels of public investment will be needed to ensure a fair green transition, so it is concerning that the government’s net zero review is pushing back on this by warning about costs being passed onto ‘future taxpayers’. Public spending to build new infrastructure and create the green jobs of the future will not be a burden on future generations, but a prudent investment that will pay for itself and deliver huge dividends for the whole of society.
“There is also nothing about the emissions the City of London are responsible for through the billions of pounds they are pouring into fossil fuels overseas. To reach net zero by 2050 the International Energy Agency has said no new fossil fuel projects are required – the government needs to ensure its Green Finance Strategy reflects this.”
The Net Zero Strategy estimates that additional capital investment must grow to “an average of £50-60bn per year through the late 2020s and 2030s” and intends for the private sector to fill most of the gap, with the government aiming to leverage £90bn of private green investment by 2030. Targeted public spending, for instance through the UK Infrastructure Bank and British Business Bank, will seek to catalyse private investment and stimulate innovation in low-carbon sectors, but critics argue this isn’t enough.
An accompanying “Greening Finance” roadmap, published yesterday and backed by the Treasury, Department for Business, Energy and Industrial Strategy and Bank of England, set out new requirements for big companies to outline detailed plans for how they will reach net zero by 2050 or “provide an explanation if they have not done so”.
The government also confirms that a full “Green Finance Strategy” will set out how the UK financial system will “transition to net zero as a whole” in 2022.
- Department for Business, Energy and Industrial Strategy, “Net Zero Strategy”, 19 October 2021: https://www.gov.uk/government/publications/net-zero-strategy
- HM Treasury, “Net Zero Review”, 19 October 2021: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1026725/NZR_-_Final_Report_-_Published_version.pdf
- UK government, “Greening Finance: A Roadmap to Sustainable Investing”, 18 October 2021: https://www.gov.uk/government/publications/greening-finance-a-roadmap-to-sustainable-investing
- Last week, 60 MPs and 25 peers from across the political spectrum wrote to the Bank of England governor, asking him to do more to regulate fossil fuel finance and support the green transition: http://positivemoney.org/wp-content/uploads/2021/09/Green-finance-open-letter-to-Andrew-Bailey-1.pdf
- The International Energy Agency has warned that there can be no new oil, gas or coal development if world is to reach net zero by 2050, and said that annual global investment in clean energy needs to increase by more than triple, to $4tn (approx £3trn) by 2030. 17 May 2021: https://www.iea.org/reports/net-zero-by-2050
- In May 2021, the UN Secretary General Antonio Gutteres, said: “There must be no new coal plants built after 2021… Countries should also end all new fossil fuel exploration and production, and shift fossil fuel subsidies into renewable energy.”: https://www.un.org/sg/en/content/secretary-generals-statement-the-ipcc-working-group-1-report-the-physical-science-basis-of-the-sixth-assessment
- New Economics Foundation and Positive Money report, ‘Greening Finance to Build Back Better’, June 2021: https://positivemoney.org/publications/greening-finance/
- Positive Money is a research and campaign organisation working towards a money and banking system which supports a fair, democratic and sustainable economy. Set up in the aftermath of the financial crisis, Positive Money is a not-for-profit company funded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. www.positivemoney.org.
- For more information from Positive Money or to arrange a briefing/interview with a spokesperson, please contact firstname.lastname@example.org or Anna Pick on 07948802104.