The Government’s Net Zero Strategy Is Beyond Disappointing

Without the money, it's just empty promises.

by James Meadway

25 October 2021

Boris Johnson climate change panel children kids
(Number 10/Flickr)

The British government’s long-awaited Net Zero Strategy has finally been published alongside a raft of other documents detailing its various plans for decarbonising domestic heating and, significantly, its review of the “costs” of reaching ‘net zero’. 

To reach net zero, the amount of greenhouse gases we put into the atmosphere need to be balanced by taking away the same amount. By this logic, an economy working at net zero may still be emitting some carbon, but this will be balanced by the amount it takes out of the atmosphere – for instance, through tree planting or (potentially) new technologies like carbon capture and storage. 

If major emitters like the UK can achieve net zero fast enough, thus reducing the total amount of greenhouse gases pumped into the atmosphere, climate scientists say that climate change can be slowed

But while the government’s commitment to achieving net zero is something to be welcomed, it still leaves a lot to be desired – including the details on how it actually intends to achieve its goal. Indeed, not only is the UK’s target too loose, the Tories have yet to make clear how they will provide the funding and resources needed to transform the British economy in such a radical way, with the Treasury failing to show properly how the strategy will be financed. The government is also wildly hypocritical; for all its fine words about the things it could do to achieve its target, it is still subsidising fossil fuels and even financing fossil fuel production elsewhere in the world

The Tories have changed their tune. 

A combination of the environment becoming noticeably more unstable and rising climate activism have contributed to the debate over the climate shifting dramatically in just a few years. Climate deniers have become noticeably less vocal, with climate delayers– those recognising a problem, but arguing for slower, less radical action on climate change – taking their place.  

The Tories themselves have adapted to this change in mindset, with the one-time climate sceptic Boris Johnson now describing reaching net zero as “the greatest opportunity for jobs and prosperity for our country since the industrial revolution”. Elsewhere, Tories like Teesside Metro mayor Ben Houchen are talking up green jobs as the way to cement Tory support in the so-called red wall.

And we should be clear that this isn’t just rhetoric. The Tories have realised that, quite independently of their actions – indeed despite them actively cutting subsidies for green energy – the UK can be presented as a relative climate leader amongst the larger developed economies. The near-disappearance of coal from our energy system, and the loss of manufacturing have both resulted in the UK producing 38% fewer emissions than in 1990.

Meanwhile, the falling price of renewable generation technology in recent years has meant that it no longer requires heavy government investment, and instead something that the private sector can profitably invest in. The smarter of the Tories have observed this and want to leverage Britain’s relative economic and environmental advantages, like its significant coastline for wind power, into the government’s economic strategy. 

That said, the so-called commitment the Tories are making in their decarbonisation strategy is still woefully inadequate. The headline target, of achieving net zero by 2050, is a long way off the kind of commitment the UK could and should be making, given its historic emissions. 

Labour’s 2019 manifesto committed to a dramatic programme of decarbonisation by 2030, led by the government. But even short of this programme, this Conservative government could be doing far more to get us there. 

Emissions aren’t the only problem. 

Removing greenhouse gas emissions from our economy, however, is not the only challenge the UK government faces. Biodiversity loss and resource depletion – from rare earth to topsoil – are also fundamental problems, but receive nowhere near the government attention required to solve them. A serious ecological transformation of the economy would build in biodiversity protection, including rewilding, and develop a circular economy approach to production – recycling, reusing and reprogramming wherever possible.

Meanwhile, as the Environment Agency warned a few weeks ago, with unstoppable environmental changes now in motion as a result of climate change, we can expect to see more extreme weather and natural disasters in our future. “Adapt or die” was the agency’s stark message – meaning that we also must increase spending on preventative measures like flood defences and water systems.

It’s all about the money.

Within this overall target for decarbonisation, the government’s goals are reasonable: phasing out sales of combustion-engine cars and vans by 2030, ending the sale of gas boilers by 2035, and implementing a fully decarbonised energy system by the same year are all good things to have. But the language of “ambition”, used in the strategy and its surrounding documents, is a long way from any kind of meaningful commitment. And what’s more, without the funding to make the plans, they either won’t happen, or will be implemented half-heartedly. 

But the vague language of “ambition”, used in the strategy and its surrounding documents, is a long way away from any kind of meaningful, concrete commitment the government needs to make. And what’s more, without the funding to make the plans, such commitments either won’t happen, or will be implemented half-heartedly. 

This lack of funding is the critical failing of the whole package of measures. Indeed, the Treasury remains the biggest single barrier within the British government to implementing the sort of programme needed to overhaul and decarbonise our economy. For a decade now, the department has acted as a barrier to decarbonisation – cutting subsidies to renewables whilst continuing to subsidise fossil fuels to the tune of billions a year, for example.

Its ‘Green Book’, the internal manual used to decide which projects receive funding and which do not, is biased against long term decision making. This means that the rules would, for example, tend to favour something like investment in road-widening – since this produces an immediate benefit to drivers – over investment in new public transport – since this will produce its benefits (including lower emissions) only over a longer period of time. In practice, environmentally critical projects end up being deprived of funding.

What’s more, the department’s internal belief system, the ‘Treasury View’, first laid out in the 1930s, prioritises short-term funding through taxation (“balancing the books”) over the long-term need to finance important investments through borrowing. In this way, the austerity program implemented by the Tories over the last decade was the pure application of the Treasury View, which saw the government plough on with its brutal spending cuts regardless of the harm they were inflicting. 

Getting behind borrowing.

The Treasury’s contribution to the government’s plans does, at least, recognise that the potential costs of failing to act will, by 2050, be larger – in terms of financial losses – than actually doing something. However, the department’s own biases ultimately undermine this recognition, with the Treasury insisting that the government should not borrow money to finance its planned environmental expenditures, ironically citing the costs it will impose on “future generations”. 

This, of course, is nonsense. Any plausible forecast for the amount of damage climate change will cause in the future is vastly bigger than any plausible costs incurred by additional government borrowing. It’s an excuse for inaction by the Treasury – and comes at a time when the real cost of borrowing for the government, once you allow for inflation, is negative – in other words, lenders will (in effect) pay the government for the privilege of lending it money. The government, right now, should be borrowing something around £30bn a year, every year for at least a decade, to finance the costs of decarbonisation – and it can do so at exceptionally low rates of interest.

Instead, the Treasury thinks the costs of decarbonisation should be borne through taxation. But it’s unlikely that enough money could be raised through taxation to cover the costs – and, with this government cutting taxes for banks while hiking taxes on workers, it’s obvious it won’t be chasing the worst polluters or the biggest corporations to get them to pay their due. 

Unless the Treasury’s attitude towards borrowing changes, the rest of the government’s decarbonisation strategy is futile. If it doesn’t have money to carry out its plans, no plans will be carried out. And we definitely can’t rely on the private sector to act fast enough, or on a large enough scale, since it cares far more about short-term profits than it does the long-term gains for society. Market-based solutions, like “emissions trading” have failed to deliver meaningful reductions in greenhouse gas emissions. The problem is too serious to be left to the profit motive; the government must step in to deliver the investment we, and the planet, desperately need. 

James Meadway is an economist and Novara Media columnist.

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