Boris Johnson, Chancellor Sunak Reportedly at Odds Over Cost of UK Moving to Carbon-Free Economy
05:46 GMT 17.10.2021 (Updated: 21:39 GMT 18.10.2022)
In mid-November 2020, UK Prime Minister Boris Johnson announced the country's "green industrial revolution" as he unveiled a ten-point plan "to create, support, and protect hundreds of thousands of green jobs, whilst making strides towards net zero by 2050".
British Prime Minister Boris Johnson remains at loggerheads with Chancellor Rishi Sunak
over the cost of the UK moving towards a carbon-free economy, according to confidential Treasury documents leaked to The Guardian
The documents described the investments "to decarbonise" the British economy as "uncertain", claiming though that they "could help to improve the UK's relatively low investment levels and increase productivity".
At the same time, the papers warned that more green financial injections are "likely to attract diminishing returns, reducing the positive impact of ever more investment on GDP [gross domestic product]".
"Some green investments could displace other, more productive, investment opportunities. If more productive investments are made earlier in the transition, this risk may be accentuated later in the transition", the papers insisted.
They also warned of the risk of additional costs to companies from green proposals, arguing that "climate action in the UK can lead to economic activity moving abroad if it directly leads to costs increasing, and it is more profitable to produce in countries with less stringent climate policies".
Referring to potential fiscal implications, the documents asserted that the cost of shifting to net zero could result in tax hikes because of "the erosion of tax revenue from fossil fuel-related activity".
"The government may need to consider changes to existing taxes and new sources of revenue throughout the transition in order to deliver net zero sustainably, and consistently with the government's fiscal principles", the papers claimed.
15 December 2020, 03:22 GMT
The leaked documents come as the 2021 United Nations Climate Change Conference (COP26) in Glasgow looms large. At the gathering, Prime Minister Johnson is expected to position the UK at the forefront of international efforts to combat climate change and contain greenhouse gas emissions.
In July, the Office for Budget Responsibility (OBR) argued in a report that between now and 2050, "the fiscal costs of getting to net zero in the UK could be significant, but they are not exceptional […]".
The report claimed that "while unmitigated climate change would spell disaster, the net fiscal costs of moving to net zero emissions
by 2050 could be comparatively modest".
The forecasts were echoed by the Committee on Climate Change, the government's statutory adviser, which has repeatedly argued about "small and diminishing" costs of action on a zero-carbon economy, which may amount to less than 1% of GDP by 2050.
The OBR report was preceded by Johnson touting Britain's "green industrial revolution" in a keynote speech in mid-November 2020, unveiling a blueprint to protect the environment.
"My ten-point plan will create, support, and protect hundreds of thousands of green jobs, whilst making strides towards net zero by 2050", BoJo said at the time, adding that the nation's "green industrial revolution will be powered by the wind turbines of Scotland and the North East, propelled by the electric vehicles made in the Midlands, and advanced by the latest technologies developed in Wales" so that the country can "look ahead to a more prosperous, greener future".
The £12-billion ($15-billion) plan stipulates that sales of new petrol and diesel cars will be banned in the UK by 2030, amid the push for electric vehicles. The latter will come with a £1.3 billion ($1.7 billion) investment in charging points in homes, streets, and trunk roads.