Government has ‘no clear plan’ for funding net zero

The government lacks answers to “key questions” about the cost of achieving its 2050 net zero target and how the transition will be funded, the House of Commons Public Accounts Committee (PAC) has warned.

In a new report assessing the government’s Net Zero Strategy, which was published ahead of last autumn’s COP26 conference in Glasgow, the PAC concludes the government has “no clear plan” for how the transition to net zero will be funded.

The report also says the government’s ability to track its performance against the 2050 target is “hampered by vague performance measures”, a lack of an overall budget and a “limited assessment” of net zero’s cost impact on consumers.

It says: “The government has unveiled a plan without answers to the key questions of how it will fund the transition to net zero, including how it will deliver policy on and replace income from taxes such as fuel duty, or even a general direction of travel on levies and taxation.

“The government has no reliable estimate of what the process of implementing the net zero policy is actually likely to cost British consumers, households, businesses and government itself.

The report says that while it will be difficult to separate out spending in pursuit of net zero from other costs, this should not be a reason for the government to “shy away” from reporting the public money spent on achieving these objectives.

As an example, it points to the similar challenges that the National Audit Office overcame to create its Covid Cost Tracker.

The committee urged the Department for Business, Energy & Industrial Strategy (BEIS) and the Treasury to set out in writing how it will report progress in implementing its net zero policies.

The committee expects this to be produced in an annual report including updated costs to 2050 and the amount spent that year in the public sector to achieve net zero.

The PAC also concludes that while the Net Zero Strategy relies heavily on private investment and innovation to drive down costs, the government has a “poor track record” of providing investor confidence.

It says BEIS should monitor how quickly the costs of technologies like heat pumps are falling and the levels of private investment being attracted as well as setting clear triggers for intervening with new policies and regulations if progress goes off course.

Dame Meg Hillier MP, chair of the PAC, said: “Government is relying heavily on rapidly changing consumer behaviours and technological innovations to drive down the costs of green options, but it is not clear how it will support and encourage consumers to purchase greener products or incentivise businesses and drive change.

“Every government department has a responsibility for delivering policies towards the target of net zero but two years after enshrining the ‘net zero’ by 2050 target in law, the government has unveiled a plan without answers to the key questions of how it will fund the transition to net zero – including how it replace significant income from taxes such as fuel duty.

“The government’s net zero strategy requires government, local government, regulators, businesses, and consumers working all together to deliver its targets. A top-down strategy from government won’t deliver on its own. There is a risk that a series of disconnected initiatives announced by central government will not bring about the changes that are now set out in law.”