U.K. Treasury Needs Net-Zero Funding Plan, Says Climate Watchdog
(Bloomberg) -- The U.K.’s Treasury must detail how it will fund its ambitious plans to decarbonize the economy in the coming decades, according to the government’s independent advisers on climate change.
The plans are a “genuine step forward” and in line with the country’s targets to cut emissions by 78% from 1990 to 2035, the CCC said in a statement. “The strategy is not the end of the road, however.”
The Treasury needs to set out how it will use the tax system to help the energy transition and fill the fiscal hole it will leave. While the department led by Chancellor of the Exchequer Rishi Sunak published a net-zero costs review last week, “this work is far from complete,” the CCC said.
Specifically, the Treasury acknowledged it will need to plug a revenue gap left by the switch to electric vehicles as fuel duties decline.
Despite growing recognition that a shift to road pricing is likely needed, and that the change will be easier to manage the sooner it is initiated, “details on how much of the transition will be funded beyond 2024 are still missing,” the CCC said.
The watchdog also questioned the Treasury’s assumption that borrowing to fund the shift would create greater inequality. Most of the transition costs are investments that will bring benefits to future generations,” it said, noting that the U.K. has already issued a sovereign green bond.
The committee also called for more measures on agriculture and food, and more clarity on plans to switch to heat pumps.
©2021 Bloomberg L.P.