Thread by @ChiefExecCCC

Last year, we recommended that @hmtreasury undertake a review of how Net Zero will be funded. Very pleased that they accepted that invitation.

We've now got their interim report - the final report will be next Spring probably.
gov.uk/government/pub…

Quick thread...

You may have heard me bigging up this review, because it's essential that @hmtreasury looks at the question of 'who pays?' for Net Zero.

Our new analysis says the aggregate cost is likely to be low, but that masks a policy challenge to distribute the costs and benefits fairly.

Happily, this looks like it will tackle the right issues. And because it's interim, I hope the @hmtreasury will have more time to consider our latest assessment of the pathway to Net Zero - and the investment and savings insights that emerged in this chart.

How about this for an opening statement?

Their insights:
1) The combined effect of UK and global climate action on UK economic growth is likely to be relatively small. The scale, distribution and balance of new growth opportunities and challenges will depend on how the economy and policy respond to the changes required.

2) The costs of the transition to net zero are uncertain and depend on policy choices.

3) Government needs to use a mix of policy levers to address multiple market failures and support decarbonisation.

4) Well-designed policy can reduce costs and risk for investors, support innovation and the deployment of new technologies.

5) The risk of carbon leakage will increase with efforts to reduce emissions.

6) Households are exposed to the transition through their consumption, labour market participation and asset holdings. Government needs to consider these patterns of exposure in designing policies for the transition.

Those of you steeped in climate policy might not regard these as gamechanging – but it really is *good* to see the UK’s economics and finance Ministry enshrining these principles.

A sensible economic outlook from the department that once brought you the Stern Review.

This is the Treasury acknowledging (embracing?) the structural changes in the economy implied by Net Zero. That’s good, because it should move us fundamentally from the old paradigm that decarbonisation was an annoying cost to be managed.

Sadly, not many clues on where policy is heading – unsurprising in an interim review – especially the fiscal policies. Tantalising references to transport taxes, but nothing that tells me what the answer is if we all go electric. Likewise, domestic heating and energy bills.

Chapter two is the one to read with references to the fiscal implications and this chart. A whopping £35bn+ of Exchequer revenues from fossil fuel consumption.

There are 27 billion reasons for the Chancellor to get thinking about the future of fuel duties in a zero carbon world.

But I think this interim review sets up the strategic questions pretty well.

It’s a thoughtful report too – with messages that made me think , about the costs of the transition that we haven’t fully considered: retraining and skills provision for example.

It’s the hope that kills you – but I'm pretty positive about the impact this review could have on the strategic decisions on tax and public spending before the Chancellor for the Budget and the next spending review next year.