Thread by @pmdfoster

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So. As green-tinged budget approaches...a question looms: who will pay for getting U.K. to net zero? What is coming down the tracks? My latest for ⁦@FinancialTimes⁩ with some cool charts.
on.ft.com/3syuZEU

@FinancialTimes So the short story is UK has cut emissions by more than 70 per cent since 1990 (thanks to windmill bonanza + shuttering coal power stations) BUT that means that for a lot of consumers the greening has come largely unnoticed. That's about to change. /2

@FinancialTimes As Chris Stark @ChiefExecCCC tells me, the next leg of the 'net zero' journey is going to mean change for consumers. It'll not be enough to admire Greta Thunberg, it'll mean consumer changes in a) transport, mostly electric cars b) way we heat our (elderly) housing stock /3

@FinancialTimes @ChiefExecCCC But this creates a series of political and fiscal choices for the government which it has - largely - ducked so far. Questions such as 'what replaces' fuel/car duties which raise £37bn - 5p-6p equivalent on income tax. /4

@FinancialTimes @ChiefExecCCC As @jbuckland13 tells me, that means replacing lost duty with other revenue raising schemes - congestion charges and road pricing/mile that govt has historically strayed from and is politically tricky...BUT probably not impossible. /5

@FinancialTimes @ChiefExecCCC @jbuckland13 Because as a consumer proposition EVs are good (smooth, quiet, clean etc) and cheaper to run. It should be a revenue neutral proposition, though of course govt has to be careful not to get people permanently used to the idea EVs are cheaper for consumers./6

@FinancialTimes @ChiefExecCCC @jbuckland13 The govt has produced in Dec an 'interim' Net Zero Review discussing this (and lots of other elements) which is worth reading...BUT ducks political/fiscal choices issues, noting only euphemistic 'policy choices' to come. /7
assets.publishing.service.gov.uk/government/upl…

@FinancialTimes @ChiefExecCCC @jbuckland13 But anyway, electric cars should be OK and (I love this) will actually be good for the grid, since they'll be a massive national battery store overnight while the windmills are turning, but I digress. What about all the rest, and those costs?/8

@FinancialTimes @ChiefExecCCC @jbuckland13 Well, the Climate Change Committee @theCCCuk estimates it will cost £50bn a year - about one eight on top of 2019 total UK capital expenditure - to pay for the shift to net zero...see this chart below for a breakdown. Aside from electric, its buildings & cars that feature/9

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk And it's buildings that are the biggest problem - both in terms of 'return' on that investment (and we'll come to that in a second) and as a consumer proposition - i.e getting folk to spend money on insulation/heat pumps etc rather than kitchen/bathroom/holidays! /10

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk So this chart illustrates how you invest avg £14bn/year in 'capex' greening buildings & installing greener heating to save £2bn a year by 2050 in operational spending 'opex'. And read the note carefully, the govt won say if its householders, owners or taxpayer who'll pay /11

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk And those savings are MUCH smaller than the savings from taking cars electric...which CCC reckons will amount £27bn/year by 2050, from cleaner fuel, lower maintenance (below from p249 of CCC's sixth carbon budget) /12
theccc.org.uk/publication/si…

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk So what to do about buildings? We need to green these - and the UK's old housing stock is 'leakier' than most of developed world, so that makes it even harder. We need to insulate and install green heating (hydrogen or heat pumps) to 30m homes by 2050. /13

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk The task is immense. We currently install c.30,000 heat pumps/year. The govt target is 600,000/year by 2028, but by 2030s & 40s we need to be doing 1m+ a year (which isn't impossible since we do that in gas boilers annually) but does mean a BIG shift /14

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk And as @jossgarman says the public conversation is way behind the policy conversation - @EnergySysCat survey in 2020 found that 49% of people didn't even think their boiler contributed to global warming! So the public conversation needs to shift quickly.../15

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk @jossgarman @EnergySysCat If it does, then this is how the CCC sees the investment v cost savings panning out...you start by investing in insulation up to 2030ish...then go hard after the heat pumps from there. With the line below showing 'opex' savings. (CCC 6th budget p121) /16

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk @jossgarman @EnergySysCat All of which is easier said than done - the govt is going to have use a mixture of sticks (?fining landlords for having low-rated properties, getting mortgage companies to 'green' their loan books) and carrots - grants and shifting taxes onto gas and off elec to drive choice/17

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk @jossgarman @EnergySysCat But even so, given the cost of this stuff - £6.5k for a heatpump, average £10k/house to insulate and then install - the government is going to have push hard and ultimately, spend money on those not able to pay. /18

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk @jossgarman @EnergySysCat This will not be easy politics. And as Chris Stark @ChiefExecCCC says, there "There isn’t a technical barrier here, so much as the lack of a plan" - and for UK to be credible at #COP26 it will need to start making fiscal choices clear by the summer in Net Zero Review /19

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk @jossgarman @EnergySysCat But amazingly, if we do this, getting to 'net zero' will actually SAVE us money from mid 2040s- that seems mad, but that's what @theCCCuk says! Just look at this chart.

Capex (spend) on top, Opex (save) below the line.

I'm not sure how widely appreciated this is. /20

@FinancialTimes @ChiefExecCCC @jbuckland13 @theCCCuk @jossgarman @EnergySysCat None of this to diminish how hard the politics of this will be to me this message (it's doable, and it'll be better when done) is SO much more compelling than the catastrophising of some lobby groups. Fairness will be key also, but first folk need to believe it can be done. ENDS