There’s plenty of rhetoric around net zero, but how can we pay for it – and who’s footing the bill?
Financing a fair transition to net zero is an enormous challenge.
More than 140 countries now have net zero greenhouse gas emission targets, covering close to 90% of global emissions.
They are joined by 115 state and regional governments, 235 cities and more than one-third of the world’s biggest publicly traded companies.
Delivering net zero is an essential part of the UK’s response to climate change.
To hit net zero greenhouse emissions by 2050, the Climate Change Committee believes that the UK needs to be investing an extra £50 billion a year. However, the framework to deliver this investment is unclear.
In the current cost of living crisis, financing a fair transition that will relieve pressures on households becomes an urgent priority.
The global picture
Russia’s invasion of Ukraine has led to major disruptions impacting the global energy system.
This disruption has thrown energy markets into turmoil and created major energy security and poverty risks across the globe.
On a global scale, Europe is facing an energy crisis, with forward prices for winter 2022/23 delivery having recently surpassed €1,000/MWh. This is four to five times the prices experienced on average last winter.
America is also experiencing its worst energy crisis in nearly five decades.
We need solutions to this ongoing crisis – the rapid deployment of renewables, energy efficiency and other low emissions technologies can solve supply and demand issues.
Financing net zero has to be a principal priority.
However, it’s important that the transition is managed to avoid another energy crisis and a subsequent, damaging economic shock.
What are the challenges?
The net zero transition faces multiple challenges alongside financing and funding the infrastructure needed. These include:
- delivering the necessary infrastructure to tight timescales;
- gathering and maintaining political support and commitment across the political spectrum; and
- retraining and skilling a workforce to operate net zero technologies.
By starting with filling in the gap when it comes to financing and funding net zero ambitions, policymakers, businesses and local and national government will be better placed to address these additional challenges.
The UK’s net zero target is protected by law. But to get there, targeted and scaled investment is key. Not just in the UK, but worldwide.
Now, significant questions must be addressed as to who is responsible for paying for net zero, what data is available to dictate how it’s paid for, and how to define what's considered a net zero investment.
Financing Net Zero – online panel debate on 1 December
Led by the ICE policy and public affairs team, this timely public debate session on financing net zero will bring together panellists from politics, finance and infrastructure as we look ahead at the next steps from a policy perspective.
This is the second of the ICE’s ‘Next Steps Programme’ events, a policy insight and public discussion series that allows the institution to lead on policy debates on UK and international themes.
This panel debate will explore options for what policymakers need to do next and address key questions, including:
- What are the options for funding net zero (taxpayer, billpayer, borrowing, etc.) and which should be prioritised?
- Are the public willing to pay for net zero? And how much?
- How can we ensure that the burden of paying for the transition in the long term does not affect those suffering most from the cost-of-living crisis in the short term?
- If governments took or continue to take limited action to facilitate net zero finance, what else can be done to move things forward?
We want to hear from you
ICE wants to hear views from across the sector when it comes to financing and funding net zero.
Using the ICE Infrastructure Blog as the platform for debate, we are keen to hear opinions and thoughts on the main issues policymakers should be considering and addressing.
The briefing paper launched below provides an initial starting point for this discussion. This will culminate in an online panel debate providing an honest look at options for what policymakers need to do next.
Please contact the policy team if you are interested in authoring a guest blog on this topic or attending the panel debate.
What role can civil engineers play in the transition?
Climate change is the defining issue of our age. Decarbonising our industry and public infrastructure is one of the key aims of the ICE.
We’re exploring ways to tackle the crisis, and how to pay for the changes required, from a multitude of angles with experts from across not just civil engineering, but a multitude of disciplines.
Find out more about the part civil engineers can play in ensuring that low-carbon projects are invested in by reading this report from our knowledge team on Financing Low Carbon Infrastructure.