Why growth and net zero are two sides of the same coin

The Climate Change Committee (CCC) has today issued its formal advice to the UK government on reducing carbon emissions during the Seventh Carbon Budget, which covers the period 2038-42.

Carbon budgets are an integral part of the UK’s response to climate change. Covering five-yearly periods, they ensure steady progress towards the 2050 net zero target.

The Sixth Carbon Budget, published just over four years ago, was the first to account for the target, which became law in 2019.

A positive outlook

Broadly, the CCC’s advice paints a positive picture.

Savings from the net zero investments being made now start to meaningfully pay off during the 2038-42 period, including lower household energy bills and reduced costs for motorists.

This tracks with the findings of the National Infrastructure Commission’s (NIC) second national infrastructure assessment. The NIC found that average household energy and transport costs will be at least £1,000 lower per year by the mid-2030s compared to today.

This comes alongside new jobs and growing markets linked to new technologies, as well as cleaner air and enhanced biodiversity.

Of course, this relies on the government meeting its emissions targets.

So, how far do emissions need to fall?

According to the CCC’s models, by 2042, emissions must fall by 87% compared to 1990 levels.

This is a limit of 535 million tonnes of CO2 emitted over the five-year period – a quarter of the level they are today.

This is achievable, but only if the government acts quickly.

What does this mean for infrastructure?

Rapid emissions reductions across the infrastructure system, particularly surface transport and buildings, will be needed to meet the Seventh Carbon Budget.

Progress in decarbonising electricity must also continue.

By 2040, surface transport emissions must fall by 86%, and residential buildings emissions by 66%, from 2023 levels. At this point, aviation and agriculture will likely be the leading sources of UK emissions.

Electrification will deliver the bulk of this change, mainly through the shift to electric vehicles (EVs) and electric heat pumps.

This means that most of the solutions are available today.

The CCC is confident that these solutions could be rapidly deployed with the right incentives for the market and the public.

Private investment is crucial

Between 2025 and 2050, the UK will need an average investment of £26 billion per year to meet net zero, peaking in the first half of the transition.

The majority of this will come from the private sector.

The CCC estimates that public investment in decarbonisation will never exceed 2% of total annual public spending. The main purpose of public investment should be to attract private investment and help people meet upfront costs.

The CCC compares the scale of the rollout of EVs and heat pumps to that seen in the recent past with mobile phones and household internet connections. Both were delivered in similar timeframes, and both were pioneered by the private sector, with multiple innovations along the way.

Net zero is an economic opportunity

The CCC’s advice comes shortly after a new ICE paper on paying for Britain’s infrastructure system, which found that the government needs to work on the fundamentals of planning and prioritisation.

By demonstrating that it can plan and deliver infrastructure on time and on budget, the government can rebuild trust with the public and attract investors.

Adopting the recommendations in this carbon budget would send a clear signal that the UK is committed to ambitious action.

Also this week, the Confederation of British Industry (CBI) revealed that the net zero economy is creating tens of thousands of new jobs, boosting productivity, and attracting billions in investment.

The message is clear: net zero and growth go hand in hand.

What are the concerns?

The CCC’s advice is built on evidence. But any analysis looking so far ahead will have contingencies and uncertainties.

These include population and GDP growth, an assumption that the electricity system will decarbonise at pace, and that incentives will support the rollout of EVs and heat pumps.

The advice also warns that low-income households will need support to address cost barriers.

There is also the fact that, despite some progress, the UK is currently off track to meet its carbon targets.

Failure to get on track now will only make it harder to achieve later targets. The Seventh Carbon Budget repeats the message to the government to act decisively and swiftly.

In case you missed it

• The ICE explores how Britain’s infrastructure system can be paid for in a new policy paper. Read the findings.
• ICE Policy Fellow Simon Webb explains how the UK can avoid losing out on a generation of new engineering talent.