Regulators say that early action on net zero will halve the cost of UK public finances.

The British fiscal regulator stated that if the British government delays action until 2030, rather than act quickly now, then the fiscal cost of achieving net zero by 2050 will be twice as high.

The Fiscal Risk Report of the Office of Budget Responsibility shows that, compared with Covid-19 or the 2008 financial crisis, taking early action to decarbonize the economy has less net impact on the UK’s finances.

However, postponing to the beginning of the next decade will eventually double the national debt of fast-moving countries.

Failure to take action will have a catastrophic impact on public finances (and more importantly on the planet). By the end of this century, debt will soar to 289% of GDP, and now the ratio is about 100%.

According to the report, the cumulative investment cost of the UK Climate Change Commission (CCC) from now to 2050 for the entire economy, plus the operating cost of emissions removal, will be calculated at a price of 1.4 trillion pounds in 2019.

The government did not specify how much it expects to bear-but OBR assumes that it can meet a quarter of it.Coupled with the savings in more energy-efficient buildings and vehicles, the net cost of the country is 344 billion pounds The actual situation. Over three decades, the annual additional public expenditure only accounts for 0.4% of GDP on average.

At today’s press conference, OBR Chairman Richard Hughes explained that the regulator has formulated an “early action” plan, that is, the UK will begin to increase carbon taxes and increase investment in green technologies in the mid-2020s.

In this case, the transition to net zero by 2050 increases by approximately 20% of GDP Hughes said that the increase in government debt over the next 30 years is slightly lower than the expected increase in the pandemic in just two years.

Most of the cost comes from the loss of fuel tax, followed by government support for zero-carbon technology investment-this can only be partially offset by a heavier tax on carbon.

The report says:

Carbon tax revenue. our [early action] The scenario assumes that all emissions will be taxed from 2026 to 27, and a heavier tax will be imposed (this can be achieved by extending the UK ETS [emissions trading system] Or impose a unified carbon tax).

However, this is only a case of achieving net zero emissions. Hughes admitted that it can be said to be a “quite optimistic one.” Governments around the world have taken decisive action during this decade to push emissions to a sharp decline.

Therefore, OBR simulates alternatives-changing the time of transition, impact on productivity, and fiscal policy choices.

A scheme actually saves the government money -If the investment cost is funded in the existing spending plan (meaning the retrenchment of other public services), and the fuel tax loss is replaced by another vehicle tax, such as road user fees.

However, under the “late action” scenario, decisive measures to reduce emissions globally and in the UK were postponed to the 2030s. Then, the UK must manage a more hurried and more expensive transition to net zero emissions—and miss five years of carbon tax revenue.

In this case, debt for 2050-51 is 23% higher than GDP in the early action scenario, and GDP is about 3% lower. The cost of direct public expenditure increased by about half.

Hughes said:

The price of this delay is the doubling of the total fiscal cost of the transition.

Hughes also pointed out that in some economic sectors such as transportation, the life cycle cost of electric vehicles is lower than that of gasoline vehicles due to improvements in battery technology, so decarbonization is rewarding.

But the net cost in other areas is very high, such as replacing domestic gas boilers with green alternatives, which society must bear.

The net cost of the government depends on changes in income-net zero provides threats and opportunities. Revenues collected from gasoline taxes are at risk-once the use of fossil fuel vehicles is banned by 2030, these revenues will almost certainly disappear.

However, this can be partially compensated by a carbon tax (although incomes here will fall as the economy turns to net zero).

Here are more key charts from the report:

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