- By Dharshini David
- Global Trade Correspondent, ` News
28 minutes ago
image source, Getty Images
The UK has made good progress towards achieving net-zero carbon emissions by 2050, but getting there may require higher taxes.
So says leading economist Lord Nicholas Stern, who says both public and private investment in new technology is needed.
Britain is also being urged by a former boss of oil giant BP to follow the US in promoting green tech.
But the Government said the UK is “a leader” on climate change.
Lord Stern told the `: “We need growth and we need to cut emissions and it’s investment in the new technologies that will get us there.”
He added: “I am not advocating delaying investment in health and education. We must pursue these simultaneously.
“If we have to pay a little more tax, then so be it. If we need to borrow a little bit more for the really huge investments, then we should.”
His words come as the country grapples with a cost-of-living crisis and Britain faces its highest tax-to-income ratio since World War II.
The government is also under pressure from some quarters to cut taxes.
But Lord Stern says more public investment could help jobs and the environment.
Lord Stern wrote a landmark report on climate change in 2006 for the government then led by Prime Minister Tony Blair. He provided an updated version for former Prime Minister Boris Johnson in 2021.
He is optimistic that a turning point in key green technologies – including power generation, car batteries and fertilizer production – can be reached within a few years, with artificial intelligence playing a key role.
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Lord Stern reckons taxes will need to rise to support Britain’s journey to net zero
Lord Stern believes private investment can fund most of it, but the government needs to get involved.
Lord Browne, a former BP chief executive who now heads a private equity fund that invests in companies that reduce greenhouse gases, wants more government help for companies.
He urges the government to look to the other side of the Atlantic for inspiration.
President Biden’s Inflation Reduction Act provides subsidies and tax credits for electric vehicle manufacturing, renewable electricity, sustainable aviation gasoline and hydrogen, and cash rebates for consumers who buy US-made electric cars.
“I give the US an A mark for the Inflation Reduction Act, which is pretty dramatic,” says Lord Browne. “It’s not nearly enough, but it’s a great start and it’s made people aware of it.”
But some UK ministers, including former Business Secretary Grant Shapps, who now heads the new Department for Energy Security and Net Zero, have criticized President Biden’s move.
They are concerned that this gives US companies an unfair advantage.
Such subsidies are usually financed by tax revenues or borrowing.
But Lord Browne says there is already a source of taxpayers’ money that could be better channeled.
He supports the current windfall tax on North Sea oil and gas exploration and says it’s only right that producers should pay a share of unanticipated gains made on assets that ultimately belong to the nation.
He wants these proceeds to help renewable energy specialists who are developing new energies.
But Lord Brown is concerned that with so many issues to consider, such as securing the UK’s energy supply, environmental concerns may have slipped out of the minds of policymakers.
“Government ministers are busy with very simple things, which is rediscovering inflation and rediscovering security,” he said.
“First, it’s about keeping the lights going, energy security. Second, affordability. And third is the climate. Well, you should be able to do all three things at once, but it’s very theoretical to say that people focus on three goals at once. You just don’t in life.”
However, at the COP 27 climate change conference last year, Prime Minister Rishi Sunak said the energy crisis is a reason to accelerate the energy transition.
In a statement, the government claimed the UK was “a global leader in tackling climate change with action that has supported 68,000 green jobs since 2020”.
Last week, the Department of Energy Security and Net Zero was formed.
The latter was among 129 recommendations made in a review of the UK’s progress towards net zero, commissioned by former Prime Minister Liz Truss, which urged the government to take a bolder approach.
But expanding that role in climate action might require some tough conversations.
Pollster Ipsos noted that while people are still very concerned about climate change, they are now more focused on inflation, the economy and public services.
And when it tested several policy areas – including paying environmental taxes for frequent flights or other products and phasing out fossil fuel heating – support fell.
Voters are eager to do the right thing – but perhaps less enthusiastic about funding change, especially at the moment.
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