In a letter to Treasury minister Simon Clark, dated yesterday, he laid out the body’s expectations for ts review into the costs of decarbonisation, “and to offer ongoing support as we develop our advice to ministers on the sixth carbon budget”.
He described the review as “crucial in ensuring a successful transition. The key challenge is how the required changes, near-term and long-term, can be funded in a way that distributes costs fairly. My committee’s view is that this must be a priority consideration in public spending decisions,” and should be a “key input to next year’s spending review and budget”.
Deben laid out some of the “immense challenges” of reaching net zero, as detailed in the CCC’s report earlier this year. Large-scale roll-out of energy efficiency and low-carbon heating, decarbonising the electricity supply, industrial carbon capture and storage and massive tree planting are among them.
“Crucial to this will be a distribution of costs that is fair, and is also perceived to be fair, so that changes can proceed rapidly with support from society. The example of the ‘gilets jaunes’ protests in France is evidence of the importance of getting this right.”
The gilets jaunes – or yellow vests – movement began a year ago, holding mass demonstrations and rioting motivated by the high cost of living. The uprising was triggered at first by a planned rise in the taxation of diesel fuel, on which most French cars run. A carbon tax had been introduced in 2014 and rose sharply in 2017 and 2018, bringing the cost of diesel to around the same as petrol.
The protests forced the French government to abandon the tax rise.
“The Treasury review should therefore develop a plan for funding decarbonisation and, most importantly, review the distribution of costs for businesses, households and the Exchequer,” Deben wrote, as the gilets jaunes highlighted that costs were falling disproportionately on individuals. “This will enable decarbonisation to be delivered while minimising negative impacts on society.”
His recommendations for the review include:
Set “concrete proposals for action and funding” over the next five to ten years, covering taxation, spending and where regulation and private investment should be directed. The review should ensure that all departmental spending plans are consistent with net zero, both “urgent” and “vital” to reach the target.
Develop non-binding long-term principles “to inform the scale and nature of long-term government funding” for future governments.
Support demonstration-scale low carbon technology projects, to help bring down costs, develop new industry and create jobs.
Identify “investable propositions” for private capital.
Consider how to replace declining revenue from fuel duty and other taxes on fossil fuels, such as through road pricing.
The review should also consider how to mitigate impacts on vulnerable groups and industries, including a regional analysis, impacts on jobs and how workers in fossil fuel industries can be reskilled. Progress on achieving a fair transition should be subject to public reporting.
But the review should also reflect the socio-economic benefits of reaching net zero, among them falling burden of ill-health from air pollution.
Deben also said that the CCC would publish its advice on the 2033-37 carbon budget – the first after the net zero entered law – three months early. It will come in September next year, timed to come ahead of the pivotal COP26 climate talks in Glasgow that December and to help inform the Treasury review.
Meanwhile, the government has formally rejected the advisory body’s recommendation for international aviation and shipping to be brought within carbon budgets – at least for now.
In a response to the committee’s 2019 progress report to parliament, titled ‘Leading on Clean Growth’, it says that these are “global issues that require global solutions”. The government is instead looking for action from the United Nations’ International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO), though their schemes have been criticised as weak.
Despite there being no internationally-agreed methodology for allocating such emissions to individual states, “we recognise the importance of a good international inventory and we are also minded to include these emissions in domestic legislation at a later date, subject to future progress in the IMO and ICAO,” says the response.
