HM Treasury’s review into funding the transition to a net zero greenhouse gas economy: terms of reference
Published 2 November 2019
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1. Context
The UK has a proud record of global leadership in tackling climate change and supporting clean growth.
In 2006, the UK published the first global review into the economics of climate change. This led to the Climate Change Act 2008, which established a comprehensive legal framework for delivering emission reductions in the UK, including a 2050 carbon reduction target and interim carbon budgets.
Between 1990 and 2017, we reduced our emissions by 42% while growing the economy by more than two thirds.
The UK legislated in June 2019 to reach net zero greenhouse gas emissions by 2050, becoming the first major economy to do so.
The government also accepted the Committee on Climate Change’s recommendation that HM Treasury should undertake a review of how the transition to net zero would be funded and where the costs would fall. This review will take this forward, examining the key choices to transform to a green economy and achieve net zero by 2050.
In parallel, the government will continue its efforts to reduce greenhouse gas emissions and deliver on its carbon budget commitments, while keeping costs down for consumers, supporting the creation of good jobs and growing the economy.
2. Objectives
To consider how the transition to net zero will be funded and assess options for where the costs will fall. This will involve:
- Analysing the range of choices for how households, businesses and the taxpayer could contribute towards different elements of the transition to net zero.
- Identifying mechanisms to create an equitable balance of contributions.
- Maximising opportunities for economic growth as we transition to a green economy.
- Evaluating the trade-offs between cost, competitiveness, effects on consumers and impacts on the taxpayer.
3. Scope
The review will consider the full range of government levers, including tax. It will not duplicate existing or ongoing work elsewhere, such as:
- detailed policy to decarbonise specific sectors
- the costs of adapting to the impacts of climate change
- the social and global co-benefits of decarbonisation
4. Governance, engagement and timetable
The review will be conducted by Her Majesty’s Treasury, with close engagement across Whitehall and with the devolved administrations.
The review will consult widely, as well as draw on evidence from experts and insights from those who will have a role in and be impacted by the transition. Further details will be set out in due course.
The review will report to the Chancellor of the Exchequer. Her Majesty’s Treasury will publish a report in autumn 2020 setting out principles to guide decision-making during the transition to net zero.