Net zero targets may result in higher taxes.

 Net zero targets may result in higher taxes.

The United Kingdom has made significant progress towards achieving net-zero carbon emissions by 2050, but getting there may necessitate higher taxes.

According to leading economist Lord Nicholas Stern, both public and private investment in new technologies is required.

A former BP executive has also urged the UK to follow the US in encouraging green technology.

However, the government stated that the UK is "leading the way" on climate change.

  

• What is net zero and how UK is doing?

"We need growth and we need to reduce emissions," Lord Stern told the BBC, "and it's investment in new technologies that will get us there."

"I'm not arguing for delaying investment in health and education," he added. We must pursue both at the same time.

"If we have to raise taxes a little bit, so be it. If we need to borrow a little more for the truly incredible investments, we should do so."

His words come as the country faces a cost-of-living crisis and the UK faces the highest taxes relative to income since World War II.

Some people are also putting pressure on the government to cut taxes.

However, Lord Stern believes that increased public investment could benefit both jobs and the environment.

In 2006, Lord Stern wrote a groundbreaking report on climate change for the government, which was then led by Prime Minister Tony Blair. In 2021, he delivered an updated version to former Prime Minister Boris Johnson.

He believes that a tipping point in key green technologies, such as energy generation, car batteries, and fertiliser production, can be reached within a few years, with artificial intelligence playing a key role.

Lord Stern anticipates that private investment will fund the majority of it, but the government will need to be involved.

Lord Browne, a former BP CEO who now runs a private equity fund that invests in companies that reduce greenhouse gas emissions, wants more government assistance for businesses.

He is urging the government to look across the Atlantic for inspiration.

President Biden's Inflation Reduction Act includes subsidies and tax credits for the production of electric vehicles, renewable electricity, sustainable aviation fuel, and hydrogen, as well as cash rebates for consumers who purchase US-made electric vehicles.

"I will give the United States an A for the Inflation Reduction Act, which is quite dramatic," Lord Browne says. "It's not enough, but it's a start, and it's gotten people's attention."

However, some UK Ministers, including former Business Secretary Grant Shapps, who now heads the new Department for Energy Security and Net Zero, have criticised President Biden's decision.

They are concerned that it provides an unfair advantage to US businesses.

Subsidies of this type are typically funded through taxation or borrowing.

However, Lord Browne claims that there is already one source of tax revenue that could be better directed.

He supports the current windfall tax on North Sea oil and gas production, arguing that it is only fair that producers pay a portion of the unanticipated profits earned on assets that ultimately belong to the nation.

He would like to see those funds allocated to renewable energy specialists who are developing new energy sources.

However, Lord Brown is concerned that, with so many issues to deal with, such as ensuring the UK's energy supply, environmental concerns may have slipped from policymakers' minds.

"Government ministers are preoccupied with very simple things," he said, referring to the rediscovery of inflation and security.

"It is first and foremost about keeping the lights on. The second consideration is cost. The third factor is the climate. Now, you should be able to do all three things at the same time, but it's very theoretical to say that people do focus on three goals at the same time. They simply do not exist in real life."

However, Prime Minister Rishi Sunak stated at the COP 27 climate meeting last year that the energy crisis was a reason to accelerate the energy transition.

The government claimed in a statement that the UK is "leading the world in tackling climate change with policies that have supported 68,000 green jobs since 2020."

Do you want to make a change?

The Department of Energy Security and Net Zero was established last week.

The latter was one of 129 recommendations made in a review of the UK's progress towards net zero commissioned by former Prime Minister Liz Truss, who urged the government to be more aggressive.

However, expanding that role in climate action may necessitate some difficult conversations.

According to Ipsos pollsters, while people are still concerned about climate change, they are now more concerned about inflation, the economy, and public services.

And when it put several policies to the test, such as charging environmental fees for frequent flights or other products and phasing out fossil fuel heating, the level of support fell.

Voters want to do the right thing, but they may be less enthusiastic about funding changes right now.