Confidential documents leaked Observer reveal an extraordinary rift between Boris Johnson and its Chancellor Rishi Sunak spoke about the potential economic implications of transitioning to a zero-carbon economy, just weeks before the critical Cop26 climate summit.
Johnson as he prepares to place the UK at the head of the leadership global efforts to combat climate change Documents hosting the Glasgow Cop26 meeting and curbing greenhouse gas emissions show that the Treasury has warned of serious economic damage to the UK economy and future tax increases if the UK overspends or misdirects green investment.
Treasury’s internal documents say that while UK companies can reap the economic benefits from swift and appropriate climate action, there is a danger of economic activity moving abroad if firms find that their costs are rising more than their overseas competitors.
The leaked documents appear to have been produced to accompany a slide show that was secretly given to key groups outside the government last month. The documents state: “The investment needed to decarbonize the UK economy is uncertain but could help improve UK’s relatively low investment levels and increase productivity.
“However, more green investment is likely to attract diminishing returns and lessen the positive impact of more investment on GDP. Some green investments can replace other, more productive investment opportunities. This risk can be highlighted later in the transition if more productive investments are made earlier in the transition.”
Regarding the risk of green initiatives incurring additional costs to companies, the documents say: “Climate action in the UK can cause economic activity to move abroad if it directly leads to increased costs, and it is more profitable to manufacture in countries with less harsh climates. policies.”
Regarding financial results, the documents say the cost of moving towards net zero could mean tax increases due to “erosion of tax revenues from fossil fuel-related activities.” They say: “Government may need to consider changes to existing taxes and new revenue sources throughout the transition to deliver net zero in a sustainable and consistent manner with government fiscal principles.”
Ed Matthew, campaign director for the E3G think tank, said: police26This looks unprofessional and embarrassing. The UK stands ahead of the world at Cop26 and seeks to mobilize ambitious action from every country. If the government has not presented the sound economic situation in favor of action, this will significantly undermine these initiatives.”
On the costs of moving towards net zero in its OBR report, he said: “The financial costs of achieving net zero in the UK between now and 2050 may be substantial, but they are not exceptional … The net financial costs of moving to net zero emissions by 2050 may be relatively modest.”
The Climate Change Committee, the government’s legal adviser, also repeatedly said: action costs are small and decreasingAt less than 1% of GDP by 2050, the costs of inaction are large and rising.
Whitehall sources said there is a belief that Sunak is keen to position himself as a climate change skeptic to boost his popularity among Tory party members and draw comparisons to Johnson’s green enthusiasm. “Rishi clearly has an interest in showing that he doesn’t really care about this green thing. He wants Boris to own the whole agenda.”
A source in the Department of Business, Energy and Industrial Strategy confirmed that the Treasury “backfired” against most of the No 10 and Kwarteng green plans. “They don’t deny climate change, but they emphasize the short-term risks rather than the long-term needs that we emphasize.”
Contrary to the Treasury’s prudence, the Labor Party pledged at its last party conference to invest an extra £28 billion each year through 2030.
The leak comes as the government prepares to release its long-awaited net zero strategy and heat and building strategy, which from 2035 will include policies to cut emissions and create green jobs, including bans on new gas boilers and grants to move homeowners. green to heat.
Alok Sharma, the former business secretary and head of the government’s Cop26, takes on a crazy business. final stage of diplomacySpeculations that Chinese President Xi Jinping will not attend the talks include Chinese representatives. The US and EU are also negotiating with key high-emissions countries in the last weeks before Cop26, which opens on October 31st.
The Treasury said: “The government is committed to tackling climate change, and the prime minister has come up with an ambitious 10-point plan to help us achieve that. The Treasury plays a pivotal role in this effort by allocating £12bn to finance the scheme, establishing the UK infrastructure bank to invest in net zero, and committing to raise £15bn for projects such as zero-emission buses, offshore wind and schemes. to decarbonize homes.”