Box sets » Climate change

Chart 3D: Emissions in the CCC's balanced net zero pathway
Since our 2021 Fiscal risks report - which showed that reaching net zero carbon emissions will have significant impacts on the public finances in the UK - estimates of the fiscal impacts of reducing emissions in other countries have begun to be produced. In this box we recapped our 2021 work and discussed how IMF and French analysis compared to it.

Fiscal categories: Public spending

Cross-cutting categories: Climate change, Net zero

Chart 3.D: Electric vehicle new car market share
This box outlined the recent growth in electric vehicle sales and the fiscal implications of this and the role of policy in the transition.

Fiscal categories: Receipts, Vehicle excise duties, Fuel duty, Corporation tax

Cross-cutting categories: Climate change

Chart 3.C: Climate change scenarios: impact on public sector net debt in 2050-51
Our 2021 Fiscal risks report explored the fiscal risks posed by climate change and the Government’s commitment to reduce the UK’s net carbon emissions to zero by 2050. This box examined the policies announced in the Budget, Spending Review, and Net Zero Strategy in October 2021, and the significant rises in market prices for hydrocarbons since we completed our Fiscal risks report, and how they had changed the risks associated with climate change and decarbonisation.

Fiscal categories: Public spending, Vehicle excise duties, Business rates, Fuel duty

Cross-cutting categories: Climate change

Broader measures of the balance sheet are useful to consider when thinking about fiscal sustainability. However, under the national accounts framework even the broadest measures fail to recognise natural assets – the very assets affected by climate change. The box discussed the frameworks under which the ONS produces the environmental and natural capital accounts, and which bodies are working to address the gaps in these frameworks. The box also discussed key messages from the Dasgupta Review and Treasury’s response.

Cross-cutting categories: Public sector balance sheet, Climate change

Chart A: New car registrations and total care stock by power type
With the sale of new petrol and diesel cars to be banned from 2030, the transition to electric vehicles is a key element in the UK’s path to net zero emissions. This box outlined the recent growth in alternatively fuelled vehicle sales, the fiscal implications of this and the role of policy in the transition.

Fiscal categories: Receipts, Vehicle excise duties, Fuel duty

Cross-cutting categories: Climate change

One of the greatest challenges in achieving net zero in terms of both cost and technical difficulty will be to decarbonise the more than 28 million homes in the UK that rely on fossil fuels for heating (typically gas central heating) and are, for the most part, poorly insulated. In this box we examined the similarities and differences between the future transition of domestic heating and one of the past, that of the switch to natural gas over the decade to 1977.

Fiscal categories: Public spending

Cross-cutting categories: Climate change

Chart G: UKIB lending forecast relative to historical EIB lending
The Government announced the establishment of a new UK Infrastructure Bank (UKIB) at Budget 2021 to tackle climate change and support regional and local economic growth. It does this in part by replacing some of the activity of the European Investment Bank (EIB). This box looked at how UKIB will operate and how this compares to the EIB, as well as briefly exploring potential fiscal and classification risks.

Fiscal categories: Financial transactions

Cross-cutting categories: Climate change

The 2008 Climate Change Act requires the Government to assess the risks from climate change every five years. In this box, we looked at the most recent assessment published in 2017 and linked the six priority risk areas to how they are fiscal risks.

Cross-cutting categories: Climate change

In 2016, the Office of Management and Budget and President Obama’s Council of Economic Advisors produced a preliminary assessment of some of the fiscal risks associated with climate change. In this box, we describe the estimated potential costs of these fiscal risks, which could affect both expenditure and revenue.

Cross-cutting categories: Climate change

Climate-related scenario analysis: the NGFS approach
In April 2019, the Network for Greening the Financial System (NGFS) issued a ‘call for action’ that sets out the next steps for assessing climate-related risks to financial stability. In this box, we looked at the scenario framework used by the NGFS, and the Green Finance Strategy – in which the UK Government set out how it will ensure the management of climate-related financial risks.

Cross-cutting categories: Climate change