
Table of contents
Approximate read time: 25 minutes
On 24 October 2024, the House of Lords is scheduled to debate the following motion:
Lord Lilley (Conservative) to move that this House takes note of the impact of His Majesty’s Government’s climate agenda on jobs, growth and prosperity.
This briefing focuses on the government’s policies for reducing the UK’s greenhouse gas emissions and the potential economic impacts of accelerating the transition from fossil fuels towards renewable energy sources. The government’s response to climate change includes several other policies, such as supporting developing countries through international climate finance and assessing the degree to which the UK is able to adapt to climate change. Both of these policies are also covered in this briefing.
1. UK climate policy
1.1 Emissions targets
In March 2023, Labour said the growth in global emissions and rising global temperatures constituted a “climate crisis”. It described this crisis as the “biggest long-term threat we face”.[1] Similarly, its manifesto for the 2024 general election stated the “climate and nature crisis” was the “greatest long-term global challenge”.[2] During his speech to the United Nations General Assembly in September 2024, Prime Minister Keir Starmer described climate change as both an “existential” threat and one which was “happening in the here and now”.[3] The government has committed to support the expansion of renewable sources of energy and limit the use of fossil fuels in order to reduce greenhouse gas emissions and make the UK “a clean energy superpower”.[4]
The consensus across successive governments has been that the UK should contribute towards international efforts to address climate change by reducing greenhouse gas emissions. For example, in 1992 at the United Nations Conference in Rio de Janeiro, the then Conservative government signed the United Nations Framework Convention on Climate Change (UNFCCC).[5] This established a framework for intergovernmental efforts to reduce global greenhouse gas emissions. In the preamble to this agreement, the parties to the convention acknowledged that “change in the Earth’s climate and its adverse effects are a common concern of humankind”.[6] In 1998, following negotiations which began under the Conservative government, the then Labour government signed the Kyoto Protocol to the UNFCCC.[7] The protocol, which came into force in 2004, set binding targets for industrialised countries, including the UK and the European Union, to reduce greenhouse gas emissions.[8] In December 2015, the parties to the UNFCCC adopted the Paris Climate Agreement, a replacement for the Kyoto Protocol.[9] The overarching goal of the Paris Agreement was to limit the increase in global average temperatures to “well below” 2oC above pre-industrial levels and to “pursue efforts” to limit this increase in temperatures to 1.5oC above pre-industrial levels.[10] This agreement was ratified by the then Conservative government in 2016.[11]
Over the last two decades, there has also been a consensus across successive governments to either maintain the UK’s statutory emission reduction targets, bring them forward or to increase the target for emissions reduction. In 2008, the then Labour government passed the Climate Change Act which established a legal requirement for the UK to reduce greenhouse gas emissions by 80% by the middle of this century compared with 1990 levels.[12] The 2008 act also requires the government to publish regular carbon budgets setting limits on the total amount of greenhouse gases the UK can emit during a series of five-year periods in order to meet this 2050 target.[13] In 2019, the Conservative government under then Prime Minister Theresa May used delegated powers in the 2008 act to establish a new target for the UK to achieve net zero greenhouse gas emissions by 2050 compared with 1990 levels.[14] Separate legislation in Scotland passed by the SNP government set a target for Scottish ministers to achieve net zero emissions in Scotland by 2045.[15] In December 2020, the Conservative government under then Prime Minister Boris Johnson committed the UK to an interim target of reducing its greenhouse gas emissions to 68% by 2030 compared to 1990 levels.[16] This commitment was made as part of the UK’s submission of its nationally determined contribution to the UNFCCC as required under the Paris Agreement.[17]
While the Conservative government remained committed to the 2050 net zero target, in September 2023 then Prime Minister Rishi Sunak argued the approach of the government to achieving this goal had failed to take account of additional costs to households and disruption to people’s lives.[18] In his speech to the 2023 Conservative Party conference, Sunak said net zero measures risked “losing the consent of the British people” and that therefore the government would adopt a “more pragmatic, proportionate, and realistic approach […] that eases the burdens on working people”.[19] This change of approach included the pushing back of the planned date for phasing out the sale of new petrol and diesel cars and vans from 2030 to 2035.[20] The Labour manifesto for the 2024 general election included a commitment to reintroducing the ban on the sale of new cars with internal combustion engines by 2030.[21]
During the 2024 general election campaign, both Labour and the Conservatives committed to maintaining the target of achieving net zero emissions by 2050.[22] The Liberal Democrats and the Green Party committed to achieving net zero carbon emissions before 2050.[23]. By contrast, Reform UK committed to “scrap net zero” and increase the UK’s fossil fuel production, arguing this would reduce household energy bills and improve economic growth.[24]
1.2 Renewable energy
In its manifesto, Labour committed to decarbonising the UK’s electricity system by 2030 saying this would help the UK achieve the 2050 net zero target.[25] In order to achieve this, Labour said it would “work with the private sector to double onshore wind, triple solar power, and quadruple offshore wind by 2030”.[26] To achieve the planned expansion of renewable energy production, Labour said it would:
- spend £4.7bn each year of the new parliament to support the transition to renewable energy through the ‘Green prosperity plan’[27]
- establish Great British Energy, a new publicly owned company which would co-invest with the private sector in order to expand clean energy production[28]
- reform the planning system in order to enable the expansion of onshore wind energy[29]
- increase government investment in carbon capture and storage[30]
- increase investment in hydrogen and marine energy (including tidal and wave energy)[31]
Labour said that investment in clean energy would be supported through the creation of a national wealth fund that would be capitalised with £7.3bn over the course of the parliament.[32]
As well as reducing the UK’s greenhouse gas emissions, Labour has argued expanding the use of renewable energy would achieve other benefits, such as lowering household energy bills, improving the UK’s energy security and creating new jobs in the renewable energy sector.[33]
At the same time as providing support to expand the renewable energy sector, Labour said it would not issue any new licences to explore new oil and gas fields or grant any new coal mining licences.[34] It also said it would introduce a permanent ban on hydraulic fracturing (fracking).[35] The Conservative government introduced an effective moratorium on granting permission for fracking in England in 2019.[36] This moratorium was briefly lifted in September 2022 during the Liz Truss administration but was subsequently reintroduced in October 2022 following Rishi Sunak becoming prime minister.[37] Further information on the environmental policies in Labour’s 2024 manifesto is provided in the House of Lords Library briefing ‘King’s Speech 2024: Energy security, net zero, environment and agriculture’, (11 July 2024).
In her speech to the 2024 Conservative Party conference, Shadow Secretary of State for Energy Security and Net Zero Claire Coutinho criticised the way in which Great British Energy was being established. The Great British Energy Bill, which would create the new company, is currently before the House of Commons. Ms Coutinho argued that the Energy Secretary Ed Miliband, would be given too much power to direct the way in which funds were invested.[38] She also criticised the government’s target for decarbonising electricity by 2030, describing it as “rushed, and likely expensive”.[39] She argued this target would mean the UK would miss out on technologies that would mainly come on stream after 2030. Ms Coutinho stated this included fusion energy, small modular reactors, space solar, carbon capture and carbon removals.
2. Economic costs and benefits of reducing emissions
2.1 Assessing the economic impact of climate change
Various attempts have been made to assess the costs and benefits of reducing the UK’s emissions based on projections of the economic impact of unchecked climate change. For example, in 2006 the then Labour government published the independent review of the economics of climate change, chaired by the economist Nicholas Stern (now Lord Stern of Brentford (Crossbench)).[40] This report concluded that the overall costs and risks of climate change would be equivalent to losing 5% of global gross domestic product (GDP) each year.[41] The same review concluded the costs of reducing greenhouse gas emissions could be limited to around 1% of global GDP each year. More recently, in 2022, the Grantham Institute attempted to estimate the total potential economic impact of climate change for the UK. The institute is a research body based at the London School of Economics and Political Science (LSE) and chaired by Lord Stern. It concluded there were “strong economic reasons” for retaining the net zero target, arguing the benefits would exceed the costs by the second half of this century.[42] It found that “under current policies, the total cost of climate change damages to the UK are projected to increase from 1.1% of GDP at present to 3.3% by 2050 and 7.4% by 2100”.[43]
In 2021, the Office for Budget Responsibility (OBR) estimated unmitigated global warming would result in increased costs as the UK would need to adapt to a hotter climate. It also warned global warming was likely to result in greater and more frequent economic shocks for the UK, such as increased conflict around the world and mass migration.[44] The OBR estimated that if countries did nothing to reduce global warming, this could result in UK debt growing up to three times larger than its economic output (around 290% of UK GDP by the end of the century).[45] The same report concluded that achieving the UK’s net zero carbon emissions target would require an investment cost of around £1.4tn spread over 30 years.[46] After taking into account savings, such as improvements to the energy efficiency of buildings and vehicles, the OBR estimated the total net cost of decarbonising the UK economy would be £344bn. This estimate assumes that only around a quarter of this funding would need to come from the government, with the rest coming from private sector investment.
The OBR concluded the “costs of failing to get climate change under control would be much larger than those of bringing emissions down to net zero”.[47] However, the OBR noted that while the UK had a high degree of control over its own emissions, these only accounted for 1% of global emissions.[48] The OBR said the risks faced by the UK economy would depend to a significant extent on how successful other countries were in achieving net zero emissions.[49]
The OBR noted that estimates of the economic impact of climate change are subject to several uncertainties. These uncertainties include the unpredictable speed at which global temperatures may rise and what the full consequences of climate change might be. It said the speed at which low emission technologies may develop and how much they would ultimately cost was also uncertain.[50] More broadly, the OBR said assessments of the impact of climate change which focused primarily on GDP were subject to limitations.[51] These limitations include the fact that GDP did not take sufficient account of the value of natural assets.[52]
In 2022, a working group of the United Nations Intergovernmental Panel on Climate Change (UNIPCC) concluded the aggregate impact of climate change on the world economy was difficult to estimate and that existing estimates varied widely.[53] It also noted the estimated economic impact was likely to vary widely between regions. The IPCC did not publish an aggregate figure for the global economic impact of climate change as part of its sixth assessment reporting cycle, covering October 2015 to July 2023.[54] However, the IPCC working group did conclude with a high degree of confidence that the economic damage caused by climate change was likely to be higher if global temperatures were allowed to rise by 3oC or more compared to pre-industrial temperatures than if they rose by 1.5oC.[55]
2.2 Potential benefits for the UK economy
As discussed above, the government has argued the expansion of clean energy would be beneficial to the UK economy.[56] In January 2023, the Conservative government published an independent review of net zero chaired by Chris Skidmore (then Conservative MP for Kingswood).[57] The review concluded that the economic opportunities presented by investing in renewable forms of energy outweighed the costs to the UK economy of the clean energy transition. It estimated the UK could see 2% additional growth in GDP through “the benefits from new jobs, increased economic activity, reduced fossil fuel imports and cost savings”.[58] The review concluded other policies to reduce the UK’s emissions would also result in benefits for households. For example, it said that improving the energy efficiency of homes through the installation of heat pumps to replace oil and gas boilers had the potential to reduce household energy bills.[59] Further information on heat pump replacement schemes and the energy efficiency of domestic properties is provided in the House of Lords Library briefing ‘Home is where the heat is: Energy efficiency and home insulation’ (14 February 2024).
Lord Lilley has argued that, while he did not disagree with “the basic science” of global warming, the damage caused to the UK by the statutory emissions targets in the Climate Change Act 2008 outweighed any benefits.[60] In a speech during the debate on the 2024 King’s Speech, he argued the government’s commitment to support renewable energy would result in high prices for consumers.[61] He also argued government subsidies for renewable energy would result in higher costs for the taxpayer. Lord Lilley has said replacing oil and gas boilers with heat pumps and replacing diesel and petrol cars with electric cars would raise costs for households.[62] He has argued that, instead of introducing targets for reducing fossil fuel consumption, the UK should “harness the power of the market to develop lower-cost alternatives to fossil fuels for heating [and] transport”.[63]
Professor of Economic Policy at the University of Oxford Dieter Helm has argued that, while the UK should not slow down the transition away from fossil fuels, the arguments for doing this should be based on long-term threats posed by climate change rather than the economic benefits.[64] He has said Labour, the Conservatives and organisations including the Climate Change Committee (CCC) have all downplayed the economic costs of achieving net zero. Specifically, he argued the investment needed to develop and adapt the UK’s energy infrastructure and improve supply chains in order to achieve net zero had been insufficiently accounted for. He has argued that, in order for the government to avoid a popular backlash against renewable energy, it needed to be clear with the public that the UK was “living beyond [its] sustainable means” and the costs to “consumers and votes” were going to be “quite a lot more than they have been told to accept”.[65]
2.3 Impact of energy transition on jobs
In its 2023 report ‘A net zero workforce’, the CCC argued the changes to the UK economy necessary in order to achieve the government’s net zero targets would have a significant impact on the UK workforce. It said that around 250,000 new jobs had been created so far as a result of the transition away from fossil fuels.[66] It estimated that between 135,000 and 725,000 net new jobs could be created by 2030 in low-carbon sectors. These estimates factor in potential job losses resulting from the transition from fossil fuels. The CCC also said the energy transition provided an opportunity to bring jobs to areas with historically low employment. However, the CCC argued that achieving a net increase in employment was not guaranteed. It said the government would need to ensure both “the availability of skilled workers in the right place at the right time” and “long-term policy certainty and regulations”.[67]
The potential changes to the workforce and levels of employment are likely to be different in different parts of the country. For example, Professor of Industrial Strategy at the University of Bath Phil Tomlinson and Professor of Business Economics at the University of Birmingham David Bailey have both warned of the risk of job losses in central Scotland resulting from the closure of the Grangemouth oil refinery in 2025.[68] They argue the closure of the Grangemouth oil refinery reflects a broader trend of falling demand in the fossil fuel sector and government policy supporting the transition to renewables. They said that while the growth of the renewable energy sector offered the opportunity to create new jobs, these jobs were not always available in areas where existing industries were being lost.
Labour said in its 2024 election manifesto that the expansion of renewable energy would create 650,000 jobs across the UK by 2030.[69] It has also committed to working with businesses and trade unions to manage the transition to clean energy in a way that creates jobs in the UK’s “industrial heartlands, coastal areas, and energy communities”.[70] Ed Miliband has said that one of the government’s priorities is to create “good jobs in Britain’s industrial heartlands, including a just transition for the industries based in the North Sea”.[71]
The term “just transition” refers to the implementation of policies which support workers directly affected by the energy transition.[72] The term has also been expanded to refer to support for communities more generally that might be affected. The CCC argued the term has also been used to refer to the need to address wider inequalities across society. Further information on what might constitute a just transition is provided in the Parliamentary Office for Science and Technology briefing ‘What is a just transition for environmental targets?’ (16 October 2023).
3. Energy transition: recent developments
Since the 2024 general election, the government has made the following announcements on expanding renewable energy and other policies intended to reduce greenhouse gas emissions.
On 8 July 2024, Chancellor of the Exchequer Rachel Reeves confirmed the new government was introducing a revised ‘national planning policy framework’ which would put onshore wind on the same footing as other forms of energy development.[73] She said this would end the de facto ban on new onshore wind farms.
The 2024 King’s Speech included several bills which were intended to support the government’s green energy policy plans. This included the Great British Energy Bill, a bill to establish Great British Energy as a new publicly owned energy company.[74] This bill was introduced in the House of Commons on 25 July 2024 and, at the time of writing, the bill is at committee stage in the House of Commons.[75] The government also announced in the King’s Speech that it would be introducing the Crown Estate Bill, a bill to widen the borrowing and investment powers of the Crown Estate.[76] This is intended to help speed up the development of offshore wind projects in seabed areas managed by the Crown Estate. The Crown Estate Bill [HL] was introduced in the House of Lords on 25 July 2024. At the time of writing the bill has begun committee stage in the House of Lords.[77]
In July 2024, the government announced the appointment of Juergen Maier, the former CEO of Siemens UK, as the new chair of Great British Energy.[78] It also announced that Great British Energy would be entering a partnership with the Crown Estate to develop new offshore wind farms.
On 14 October 2024, the government published its proposals for a 10-year industrial strategy.[79] The government said this strategy would focus on eight sectors it believed would drive the UK’s economic growth. These sectors included the “clean energy industries” sector.[80] The government also launched a consultation on these proposals which is scheduled to close on 24 November 2024.[81] At the same time, the government published plans for the establishment of the national wealth fund.[82] In this announcement, the government said “[at] least £5.8bn” of the fund’s capital will focus on “green hydrogen, carbon capture, ports, gigafactories and green steel”.[83] The Financial Times reported that the government plans for capitalising the national wealth fund fell short of the £7.3bn commitment in Labour’s 2024 manifesto.[84] Responding to this article, the government told the Financial Times that the remaining £1.5bn would still be spent on supporting clean energy but “through other ways”.[85]
4. International climate finance
As well as signing up to internationally agreed targets limiting its own emissions, the UK has committed to providing financial support to developing countries in the form of international climate finance (ICF). ICF is overseas development aid intended to enable developing countries to respond to climate change and mitigate its impacts.[86] In 2009, the UK and other developed countries committed to providing US$100bn in climate finance annually by 2020.[87] This would be provided from both public and private sources. According to data collected by the Organisation for Economic Cooperation and Development, this goal was first met in 2022.[88]
One of the objectives of ICF is to enable developing countries to pursue economic growth in a way that limits dependence on high-carbon energy. The government has reported that, since 2011, UK ICF programmes have provided 82 million people with improved access to clean energy and reduced or avoided 105mn tonnes of greenhouse gas emissions.[89] Further information on the government’s climate finance commitments is provided in the House of Lords Library briefing ‘UK contribution to international development: Mitigating the impact of climate change on developing nations’ (22 December 2023).
The government has said one of its diplomatic objectives is to establish “co-ordinated global action” to address climate change.[90] Ed Miliband has also said one of his priorities as secretary of state for energy security and net zero was for the UK to lead on “international climate action”.[91] The government has said it would use the 29th meeting of the conference of the parties to the UNFCCC (COP29) to make progress on increasing the funding available to developing countries through climate finance.[92] COP29 takes place in Baku, Azerbaijan in November 2024.[93] The government has also committed to the UK remaining a “leading contributor” to international climate finance.[94] In September 2024, Foreign Secretary David Lammy said the contribution by the UK to international climate finance would be subject to the government’s planned spending review.[95] However, the government has said this decision does not undermine the UK’s existing commitments to international climate finance.[96]
In their manifesto for the 2024 general election, the Conservatives stated they would maintain the UK’s commitment to contribute towards international climate finance and said this funding be ringfenced if they won the election.[97]
5. Adaptation and mitigation
Successive governments have pursued policies intended to enable the UK economy to adapt to climate change and mitigate the consequences of global warming. This includes policies intended to mitigate risks such as rising temperatures, extreme weather events and damage to food production. Under the Climate Change Act 2008, every five years the UK government is required to produce a ‘UK climate change risk assessment’ identifying these risks and a ‘national adaptation programme’ (NAP) outlining how it intends to address those risks.[98]
The OBR has estimated the cost to the UK of adapting to rising temperatures would be equivalent to 0.3% of GDP per year for each degree of warming.[99] However, the OBR has said in practice the speed at which the cost of adaptation rose would be uneven. It said the size and frequency of economic shocks resulting from rising temperatures were likely to be larger and more frequent by the end of the century.
The UK published its third NAP in July 2023, covering the period from 2023 to 2028.[100] Measures outlined in this plan included building new flood defences to protect the UK against rising sea levels, developing more green spaces near urban areas to reduce temperatures and improving the ability of the UK’s infrastructure to withstand temperature extremes and flooding. In its assessment of the third NAP, the CCC argued it “falls far short of what is needed”, and said that there needed to be an “urgent refresh” of the government adaptation plans.[101] Friends of the Earth is also taking legal action against the government on the grounds that the third NAP failed to meet legal requirements, including requirements of the Climate Change Act 2008.[102] The government has indicated it does not plan to review the NAP before the end of the next five-yearly cycle in 2028.[103]
Further information on the adaptation policies pursued by the Conservative government is provided in the House of Lords Library briefing, ‘Preparing for climate change’ (11 July 2023) and the House of Commons Library briefing ‘Climate change adaptation and resilience in the UK’ (27 March 2024).
Cover image by Sergio Rodriguez—Portugues del Olmo on Unsplash.
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