Simon Evans

The OBR identifies three "potentially catastrophic" sources of fiscal risk to the UK These are the pandemic, unmitigated climate change & public sector debt ("the fiscal costs of reducing net emissions to zero…could be significant but not exceptional") https://obr.uk/frr/fiscal-risks-report-july-2021/ …pic.twitter.com/TpwPRueML1

Notably, the @OBR_UK highlights the costs of **not** acting on climate change as being "much larger" than the cost of reaching net-zero In a "stylised" scenario of unmitigated warming, it says public debt could "spiral" to nearly 290% of GDP, up from today's level of around 100%pic.twitter.com/QrUMgIF4dS

Here's the @OBR_UK scenario showing the UK fiscal impact of unmitigated warming (It is open about the uncertainties: "These figures are based on extremely broad-brush assumptions, but do serve to highlight the magnitude of the fiscal costs that might be avoided")pic.twitter.com/UrfMtJrdDW

Turning to costs of net-zero, the @OBR_UK bases its analysis on estimates from @theCCCuk This OBR chart is near-identical to the CCC's It shows that net-zero by 2050 entails early investment in power + buildings, offset by savings from vehicles https://twitter.com/DrSimEvans/status/1367774862366941187 …pic.twitter.com/hRhZJj3kzf

Taken together, the @OBR_UK shows @theCCCuk estimates the costs to the UK of reaching net-zero as £1.4tn, offset by savings of £1.1tn, with an overall net cost of £321bn over 30 years (Anyone pointing to the costs, but not the savings, is being disingenuous)pic.twitter.com/Xzso4Ce0Vk

Moreover, the @OBR_UK says reaching net-zero by 2050 after delaying action for a decade "could double the overall cost" for the UKpic.twitter.com/NgDxSHlag8

The @OBR_UK has another helpful chart breaking down the costs and benefits of net-zero by sector It's clear the large majority of costs are the power sector (electricity) and buildings (heat, insulation), whereas most savings are from transport (EVs) https://obr.uk/frr/fiscal-risks-report-july-2021/ …pic.twitter.com/ajLMD4VznX

In terms GDP, the @OBR_UK says the UK economy in 2050 would be very slightly smaller if it reaches net-zero emissions, compared to if it doesn't (and ignoring the impacts of warming) Instead of reaching ~158% of today's GDP, it'd be more like 156.6% (1.4% less)pic.twitter.com/czRISuxu6Z

Notably, this 1.4% hit to GDP comes from the @bankofengland & is measured "below a (purely hypothetical) counterfactual path in which there are no additional headwinds from climate risks" The Bank estimates a hit of 7.8% to UK GDP, without climate action https://www.bankofengland.co.uk/stress-testing/2021/key-elements-2021-biennial-exploratory-scenario-financial-risks-climate-change …pic.twitter.com/dnU3ctxDsw

The @OBR_UK takes things a step further to answer the Q, what might net-zero mean for UK public spending & public sector net debt as a % of GDP Its central "early action" scenario says debt would be 21% higher with net-zero by 2050, which it compares to the impact of Covidpic.twitter.com/46Q9dokjIv

Crucially, however, a huge chunk of this higher debt from meeting net-zero is due to lost revenue from fuel duty and road tax, according to the @OBR_UKpic.twitter.com/bg5Je2mIxh

In an alternative scenario, where the UK reaches net-zero while maintaining public spending and holding car tax revenues steady, public sector debt is actually *lower* than in the @OBR_UK baseline pathway ("early action" vs "investment included & motoring maintained")pic.twitter.com/tM0Pq7vibm