Policies to reach net zero emissions in the United Kingdom

Jon Pareliussen, David Crowe, Tobias Kruse and Daniela Glocker

No 1742, OECD Economics Department Working Papers from OECD Publishing

Abstract: The United Kingdom is among world leaders in reducing domestic greenhouse gas emissions, and a broad political consensus supports the target to reduce net emissions to zero by 2050. The UK’s strong institutional framework is an inspiration to countries around the world, and the country is pioneering work to embed climate considerations in the financial sector. Achieving carbon neutrality will require policy to match ambition. Emission reductions so far were largely driven by electricity generation, a sector targeted by explicit pricing instruments and a cost efficient renewables auction-design subsidy scheme. Expanding pricing instruments across the economy is an essential building block to reach targets. Such measures will be more effective if complemented by well-designed sectoral regulation and subsidies, and more acceptable if implemented once energy prices have started to come down from historically high levels. Britons are conscious of the need to act. However, winning their acceptance of the needed policies may require targeting carbon revenue to compensate low-income households and investments in green infrastructure and new technologies. A mechanism defusing fears that effective policies undermine competitiveness, preferably internationally agreed, would facilitate effective policies towards emission intensive trade exposed industries.

Keywords: Climate policy; green investment; redistribution (search for similar items in EconPapers)
JEL-codes: H23 H31 H32 Q52 Q58 (search for similar items in EconPapers)
Date: 2022-12-19
New Economics Papers: this item is included in nep-ene and nep-env
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