When considering how to mitigate the effects of the climate and nature emergency, or what has to be done to adapt to the effects we can’t mitigate sufficiently, the talk will mostly involve a myriad of practical things like switching to renewable energy, electrifying transport, changing the way we grow and consume our food or retrofitting homes for both insulation and to cope with hotter outside temperatures.
In the majority of these changes and solutions there will be an upfront cost, ongoing costs as well as savings.
How and when money is spent therefore is the one aspect that connects all the these disparate things together. It is pointless to discuss and plan for house retrofits or even speculative technologies like carbon capture unless someone, at an early stage, is prepared to put up some money to start things off, or commit to longer term risk-taking where it’s needed.
In its 6th Carbon Budget report, the Climate Change Committee produced projections for the capital costs and operational savings for all of its recommendations to achieve net zero by 2050, as shown in Figure 2.
Within 15 years the graph projects that we, as a country, must be investing over £50bn pa, and also shows increasing savings, eventually offsetting most of the investment. However, neither the report, nor graph, attempt to show how these sums should be split between the government and private sectors as this will be determined by government policy.
As has been the case for decades, and as we saw with the Covid vaccines, if innovations and new technologies or sectors are to make it to market, or be part of fixing a problem, the original risk investment is almost always shouldered by government in the form of funding for say research and development, viability trials etc.
In this case, however, the government is holding back from publishing its own financial projections in full and is likely to start small and to involve what it sees as constraints in terms of what it can tax and borrow to cover the costs.
The following pieces therefore provide a summary of how money is created and flows around the economy in a way that suggests that in the real economy, of people and resources, these constraints are fictitious and indicate political rather than financial obstacles to government investment in the climate and nature emergency.