Net-zero Emissions Target: Affordability

Lord Freyberg Excerpts

Thursday 3rd April 2025 Lords Chamber

[Lord Freyberg (CB)]

I thank the noble Lord, Lord Offord, for initiating this debate. I am looking forward to the maiden speech of the noble Lord, Lord Rees of Easton, whom I warmly welcome to the House.

The need to dramatically reduce carbon emissions to prevent climate catastrophe is clear. As the noble Lords, Lord Teverson and Lord Stern, have said, the Climate Change Committee has established a scientifically sound pathway to achieve net zero by 2050. Our challenge now is ensuring that we reach this target while stimulating economic growth.

The clean energy transition is already under way, with solar and wind offering the cheapest forms of energy generation. This cost advantage is likely to improve further as gas and electricity prices decouple. Households and businesses embracing decarbonisation will see significant financial benefits in the near term. Crucially, we already possess many of the technologies needed to decarbonise. Renewable energy, electric vehicles, heat pumps and energy-efficient buildings are not futuristic concepts; they are scalable, increasingly affordable and often outcompete fossil fuel alternatives.

The construction sector illustrates this opportunity perfectly. Currently, one-third of UK construction materials is sourced internationally, making the sector vulnerable to global price volatility and supply chain disruptions, as exemplified by today’s US tariffs. A smarter strategy would be to develop a robust domestic supply chain using renewable bio-based materials such as hemp, timber and mycelium. This approach would reduce embodied carbon in buildings, strengthen the UK’s industrial base, support rural economies and improve our trade balance. Natural materials also promote healthier environments and enable safer construction practices.

The wider transition to net zero holds similarly transformative economic potential. Green industries offer a platform for revitalising UK competitiveness and fostering regional economic renewal. The path to net zero is not a cost but an investment in future prosperity. However, as the noble Lord, Lord Berkeley, said, this transition must be fair, protecting low-income households and ensuring that regions historically reliant on carbon-intensive industries are not left behind. Government policy has a critical role through targeted subsidies, retraining programmes and smart regulation. Private capital must also have its part, as the noble Lord, Lord Howell, said. With predictable regulation, stable carbon pricing and ambitious procurement policies, we can unleash green investment. The financial sector is already awakening to climate risk. We must encourage a proactive pivot towards opportunity.

Thanks to clear objectives set by Theresa May in 2019, the UK has led the world in attracting foreign direct investment in the renewables sector, excelling in both capital expenditure and job creation. Foreign investors in renewables have committed more to the UK than to the US, Germany, France, India and China combined. In 2022 alone, £55.1 billion was invested, compared with just £0.6 billion in France and £10.1 billion in Germany. The evidence speaks for itself: the net-zero sector is growing three times faster than the overall UK economy.

As the noble Lords, Lord Stern and Lord Teverson, have mentioned, CBI analysis shows that the sector grew by 10.1% between 2023 and 2024, compared with 3.2% for the overall economy. Forward-thinking businesses with ambitious ESG strategies are accessing exclusive financial opportunities. The London School of Economics analysis has found that while reaching net zero initially requires annual investments of 1-2% of GDP, it will generate savings by approximately 2040. While this figure is not insignificant, it is crucial to understand this in context. These investments represent a re-direction of existing capital flows rather than wholly new expenditures.

Let us consider the alternative—the costs of inaction. It was a pleasure to hear the speech of the noble Lord, Lord Stern, earlier. His report and subsequent analyses have made it clear that the economic damage from unmitigated climate change will far outstrip the investment needed for transition. Delaying action only compounds these costs. The Office for Budget Responsibility’s analysis concludes:

“From 2040 onwards, net operating savings are projected to outweigh investment costs. And by 2050, the CCC projects a £19 billion annual saving”.


The same report warned that:

“Unmitigated climate change would ultimately have catastrophic economic and fiscal consequences for the UK”.


The question of whether we can afford net zero is the wrong question. The real question is whether we can afford to continue our high-carbon status quo. The answer is no. The costs of delay are too great and the benefits of action are too numerous. Net zero is beneficial for business, essential for the economy and necessary for our environment.