Net-zero Emissions Target: Affordability

Lord Sharma Excerpts

Thursday 3rd April 2025 Lords Chamber

[Lord Sharma (Con)]

My Lords, my noble friend Lord Offord noted that, under the UK’s leadership of COP 26, we went from less than 30% of the global economy covered by a net-zero target to nigh on 90%. That would not have been possible without the then Conservative Government showing domestic leadership and ambition—first, in our 2030 emissions reduction targets and then by having enshrined into legislation net zero by 2050. Why did countries sign up to net zero? Why did they sign up to the Glasgow climate pact? Why did they decide that it was time to tackle and take action against climate change?

First—and a number of noble Lords have noted this—countries acknowledged the science that human activity is unequivocally responsible for rising temperatures. Secondly, countries recognised the negative impact of a changing climate on lives, livelihoods and infrastructure in their own countries, and the growing economic and human cost of inaction. I have to say that many of those economic estimates for inaction that have been put forward recently are stark. Unless the world is prepared to act collectively, we will be heading into economic and environmental planetary insolvency. I do not think that that is putting it too strongly.

Thirdly, countries and businesses recognise that the drive to net zero offers enormous economic opportunities for jobs, growth and inward investment. Yes, we have seen some recent geopolitical headwinds, but the reality is that many countries and companies—not least in Asia, where I was a few weeks ago—are sticking with their climate commitments and continuing to invest in clean energy, electric vehicles, hydrogen, SMRs and energy efficiency. They are building their economies for tomorrow.

I agree with noble Lords who have talked about the G20, the biggest emitters, having to step up and do more, but the reality is that every country needs to play its part. Nearly a third of global emissions come from countries like ours whose individual territorial emissions are 1% or less of the global total. It is vital that we all act.

I turn to the cost of net zero in the UK. The Climate Change Committee brought out a report a few weeks ago on the seventh carbon budget and it said that the net cost of net zero will be around 0.2% of GDP per year, on average. The CCC expects that upfront investments will lead to savings during the seventh carbon budget period, and much of this investment is expected to come from the private sector. It is also worth emphasising that the CCC’s net cost estimates have been falling significantly: the estimate was between 1% and 2% of GDP in 2008, it was less than 1% in 2019 and it is 0.2% of GDP today. This is driven by cheaper and more efficient green energy and technologies. I welcome the earlier comments from the noble Lord, Lord Stern, on clean energy.

As there is for the rest of the world, for our country there is a big cost of inaction on net zero. A number of noble Lords, including the noble Baroness, Lady Curran, referenced the OBR’s fiscal risks report. She talked about the 2021 report, but the most recent one has climate change in the top three long-term pressures on the public purse. That report is clear that rising temperatures impact productivity, agricultural output, energy costs and, ultimately, people’s lives and livelihoods.

On the flip side of that coin, there is a big economic opportunity, which a number of colleagues have talked about, in pursuing net zero. The private sector absolutely gets this. Colleagues have referenced the CBI report showing the 10% increase of growth in the net zero sector last year; it is now generating more than £83 billion in gross valued added and supporting almost 1 million jobs in our country. That number is growing, and private investment has driven that growth. I agree that it is key to get more private sector money flowing.

At this point, I want to refer the House to my entry in the register of interests, particularly my chairmanship of the City of London’s Transition Finance Council. The council’s aim is to leverage the UK’s existing strengths to become the best place in the world to raise transition finance in support of the UK’s and the world’s net-zero ambitions. As part of the Transition Finance Council, we will play our part to try to get more private sector money flowing.

Then there is the issue of cross-party consensus. I think that it is cross-party consensus on net zero over the past two decades, which many of us in this House have striven to maintain, which has given the private sector confidence to invest in the UK. I personally believe that a go-slow on net zero will have seriously negative economic, environmental and reputational impacts for the United Kingdom and, frankly, could end up costing the British taxpayer a lot more than keeping on track.

I want to end, as a good Conservative, with the words that Margaret Thatcher said in 1989 at the United Nations:

“The environmental challenge that confronts the whole world demands an equivalent response from the whole world. Every country will be affected and no one can opt out”.


Those are the wisest of words, which every political party should take heed of.