Gas price surge may slash UK’s cost to hit net-zero emissions

Bloomberg

Britain’s path towards zeroing out its greenhouse gas pollution may cost a third less than expected if natural gas prices remain elevated, analysis by government’s fiscal watchdog showed.
The Office For Budget Responsibility examined how high fossil-fuel prices would impact the whole-economy cost of the UK reaching its target for net zero emissions by 2050.
In 2019, the government’s Climate Change Committee estimated that the total costs of reaching net-zero by 2050 would be £321 billion ($385 billion). But the OBR on Thursday said that the marginal cost to 2050 would fall by £116 billion in real terms by 2050 if gas prices remained higher.
The watchdog also found that sustained higher natural gas prices could displace the Treasury’s revenue from carbon taxes by nudging investors to cut gas usage either by improving energy efficiency or switching to other fuels. That would have a small impact on Treasury income.
Overall, the OBR found that higher energy costs raise “numerous” fiscal risks, but the scale of those risks rests on how the government spreads those costs between consumers and the exchequer.
“Governments cannot make the costs of more expensive energy go away, they can only adjust who pays them, and when,” it said.