The Price of Progress: Higher Taxes for a Greener Future?

According to Lord Nicholas Stern, a leading economist, the UK has made substantial progress towards achieving net-zero carbon emissions by 2050, but higher taxes may be necessary to reach that goal. Both public and private investment in new technologies is needed, according to Lord Stern, who is optimistic that key green technologies, including energy generation, car batteries, and fertilizer production, can reach a tipping point with the help of artificial intelligence in the near future. Lord Stern says that while he is not advocating for delaying investment in health and education, if a bit more tax or borrowing is required to make significant investments in the environment, then that should be done.

Former CEO of BP, Lord Browne, who now leads a private equity fund investing in firms reducing greenhouse gases, is urging the UK to follow the example set by the US in stimulating green technology. President Biden’s Inflation Reduction Act provides subsidies, tax credits, and discounts for electric vehicles, renewable electricity, sustainable aviation fuel, hydrogen, and electric cars made in the US. Lord Browne supports the windfall tax on North Sea oil and gas production, which he believes should be redirected towards renewable energy specialists.

However, some UK ministers have been critical of President Biden’s move, arguing that it gives US businesses an unfair advantage. The government claims that the UK is “leading the world on tackling climate change” and that its policies have created 68,000 green jobs since 2020. The creation of the Department for Energy Security and Net Zero last week is a step towards the bolder approach recommended by a review commissioned by former Prime Minister Liz Truss.

While people are still concerned about climate change, they are now more focused on inflation, the economy, and public services. According to a poll by Ipsos, support for environmental levies and phasing out fossil fuel heating has declined, indicating that voters are willing to do the right thing, but may be less willing to fund change at the moment.

Reaching the UK’s goal of net-zero carbon emissions by 2050 will require a significant effort from both the public and private sector. While some, like Lord Nicholas Stern and Lord Browne, believe that higher taxes may be necessary to reach that goal, others argue that it should be done through investment in new technologies.

The creation of the Department for Energy Security and Net Zero is a step towards a bolder approach, but public support for environmental levies has declined, indicating that there may be a challenge in funding these efforts. Nevertheless, both Lord Stern and Lord Browne remain optimistic that with the help of AI and by following the example set by the US, the UK can reach a tipping point in key green technologies and achieve its goal.