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Oil Taxes and Green Homes Seen Key to Spurring U.K. Recovery

Jessica Shankleman
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Oil Taxes and Green Homes Seen Key to Spurring U.K. Recovery

(Bloomberg) -- The U.K. government’s climate adviser warned the nation is behind on its net-zero emissions target and called on Prime Minister Boris Johnson to hike fossil-fuel taxes and boost green subsidies to help rebuild the economy.

Rising from the tragedy of the pandemic, which has killed more than 43,000 people in Britain, is a “once in a lifetime opportunity” to reset the economy on a path to achieve its goal to zero out greenhouse gas pollution by the middle of the century, the Committee on Climate Change said in its annual progress report on Thursday.

Johnson has said a green recovery will be vital to help the U.K. come back from the sudden stop to the economy caused by the pandemic. His environmental agenda will be tied to a major speech expected in coming weeks and Chancellor of the Exchequer Rishi Sunak is drawing up options to bolster the economy as the government prepares to withdraw its vast package of financial aid.“If we are to emerge successfully from COVID-19, there is only one route, and that route is one which enables us also to fight climate change,” said John Gummer, chairman of the CCC.

The U.K. remains off track to meeting its net zero emissions target that was enshrined in law last year and is woefully unprepared for the worst impacts of climate change, the CCC said.

On what’s expected to be the hottest day of the year, the committee urged Johnson to roll out a building retrofitting program that would rapidly create jobs up and down the country and help to tackle the increasing problem of homes overheating during hot summers and being too cold during winter.

A spokesman for the government said “tackling climate change should be at the heart of our economic recovery” and that it will formally respond to the CCC’s recommendations in October.

At the height of the lockdown, U.K. carbon emissions plummeted by 31% from last year’s average, the CCC said. But that unusual drop shouldn’t be taken as a sign of progress, or of how to tackle climate change.

Instead, investments are needed across transport, buildings and industry to deliver annual emission cuts of about 3% from 2019 levels, it said. Reaching net zero means virtually eliminating pollution from heating, driving, manufacturing and power generation by 2050, with the rest removed from the atmosphere by technology or trees.

As the host of next year’s global climate summit and the incoming president of the Group of Seven countries, the U.K. now has a prime opportunity to demonstrate its commitment to a green recovery. The CCC presented a menu of policy recommendations that it said would rapidly create jobs and investment while cutting emissions.

The committee said green strings should be attached to any corporate bailouts the government provides and that carbon taxes on fossil fuels could raise 15 billion pounds ($19 billion) a year for the Treasury’s coffers. Other recommendations include:

Quickly spending 5.2 billion pounds that the government promised earlier this year for flood defenses.Ramping up spending on electric vehicle charging points and cutting taxes for low carbon vehicles.Creating geographical clusters for companies to develop carbon capture and storage technology and hydrogen production facilities.

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