Reaching net-zero will be much cheaper for the UK government than previously expected – and the economic damages of unmitigated climate change far more severe.
These are two key conclusions from the latest report on risks to the government finances from the independent Office for Budget Responsibility (OBR), which includes a chapter on climate change.
The new OBR report shows very clearly that the cost of cutting emissions to net-zero is significantly smaller than the economic damages of failing to act.
Here are four key charts from the OBR report.
Climate damages could reach 8% of GDP by 2070s
The UK could take an 8% hit to its economy by the early 2070s, if the world warms by 3C this century, according to the new OBR report.
(This aspect of the OBR report has been picked up in a Reuters headline: “Global 3C warming would hurt UK economy much more than previously predicted, OBR says.”)
Its latest estimate (blue line) of the impact of “climate-related damages” by the 2070s is three percentage points (60%) higher than thought just last year (yellow), as shown in the figure below.
The OBR says that the increase in its estimate of climate damages is due to using a “more comprehensive and up-to-date analysis”.
(The world is currently on track to warm by only slightly less than 3C this century.)
Unchecked damages could double hit to borrowing
The impact of climate damages on government borrowing would be nearly twice as high by the 2070s, if global warming goes unchecked and reaches 3C, according to the OBR report.
This is shown in the figure below, which compares additional government borrowing each year, as a share of GDP, if warming is limited to less than 2C this century (left) or if it climbs to 3C (right).
The OBR explains that the largest impact of climate damages on government borrowing is “lower productivity and employment and, therefore, lower tax receipts”.
Cost of net-zero halved
When it comes to cutting UK emissions, the OBR says the government will only need to invest just over half as much on reaching net-zero, compared with what it expected four years earlier.
This is shown in the figure below, with the latest 2025 estimate (right) showing a cumulative government investment of 6% of GDP across the 25 years to 2050, down from 11% (left).
(Note that the large majority of “lost government receipts”, shown in yellow in the figure below, are due to fuel duty evaporating as drivers shift to electric vehicles. As the OBR notes, the government could choose to recoup these losses via other types of motoring taxes.)
The OBR takes its estimates of the costs and benefits of cutting emissions to net-zero from the government’s Climate Change Committee (CCC). The CCC recently issued significantly lower estimates for net-zero investment costs, due to more rapidly falling clean-technology costs.
Acknowledging this shift, the OBR says the latest CCC estimates on the cost of reaching net-zero are “significantly lower” than earlier figures.
It notes that the net cost to the economy of reaching net-zero emissions by 2050 is now put at £116bn over 25 years, some £204bn lower than previously expected.
In very rough terms, this figure – which excludes health co-benefits due to cutting emissions and avoided climate damages – is equivalent to less than £70 per person per year.
Cost of action far lower than cost of inaction
Taken together, the OBR findings show more clearly than ever before that the cost of taking action to tackle climate change would be far lower than the cost of unchecked warming.
For the first time, its latest report combines the estimated cost of cutting emissions with the expected damages due to rising temperatures in a single figure, shown below.
The comparison illustrates that climate damages (blue bars in the chart) are set to impose severe costs on the UK public finances, even if warming is limited to less than 2C this century (left).
The OBR also shows how the cost of government investment in cutting emissions (yellow) is both temporary and relatively small in comparison to climate damages.
Moreover, it highlights how unchecked warming of 3C this century (right) would impose far higher climate damages on the UK government’s finances than if global temperatures are kept in check.
Specifically, global action to limit warming to 2C instead of 3C could prevent more than 1 percentage point of climate damages being added to annual government borrowing by the 2070s.
In contrast, the combined estimated cost to government of action to cut emissions never exceeds 0.6 percentage points – even if lost receipts due to fuel duty are not replaced (green).
Beyond these new numbers, the OBR acknowledges that it still does not include the cost of adapting to climate change, or the impact this could have on reducing damages.
Nor does it consider the potential for accelerated transitions towards clean energy, technological advances that make this shift cheaper or the risk of tipping points, which could cause “large and irreversible changes” to the global climate.
The post OBR: Net-zero is much cheaper than thought for UK – and unchecked global warming far more costly appeared first on Carbon Brief.
OBR: Net-zero is much cheaper than thought for UK – and unchecked global warming far more costly
Three countries have been named by the Paris Agreement’s compliance committee for failing to submit a nationally determined contribution (NDC) and repeatedly snubbing offers of help with their climate plans.
After months of internal debate over whether to identify serial non-responders, the Paris Agreement’s Implementation and Compliance Committee (PAICC) named the three countries which have failed to engage with it over their NDCs on Friday.
It named Democratic Republic of Congo, Senegal and North Korea in a footnote of its annual report, adding that it decided to name them “with a view to facilitating engagement”, adding that representatives of the three nations had been invited to its meeting in early 2027 “with the purpose of identifying any challenges and constraints”.
“The Committee noted the importance of Parties engaging with the Committee in a timely manner, while noting that some delays may be due to the national capabilities and circumstances of the Parties”, the report said.
-
Under US pressure, World Bank says it will back gas “where appropriate”
The US wants the World Bank to expand its gas support while climate campaigners are pushing for it to end – its head spoke this week of limited backing for the fossil fuel -
IPCC scientists vow to press on with climate reports despite political deadlock
After governments again failed to agree a timeline, nearly 120 IPCC authors pledged to complete their assessment on time and with full scientific rigour -
Paris Agreement committee snubbed over missing NDC climate plans
Many governments have still not submitted a nationally determined contribution to the UN, breaching a key requirement of the Paris Agreement
In July, PAICC said 12 countries had ignored its repeated attempts to discuss why they had not published an NDC as required every five years under the 2015 Paris accord.
Members of the committee had been divided over whether to name them, but at a September meeting decided to do so in their annual report to the annual climate COP summit.
By the time the report was published on Friday, only Congo, Senegal and North Korea “had not communicated an NDC or submitted a [Biennial Transparency Report] and had not yet responded to any of the Committee’s notifications, despite several reminders issued by the Committee in this regard”.
Rainforest and renewable energy ambitions
The silence from Congo and Senegal is notable because the former is home to much of the Congo Basin rainforest while the latter has sought billions of dollars in climate finance to support its renewable energy ambitions.
After Brazil, Congo has more rainforest than any country in the world. This forest, and the country’s peatlands, absorb huge amounts of greenhouse gas but are fast being lost to expanding farmland, charcoal production, logging and mining.
Senegal signed a Just Energy Transition Partnership with Canada and wealthy European nations in 2023, to help it meet its renewable energy targets under the-then government of Macky Sall. It was chair of the Least Developed Countries group between January 2022 and December 2023.
Tejas Rao, who is researching the PAICC as part of a doctoral thesis at Cambridge University, said the governments of the three countries should engage with the committee.
“Engagement costs these governments very little and the committee has shown it will listen,” he said.
“Silence leaves the committee with no basis to help, and it leaves the [governments] exposed to the narrative that they are simply disengaged,” he told Climate Home News.
Paris Agreement requirement
The 2015 Paris Agreement requires all parties to publish an NDC every five years outlining their emissions reduction targets, with each plan meant to be more ambitious than the country’s last NDC.
The latest set – the third round of plans, with new targets for 2035 – was due in February 2025. While most countries missed this deadline, all but around 30 – mostly small emitters but including Egypt, Vietnam and Argentina – have now submitted them.
Over the year, the PAICC – which is made up of government climate officials from developed and developing countries – has been communicating with governments that have not submitted NDCs and trying to overcome barriers to them doing so.
Some nations have cited exceptional circumstances as the reason for not submitting an NDC, a process that requires a significant amount of work in tracking emissions and consulting on how to curb them across the economy. For example, a letter from a Sudanese official to the PAICC, seen by Climate Home News, said that the country’s civil war had led to the suspension of its NDC preparation.
-
IPCC scientists vow to press on with climate reports despite political deadlock
After governments again failed to agree a timeline, nearly 120 IPCC authors pledged to complete their assessment on time and with full scientific rigour -
Under US pressure, World Bank says it will back gas “where appropriate”
The US wants the World Bank to expand its gas support while climate campaigners are pushing for it to end – its head spoke this week of limited backing for the fossil fuel -
Who shapes climate science? The equity question facing the IPCC
Early completion of the next global climate science assessment reports risks excluding research from the Global South, which is key to ensuring the findings are fair
The US and Iran are not signed up to the Paris Agreement and so do not have active NDCs, nor does Taiwan, which is not a UN member state.
Rao said that because the PAICC is “facilitative and non-punitive”, naming the countries “is meant to open a door, not close one – the invited consultation is the point”.
“In recent months, governments that explained their constraints, whether capacity, finance or domestic process, have been met with follow-up and support rather than sanction, and the number of silent governments has fallen sharply,” Rao said.
The post Paris Agreement committee names three countries snubbing it over NDCs appeared first on Climate Home News.
Paris Agreement committee names three countries snubbing it over NDCs