The cost of making the UK’s stock of housing greener will run into the billions, with most of the financial burden being shouldered by the poorest households.
It will cost around £42.5bn over the next decade to green British homes, according to the economic think tank the Resolution Foundation.
Poorer households are the most likely to live in energy inefficient homes, compared to being the least likely in 2014, meaning they will have to a relatively larger sum than wealthier Brits to green their homes, the Foundation found in a joint report published in collaboration with the London School of Economics and the Nuffield Foundation.
Urgent measures needed to be taken to prevent the transition to net zero by 2050 “widening inequalities by loading costs onto lower-income households, while the benefits flow to better-off households,” the Foundation warned.
The government’s fiscal watchdog, the Office for Budget Responsibility, estimated in its Fiscal Risks report the total cost of reaching net zero by 2050 could run as high as £1.4 trillion.
Jonny Marshall, senior economist at the Foundation, said: “While the UK is well-placed to lead this transition, with its proven track record on reducing emissions and strong political and public consensus on the need to act, no-one should kid themselves that this next phase won’t be challenging.”
The Foundation found the cost of transitioning to a greener economy falls each year and starts to pay off in the 2040s. However, paying for the programme will still be one of the largest outlays on the government’s books.
The path to net zero requires annual net investment of £27bn and £15.9bn per year in the 2020s and 2030s respectively, before an annual net payback of £11.2bn in the 2040s.
The Foundation called for the debate on climate change to laser in on how the government can achieve net zero goals efficiently.
“We cannot allow the costs of net zero to derail our decarbonisation efforts. That would simply lead to higher costs, missed growth opportunities, more disruption and greater climate damage further down the road,” Marshall said.