The impact of Covid on government spending on zero carbon


Covid 19 and Zero Carbon both stretch government borrowing

“Why house prices may dip but will not crash” – Merryn Somerset Webb (FT January 15, 2021), contains the following sentence:

“In 2008, the UK spent 1.5% of gross domestic product to alleviate the global financial crisis; this time we have spent 26% of GDP.”

Just take a moment, 26% of GDP! This is breathtaking and the important point is that most of this money has been borrowed. The UK’s 2020 GDP is estimated by the World Bank at roughly $3 trillion (World Bank figures are US$ for comparative purposes). So, we have spent roughly $750 bn (£550bn) on Covid.

When it comes for additional government expenditure on achieving zero carbon this will inevitably have to be funded by additional borrowing in addition to this existing debt.

These numbers are enormous, my book came up with a figure of £1tn for the expenditure to achieve zero carbon in the UK and that is probably conservative. Financing this for government would have been a challenge, given the fiscal impact of Covid that challenge just got significantly greater.

© Chris Lenon and http://www.zerocarbonourchoice.com  2020-2021. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.

Schroders work at home and Metropolitan life – Consequences

“Fund manager Schroders will allow thousands of its employees to continue working from home even after the pandemic, marking a huge shift in the way the City works.

In a recent interview, Schroders’ chief executive Peter Harrison said the pandemic had “changed society irrevocably”.

“The contract between society and business has changed forever,” he said. “The office will become a convening place where you get teams together, but the work will be done in people’s homes.”

This is likely to raise fresh fears among government figures that the shift in working patterns triggered by coronavirus will be permanent.” City am.

This illustrates the change being considered currently and the scale of that change. We are possibly seeing peak metropolitan life. While the Schroders decision is covid provoked, there are other carbon emission issues which will erode metropolitan life.

As my book, Zero Carbon Our Choice describes, Metropolitan areas contribute to emissions but are poor at emission mitigation, ie in terms of renewable power investment in particular, and conversion to non carbon heating is more challenging in higher rise buildings. The changes will be enormous, if Schroders and other firms adopt this business model then city CBds will be hollowed out (walk round the City of London to check this out). The ancillary service jobs will migrate or disappear. Demand for public transport will decline (many systems are radial from the CBD or focussed on it).

No solar panels. London terrace houses.

Cities are considering how to replan for a low or zero emission future. Paris is considering a “15 minute city” where you can walk to all your daily needs. There is no reason why employment patterns will not follow this. This means that cities will need to create a planning strategy to make these changes over the next decades.

Smaller cities will find it easier to adapt to this future and it is not surprising that the press is full of stories about the attractions of non metropolitan life. If Covid is making people consider the scale of change we see, thinking about zero emissions will require even more dramatic change.

© Chris Lenon and http://www.zerocarbonourchoice.com  2020. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.