 Good morning everybody and welcome to this resolution foundation Event, my name is Thorsten Bell. I'm the chief executive of the foundation now This event is part of our rather overly large economy 2030 inquiry that's a joint project between ourselves LSE and the Nuffield Foundation running over the next two years and it's examining the effect of big drivers of economic change During the 2020s on our economy and those the big three obvious ones Brexit Covid and net zero and it's net zero. We're going to be focusing on The smorning and we're going to be focusing not on lots of what you hear about in the net zero Space about how even more ambitious the target should be or how the targets aren't ambitious enough and they need to be Ramped up or about what exactly the right technology is we're going to be focused on delivery of policy to make those targets Actually happen and actually the normalization of that policy into what government Does thinking about What the distribution of that policy is on different kinds of households and what it actually takes to make this Decarbonization actually happen and this discussion is going to be drawing on a discussion paper We published this morning written by Jonathan Marshall from ourselves and Anna Valero from the LSE and then to help us And you're going to hear a summary of that discussion paper in a second from Johnny who's going to present you some slides running through the headlines of that paper and then to discuss the discussion paper You're going to hear from rebecca heaton who has just started as the director of sustainability at ovo energy and as a former member of the ccc and lots of other jobs in this kind of Space and then you're going to hear from a dare turner who my briefing says is a now What is it a day? You're it's very general a columnist and business leader Which I thought was a suitably enigmatic aiming to be the number new 007 But anyway, he's actually done everything They're including being the first chair of the ccc and right now he's also chairing the energy transitions commission Which is kind of a attempt to be a global ccc to be a slightly overly grand about it Maybe sort of yes. Anyway, you can tell us what it is in a second at this. So don't worry So that is the plan as always you can ask questions on slido the hashtag is net Zero and we'll have a few polls there and people in the room can also log on to slido Some of you are online. Some of you in the room, but everyone has equal access to slider because we're a very equal kind of Place so that is the plan Johnny over to you to kick us off with the presentation Oh, thank you so Very good. So the uk is entering a new phase on its transition to net zero That's moving from one way we've been focusing on setting targets to one way focusing on delivering policies The past couple of years we've seen numerous targets set for emissions. We've seen net zero targets carbon budgets We've seen ndcs. We've seen targets for offshore winds targets for hydrogen targets for heat pumps But at the moment, we've got no policies to really achieve any of these And the 2020s is absolutely vital in increasing the pace of decarbonisation hitting these goals and getting back on tracks Where we need to be to reach net zero I'm moving into 2020s the next stage of decarbonisation is going to be very different to that which has come before It's going to have a much greater impact on household and on day-to-day life And this slide this slide speaks to that this this shows the The pace of decarbonisation in a number of sectors over the previous 15 years And that will be needed to be achieved over the next 15 years And it shows there's very slow progress outside of the electricity sector in particular surface transport and residential property our homes are lagging behind And the 2035 targets require acceleration across the board And this will be inherently more impactful on households when we decarbonise how we get around how we stay warm at home Then it has been in decarbonising our electricity system So our approach to focus for our discussion paper out this morning is to attempt to move the debate on from one arguing over targets Or arguing over technologies to one in which challenges are faced up to and dealt with We're going to try and move beyond arguing over whether it's nuclear or wind whether targets are too expensive And try and do something more proactive and more constructive We're going to realise they need to there's a lot of difficult discussion difficult decisions They need to be understood faced up to and trade-offs need to be made to overcome them And we're going to attempt to move the debate away one that's focused on as Dawson said on on jobs on green Jobs on targets to one that looks really at households On the impacts of decarbonisation on different households in different parts of society, which we see is absolutely key to making the net zero transition successful And this is seeing the extent of decarbonisation of the next 15 years Which is going to need some sort of behaviour change the ccc reports say that from now to 2035 we're going to need The policies to cut emissions are going to about 60 of those are going to need some sort of behaviour change We're from 2009 to 2019 only about 13 percent of decarbonisation involved some form of behaviour change And it's absolutely essential to know how households are going to manage this and can manage this before embarking on this change And finally, it's the fair distribution and the fair distribution of the costs and the benefits of net zero Which is absolutely key We need to avoid the costs falling on the shoulders of those that are least able to bear them And avoid the benefits which are financial and non financial such as warmer homes cleaner air Being concentrated among wealthier families This is this this is largely lacking from the climate rate so far and is absolutely vital in navigating the next decade and beyond So this slide shows the ccc forecasts of the net net cost of net zero out to 2050 If you add all the numbers up and all the years the costs above the x-axis and the savings below the x-axis You see that the cost is pretty pretty manageable. It's about 300 billion pounds about over 30 years This is this isn't beyond the width of government sought out But what this hides are crucial issues around timing There might be a lot of the investment costs come years or decades before the savings from lower running costs How are we going to manage this? You know, this is ultimately a function of policy This is something that the government and policymakers need to face up to And it also hides distribution impacts, you know, how other costs or say decarbonising our homes going to be Spread fairly The obr central forecast reckons that about half of the cost of decarbonising our homes is going to be met by property owners This is home owners landlord landlords freeholders But how are we going to make sure this happens in a way that doesn't penalize those who don't have the means to invest in their homes? Sticking with homes so some recent evidence from how our building stock has improved Show us how tricky this can be from 2013 to 2019. There's a general increase in The efficiency of of england's homes is english housing survey data But this has not been this has not been universal across the income distribution You know the start towards the start of last decade if you're in a low lowest income Quintile you are more likely to live in a more efficient household than if you are at the top of the income spectrum But towards the end of the decade, this has switched around and this comes despite the only real long running support for Building decarbonisation for home decarbonisation being targeted at fuel poor households and low-income households So we need to face up. We need to understand why these policies didn't work. Were they not fundable enough? Were they not accessible enough? Was it not enough demand? Figure out what the problems were and then tailor those that are going to be in the next stage of our our journey to net zero So they work in a better way than than they have done to cut our emissions from our homes This is particularly stark when you think about the energy price spike that we're undergoing now If you live in an a or b rated home a more efficient home The the impact of the price cap increasing will mean your gas bill will go up about 75 pounds a year If you're in an e or f rated home, that's gonna be about 130 pounds a year on your bill So if this if the if this higher increase is felt by people with lower financial means, that's obviously gonna be be problematic Sharing the benefits of net zero is also as important as sharing the costs So the main the main payback for investment costs of net zero comes in later years via cheaper motoring So there's two Main prerequisites you need to have as a household to access this first is having a car Around half of the lowest income households don't have a car Whereas half of the highest income households have two or more cars But it's also vital to be able to charge your car at home to get Use use electricity when it's cheapest overnight to charge a car when it costs the least And this is much easier if you can park your car in a garage or on a driveway or off the street And again, you can see there's a split across the income distribution of how available this this sort of parking provision is If you're in the highest income households the highest fifth um The distribution you're about, you know More like you're more than more than three quarters of this of this group have access to a garage or off-street parking And this forced around half for low-income homes And this means that you know without policy intervention, these benefits are going to be concentrated amongst higher amongst higher income and richer families without policy intervention So for a successful transition to net zero, we need to place it at the core of our economic model This is going to require more hands-on approach. If you look at the intervention that has been made in electricity system The government has used almost all of the tools at its disposal. We've had regulations. We've had taxes. We've had subsidies We've had support for new technologies This hasn't been the case for other sectors of the economy and in the next decade and beyond this is going to have to change This is to do this You're going to have to have net zero as a core tenor of what the government do It's going to have to require full government buy-in to avoid like we've seen in the past bickering between different departments So that's led to progress being slow Net zero will mean that also mean that the the shape of Britain's comparative advantage will change You know, we have growth industries in offshore wind in carbon capture and electric vehicles But without properly understanding these and planning for these they could be lost they could not be not they could be lost or not Exploited to their full potential And then finally net zero only increases the urgency that we need to refresh our fiscal policy We need to face up to the fact that pollution taxes are dwindling and are carrying dwindling Fuel duty and vehicle excise duty will continue to fall as we move away from petrol and diesel cars and vans and our current projection just going to have a Gap to the A tax gap by the end of this parliament around 13 billion pounds per year This should only increase the pace at which we sort of start to have the discussions about how we're going to feel This gap. Is it road pricing? Is it something else? We need to also need to talk about What we're going about carbon pricing are carbon prices being used effectively across the economy Do they work well enough to decrypt to drive decarbonisation and can they be implemented in a way that doesn't make Goods and services more expensive for low income households So finally just to go over it again This next decade is going to be a new phase of decarbonisation where the impacts are more visible to households Successfully navigating these is going to require a thorough understanding of the challenges and the opportunities ahead The timing of the cost and the benefits and the distribution of split of the cost and the benefits are absolutely essential in Navigating net zero with a focus on households And finally we need to take net zero out of the silo within which climate policy has generally been placed And putting it at the center of the uk's economic model. Thanks. Great. Thank you very much indeed, johnny And i should apologize to those watching online that we're slightly struggling on the slides visibility But they will all be available on the Website along with the report itself. So lots of food for thought there some I kind of you know a An attempt to fit on middle line between Those that say this whole thing is really really easy and we should just get on with it And those that say it's so hard. We should give up there, but you weren't really ever in the give up bucket Anyway, Rebecca. So over to you So, um, thank you. I would say um, I very much agree on the moral and economic case for action And I think it's never been more obvious than now With the soaring gas prices, you know 80 percent of people's of uk homes are heated by gas and a third of An average electricity bill in the uk is linked to fossil fuel prices So if we can try and decouple that that has to be a good thing So I think there's a really economic upside to net zero and also though there's benefits to people's lives Now, I know that might seem a little bit Counterintuitive because I completely agree. We've got this really costly and disruptive journey ahead But ultimately we're going to come out in a much better place. So that's the optimist in me speaking so, um I've recently joined ovo and a real reason why I joined ovo was because of their focus on zero carbon living and on taking consumers on that journey And helping consumers to really decarbonize their lives and their homes So the sort of solutions we're talking about are first of all Getting the fabric of our building's rights. So we all know about insulation. We really have to focus on this But then secondly electrifying heat, which we all know about predominantly. That's probably going to be with heat pumps But then linking that really closely to electric vehicles. So what can we do with our ev batteries in all these cards? and um, finally The intelligent tech which links it all together So this is sort of this vision for a mini power plant in the home and ovo have done some trials on this We ran the world's largest EV battery trial and basically our members car batteries We used to supply energy to the grid. So this pressures renewable energy That we need to really store and look after when the wind isn't blowing. So we're not using gas We can actually store that in customers batteries and feed it back and the average Income from our customers doing this Was 420 pounds a year income that they got and the highest was 800 pounds a year So we know that this this can work Which is why the optimist in me is is feeling more comfortable But how how really do we get there equitably? So I think history will really judge us on whether we've taken everybody on this journey And it's all very well for me with my EV But that's not going to work for everybody. So what can we do? So I do worry about EV's, you know, the great thing about them is you can just go in and buy one, you know in your local garage That's fantastic I worry about stranded assets. So these petrol stations. I live in a rural area. There aren't that many petrol stations Anyway, we're going to end up with even less. That's going to be the poorest who are going to be really hit by that But I think more of a concern for me really is electrifying our heating in the UK So and there's two big challenges here firstly the upfront costs I mean these things are so eye-wateringly expensive at the moment So we really do need some government support But that support should really be aimed at those who are less able to pay. We really have to focus that support And secondly, and this is I think an opportunity to really develop the the heat pump industry in the UK from a cottage industry into something much bigger It's really one I'm possible to find a heating engineer. There's 1200 heat pump engineers in the UK There's 130,000 gas engineers and let me tell you I don't think any of those heat engineers live in mid-wales Because I'm really struggling to find someone to put one in So over we've got a report coming out in a couple of weeks Which really talks about some of the policy levers we think and how this can be really an opportunity in job creation for the UK Other things we could do so the government have set a ban on gas boilers in new builds. That's great How about looking at a ban on gas boilers in all houses or new gas boilers in all houses? So if your gas boiler goes to foot you might have to then move over to a heat pump So that's the sort of the upfront cost but the running cost at the moment It's going to cost you a lot more to run a heat pump than it is gas to heat your home with gas And this is because if you look at an electricity bill 20% of your electricity bill are these levies and only 2% of your gas bill is actually these additional levies So what we need to do is remove those from our bills and Generate that income through income tax, which is much fairer And just put a basic carbon tax on gas and electricity and that would make the running costs of these things much more equitable And finally one little thought stamp duty We've all seen how that's been really distorting the market at the moment So how about a zero stamp duty for a zero carbon home? And i'm just going to finalize a little bit about why I think this is better for lives by sharing a little bit of an anecdote from me That I spent my 20s and early 30s renting very damp cottages in mid-wells where I would just have one open fire in the living room It's miserable. It really is miserable lovely in the summer quite grim in the winter and it's not good for family life either So I think there's a real opportunity here to also improve lives and as well as giving consumers a lot more control over their energy Thank you very much indeed Rebecca and that was a good positivity except for any treasury civil servants Watching who you just asked to give up their stamp duty revenue when they're already losing their fuel duty revenue And they'll they'll all give up their day's work by lunch just a suggestion just being creative And there is you know, we've to consider people's well-being of the viewers as well as of the Think now Ade, what's your level of perkiness? Uh Well, look, I think it's great that the resolution foundation is now bringing its classic skills of granular analysis focusing on households and distributional issues to this issue of how we Get the transition to a zero carbon economy and the starting point. I was very good to see is that great slide Taken from Chapter six of the climate change committee's sixth carbon budget report one of the great chapter sixes in the world And in there, there is that chart which shows the essence of the economics of this transition A set of investments above the line And then a set of operational cost savings below the line and what it shows is that there's an absolutely believable story that by 2050 Uh people in britain on average will be better off than they Would otherwise be they will be enjoying at least the same and possibly even a higher standard of living because of those operational cost savings But that doesn't mean that it isn't costless It's or not difficult because you have to go through a period where there is investment An investment of course doesn't mean gdp goes down I mean gdp will probably be as high as it would otherwise be indeed You might argue that there's a set of multiplier reasons why it might even be higher But if you've got to invest an extra one and a half percent of gdp by the 2030s and you have the same gdp That means less consumption. You've actually got to persuade people. Let's make it come real here spend a little bit less on restaurants on holidays and some more on heat pumps That's that's what this this really means. So the issue is is this possible? What policies are to drive this? Where are we and what are the distributional consequences? I would say the issues are important But not You know difficult to deal with in the transport space and really tricky In the residential home space So will the uk decarbonize road transport a passenger road transport? Yes, it will We now have a commitment that it will be illegal to sell A emissions producing cars after 2030 that's in there. The manufacturers will have to respond We will primarily respond to that by rapid growth of electric vehicle sales Which by 2030 will be getting to very high levels and then that will run through the stock So will the transition occur? Do we have the instrument in place to make it occur? Yes, we do On the other hand, there are some distributional issues and they are fundamentally of two things One is the one that johnny highlighted which is different access to cost of electricity if you have off-street parking and You intelligently go to a company I won't name what the market companies might be and get yourself an electricity tariff So that you charge your a electric car battery in the middle of the night You will pay maybe five p a kilowatt hour And if you don't have off-street parking and you go to a charger in the street provided by a company providing that You might be paying 30 or 40 p a kilowatt hour. This is a this is a big difference So this issue of do you have access to off-street parking is going to make a lot of difference to the economics of buying an electric vehicle Now at least initially Electric vehicles are also going to be more expensive to buy up front But much cheaper to run provided you have access to that at home electricity And there is therefore a bit of a distributional issue because essentially richer people's cost of capital is much lower Right somebody who has money already sitting in the bank Who can buy a car with cash has a close to zero cost of capital today Somebody who doesn't have that and has to buy it on a lease or a credit thing is paying a much higher cost of capital So wherever we have up front investment for future benefit that has a clear distributional impact I think that one of the things that we ought to be doing now is really pivot The subsidy regime for electric vehicles to very strongly concentrate on cheaper cars This also relates to the fact that the bias of the automotive companies Is to produce electric versions of the bigger more expensive cars because that's where they make the margin Our streets are filling up with electric vehicles of suv Yeah, just just put on record Like turning around, but he really hates this And you know, we don't need to subsidize those any any longer. We've got a clear Forcing technique. We've got a we've got a stick in there But we need to make it easier for the we need to encourage the automotive engine Companies do be producing more smaller electric cars and we should be subsidizing those For lower income people as well as providing charging infrastructure publicly and trying to make that As efficient and as cheap as possible We need to think about how to do that But it may involve a more strategic plan of how we get there and some regulation Rather than allowing it to a completely chaotic market in which we end up with a somewhat expensive A on street and a not at home a parking a charging mechanism But the much bigger issue the bigger issue by far Is residential heat because just on the automotive. I'm pretty confident that by the late 2020s Electric vehicles will be cheaper to buy up front as well as cheaper to run So in a sense the technology is going to come to our rescue there But residential heat is the big one. That's the big figure above the line on the chart That johnny showed And I actually think it's even bigger than the ccc thinks and the treasury things I mean, I actually think they've got they've got too much Above the line on evs. I think they're overstating how much expensive evs will be But they're plugging in. I think it's about eight or 10 000 per household on the residential heat side Wouldn't at all surprise me if it ends up being more and so here This is a Invest now For what each household is a non-trivial amount of money for a future Benefit which ought to be a future lower price though There's the issue that becky has mentioned about the The unequal treatment of electricity and gas today, but these are significant elements of a investment and they're also distributionally complicated Because it's partly a gradient by income and wealth But it also has layers of granular detail, right? There are at least some people in less well off homes Who are already in efficient homes, right? And there are some people who are in very inefficient homes You also have very complicated gradients by Family size or age, etc on the whole Higher in energy expenditures on residential heating Correlate with income, but they don't entirely some of the highest is retired couples Living at home and being at home all the time I mean rich people who leave their house to go to an office Which we may start doing again in future to a greater extent over last year Don't need to leave their heating on when they're not there retired people at home do So we have a very very granular and complex distributional issue And we will need a vision to how to get through there And this is the area where there isn't the government policy It may be imperfect and incomplete But on the EV transition side, we have a clear government policy on residential heat We don't really have a policy either To drive the transition at the speed that we want or to deal with the distributional consequences of that transition I think it is going to have to be again a mix of sticks and carrots at the upper end of the distribution It should be things like higher council taxes or higher stamp duty I've just made myself No, I've just made myself popular with the Treasury because Becky's reduction in some area is going to be offset my increase But we need to use fiscal sticks or regulatory sticks to drive the people who have the income and wealth to make those investments Take it forward, but we've also got to realize that these are significant investments For many lower income people who have higher cost of capital and we will have to have I think fiscal mechanisms Certainly mechanisms to enable people to Borrow money for these investments at very low rates Or and or forms of direct distributional support So within everything that we're talking about here the big difficult one both in terms of Driving the transition and in terms of the distributional implications of driving the transition is the residential heat side And that is where we need the government soon to end up with a strategy because each year that we don't have a strategy Is making it more and more difficult To set the stretching targets which the climate change committee Recommended and which the government has accepted Great. Thank you very much indeed today. That was lots of people thought and I think that Chimes with exactly the argument we're trying to we're making in today's report. I mean we agree Entirely that Home heating is where the politics of net zero and the policy of net zero Is going to come to live for the next 10 years at least 15 years Then and is the new part not least because of the point Becky makes about there being no There being nobody that can actually fit any heat pumps in most of the country Let's have your conversation with some people up in Sheffield council, you'll have noticed they've just negotiated They've just got a green labor coalition getting going at the council And I think the greens who've just entered the council reasonably said, you know Can we get on with putting loads of heat pumps into our council housing? And they said and the Reasonably the council officers said here is Jim. He's the one person who knows how to fit heat pumps Yeah, and if I could just make the point here, I mean extra Investment in a part of the economy in particular in things that we do in the buildings is um Extra labor. I mean marks was right capital is ultimately labor early in the morning for that and a Again, the etc. Sorry the the climate change committee has Given us a very good quantification of that that by the early 2030s. We need order of magnitude 200,000 more people working on things to do with making the building stock More efficient better insulated putting in heat pumps But that is at one level a great story in terms of leveling up because those 200 000 jobs unlike say jobs in the offshore A wind industry or the battery industry which will be good jobs But they will be necessarily focused on industrial clusters by definition these jobs to improve the building stock Are jobs equally spread across the country in relation to the population and wherever there are buildings So it ought to be one of the most attractive possibilities in leveling up to create 200 000 of these Insulators plumbers electrician type jobs, but we absolutely need a strategy for the development of those skills Which brings together the supply and hold hold on a day. We've got some great audience questions along the way So stop skipping because you've got to give the people a chance to ask that question before you answer it But first of all just so for those of you Watching on slide there. We're putting up the first poll Which is basically getting at this big question We've been asking which is which of these areas will be the biggest challenge when it comes to hopefully you at all Just agree with us. So is it housing which is basically getting this gas boilers out? Is it transport we focused in this discussion so far on household level transport so private cars there's obviously some other issues to do with Decarbonizing public transport and even harder decarbonizing our air transport Which is obviously the the big longer term challenge or actually is it the bit? We haven't discussed much until a day when in cheated and skipped ahead Which is the world of work which is some people work in carbon intensive industries And those industries will need to either change a lot or shrink And is that I'd say you know if you see most of the just transition discussions over the last 10 years Actually, they've tended to focus on this world of work Question rather than the consumption question, which our discussion is focused on much this morning So have a vote on that those of you on slider. We're going to come back to the results In a second and then let's dig into this. So I thought we'd split this conversation. We've got about 40 minutes. So Into two big chunks there's Change so there's like the level of change our readiness for change How intrusive it is in our lives or our work? And then there's this costs question which most of our conversations focus on but like who bears which costs And actually who gets which benefits from this and and how much can policy affect that versus how much is that intrinsic to The nature of decarbonization. So I thought we'd do that. So let's start by taking Um, let's talk about taking this general question of readiness. So The premise of this discussion is the government sets some ambitious targets. Those are ramping up during the 2020s they require As johnny said in his presentation, they require Decarbonization to go from being something that happens in the abstract in the energy Generation business and to start happening in our lives. Basically, that's the big change in what's going on Then if you look at the opinion polling, the good news Is the public thinks Climate change is a real problem and we should probably do something about it and supports government announcing targets Which is why governments keep announcing more ambitious targets every few years And if you ask them what should change in their lives and are they doing enough, they broadly say I'm doing quite a lot. I think other people should probably do something In their lives where and I definitely don't say i'm ready to replace my gas boiler Even if that cost me a bit of money in the near future, they're a bit they're very they are more positive about cars So I think public readiness on cars is basically there but on other stuff to their lifestyles. There is not Readiness for really swift action on the scale we We need so how do we like how should we balance that optimism versus Like general optimism versus specific lack of what do you reckon to do because you're always so perky, but let's have a bit Well, look, I think the answer is the You've almost said it that the most difficult things are where people have to do things in their own homes So it's important to realize Johnny showed that figure that we'd we brought down the emissions a lot in the electricity system There's still a lot to do in the electricity system But it's now about making the electricity system much bigger while completing the decarbonization In fact, broadly speaking over the last 10 years, we've taken a system delivering about 330 terawatt hours of electricity With a carbon intensity of about five fifty grams per kilowatt hour And we have now got a system actually producing no much more no more electricity than 10 years ago The electricity demand has been flat because of efficiency and it's down at about 200 grams per kilowatt hour What we've got to do by 2035 is produce a system which produces almost twice as much electricity It's getting on for five or 600 terawatt hours of electricity We've got to complete the decarbonization down to almost no grams per kilowatt hour I however Relatively confident that this bit will happen. It doesn't require things that individuals have to do It requires the government to come forward with a set of options for the what's going to happen Particularly in the North Sea, which is our huge offshore wind resource. It needs clear vision It needs stuff on the transmission and distribution system It needs to enable national grid to build, for instance, an efficient undersea network out in the North Sea Rather than doing each wind farm and bringing it to to land individually with all the opposition that produces There's a hell of a lot of stuff to happen, but for the vast majority of households, it's it's happening Somewhere in the economy They will see it if we get it right in they'll be using more electricity at no higher price I'm moderately You know, I'm sure that will happen But I think I'm reasonably sure that something that most of what will happen will happen on the electrification of Road transport. I think we will drive that forward and it is as we said, it's the building space in terms of is it gonna happen? Do you think the public opinion will move on that or do you think it's just gonna be a Well, I think I think I think public opinion just has not been told told I mean, you know We yes, but this is not the public what's the greatest respect I mean, I mean, I love I love the people who have come to resolution good webinars They're very very high quality people but to call them, you know, the average public Look, I think one of the things that we need is for politicians to step up To explain to people what is required. I think probably I find that Most people, you know, because they know I I work in this stuff. This is what I do They ask me. Well, what do I need to do? And when I start saying, you know, well, you've got to have a system which is not your gas boiler They say well always gas a problem. I mean literally the level of understanding of this transition is very very low Okay, so you need first people to understand Just where the big emissions from their lifestyle are coming and that one of the biggest is their own residential heat I was going to say that I think it's about people's understanding and literacy levels on all of this Now, if you look at dietary change people are aware that eating meat To access certain types of meat is not necessarily good for the planet And we are seeing It is and come of vegetarianism. So what can we do for we've also seen flight shaming as well So that's that's another Which people are aware of so what can we do to make decarbonizing our heating sort of sexy, you know I'm not entirely sure I've got the answer I think perhaps roll out at a larger scale maybe across social housing would be a start So friends who have got this who've bought new houses. I've gone and seen it and I've gone. Wow That's just an amazing bit of kick. Yeah, so we need to get more of that out there It's never going to be as easy as dietary change, but I would say five years ago I was very scared about talking about dietary change in public And and thinking this is massively contentious people are going to say, don't you tell me what to do? And actually we're really seeing some movement on that front. Okay, that's good optimism again Then let's bring up the results of the poll to see what everyone else Thinks back home and then we're going to come on. I've got a question for you I go from the audience. So let's bring out the results on the screen if we can. Here you go Oh, well, that's really boring. Okay fine. All right, you all agree with us This is the problem. Okay people even if you agree Let's at least pretend because otherwise you haven't got a debate. You should have done that before we presented Thank you for the thank you for the feedback. We'll take that into account. You could this is a survey at the end Everyone else can give us their feedback Right now Rebecca a question for you here, which is on the specifics of some of this Which is we're talking about disruption via heat pumps being put in But obviously heat pumps are only appropriate for some kinds of housing Them and a harder heart not impossible but harder in flats for example or places with small gardens So how should we hear the question from Henning so what are the how do you how is it Do the up to the alternatives are they less disruptive more disruptive? How optimistic are you when you come to kind of you know some of your customers who are going to be wrestling with this in the decade ahead that we are That we're not going to get people scared off by basically being forced into more technology I think in terms of scale there are enough residential Houses where this clearly heat pumps clearly are the answer. I wouldn't say they are the only answer They are quite large. I think they're coming down in size. So I think that outdoor space becomes less of an issue I was surprised to have big they're really big and quite noisy But then some of them also not so I do have a lot of faith We're really really early on here in this technology journey and I think we will see massive massive improvements I also wouldn't say heat pumps are the only answer to me. They are the most scalable and the answer to To the really material Solution I think we will see some hydrogen particularly in a sort of more of a mosaic pattern across the UK Particularly where you might have an industrial cluster that's producing hydrogen. So I wouldn't draw that out I also Wonder where we might be going with more conventional letter tree hitting in homes and improvements to those sort of conventional storage heaters So I think there are there are different options But let's tackle the one that we think is probably going to answer most of our housing stock Which is heat pumps and let's just get on with that. Okay, very good now Johnny let's do as I said before everyone went and voted and said they were worried about heating rather than about Homes as I say the debate over the last decade Actually, you saw this a bit down at lower party conference in Brighton that you stole elements of this which is a lot of the debate was actually on Climate optimists and climate campaigners saying let's get on with it and actually unions and workers saying hold on a second You're going to kill the steel industry Or if you're in Germany the coal industry or in Poland for that matter And then it was a work. It was a jobs concern that was the main thing. So the question from Stefan from the OECD, which I think we can bring up on the kind of I make the it work. Here you go So first of all, he says it's an interesting topic. That's encouraging Stefan. Thank you Here we go. He's curious about whether the panel also see a role for labour market policy skills and working practice to push for net zero Economy rather than just getting just dealing with the problems that happen to the industry Adele's given us part of the answer here, which is some people are going to work in the middle paying sectors that deliver this home Transition, but what's the broader labour market side of this? I mean, there's a lot of jobs, which the only future is is low carbon. So steel like you mentioned Across the Europe and across the world countries and companies are investing in low carbon steel Whereas in the UK we are not and this means that people employed in steel in the UK have got a time limiting factor on the employment unless we Get keep Make up pace with what's going on the rest of the world because this is going to be the way that steel is produced in the future It's more expensive now, but as the cost of making hydrogen comes down It'll undercut the cost of making steel in an in a massive way. So we need to as well we need to sort of make sure the the industries and the the source of employment are forward-looking enough so that Change of employment aren't sort of forced upon people as industries reach the end of their sort of lifestyle at the end of their Their lifespan also make sure that these are these are planned for and that you know training is offered for New roles for changes within the sector and changes outside of sectors as well. I think this point about this point about That the nature of your economic strategy for a country like a liberal market economy like the UK is actually Different in the an era of net zero than it is without one because the level of direction required So this that steel is a really good example where you've basically got to transition to Big a role for hydrogen in making your steel Countries us with steel industries are either going to decide to get on with that quickly Which is expensive Like and it requires some public subsidies that what we're seeing around the world Or they're going to say goodbye to their steel industry and that is not going to be delivered by the market in general If you want to keep your steel industry and that is that is a big change to how we've generally thought about Where where how comparative advantage is decided between Different bit different sectors. Is that fair? Well, I think there is the international competitiveness whether one country moves faster than another But you've got to begin by saying, you know a whole economy level or a closed economy level Where does this transition lose jobs and where does it gain jobs? And broadly speaking it doesn't lose jobs in steel, right? I mean, there are some things at the margin, but steel mills that you know run with hydrogen as the direct reduction agent are not fundamentally different in the employment level than steel mills that Use coking coal as the reduction agent. I mean, I believe they're somewhat less But we're not dealing with the transformational stuff, right? We are going to continue to produce steel big changes are going to happen in the global steel industry It's going to move much more to recycled steel as we get to a sort of stock of steel that we need But broadly speaking if you look at steel at cement Chemicals there are all things where we've got to change what we do and do it in a zero carbon fashion But there isn't a fundamental change in the number of people employed in that industry Where are the big numbers? And again, I would say the ccc has given us the big numbers The automotive industry In the future it will take time will employ less people than it does today Because electric engines are much much much simpler things to make and internal combustion engine is unbelievably complicated. I mean if we already had Electric vehicles and somebody came along for the first time and described an internal combustion engine And said what I'm going to do is put some high explosive into everybody's car and set off a set of controlled Emotions which is going to produce some motion, but also some heat So I'm going to have to cool it down and then I'm going to have it. It's a complete lunatic Now the automotive companies have done a tremendous job over a hundred years in making this Fundamentally complex thing work as best possible, but it's an immensely complicated supply chain with huge numbers of moving Electric engines are massively simpler and that means that by 25 to 5 2040 there are going to be less people employed in Automotive manufacturing than today and in repair This is the even bigger one electric engines don't break down. They don't break down to anything like the same extent so broadly speaking 100 200 000 people will probably have to move from Mending your internal combustion engine car when it breaks down to ending your house mending your house I mean this is where the big numbers are in switches and people There is a separate issue which is about comparative advantage and there's a point You've made to me torsion in the past is it isn't all about jobs It's also about value added and even where there are relatively small numbers of jobs in absolute numbers They're still important to the economic prosperity of a nation So we have got to think about you know Are we just going to buy our wind turbines from elsewhere or are we going to have those supply chains? Of you know high quality jobs producing those wind turbines or the the nacelles the The engineering that goes into the running of it here in the uk And so that is important even if in total number of terms. It's not where Employment it's not where the big battalions are either on the plus or the negative side Right there over with all of that just as an aside. I think this I think it's really important when people think about countries economic strategies That we basically countries go through phases of either just caring about their gva So like where's the value added coming from which is the long-term driver of their living standards Or they go through phases of just caring about Employment And if you don't have both you are stuffed isn't like polite way of putting it and you've got to have a strategy The mainstream's both they don't need to be the same thing They can come from different sources and one is not more important than the other But you have to have both otherwise you're basically either poor or you don't have enough jobs and both are suboptimal Well, last question in this section is from claire, which is specifically There's actually a number of questions in this space, but we'll use claire's one Which are basically to do with okay, but how are we going to get people the skills to make this transition happen? Like it's easy to say people are going to move from Fitting dealing with our mini explosion based cars to putting heat pumps into our homes But some people are asking what how do we actually make that happen? Some of the people lower down are also asking us Can't we just get the existing gas boiler people to do all the heat pumps? They're so common wise What do we need to do to make this actually happen in practice in the real world? I think we need a massive sort of training program and awareness raising program We are coming out with a report which has got some of these suggestions in it in a few weeks Which I don't want to pre-empt really But but certainly embedding this into into training and education much more. She's a bit of a no-brainer I think these 130,000 gas engineers could probably be retrained to be heating engineers That also seems like a little bit of a no-brainer. We aren't going to be having gas do need heat So I I gained you feel quite optimistic About the ability to do this. We have done these things in the past. We have had these transitions We have changed this we definitely have that is true Just I mean this is an example on so this goes on on this like liberal versus directive Nature has gone the day you're gone. Well, well in part The market will do it if it knows where we're heading, right? I mean if you were a small business With you know one heat pump You know engineer on your role and and then you're the self-employed Manager of it and you were thinking Should I go out and have an apprenticeship program? Should I plan to have five of them in my business in five years time? You might do that If there was a clear government strategy with a set of subsidies, etc Which made it reasonable to expect that there's going to be demand there But if you don't know that the demand is there, you know, you won't do it so part of this is just a very very clear plan on What forms of subsidies are we going to produce? When are we going to take the existing gas boilers out and then the market will pull through now It won't pull through entirely because there is then a role of government support for training and and you know Local making sure that you know the places are available for training, etc But I think step one Is to give the market the best opportunity to work by giving certainty because if you were You know an SME potentially in this business at the moment You wouldn't go out and preemptively hire some new people because There is no there is no plan. There is no certainty that the demand will be there So creating the certainty of demand. I think is the most important step What you want to see at your heart although you keep referencing marks You are basically a massive liberal still a day. You see and the are we Just sound a bit less more directive on it. So government has obviously tried government has obviously tried Lots of ways I mean, you know government's banging on about how they were definitely going to support homes to become More energy efficient is like one of the big stories of that and basically every policy we've tried in this area Has been a turkey. So even in the last 18 months the government has announced a big retrofit program It's and the reason it's failed in there's other reasons Which is the public doesn't want to take on loans basically to retrofit their houses one reason So that's like that's like a psychology problem But you've also got a delivery problem, which is We keep trying to push money And a policy into an industry that has basically is under regulated Um is poor quality and basically people are then going around being ripped off by people who don't turn up to put No, no, you may well need you need some regulation. You need some regulation. You need to define standards You need to help make sure that trust people know where they can go and that is a certified heat pump engineer who's going to do it in a good job So that doesn't quite make one a marxist those torsion. I think I didn't say it's a marxist I was a little bit less liberal than you really would Um, I think the greenhouse grant failed because it was a bad policy rather than a lack of demand There was there was a huge uptake for a huge interest in it and the way the policy was designed Not only had implications last year when there was a mess and it's embarrassing for the government but also For communicating to the public that millions of homes need upgrading millions of heat pumps need installing If the only interaction with that process so far is with a fairly shoddy scheme That's not going to help with future iterations. That's all a bit impressive Installation which is slightly different, I think from easier from heat pumps And it's a very local issue very much and there is there is an obligation and electricity suppliers To to do insulation schemes and energy efficiency schemes And I think that's actually working quite well because they're used to people are used to having someone coming in reading their meter They're used to that sort of interaction. We also know where these people live We know who they are so I think that that's been quite positive. I mean there are other levers of the Areas of the housing stock or the building stock which naturally give themselves to Government initiative, you know regulation in the social housing stock or support for that Or you know insulating the office buildings of hospitals and schools etc And that now it may cost money It may mean that you've got to move away from the lowest cost expenditure on those buildings But that is where you can use the power of public procurement To help create some of these skills and capabilities which are then available for the private Owned owner occupation stock. I think that's what we need to get heat pumps off the ground very much But I think also for a homeowner There has to be value in having a green home and that's sort of what I was alluding to of my somewhat Duty comments, but there's certainly role for green mortgages and we are seeing that come We really are and I think in the next year that's going to be quite We're going to see a real escalation in that. Okay. Well, let's because the green mortgages and others Are basically attempts to answer the cost both the timing and the distribution of the cost problem And they help on the timing and they're less helpful of the distribution basically Well, but on the district, I mean if you think about I sometimes think about it, you know, there are There's a sort of income elite who are also a wealth elite who who have You know, if it's 15,000 quid, they've probably got 15,000 quid in the bag and they should go with it earning Zero their cost of capital is zero. They should get on with it And they should be forced to get on with it There are other people at the other end who actually need, you know, support To to do it, you know, distributional support from fiscal transfers There is probably a non-tremual slice in the middle who if they have an existing mortgage Which is now at 60% loan to current value and if their mortgage provider says look here is a dead simple way Of adding 10 to 15 percent to your mortgage And maybe you put in a bit of a fiscal sweetener to make sure that that incremental interest rate is as low as possible So here's another 15,000 quid it's going to cost you 1 to borrow this You know, if we made that Very very smooth that I think might be relevant for the sort of intermediate between, you know The upper income upper wealth groups who have the money to just get on with it immediately and The bottom third of or whatever it is of the population who will need support to do it That is so I think that so that is exactly the policy discussion that basically we actually need to have And if I'm honest, I think I mean, maybe I'm too pessimistic on this but it's not actually clear to me the government Is ready to have that conversation because it does require telling people very clearly the boiler's coming out basically and that is difficult and it requires Transparency because you wouldn't if the cost wasn't 10k then you wouldn't need these complicated policy mechanisms to deal with it So as soon as you have the mechanism, you've got to tell people the cost is actually Quite high and that is where the rubber hits the road on the button It would just be easier to wait for but I think most of you on the panel are more optimistic than me Johnny, what's your so in your presentation you're highlighting two The campaigners in this area all point to the back end of the period of your child showing look how cheap everything is by 2050 The the climate denialists who have now become have now like transitioned out denial and are now just in the like Tell everyone that it's expensive and like just make a load of mess and make it hope it goes away You kind of thing is the nurse the modern denialism. Those are the two kind of not particularly helpful positions that are taken You've you're highlighting the slightly more realistic position, which is It's doable, but there are big timing problems and there's big distributional problems So a day has given us his example of how you might deal with that in some of the heat pump area Sorry in the home energy area more broadly actually and retrofitting, but they But why isn't it happening if it's so easy a day I can fit it into one sentence Why is none of that happening? And is that what tell us a bit about what the government might be announcing before cop? So I guess the main reason it's not happening is because it costs money The government is going to have to pay for some of this and cash is tight at the moment And I guess there's other other priorities at the moment But you know before cop did we know we're expecting the heat and building strategy which needs to deliver a route to Decarbonized housing stock if it doesn't do that is not good enough And that was going to have to include both a focus on able to pay households people with 15 grand sat in the bank But also those who are going to need support to do it and also crucially landlords the private rented sector is some of the Worst houses in the country some of the weakest houses some of the Many that fall decent of fall fall of the warmth of these decent home standards and the Both the sticks and the carrots that landlords face at the moment to make their homes better aren't sufficient They've been they've been lobbied down. They're largely ignored And this is a huge amount of the building stock could be upgraded Which could be removed from the gas network Which could be nicer to live in cheaper to run and again Often populated by people at the bottom of the income spectrum Here's this is a question for you for a day of Rebecca. So Um, so the irony is we basically need lots of public investment to deliver The transition for low-income households basically for these for these heating systems Yeah, that's the big picture where policy needs to get to eventually the irony is The government is actually heading has put big increases in public investment into the public finance numbers We will be at the highest level of sustained investment since the 70s when we nationalized everything was nationalized Yeah, so we were spending a lot of investment running those industries now We're gonna have a lot of it The irony is that actually because people don't want to talk about this problem yet The money is not being spent on heating systems if you're if you're Boris Johnson And this is not it's true of both main parties. So Boris Johnson He's putting in lots of public investment higher since the 70s but wants to spend it on science And he wants to spend it on leveling up center of towns and he wants to spend it on transport and a bit of housing Okay, there's lots of it happening It is not being earmarked for dealing with this challenge yet and the lay party this week has called for 28 billion pounds a year It's not absolutely clear how much of that is on top of what the government's doing and versus Including what the government's doing, but it's a lot of money Okay, there's probably you know per capita and for the size of the economy bigger than what's happening in the states Under biden's plans if they ever actually passed the senate There's a lot of money, but if you hear them talking about what that money is to be used for It's very much in the industrial space It's in the science. It's in the industrial space down the list You get some the homes get mentioned, but it's not the thing So are we sure that politics wants to focus on the like green jobs shiny bits of this transition and not on the actually hard bit Well, I mean my point is that actually in terms of levelling up in green jobs This ought to be one of the most I know, but why are they not agreeing with the answer is I I find it surprising. I mean for the last couple of budgets. I have been expecting Something big on the housing stock because actually I think you know, there's an alignment here of what we need to do for the climate And the levelling up and the jobs agenda. I think it's one of the clearest bits of the levelling up and jobs agenda I mean, I'm passionately in favor of spending more money on the science base However hard you try The science expenditure will be focused on particular existing clusters of excellence And if you think that's not going to occur you're deluding yourself because you will get the highest bang for the buck On science by reinforcing where you have excellence already So if you think you're going to spread jobs across the country by spending money on the science budget I do think that's a delusion This is the housing stock is where there's a real opportunity to contribute to the levelling up agenda. So I don't know Torsten why there's a tendency It's not as shiny, right? I mean, you know, it's not shiny. You've got to tell people there's a big bill There's a big bill 20 million Individual 10,000 pound projects. It's not a great big shiny new factory or bridge or science lab But there's a sort of tendency to to go for grand projet which are attractive I think in the investment, though, the other thing I would say is it's very important to realize where we need the public balance sheet And where we probably don't so there are huge investments big investments to make that bigger electricity System, you know, we've got to take offshore wind in the North Sea from what have we got now probably about 15 gigawatts running I think up to 40 by 2030 maybe 100 By by 2050 But if you get the market structure, right That will be funded by private investors because you get a market structure, right? Which through the use of contracts for difference creates a certainty of future revenues flow You have created a classic infrastructure finance Low risk low return and the world is full of money private money Which wants a yield uplift against rock bottom Treasury a bond rates guilt rates That money's there. You don't need to deploy I don't think on a large scale the public balance sheet in that area where you need the public balance sheet I think is to deal or just the public transfer because it's an issue of whether you do keep this as capital investment Or is it just you know, it's capital investment at the micro level in treasury terms It might be just straight the current investment transfer This is where you need Fiscal power to make progress and I think we've just got to keep through the resolution foundation and everybody else Making that argument again and again that this is the big missing bit of uk climate policy so far I want to get some questions from the audience and so let's bring up one here Which is but record why you take this because you read you mentioned this slightly which is a lot of what we're discussing here in terms of Providing this fiscal support happens at a national level realistically Lots of the rest of this needs doing at a local level. Yeah, I'm particularly housing is very much a local level I mean that just comes back to our the social housing comment that we've made before with local authorities really taking responsibility We're seeing lots of individual council set a climate emergency I'm still not entirely sure what would be mean by a climate emergency or what that drives But you know that's something we're also seeing the recruitment of of sort of climate change offices In different in in different cases. What are they doing? Not entirely clear Any of you that are out there that are climate change officers email us. We want to know what you're doing day to day Not in a stalking kind of way, but in a informing us kind of way, but I have seen quite a lot of these These doors being closed so that great that gives me some confidence I'm just going to go back a little bit to how can we get the government to look at heat actually Yep, and now I possibly have a slightly misplaced confidence in the role of the Climate change committee and your progress reports, but they do focus the government and you have to debate those in parliament And if you look back to where we were with transport that was quite a few a few years ago That was just a line and it was actually going up on the grass And it was sort of how we ever going to get that to turn around and that's actually happened relatively quickly So again, this is the optimistically speaking I think the time will come when the focus will suddenly be on that awful line on those charts for housing and the need to act Okay, that's good a good bit optimism now. I want we focused here on the costs So let's just perk ourselves up a bit and focus on the benefits for a second Which is there are significant there's like saving the planet benefit, which has quite broad It's quite a large quite broad benefit. So we're all in focus of that I'm assuming They are which is why we're taking the whole net zero thing as a given as an objective But there are other benefits in terms of you know cleaner air Um, there's some there's actually some financial benefits And I think Johnny one of the things we're trying to add with this discussion paper today is that It's not just the distribution of the costs that matters to how this whole thing plays out over the next 30 years There's actually big differences in the distribution of the the benefits to yeah, huge distribution To go to go on cars if you live in a you know If you live on a main road at the moment, you're going to see a huge improvement in your local air quality as cars Ask transport decarbonise and this has this has effects on on your way of life on house prices On you know on health of yourself and of your family And again warmer homes as we decarbonise housing, you know, there's the state of britain's housing stock is Is close to being an embarrassment compared to those those in europe and Speak to yourself my house is perfectly fine Um mine isn't But uh Yeah, improving that means that we're going to not only like spend less money on on gas which you know Is expensive is imported and we're also going to have you know less damp less mold better living conditions It's better for sleeping better for learning better for working from home. It's a vast improvement in in the quality of life Which is beyond just lower lower costs of driving around But i don't sound like a kind of you know The money the accountant here, but what about the money? Like so we mentioned We met like if you look if you look at that save if you look at the money That's things that's saving you money in the long term It basically is just cars. It's all cars the rest of it. It's like tiny Yeah, but this this this assume this is taking the ccc costs forecast of the given which you know historically Underestimated how much energy gets cheaper and if um if we move to electrified heating more widespread That is going to be that's only going to get cheaper and it's only going to identify the second half of the century if we're successful Household budgets will be spending both less on road transport and less on heating than they were Wood under a business as usual. I think you know it will take longer to get there on the residential heating side But I think that's where we will be eventually But there's a cost of the investment required to get there and also we'll be dead today But that's our personal that's just our personal problem rather than the Anyway, right, let's uh, you won't be dead The way things are going right the um, okay, so we've covered off Timing issue we've covered off the distribution on the distribution. We need to focus on the cost But also where the benefits lie. I want to briefly touch on some of the the macroeconomics of this Okay, so there's two issues coming through all the questions one Which is from uh social x of the mpc who reasonably asks us Reasoning asks us and this is slightly relates to let's so how much of what is going on Okay, is that this whole net zero transition is us dressing up basically a supply shock to the economy when we want to make happen Uh, and that's going to have implications for the overall level of inflation in the years ahead The um, and would it be better to have a higher inflation target? There by the way, there's going to be lots of resolution foundation reports on a higher inflation target next year Although there's a mainly not being driven by the net zero transition They've been driven by the fact that we haven't got a macro policy framework anymore But the um, but would that higher inflation target which is this is basically can we lubricate the economy with the higher level of inflation? So that we don't end up with relative price changes causing us big problems as we look to make this transition So what do you think are there you're the kind of the the macro-ish guy on the panel? Well, uh, that's a new question for me. So thank you sushil for life is all about new questions It's um, I start with the assumption. No Um, uh, this is where I get a bit conventional I think there's something to be said for once you've got an inflation target having the certainty of broadly sticking to it Um, very important that inflation targets are not zero, but are positive precisely in order to Lubricate the movements in relative prices that all economies need to Adjust Uh, I think I'd have to think about this more. I mean do obviously we we will have You know some Significant shifts in in relative prices though. You always have to remember There are major transitions here, but there is about 90 or 95 percent of the economy which is fundamentally not affected here, right? I mean broadly speaking if you run a law firm or an entertainment company or you know a local pub or you know, you know all sorts of different things You've got to change a boiler. That's it. You know what changes for you is a relatively small part of the business that you're running So it's important what you mustn't overstate it and you know at one level this is a transition, but I think it's a less big transition than what post-war europe Went through in the shift from agriculture to industry. I mean, that's a high bar But it's also the numbers that we're talking about here, right of how many jobs have to shift from a to b They're less than we took out of the coal industry In the 50s 60s 70s 80s. So, you know economies are always going through structural change We need to plan this. So I think my answer is no for now But um, I'll think about it further and you may be able to convince me Okay, so should I think We're doing that research at the moment I'm my starting point is actually is that you're probably right social But maybe less for the net zero reason and yes for lots of other reasons Although I should say I think it's really hard and ideally we'd like the yanks to get on with it first because it would make it Much easier the rest of us to do step one I mean what I'd have said a year ago. It's all a bit more complicated now with this temporary shock that we got what I've said a year ago is Central banks should make sure that we hit the inflation target that we've got And a year that's the old problem Well a year ago we were standing at the end of five years where The totality of central bank actions was not getting us up to the two percent target Now we are in this particular phase. My own belief is I'm still sticking to it With slightly less confidence than I was two months ago that this is going to be a temporary surge And by two years time The fundamental problem for central banks will still be how do we get the inflation rate up to the two percent target rather than down? But we'll see we're clearly in an We're clearly in a set of supply shocks Much bigger as we came out of covet than I think almost any economist managed to predict. I mean, I think this is This is a real Humility creator for the economist profession I know very few people who knew that we were going to hit hit these multiple forms of Labor and capacity is in the wrong place when you close down an economy and start it again It's a bigger effect than some of us. I'd say some of it. I think that is true on the scale Some of us told the government back in july that I should expect a much bumpy ride than they were planning for And and it has arrived for the You know, but you know, but yes, I think humility in general about certainty on any of this stuff Is definitely a good idea because the world is a very uncertain place Right. We're making another poll live Which is about um, so johnny was talking earlier about what the chancellor needs to do Ahead of the spending review. So remember everyone the spending reviews in the last week of october Any of you that kids will remember this because it's half term. Why would the treasury do that? No one knows They're anyway, but you need to announce lots of net zero policies ahead of that Are they going to deliver this because are they are they likely are you confident? They're going to deliver getting us on track for the net zero targets in a second Johnny's going to tell us what we are currently and I'll not on track for because there's a million targets Just to keep you all confused them or are you not? I'd say the reason for optimism is Cops happening like 10 days later and no one wants to be embarrassed about being off track The reasons for pessimism are the politics of this are quite complicated The government can probably Say some warm words get through cop and then there's no pressure till the 2023-24 election So we'll see you in the middle of the decade before we get going So let's have your votes on that 30 of you have already voted. So let's get the rest of them in Johnny remind us what targets we are and we are not on track for So we're on target for our carbon budget, which is we're in the middle of now our third carbon budget After that we are not on track for anything for anything. Okay. That was a least simple, Johnny Right. Okay. So we should get on track The while you're all voting on that then I want to just touch on this big picture because a lot of what we're talking here on Timing of costs and distribution of costs sits underneath this big macroeconomics issue, which is What does the net zero transition due to your macroeconomy and lots of the rouse from the kind of Denialists and the kind of campaigners is it's either going to like drive much faster growth or the campaigners say GDP is going to surge because of the green transition or it's going to kill growth If you're a denialist and the GDP is going to fall because it's a supply shock to the economy The Actually our view is both of those are overdone and the big Issue is we need investment to go up and we need consumption to come down and the consumption can come down today If we pay for this stuff up front or it can come down tomorrow if we pay for it through borrowing But that is basically your two choices. Is that a there's that a fair big? Yeah, I mean, so What is the case for this being positive? I mean if we were in America in 1932 and You know Roosevelt got elected Huge investments around a climate change agenda would be positive for growth because you had huge underemployed capacity You had, you know x anti attempted savings higher than x anti attempted investment The need to investment would close that gap You know, I mean what actually pulled America out of that eventually was spending ahead of the war And the war itself, you know a climate war could be the same So the question is are we remotely in that environment? Do we have a whole load of spare capacity? I mean broadly speaking Keynesian multipliers Produce a higher level of growth than they otherwise would be if you start with large aggregate spare capacity There was an argument to which I have, you know some sympathy Which has been put forward by people like larry summons the sort of secular stagnation hypothesis That we live in a world in which there are some reasons inequality There are forms of current account imbalances where there is a sort of structural imbalance of x anti attempted savings And a desired private investment That that is why we have real interest rates at very very low equilibrium levels and that in that environment What's not to like about the need to invest? I would attach some Importance to that. I think there is some of that But I don't think we we're not remotely like a 32 type situation a great depression So I think there's at least some possibility that the need to invest on this might be mildly Beneficial for aggregate growth, but on the whole I think this is about a need in Some countries for a switch in the composition of growth From consumption to investment Matched by the fact that in the biggest and most important economy in the world Actually, what we need is a switch precisely the other way One of the biggest problems we have in climate change Is china over investment in physical construction Which is driving enormous use of concrete and cement and steel To produce investment assets which will end up being completely wasted In second and third tier towns, which are going to be in excess of china's needs as its population begins to decline So at the global level we need more investment in some parts of the world China extra China and we've argued this in china if china just stopped spending 2% of GDP of the 25 percent that is expending at the moment on physical construction I mean it should cut that more But it would just have to take 10% of it quite a lot of which is wasted It could absolutely afford the whole of the investment needed to drive decarbonization far faster So net net torsion, you know, I certainly don't think this is negative for economic growth It might be mildly positive But I think the biggest issues are the issues we've actually been talking about Which is how what how does government need to lubricate both the Sectoral reallocations and the distributional Challenges and that that's where the big story is rather than a big macro story. That's my own belief Great the another sort of relief that we haven't wasted the last hour and a quarter So another of the viewers time now let's bring up the results of the poll and then we're going to wrap up The event so what was your level of confidence? Oh, look you're a bunch of See all I'm saying is you three are all pretty confident. I'm afraid I'm with the punters On being less confident the politics of this points to let's pretend these heat pumps don't cost 10 000 pounds And I'll see you in 2024, but you know, I'll be wrong and everything else in the last decades Hopefully I'm wrong on that again. Look, thank you everyone for joining us this morning And thank you to the panel for their Thoughts as a leaving thought I'm going to leave you one of all with one of the questions from One of the audience, which is why don't you all go and retrain his heat pump engineers off you go everyone Have a lovely day and see you all at a new event soon