UK Faces Uphill Battle to Incentivize Massive Private Sector Investment Needed for Net Zero Transition
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To reach net zero emissions, the UK and other countries will need massive private sector investment, far beyond what governments can provide.
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The US's Inflation Reduction Act subsidies for clean energy could end up costing $3 trillion if emissions targets are met. The EU's green transition fund is smaller at $600 billion. The UK's investments so far are comparatively tiny.
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Governments are looking at innovative financing like green bonds and infrastructure credits, where private companies get credits for investing in green projects, but these can be expensive or open to abuse.
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The UK has a history of selling off state assets to raise funds, but there's little left to sell. Politicians may turn to selling licenses or long-term contracts.
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Reaching net zero requires huge effort and costs that must be expended now or later. The private sector will need incentives to provide the bulk of the necessary investment.