So the Treasury (Report, October 20) thinks that borrowing to pay for the costs of moving to net zero “would be unfair to future generations and would not be fiscally sustainable”.
Balderdash.
Future generations will start life with higher incomes, which have in part been driven by carbon emissions. They should be asked to contribute towards the overall costs of planetary repair — think of it as running costs.
These future generations are not yet born and cannot make decisions but they will be the ones to benefit from net zero over their lifetimes. So would they want more debt but a sustainable planet or a planet wrecked but a lower debt burden?
Climate change is an investment and there is no reason why the state cannot borrow for that.
And on the question of fiscal sustainability, it always depends on reforming the tax system to balance efficiency losses versus equity while raising revenues to match overall public expenditures.
Being able to issue debt instruments not only offers a degree of freedom in this exercise but also allows changes in taxes to be smoothed. We should neither use the net zero objective as an excuse to depart from other objectives of public expenditure nor as an excuse to introduce other taxes in an abrupt manner.
Jagjit S Chadha
Director, National Institute of Economic and Social Research, London SW1, UK
Letter: Think of investment in net zero as the planet’s running costs
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