Distribution of climate action co-benefits

1. Preamble

The Climate Change Committee (CCC) is an independent, statutory body established under the Climate Change Act 2008. Our purpose is to advise the UK and devolved governments on emissions targets and to report to Parliament on progress made in reducing greenhouse gas emissions and preparing for and adapting to the impacts of climate change.

2. Background

The CCC's Sixth Carbon Budget scenarios imply growing and enduring savings in operating costs, alongside a major investment programme. To 2030, the largest cost increases affecting households are for decarbonising buildings. Large savings are available for households in other areas, most notably in transport from the shift to electric cars. However, even in areas where costs are likely to fall relative to today, the distribution of costs and savings could create both 'winners' and 'losers' during the transition.

Achieving Net Zero in the UK will also result in significant benefits to human health from better air quality, less noise, more active travel and a shift to healthier diets. Changes to land use and farming practices that cut emissions can also improve air quality and water quality and benefit biodiversity, resilience to climate change and bring recreational benefits. Benefits could partially or fully offset costs. Adapting to a changing climate could also result in co-benefits beyond direct policy impacts.

As set out in the CCC's Sixth Carbon Budget advice, a key challenge on the path to Net Zero is how to spread the costs and benefits of the transition across the economy: for households, businesses and the Exchequer. The CCC commissioned Frontier Economics in early 2022 to develop a set of household archetypes (using Ofgem's archetypes as a starting point) and a distributional impacts model, to explore the costs and savings to households from decarbonising homes and transport. The archetypes developed are shown in Table 1.

This analysis will only tell part of the story, as it does not yet incorporate the co-benefits enjoyed by households alongside any direct financial costs or savings. We are specifically interested in exploring the health co-benefits of our Sixth Carbon Budget scenarios from which the 15 archetypes developed by Frontier could benefit.

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