Financing Transition Written by Mike Robinson, RSGS Chief Executive With recent announcements by Scottish Government (net zero carbon society by 2045) and the various climate emergency statements from most local authorities (especially Glasgow which has set a carbon neutral date of 2030) the focus must now fall naturally on how to deliver against these very worthy commitments. And importantly how to fund them. Of course, some measures may well save money or be at worst cost neutral. However, if we are serious about bringing about this transition, it will require money, both to deliver change and also to accelerate adoption. So how much is needed? And where might it come from? Both the ground-breaking Stern Review (The Economics of Climate Change) of 2006 and the more recent 2019 UKCCC Net Zero Report stated that to transform into zero carbon societies would require around 2% of GDP, if we take early action. If not, we risked spending more than 20% of GDP on mitigation and adaptation in future. In Scotland, that 2% GDP equates to approximately £3.5bn/year. Therefore, if we are serious about this transition and we heed the advice of the Stern Review and the UKCCC Report, we need to allocate this level of funding (as a minimum) to begin this transformation. Recently the Scottish Government set out its plans for the Scottish National Investment Bank which will provide £200m/year of investment with a strong emphasis on climate action. Not all of the £3.5bn necessarily needs to be found as new money. Some of it could possibly be re-profiled within existing spending priorities, especially from the national public expenditure budget, which is currently of the order of £11bn/year. However, in a recent Climate Emergency Summit we ran in Perth, a clear finding was the need to reconfigure taxes and subsidies to properly reflect the environmental and climate damage of current activities. There are a range of existing ‘perverse’ subsidies, where high carbon intensive activities (like flying) are barely taxed compared to much lower carbon activities. In total, globally the net subsidies received by fossil fuels alone (in various guises) exceeded $544bn in 2012, according to the International Energy Agency, greatly exceeding the subsidies applied to renewables of only $101bn in the same year. But what are the taxes and behaviours we should be moving away from, and which are those that require more subsidy to progress and to accelerate take-up? And how much could be generated by reconfiguring existing taxes and subsidies? Do we need new taxes to generate the financial momentum to help bring about this necessary change? Should we see a ‘voluntary’ extra 2p on income tax or council tax, for those minded to act? Or what about a renewables wealth fund, mirroring the Norwegian oil wealth fund which Norway built up so effectively over the past 30 years? Do we need a regular flier tax? Or wide-scale carbon pricing? After all, until we start to reflect the cost of carbon dioxide and other greenhouse gas emissions, they remain invisible on the balance sheet and can easily be ignored. Since we need to find 2% of GDP in some way, maybe every organisation should be challenged to direct at least 2% of spend to climate positive activity – after all, it isn’t just the Government’s job to make this all happen. One way or another, we all need to help deliver the net zero targets and we really need to make the bulk of the headway in the next decade. Financing this transition is one of the first things we need to tackle, because we risk scrabbling around as we try to make these changes, and are in danger of just ploughing the same old high carbon furrows, and being too late to really effect any real difference. And if we can’t find 2% GDP now, what chance do we have of finding 20%+ GDP in 20 years’ time?