Earlier this month, Rishi Sunak, Chancellor of the Exchequer, announced the Budget under the sizeable shadows of the pandemic and the climate emergency. Whilst the economic response to the pandemic, quite rightly, featured front-and-centre, mention of the government’s environmental strategy was notably scant. Despite climate change presenting the greatest challenge of the coming decades, Sunak’s 50-minute long speech contained just three minutes on the environment. Let us examine the content of these three minutes.

There are three things to consider: what was announced, what was missing, and what is needed if we are to keep the global temperature rise to less than 2°C or the more preferable 1.5°C target.

There were four announcements of relevance, all focused on the “green industrial revolution.” These were a new infrastructure bank, investments in offshore wind, the Sovereign Green Bond, and a new focus on carbon offsetting markets.

“The absence of transport and housing from the Budget’s two minutes on net-zero is gaping”

Examining each in turn, the infrastructure bank is to be the first of its kind in the UK. It is intended to fund green industry across the country, with an initial financial capacity of £22 billion. Its core objectives are to tackle climate change through meeting the UK’s net-zero emissions targets and to support economic growth via interventions that stand to make the largest impacts.

Offshore wind, as Sunak rightly stated, is an area in which the UK already has a “global competitive advantage”. He announced new investment in ports in Teesside and Humberside to support the next generation of offshore wind projects.

Next, the somewhat high-sounding Sovereign Green Bond is a scheme in which retail investors interested in the environment will be able to take out savings bonds, which will generate funds for the Government to invest in green industries, such as renewables. Intended to stimulate a future economy with green jobs, technologies, and growth, this will help the UK keep on top of its net-zero promises and form part of the “levelling up” agenda.

“The less the Treasury is prepared to invest now, the more will need to be invested in the future”

The final announcement was on carbon offsetting markets and this came in two parts. First, Dame Clara Furse, an ex-chief executive of the London Stock Exchange, has been placed in charge of a new group tasked with positioning the City of London at the heart of the growing global carbon offsetting market. This comes in the context of Brexit and the pressing need for the UK to establish itself as a global financial leader. Second was an adjustment to the remit for the Bank of England’s interest-rate setting policy committee: it should “reflect the importance of environmental sustainability” and be “consistent with the transition to a net-zero economy.” The details are woolly. Beyond obliging the Bank to support the transition, there are scant specifics on how interest rates are supposed to be set to reflect this.

How do these announcements fare in the context of environmental forecasts and the economic leadership required? Collectively, this Budget is likely to have a large impact on shifting the economy towards net-zero and channeling investments towards green technologies. This is welcome, but, some would argue, the bare minimum for a Budget delivered in the context of an imminent COP26 summit and impending climate disaster.

Where were the promises of investment in electric vehicles or green homes? These are two of the largest areas the UK will need to tackle if it is to reach its legally binding carbon-emission targets. Reductions so far have been achieved through relatively easy avenues: moving away from dependence on coal, something set in motion by Thatcher in the 1980s for different motives, and greening the energy grid. The hardest parts remain: transport and buildings, responsible for 28% and 17% of UK emissions in 2018 respectively.

These two sectors have been pinpointed by the Climate Change Committee (CCC) as areas in which we must achieve significant emissions reductions if we are to reach net zero. Yet, emissions in these areas have remained stubbornly high. The current savings through shifts towards electric vehicles are largely being cancelled out by more people driving SUVs, and successive versions of green homes schemes have been scrapped before coming into force. The Warm Front scheme, intended to improve home insulation, was scrapped in 2013, followed by the axing of the zero-carbon homes policy in 2015, after industry complaints that it would make construction too expensive. This means no new homes have been subject to the environmental standards they should have been, and they will all need to be retrofitted.

The UK’s housing stock is old and cold. 80% of current stock is expected to still be in use in 2050, and 33% of private-sector housing in the north of England was built before 1919. The Department for Business, Energy and Industrial Strategy estimates retrofitting costs of £25,000 to £58,000 per home, with a mean cost of £42,000 for an average semi-detached house. Scale this up and the national total is gulp-inducing. The sooner the Government brings in their promised Future Homes Standard, predicted to reduce emissions by 75-80%, the better. The later this happens, the greater that retrofitting bill grows.

The absence of transport and housing from the Budget’s two minutes on net-zero is gaping. It’s a hole that will have to be filled eventually, and the less the Treasury is prepared to invest now, the more will need to be invested in the future. The pandemic surely provides the most unenviable Budget backdrop in decades, but this record is just waiting to be smashed by the repeated sweeping under the carpet of the growing bill for tackling climate change.