The Office for Budget Responsibility (OBR) has warned that the cost of achieving net zero by 2050 will total £803billion – placing significant strain on the public finances over the coming decades.
The stark figure is revealed in the OBR’s latest Fiscal Risks and Sustainability Report, which outlines the long-term financial implications of both climate mitigation and climate-related damage.
The £803billion estimate includes £30 billion a year on average until 2050-51, two-thirds of which stems from lost government revenues – especially fuel duty – as drivers switch to electric vehicles. The remainder reflects public investment in areas such as decarbonising transport, buildings and industrial processes.
However, the report does not provide a detailed analysis or forward-looking fiscal projections specific to ongoing North Sea oil and gas production, revenues, or employment. Its focus remains primarily on climate-related fiscal risks, net zero transition costs, and broader energy sector impacts.
The OBR’s £803billion estimate spans the period from 2024 to 2050 and is split roughly two-to-one between lost revenues and increased public spending.
Around two-thirds of the total – some £534billion – reflects declining tax receipts as fossil fuel consumption falls, with fuel duty alone expected to drop from £24.4billion in 2024-25 to near zero by mid-century.
The remaining third – approximately £269billion – accounts for direct public investment in the transition, with the largest costs tied to decarbonising homes and buildings.
Other notable spending areas include surface transport, carbon removals and land-use changes, as well as support for clean energy infrastructure. Residential buildings alone are projected to make up 14% of the total fiscal cost.
The figures assume the state will fund around 36% of the UK’s overall investment in reaching net zero, in line with assumptions from the Climate Change Committee. That equates to annual public investment of £9.9billion – or 0.3% of GDP – for the next 26 years
Despite the scale of the challenge, the OBR says the Government’s current net zero investment plans are broadly in line with their central scenario assumptions.
However, it stresses that fiscal risks remain elevated – especially if revenue lost from fossil fuel use is not replaced, or if mitigation costs rise due to reliance on unproven technologies or slower private sector delivery.