Mr. Sebastian Barnes:

The Deputy raised many different issues there. The core of the issue is that the climate transition is, even without the war in Ukraine, a very complicated and challenging undertaking. As we have emphasised, it requires a huge re-engineering of our society in many ways. It is not just about changing the energy mix. It is a very deep change to the way the economy functions and the way society functions. On top of that, there is the war in Ukraine. In some ways, the war has had some of the same effects that meeting emissions targets would have had, in terms of having to change and move away from fossil fuels and things, but it is happening far more quickly and in a far more unstructured way than we had planned. It underlines the fact that we ultimately need to take a steady approach towards tackling climate change but in the short run there may be some more urgent imperatives, which means some slightly different actions will have to be taken than would otherwise have been the case.

What the Deputy said also highlights some of the issues we will face with climate transition. One issue is higher energy prices, which are today caused by Ukraine but may ultimately be caused by the phasing out of fossil fuels. How we manage the social aspects of that is important. Relatively wealthy households are probably in a better position to manage that transition than lower-income households, partly because they spend less of their money on food and energy but also because they have more savings. They are in a much better position to deal with most problems. We did not mention this in our earlier answer but the Government needs to start thinking about what the social implications of the climate transition will be in the long term and how it is going to manage that. That is one of the big fiscal costs. For example, the evaluation that was done in the Netherlands of the economic impact of their climate change package put a lot of emphasis on the fact the Government was going to have to compensate some groups in society or provide more help for them to transition. For someone who is relatively wealthy, it may be not so difficult to manage investing in a heat pump and insulation but for someone on a much lower income, undertaking that kind of investment, which will pay back over quite a long period, is going to be much more challenging financially. The Government has to think about the social implications of that. Good planning, both on the climate side and with regard to the economic and social implications, will help make the transition as smooth and fair as it can be.