Statement | Karen Turner, Paulina Gonzalez-Martinez, David Drabble, Eve Lucas

Dec 2025

The new NESO Future Energy Scenario analysis has been launched, covering potential pathways to net zero for the UK. This work is important because it provides clear, system-wide evidence that a coordinated net-zero transition is necessary for the economy as well as the environment.  NESO shifts the conversation from whether the UK can afford net zero to whether it can afford not to pursue it by showing that a holistic transition delivers savings of around £36 billion per year relative to slower action. Avoiding long-term fuel costs, exposure to global energy volatility, and climate damages more than compensates for higher upfront investment, reinforcing the economic imperative for decisive policy action.

While NESO’s modelling establishes the total cost advantage of net-zero pathways over time, it does not directly address the crucial question of who bears the costs of investing and delivering net-zero pathways and how these costs – and the net benefits ultimately emerging – are distributed now and in the future. 

Research by the Centre for Energy Policy argues that understanding ‘who pays’ and how transition costs flow through the economy must come before judging outcomes. Without clarity on how, when and by whom net zero action will be paid for, whether through taxation, energy or other consumer prices, and/or taxation, and/or the direct and impacts of changes in economic activity if an ‘producer pays’ approach is adopted, even the most sophisticated system modelling cannot reliably inform policy trade-offs. So, we must not put the ‘cart’ before the ‘horse’ in judging the economic and societal outcomes now and in the future. 

By combining NESO’s whole-system insight with CEP’s detailed approach on ‘who pays’ for net zero interventions, we can avoid financing scenarios that transfer the cost burden for net zero onto those least able to pay, allowing policymakers to gain a comprehensive basis for designing equitable transition pathways. 

While we concur with the NESO publication on the urgency of the transition, our research shows that the wider economic and fairness impacts of net-zero decisions crucially depend on ‘who pays, how and when.’ For example, recent CEP research shows that the November 2025 Budget took an important step in making the outcomes less regressive by transferring some of the burden out of consumer electricity bills. Nonetheless, there is a long way to go, and it is crucial that we ‘put the horse before the cart’ and ensure we first understand the cost-sharing choices before coming to judgement on the overall effects of different transition pathways.

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