We use dynamic general equilibrium (DGE) models to understand the effects on productivity of the move to Net Zero in the United Kingdom. Specifically, we first look at the effects of the policies put in place to achieve a reduction in greenhouse gas emissions on productivity. We distinguish between the effects in the short run – where use of fossil fuel is a complement to other factors of production – and the medium run – where fossil fuels can be substituted for by renewable energy and other factors of production. We then consider the long run effects of moving to Net Zero on the efficiency of production, making allowance for the potential productivity-enhancing effects of investment in green technology.
Lead Researcher Stephen Millard (NIESR)
Collaborators Karen Mayhew (Bank of England), Sandra Batten (Bank of England)
