Balancing the economic and environmental impacts of net zero: an environmentally extended input-output approach

Abstract The UK Government is committed to a transition to a low-carbon economy and achieving net zero. However, achieving net zero requires significant restructuring of the UK economy, the implications of which have complex interlinked impacts on both the environment and regional economies. This paper uses an environmentally extended input-output table for the UK economy to evaluate the impacts of changes in demand for high-emissions sectors. The findings show that through a focus on high-emissions sectors a −50% reduction in final demand would be required to reach the lower bound estimates of net zero by 2050. The results add evidence that changes to the air transport sector translate the largest environmental benefits relatively to modest economic costs in employment and output terms.