Project Manager Tom Youngman and Pirta Palola provide an update on the Macroeconomics of the Seventh Carbon Budget Project (MacroCB7), which has now received a second year’s funding, running until June 2027.
In June we concluded the MacroCB7 project, an intense year-long sprint to provide the UK Department for Energy Security and Net Zero with an assessment of the macroeconomic impacts of the UK’s Seventh Carbon Budget. As with many academic projects, it is taking longer to write up and publish our research than the time we initially had allotted, so expect to see some papers from us in the next couple of months. In the meantime, here is a quick round up of some of the project’s key achievements.
The project aimed to support DESNZ decision making on the Seventh Carbon Budget – the UK’s emissions targets for 2038–42 – and in June the then Secretary of State for Energy Security and Net Zero Ed Miliband laid into law the Climate Change Committee’s ambitious emissions reduction recommendation of 87% from 1990 levels. This came at a time when there was substantial political pressure on the government. We can never know quite what impact our analysis had, but we briefed many of the senior officials who were advising the Secretary of State on this decision. We hope our analysis helped give them the confidence that the CCC’s ambitious recommendation was compatible with the UK’s macroeconomic prosperity and stability.
More concretely, briefings we provided to DESNZ and Parliament’s Environmental Audit Committee were cited several times in DESNZ’s Impact Assessment. We weren’t able to validate and publish our modelling results in time for them to feature in the impact assessment, but we’re hoping to publish results in the autumn in time to influence DESNZ’s work on how CB7 policies will be delivered and funded.
DESNZ economists found our framework for building climate shocks into a macro model particularly helpful. We developed a clear story isolating different impacts and mechanisms. They have since used our theoretical framework when working with other macroeconomic models.
Training on Agent Based Modelling
Upskilling was a key part of the project. We developed training on our agent-based macroeconomic model for the first time and ran it for more than 20 people. This has helped new DPhil students build the model into their emerging project plans. INET Oxford researchers have built policy collaboration skills, both through attending training organised by the Agile Initiative and through on-the-job learning. Our DESNZ counterparts reported feeling upskilled on research collaboration and on agent-based modelling. Tom Youngman also ran a session on policy-research collaboration with the Modelling Unit at the Department for Business and Trade.
We ran a secondment with DESNZ’s Tim Lennox visiting INET Oxford for 9 months. This direct exchange greatly accelerated the project, but also made us much more able to spot opportunities for influence and upskilling that might otherwise have been missed. Tim organised a panel on agent-based modelling for the Cross-Government Modelling Group attended by around 500 government analysts and scientists. Tim also shared his learning along the way with internal training sessions for DESNZ’s Coding Network, Modelling Team and Science and Engineering Network.
We ran a series of teach-ins and seminars for DESNZ scientists and analysts: Emilien Ravigné presented his distributional macroeconomic modelling of French climate transition plans; Ben Wagenvoort and Brendon Tankwa presented on forecasting technology diffusion; and Pirta Palola, Emma Bailey and Tim Lennox led a project findings seminar at the end of the project. We presented our findings to other researchers at the Agile Initiative’s Symposium, at a conference on macroeconomic climate modelling in Pisa, at the European Society for Ecological Economics annual conference, and at an Oxford Policy Engagement Network event.
Further funding secured
During the project we initiated a spin-off project with DBT funded by Oxford OPEN that has influenced UK visitor visa policy. We have also prompted wider links between DESNZ and Oxford, with DESNZ officials attending the Smith School Forum.
A major success was winning further funding. Our year of funding from the Oxford Agile Initiative was enough to prove the value of our project to DESNZ, who asked the Natural Environment Research Council to investigate routes to further funding for us. We now have a second year’s funding running until June 2027. We have already used that to make substantial tweaks to our modelling framework, agentising retrofit, adding government bond issuance and improving our assumptions on which sectors will benefit from decarbonisation investments.
Key Links
The Project Team from the MacroCB7 Team present their findings at a series of meetings at the University of Oxford in June 2026.
