An excoriating report from the Civitas think tank has raised the official estimated cost of Net Zero from the U.K. Government’s Climate Change Committee (CCC) by a factor of at least three to £4.5 trillion. The author of the report, the economist Ewen Stewart of Walbrook Economics, puts the figure into context by noting that the resulting £6,000 annual charge per family would enable every family in the U.K. to have free food and £2,800 spending money every year until 2050. It can be additionally noted that removing such a large sum from family budgets might dent the incomes of well-paid liberal elites, but millions of people on or below average wages will find themselves pushed into grinding poverty.
The author charges that the Government has “grossly underestimated” the economic costs of Net Zero. At the same time it has adopted one of the most stringent and legally binding Net Zero frameworks in the world. The U.K. is one of only six countries to have made legally binding Net Zero targets, although it contributes less than 1% of global emissions of carbon dioxide. Despite a modest shifting of some deadlines last week, “the U.K.’s approach remains one of the most legalistic and prescriptive, globally risking both economic prosperity and the U.K.’s competitive position”. Last week’s announcement by the Prime Minister “does not amount to any material change in policy or economic cost”.
The U.K. may wish to maintain an aspiration of Net Zero, states Civitas, “but to drive a potentially four and a half trillion pound project, based on technology that in many cases is unproven, risks the very fabric of the U.K. economy and genuine societal hardship”.
Civitas explains that it has compiled its report “on the most conservative basis possible”. There is evidence to back this up. A programme to insulate Britain’s drafty housing stock produces a figure per house of £5,000, but this compares with Technology Professor Michael Kelly’s recent calculation that installing a heat pump with appropriate insulation would realistically cost £65,000. It would not be unreasonable to note that when Governments, public employees and private profit-seeking operations start with a ‘conservative’ figure, costs tend to double and even treble. Looking at you, HS2.
The Civitas report blows numerous holes in the fantasy economics practised, seemingly without any significant debate and scrutiny, by the green activists running the CCC. The CCC budget was prepared when interest rates were 0.1%, but recent increases to 5.25% have left a £1.6 trillion black hole in official calculations. Among the problems identified, it is said that the CCC largely ignores the capital costs of obsolescence and replacement, underestimates or ignores technological and supply chain challenges, along with the inflationary cost to consumers, ignores the risk of global price inflation as the world crowds into certain commodities such as lithium, does not address the issue of ‘crowding out’ from capital spend on other areas of the economy, takes no account of systemic risks to employment in areas such as the car industry, and alienates historic allies such as Saudi Arabia, risking energy security.
Despite politicians claiming that Britain is somehow leading the world in Net Zero, the effect on employment is very small. It is noted that according to the Office for National Statistics, the low carbon economy employs only 247,000 people, somewhat short of the two million green jobs the Government forecasts for 2030. Nor does the country appear to be a world leader in green technology innovation. The number of patents in the U.K. is low in comparison to those of China, U.S. and Germany.
The small number of jobs created by green technologies is starting to be noticed. Interviewed recently by Kate Andrews in the Spectator, Gary Smith, the leader of the GMB union, said the green household levies might be tolerated if there was any sign of the green jobs promised by every Government since Tony Blair. “Communities up and down the east coast can see wind farms,” continued Smith, “but they can’t point to the jobs.” Much of the green work seems to be either London-based lobbying or clearing away the animal casualties of wind farm blades. “It’s usually a man in a rowing boat, sweeping up the dead birds,” he observed.
One of the more obvious people who should be held to account for a decade of misleading statements about of the true cost of Net Zero is Lord Deben, formerly the Conservative MP John Selwyn Gummer and chair of the CCC for 11 years. Despite recently retiring, he advanced the opinion that Rishi Sunak’s minor can-kicking Net Zero exercise was “unconservative”. The investigative climate journalist Paul Homewood has followed Deben’s green career for many years and was disinclined to be charitable. It is not conservative to ban things, wreck the car industry and endanger the electricity grid, he noted, adding: “Above all it is not conservative to bypass the public and effectively hand control of public policy to a tiny, unelected clique of extreme climate activists and the renewable lobby.”
Any attempt to undo the untold economic and societal damage that will be caused by removing fossil fuels from the energy mix in less than 30 years will require changes in U.K. law. Led by two weak Prime Ministers, Theresa May and Boris Johnson, and backed by large numbers of uninformed, virtue-signalling members of the House of Commons, the U.K. is tied into a tight legalistic path that demands net zero emissions by 2050. Civitas describes the U.K. predicament as “extraordinary granular”. It takes its authority from the Climate Change Acts of 2008 and 2020, but delegates the framework to the CCC, which then produces legally binding carbon budgets. Activists from pressure groups such as Friends of the Earth have the legal right to challenge any decision if they believe any policy is ignoring or endangering Net Zero targets. It might be noted that this carte blanche going forward could lead to a blizzard of lawsuits for almost any building project other than, of course, wind and solar farms.
Civitas observes that the overarching legal requirement to reach Net Zero in a series of legal carbon budgets was set up without any reference to the evolving scientific understanding, nor the economic, financial or societal implications of Net Zero. “The legal obligation is thus ideological, and neither holistic, pragmatic, nor dynamic,” it notes.
The U.K. needs to unpick the legally binding nature of its Net Zero commitments, argues the think tank, and abandon the centralised direction of the economy. Unless it wishes to export employment and undermine an already weak competitive position further, “the U.K. needs to move from the centralised CCC carbon budget approach to a much more organic, bottom-up, market-driven model”.
Chris Morrison is the Daily Sceptic’s Environment Editor. This article was produced from a pre-publication copy of ‘Net Zero: an analysis of the economic impact’. It is published today and further details can be obtained from Civitas.