WITH a cost of living crisis upon us, and plans for energy rationing hitting the headlines, it’s hard to see Net Zero as anything but a huge mistake.
Back in 2019, we were told that the bills were manageable: It was alleged that it would set the nation back less than £1,800 per household per year, over 30 years – just one or two per cent of gross domestic product.
That cost estimate was derived from a report on Net Zero produced for the Government by the Climate Change Committee (CCC). It has subsequently turned out to be something of a dodgy dossier, notably when it was revealed that some of those cost savings were generated by preposterous assumptions about the cost of capital assets, notably electric cars.
The fact that the electricity system planned by the CCC didn’t have enough capacity to deal with a long lull in the wind like the one last year hardly encouraged confidence either.
So how much might Net Zero cost in reality? In 2020, the Global Warming Policy Foundation concluded that decarbonisation of just three key areas of the economy – the electricity system, domestic housing and private transport – would cost twice as much as the CCC was claiming would be necessary for the economy as a whole. A figure of £10,000 per household per year was therefore quite plausible.
However, the Government appears to be sticking by the CCC, and its chairman, Lord Deben, although ministers tend not to mention the cost figures quite so frequently these days.
Fortunately, another independent source has now entered the debate; last week, the management consultancy McKinsey released a new report on Net Zero, which appears to settle the matter decisively, and not in the CCC’s favour.
According to the text, the extra spending on capital assets required to deliver full decarbonisation would be ‘equivalent to about 7.5 per cent of GDP from 2021 to 2050’.
That’s five times the CCC’s figure, for initial capital spending alone. Once you have added in the operating costs, and the inflated bill for replacing all those assets as they wear out, you could easily be talking about 12 or even 15 per cent of GDP – ten times the figure that Parliament accepted when it decided to enshrine the Net Zero target into law.
That means an annual bill, for each household, of perhaps £18,000, and a total national spend of £500billion per year, equivalent to three National Health Services. Such figures are mind-boggling, and show that the Net Zero exercise doesn’t even amount to ‘pie in the sky’. It’s not even that plausible.
But there’s another consideration that confirms that Net Zero is a catastrophic mistake. In 2010, the World Bank concluded that simply adapting to climate change would set economies back just 0.17 per cent of GDP, perhaps £120billion per year in current prices. In other words, the bill for decarbonising the UK economy is around five times the cost of the whole world simply adapting the problem away.
The Prime Minister is assailed on all sides, and desperately needs something to offer families who are being hit with a series of economic hammer blows – the energy crisis, tax rises, inflation and so on – many of them directly caused by Net Zero policy.
Looking again at the wisdom of a crash decarbonisation scheme would not only be very wise, it would probably be very popular too.