Friday, April 19, 2024
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This climate change fantasy will cripple our economy


THE Committee on Climate Change (CCC) – an organisation described in this Twitter thread by researcher Ben Pile and which is advising the government of the UK to revise and increase the ambitions of the Climate Change Act – has just recommended a Net Zero emissions target by 2050.

This aim is grounded, however, in nothing stronger than irresponsible optimism and arbitrary assumptions about cost and technological feasibility. In point of fact, the technologies seen as necessary – carbon capture and sequestration (CCS), further expansion of renewable generation, widespread adoption of hydrogen, and the very rapid electrification of the UK’s entire heating and transport systems – are either known failures or are unproven at these scales and would cost two to three times the amounts claimed by the CCC.

Any attempts to deliver these policies will not only ultimately fail, but would further harm the UK’s already declining productivity, and erode its ability to compete internationally or ensure an acceptable standard of living for its people. Were this unsustainable strategy to be accepted by government it would be very likely to end in a humiliating and distressed policy correction. A wise government would reject this advice.

The Climate Change Act already commits the country to an 80 per cent reduction of greenhouse gas emissions by 2050 compared with 1990 levels. Since the UK has, the CCC claims, already reduced its inland consumption emissions by 40 per cent against the 1990 baseline, the current proposal represents a rational continuation of that success story. Or so it argues. But this is a selective and misleading history which creates a distorted picture.

The truth is that the UK has been exporting its emissions to other parts of the world, principally China, in substantial part through carbon leakage resulting from the UK’s high energy costs, which were themselves in substantial part the result of climate policies. You can read further explanation here. It is a history that gives no ground for optimism with regard to the Net Zero target now proposed. Far from being a success on which we can build, UK climate policy has been a failure, resulting only in domestic economic damage and the illusion of reduced emissions.

The overriding problem facing the UK is the comparatively slow growth in productivity. For much of the last century, the UK’s productivity has been below that of the major industrial economies, and the gap has grown in the first two decades of the 21st century. The consequence has been no growth in real wages and incomes, a fact that strains domestic budgets and exacerbates a general reluctance to make the investments required for future economic prosperity.

This deterioration in productivity growth closely follows and is substantially associated with the implementation of policies to reduce energy use and carbon emissions. There are three reasons for this link:

(a) Large amounts of investment and labour have been diverted to capital-intensive renewables, crowding out investment in other infrastructure and sectors with much higher levels of capital and labour productivity.

(b) The resulting increases in energy prices have prompted high-productivity manufacturing and other industries to conclude that they should look elsewhere for growth in both demand and production.

(c) More generally, the efforts and resources of businesses and innovators have been diverted away from improving productivity and towards efforts to reduce carbon emissions. Furthermore, the idea that there is a global opportunity for the UK to grow by exploiting low carbon technologies is demonstrably a myth.

There can be no doubt that these factors have had a major impact on the development of the UK economy in the last two decades. Low carbon growth may be the holy grail, but the reality is almost no growth and slower reductions in carbon emissions per unit of output than in, say, the United States. Yet the CCC is now recommending proposals that are explicitly designed to reinforce this disappointing performance.

If the government accepts the CCC’s proposals, which are marked by a persistent special pleading about the costs and feasibilities, it will immediately sabotage any plan to rectify the UK’s poor productivity performance and weaken international competitiveness. Its recommendations will ensure that the UK suffers from even lower productivity and be still poorer relative to the rest of the world in 2050 than in 2020. At the same time, the slower growth in productivity brought about by these proposals will increase the burden of meeting the CCC’s targets to a level that will not be bearable. The only doubt is how much pain the population will endure, and how much damage will be done, before these infeasible targets are abandoned.

The study that underlies the CCC’s proposals is marked by what can only be called ‘fantasy analysis’. Electricity demand is required to double on present levels, when in fact it is falling due to high prices. The CCC’s plans require that all of that additional electricity must come from low carbon sources, as opposed to under 50 per cent today. The CCC itself admits that CCS (Carbon Capture Storage) is ‘essential’ to its vision for the 2050 target, and must be substantially deployed before 2030, with a significant level by 2026. But at present it is non-existent in the UK, and non-viable at scale elsewhere. There must be 30 GW of offshore wind by 2030, and 75 GW by 2050; at present there is 8 GW, all heavily subsidised, with no sign that the industry is able to build offshore wind at market competitive rates.

The CCC believes that petrol and diesel cars and vans must be phased out well before 2040, but admits that even the current eye-catching and over-ambitious plans to mandate electric vehicles by 2035 cannot deliver this transformation. It consequently suggests that new fossil-fuelled vehicles must be outlawed by 2030. Such a ban would in all probability destroy the existing market for domestic car manufacture, as Chinese and other Asian companies using cheap energy and cheap labour will make the UK uncompetitive.

The study notes that the UK’s provision of space and water heating must be converted to electricity and hydrogen, but admits that there is currently ‘no serious plan’ in existence for this revolution. That is correct, but unfortunately the study does not provide one.

The CCC states that there must be very large afforestation schemes to act as carbon sinks, at a rate of 20,000 hectares per year up to 2025, and 27,000 hectares per year thereafter. The CCC itself admits that the current rate has been only about 10,000 hectares per year over the last five years. In any case, the use of forestry as a carbon sink only has a short-term impact unless CCS is applied to wood burning, which is not feasible on a small scale and is unaffordably expensive on a large scale.

Overall, the CCC’s reaction to these manifest failures and difficulties is to conclude that the ‘voluntary approach’ has failed hitherto and would not deliver the new proposals. Implicitly, therefore, the policies that it recommends must be mandatory and state-led. But nowhere does the CCC’s report consider whether the state actually has the administrative or technical competence to deliver these remarkable objectives. Nor does it consider whether the cost of doing so is likely to be tolerable to the public. Indeed, strikingly, though the CCC makes assertions about the cost and benefits of increasing the Climate Change Act target to Net Zero, there is no attempt to actually quantify the marginal costs and benefits of each step necessary – the most fundamental requirement for such an exercise. Indeed, many of the costs actually cited in the report ignore the practical realities of installation, operation and maintenance of technologies that are well-understood and have failed to achieve widespread deployment without large subsidies. Experience tells us that, if adopted, the CCC’s programme will cost anything from three to five times the estimates in this report and will take up to twice as long to implement.

In summary, the Committee on Climate Change has not produced a serious assessment of the practical feasibility and costs of a Net Zero 2050 target. On the contrary, it has simply taken the Net Zero target as a given and made irrationally optimistic and arbitrary assumptions comprising a fictional narrative that magically delivers the emissions reduction goal as the Happy Ending. This is unrealistic, irresponsible, and misleading.

The government should obviously reject the Climate Change Committee’s poorly argued advice, which is economically hazardous and does not offer a sustainable emissions reductions trajectory.

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