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.