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Kevin Langford
Kevin Langford is an experienced policy analyst who currently works on policy analysis, particularly in the areas of climate change, taxation and distribution policies, with Radix and the Liberal Democrats.
He is also chairman of Immediate Media Bristol, NED at Frontline, and at Employment Autism. From 1998 to 2020 he was CFO of the Immediate Media Co.
The Climate Change Committee has published a supplementary analysis of its 7th Carbon Budget focussing on its conclusions about the cost of net zero. It appears to be responding to recent criticism, especially from the Institute of Economic Affairs.
To paraphrase slightly, the 7th Carbon Budget told us that:
In January the Institute of Economic Affairs produced a briefing on the Cost of Net Zero [1]. This criticised the 7th Carbon Budget and other government documents. Its executive summary said the following;
It is hard to stand up to the IEA’s headline claims. The £7.6 - £9trn ‘gross cost’ is an estimate of all the capital costs of decarbonized assets related to net zero; everything that is spent on building renewables, building transmission networks, buying electric cars, or buying heat pumps. Presenting this gross cost as the cost of net zero ignores the fact that without a net zero policy we would still need to make substantial investments in new petrol cars, gas boilers and electricity generation– so much of this ‘gross cost’ is just spending differently money that would be spent anyway. And, the ‘gross cost’ number does not take account of anything that renewables assets produce, so using it as a measure of the cost of net zero effectively assumes zero electricity is ever generated from the new renewables and other assets we are building. Implying that £7.6 - £9trn is the extra cost of a net zero policy is, as the CCC says in its most recent document, a misrepresentation.
Some of the IEA’s detailed criticisms of the 7th Carbon Budget have more validity.
The estimates of the capital costs of renewables, and of the related electricity transmission infrastructure in the 7th Carbon Budget now appear too low. The way the CCA has analysed the costs of some other aspects of the transition – while consistent with its chosen methodology – would appear surprising to most readers, and a more intuitive approach would lead to higher cost estimates. The scale of these factors is in the hundreds of billions rather than trillions, but this makes it difficult to sustain the position of many environmentalists that ‘net zero is no regret for the UK because it does not really cost anything.’
In its most recent paper the CCC has acknowledged that it may have underestimated some of the costs associated with the renewables transition, but has effectively doubled down on the ‘no regrets’ message through an alternative framing. It now tells us that “under a range of assumptions, the benefits of Net Zero consistently outweigh the costs”. “Benefits” here includes a value for the benefits that the country would get if global warming was effectively mitigated. But the key argument of the critics of the UK’s net zero policy is that delivering net zero in the UK may not have any impact on global temperatures .
Whether the UK’s delivery of net zero makes a difference to what the rest of the world does (and what we should do if it doesn’t) is a subject for legitimate debate. Rolling an assumption that UK net zero does deliver this into headline conclusions about the cost of net zero is not helpful in getting to a clear debate about the net zero policy.
Net zero will incur additional net costs. These are hard to predict, but could be in the low £10’s of billions annually over the next 25 years. They might add up (every year) to 0.5-1.5% of annual GDP – an order of magnitude that is similar to the amounts by which the UK is pledging to increase its defence budget, or a bit more than the UK was spending on its international aid budget when it was at its maximum in the 2010’s.
From this extra expenditure we should get some other benefits such as reduced air pollution, which are difficult to quantify. The contribution of net zero policies to these other goals is meaningful but such co-benefits are not enough in themselves to justify the level of spend on net zero.
If we were to succeed in reducing global warming through the UK’s efforts to achieve net zero, the extra spend on net zero is likely to have been a good investment. Whether we will so succeed, (and what we should do if we think the chances of success are small) is very much up for debate.
For a more detailed analysis of the 7th Carbon Budget estimates and the IEA’s criticism of them have a look at my ‘Temperate Zone’ Substack.
[1] https://iea.org.uk/publications/the-cost-of-net-zero/