Net Zero: Cost, Costs, and More Costs

Getting accurate estimates of the costs of going "Net-Zero" from the governments and global institutions that adopted the policy has been a difficult task from the first. That would have been so even if they had been honest and transparent in their accounting. Moving economies from dependence on cheap reliable fossil fuels to reliance on electrification fueled by renewables (i.e. wind and sun) would require massive expenditures on almost every aspect of life.

It also has the potential to be very alarming. If voters learn that the policy will result in higher fuel prices, higher taxes, and the need for them to spend large capital sums to transform their household economies by, for instance, replacing gas-fueled heaters and petrol-driven cars with electricity-fueled ground storage heaters and EVs, they may take fright and decide that the game isn't worth the dim flourescent bulb. Managing voters' opinions has therefore become an important element in the policy. It has to be "sold."

As it happens, the United Kingdom -- which has reduced carbon emissions more substantially than any other country -- has also put together the strongest political coalition in support of the Net-Zero policy. All the political parties represented in Parliament back it. So, overwhelmingly, does the media. So do all the major cultural institutions such as the BBC. Even bodies apparently remote from politics such as the National Trust (which looks after Britain's stately homes) are keen to be seen as relevant to the cause. When the Climate Change Act setting out legally-binding targets for carbon emissions reduction was passed, only five MPs voted against it.

That legislation created a climate change committee, rooted in parliament but independent of the government, and gave it the task of holding ministers to account over whether they have met the carbon reduction targets written into law. Its sixth annual report was issued at the end of last year. And it offers a very useful glimpse into the lifestyle changes and probable costs of the Net-Zero policy which most governments and agencies have been reluctant to publish or discuss in detail.

That's understandable. When wind and sun still contribute only a measly 1.5 percent of global energy consumption, as Matt Ridley pointed out recently, it's hard to estimate the costs of expanding that share to the 94 percent now contributed by fossil fuels of one kind or another. But the costs won't be small. And there will be a great many of them spreading into every area of life since the mere act of living consumes energy and is sensitive to its cost.

To prevent this article becoming an encyclopaedia, I'll examine only three kinds of cost: lifestyle costs, economic costs, and political costs. I have to admit that the committee's report is relatively honest about the lifestyle consequences of net-zero, though it wraps up its admissions in honeyed phrases. Here, for instance, is its cheerful summary of how "we" will reduce demand for carbon-intensive activities:

The U.K. wastes fewer resources and reduces its reliance on high-carbon goods . . . Diets change, reducing our consumption of high-carbon meat and dairy products by 20 percent by 2030, with further reductions in later years. There are fewer car miles travelled and demand for flights grows more slowly. These changes bring striking positive benefits for health and well-being.

And here's my grouchy response to it:

But what if our diets don’t change voluntarily? Or consumers don’t actually like the new low carbon foods predicted here? Or they want to use their cars and fly on vacation more often than the planners predict? Those "striking positive benefits for health and well-being" sound alarmingly like the medical authoritarianism currently running our lives in the fight against Covid-19. Will doctors and other planners change their presciptions if we don't like the medicine? Or will they ration the foods, car trips, and vacations that the consumers (who are also voters) are determined to enjoy?

My sarcasm notwithstanding, these recommended (a.k.a. imposed) lifestyle choices imply heavy economic costs as industry and agriculture change what they now produce in response to market demand to quite different goods and activities prescribed by ministers and civil servants. The U.K.'s decision to prohibit the sale of petrol-driven automobiles from 2030 in order to require a switch to electric vehicles will force both the taxpayer to finance the electrification of the entire country and the driver to buy a much more expensive car.

When we see the scale of this economic and industrial transformation, it's plain that it's a very expensive project indeed. As I pointed out last month, even the committee chairman concedes that if it is to make us richer rather than poorer, then "[l]ow carbon investment must scale up to £50 billion each year to deliver Net-Zero." Not to worry, however, because he also assures us that "our central estimate for costs is now below 1 percent of GDP throughout the next 30 years."

But these estimates were  immediately challenged by Dr. John Constable, energy editor of the Global Warming Policy Foundation, as "entirely divorced from reality":

Some of them are out by several hundred percent, meaning that the claim that we can decarbonise painlessly doesn’t stand up to even cursory scrutiny. Offshore wind is twice as expensive to build as the CCC assumes, and two to four times more expensive to operate. The resulting electricity will be many, many times more expensive than they claim, making the use of heat pumps and Electric Vehicles utterly unaffordable.

So the estimate that net-zero costs will be less than 1 percent of GDP annually for the next thirty years is a fanciful one. Almost all other estimates are higher, some several-fold. Net-zero is a plan fueled not by fossil deposits but by optimism.

And that takes us to the third cost: political costs. These are obvious. Everyone has accepted at the back of their minds that there'll be a price to be paid by governments in power when the higher taxes and energy prices fall due. But that won't be tomorrow or, with luck, before the next election. So MPs never seem to have done the calculation of how heavy the political costs might be -- until last week when the Onward think-tank in London produced an analysis of the political impact of net-zero and discovered that it would be formidably high.

In particular the carbon-intensive industries most reliant on fossil fuels are concentrated in the Midlands and North of England -- the very regions where Boris Johnson broke Labour's "Red Wall" and won a slew of traditionally Labour sets to swell his parliamentary majority to eighty seats. Johnson has since acknowledged that he had only "borrowed" those voters and would have to justify their trust in him by leveling up their economic prosperity to that of Britain's booming South-East.

What the Onward report suggests is that Johnson's green industrial revolution risks pushing the poorer regions further down the prosperity index rather than levelling them up. Boris Johnson's green agenda is completely at variance with its post-Brexit policy of an infrastructure build-up to as well as being economically regressive

Consider, now, the report's analysis of how this will impact the seats won in 2019 as summarized by the Telegraph:

Some of the biggest concentrations of polluting jobs are in Conservative-won seats West Bromwich West, with 59pc, as well as Hyndburn in Lancashire and Stoke-on-Trent North with 55pc each, according to the Road to Zero report.

The East Midlands has the highest share of jobs in high-emitting industries at 42pc compared to London, the lowest, with 23pc.

The research suggests that up to 10m jobs could need to be replaced, or see workers retrained, as the UK aims to achieve “net zero” carbon emissions by 2050.

What makes this report so interesting is that Onward, a progressive Tory think tank, and the GWPF, a Thatcherite one, now agree on at least one aspect of the net zero policy: It's a political suicide note.

Original article here.