There have been some outlets recently reporting that the cost of switching to energy-efficient systems to achieve net zero could be more than eight trillion pounds. Here, we investigate whether that is the case
A pamphlet from the Institute of Economic Affairs (IEA) has recently picked up on the latest Future Energy Scenarios (FES) report from the National Energy Systems Operator, stating that the information presented on UK net zero costs will be somewhere from £7.6tn to over £9tn.
At a time when net zero is considered by many to be essential to securing the future and energy security, this could be a massive blow.
However, are the figures accurate? Or do they reflect a political agenda?
What is being said about the report?
In a pamphlet released by the IEA titled The Cost of Net Zero, it is alleged that “the cost of net zero is highly likely to be above the 2020 estimate of roughly £3tn from The National Electricity System Operator (NESO), and could even be above this year’s attempt, which calculated gross cash costs of £7.6tn or over £9tn including the carbon costs of emissions.”
This has been taken by several news sources, including the Daily Express, who latched onto a £9tn number as another excuse to bash Ed Miliband, as well as The Times who wrote: “Figures published last month by the National Energy System Operator (Neso), the body responsible for running Britain’s power networks, suggest that the scale of investment needed to decarbonise the economy by 2050 is significantly higher than previously assumed,” and put a figure of £4.5tn.
The eagle-eyed reader may have already spotted something – the error in the NESO’s name in the IEA pamphlet, which may be indicative of a certain lack of attention to detail.
But furthermore, the pamphlet’s presentation of statistics is misleading, as the original analysis by the NESO (then just the ESO) in 2020 had three scenario projections of cost by 2050 that ranged from £20.8tn to £3.2tn, as well as one scenario that was inconsistent with achieving net zero with a projected cost of £2.9tn.
The report itself also illuminated this point, writing: “The costs on their own are large but it’s important to put them into context. The energy system is vast and complex and the scale and importance of its operation means the costs involved are sizeable. Therefore, significant costs will be incurred across the energy system between now and 2050 in any event and the key insight we are providing here is enabling a comparison of what those costs might be under different assumptions, or in different scenarios.”
Furthermore, the IEA misrepresented other findings, stating that the in-year “gross cost” of net zero was £7.6tn, and then said that, when “carbon costs” were added, the figure exceeded £9tn.
However, these figures are pulled from spreadsheets published alongside the NESO’s FES report. These cannot be found within the NESO report, as they are simply inaccurate.
The FES says: “The comparative costs should be seen only as indicative, given the uncertainties and differences between pathway assumptions detailed later in this report. The numbers cannot be compared directly to those published earlier in the year by the Climate Change Committee (CCC) and used by the Office for Budget Responsibility, as their costs represent the cost of reaching net zero compared to a no-action baseline, which our numbers do not.”
Put more simply, the outrageous figures from the IEA adds up the costs of net zero technology(including electric vehicles, wind turbines, heat pumps, etc.) to get to the £4.5tn figure, then adds the ongoing costs of a “new energy system”, such as the ongoing maintenance to reach £7.6tn, and then finally ignores the cost of maintaining the current energy system (including fuel, maintenance, and replacing infrastructure such as gas fired power plants that have reached the end of their lifespan) between now and 2050. This is where the number up to and exceeding £9tn comes from.
What is the actual cost prediction, then?
The NESO FES does not give a hard figure for a prediction of “the cost of net zero”, as that is not the report’s intent. This cost has been essentially manufactured by the IEA and taken up by other reporters, especially those with a readership that may be opposed to net zero, to stir up criticism of a net-zero energy system.
However, a much more accurate cost estimate can be gleaned from the same information that the IEA abused.
As energy & environmental journalist Simon Evans, currently working for Carbon Brief, highlighted in a LinkedIn post, simply removing the assumption that “fossil-fuelled alternatives would be free” allows us to compare the cost of creating and maintaining a net zero system to that of keeping and maintaining the current system.
Subtracting the cost of maintaining the current system to creating the new one leaves us with a difference of £0.36tn – or £360bn. A much more reasonable number for an energy system that powers the UK, from now to 2050.
That’s around 20 times cheaper than the IEA’s figure, and much more accurate.
As further highlighted by Dr Simon Clark, a freelance scientific video producer, the cost of maintaining the current system may be even higher in the long run, as there may be other additional costs if net zero is not achieved, such as price rises for food, natural disasters, including floods, earthquakes, and disease, as the climate continues to change severely.
The NESO report clearly states that taking these costs into account, achieving net zero is in fact the cheapest option for the UK – a far cry from the dangerously misleading reporting from the IEA, and from other journalists that do not give due consideration to the facts.
Written by Matthew Brundrett, digital editor at PBC Today.
The post Editor’s view: No, UK net zero will not cost £8 trillion appeared first on Planning, Building & Construction Today.
