The Climate Change Committee (CCC) has warned that the cost of achieving net zero by 2050 will be less costly than a single spike in fossil fuel prices
As turmoil in the Middle East raises questions over fuel prices, the Climate Change Committee has released a new report further developing its advice from last year on the UK’s Seventh Carbon Budget, warning that the expense of reaching net zero by 2050 will still be less than the impact of a single fossil fuel price shock.
The independent, statutory body tested its cost and energy security conclusions against different scenarios
The CCC found that the total additional cost of a single fossil fuel price spike of 2022 magnitude is likely to be as large as the total net additional cost of meeting the pathway to net zero across every year to 2050.
In all scenarios, achieving net zero was found to be a more cost-effective path for the UK economy than continued reliance on fossil fuels, bringing a net benefit to society.
The Committee’s key findings are:
- For every pound spent on Net Zero, the benefits outweigh this by 2.2 to 4.1 times.
- Avoiding climate damages is the most significant benefit of the transition. This saving is estimated between £40bn and £130bn in 2050.
- Energy losses are halved compared to today. Losses in a Net Zero system are valued at £30bn per year, compared to £60bn a year in today’s energy system.
- The transition is set to deliver far greater health and wellbeing co-benefits than costs. Cleaner air, warmer homes, more active travel and healthier diets strongly outweigh downsides like extra public transport time or potential congestion from increased EV use. These ‘co-benefits’ are estimated to provide £2bn to £8bn per year in net benefit by 2050.
Nigel Topping CMG, chair of the Climate Change Committee, said: “There has been a lot of public interest in the cost of transitioning to a low carbon economy. Going through an economic transition is exciting, but a sense of uncertainty about the future is completely reasonable. As such, it’s important that decision makers and commentators are using accurate information to inform debates.
“In light of current world events, it’s more important than ever for the UK to move away from being reliant on volatile foreign fossil fuels, to clean, domestic, less wasteful energy.”
As tensions grow in the Middle East, effects may ripple out across UK industry
Iran is in the top ten oil exporting countries, with most of its produce going to China. Following US and Israeli strikes in Tehran and across the country, Iranian forces closed the Strait of Hormuz, a crucial bottleneck in global energy shipping. Consequently oil prices began to climb and imports of liquified natural gas were also affected.
Whilst the UK is more dependent on gas and oil from Norway and the US respectively, the latest chapter in recent tensions in the Middle East will undoubtedly have an impact on supply chains, adding another variable to a very changeable economic era.
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