Guilt-Tripping Britain to Net Zero

  • Date: 07/05/19
  • Rupert Darwall, CapX
Net Zero

It’s time to dial down the climate hysteria

The net zero report replaces rigour with waffle

The Climate Change Committee couldn’t construct a quantified cost benefit analysis to justify its recommendation

“To boldly go where no economy has been before” was the theme of the Committee on Climate Change’s net zero report released last week — but with fingers cross behind backs. No industrialised economy has completely decarbonised, as the committee recommended.

Going to net-zero is necessary, feasible and cost effective, the committee’s chair Lord Deben asserts about Britain’s leap into the unknown. Yet a few pages later, the report acknowledges that the easy steps have already been taken; that there is still no credible plan for decarbonising the way people heat their homes and that current policy is insufficient to meet even existing targets.

Going to net zero requires a significant ramp up in policy, i.e. even more cost, hardship and disruption. The ban on petrol and diesel cars will have to be brought forward. One fifth of Britain’s farmland is to be converted to forest or given over to growing crops for fuel. “Societal choices” will be made (how?) so people eat less beef, lamb and dairy. People will need to make changes inside their homes.

Decisions on the split between electrification and the development of a new hydrogen economy are going to be taken and co-ordinated centrally. If you think Chris Grayling and Department for Transport can’t run a railway, just wait until we have Greg Clark and his mammoth department trying to get the shiny, new hydrogen economy up and running.

The committee suggests tearing up British and EU competition rules to encourage cartelisation of heavy industry so firms can pass on higher energy costs to consumers. Another of the committee’s brilliant ideas is carbon tariffs. Quite how any of this would be legal under any Brexit variant short of no deal, the report doesn’t say.

The committee envisages little room for Britain’s manufacturers in a net-zero economy. Economies in the rest of the world are expected to grow faster whereas the development of the UK economy is based more on the service sector, making it easier to get to net zero. It is evident that the path to net zero is by de-industrialising.

The report notes that since the Climate Change Act 2008 came into law, the UK’s emissions have fallen and the economy still grew. But the UK’s consumption emissions, including those emitted in other countries making goods imported and consumed in the UK, are much higher and have fallen more slowly. And boasting that the British economy has still grown is a weak claim.

As everyone but the Climate Change Committee realises, since 2008, the UK has been experiencing a prolonged productivity drought and UK productivity growth has been the worst since the Industrial Revolution. Basic economic logic suggests that if massive government interventions force business to replace efficient, cheaper means of producing energy with less efficient, more expensive ones, the cost of energy goes up and productivity goes down.

Singularly lacking in the 277-page report is anything approaching a rigorous cost-benefit analysis. Its estimates of the costs of moving from an 80 per cent to 100 per cent target are little more than hand waving. Lord Deben in his foreword and the committee in the main body of the report falsely claim that the costs of net zero are within very same cost envelope that had been accepted as the likely costs by Parliament in 2008 “when it legislated the present 2050 target”.

This is sloppiness in the extreme. One thing one might expect the CCC to be an expert on is the genesis of the legislation under which it operates. As the climate change bill was going through Parliament, the 2050 target was raised from 50 per cent to 80 per cent, but the regulatory impact assessment, which set out the expected costs of adopting the revised 80 per cent target, was only signed off by Ed Miliband, the then energy and climate change secretary, on March 9 2009 after the legislation had been passed.

That March 2009 assessment gave a range of £324-404bn for the capitalised costs of meeting the 80 per cent target but warned that these figures did not include the full range of costs, in particular the short-term transition costs. Overall costs could be higher than those estimated by the long-term modelling, the 2009 assessment says, a warning the climate change committee chose to omit.

On the putative benefits side of the ledger, the 2009 assessment gave a stark warning of the consequences if the UK take a lead but the rest of the world didn’t follow:

“Where the UK acts alone, though there would be a net benefit for the world as a whole the UK would bear all the cost of the action and would not experience any benefit from reciprocal reductions elsewhere. The economic case for the UK continuing to act alone where global action cannot be achieved would be weak.”

By contrast, last week’s net zero report replaces rigour with waffle. Set against the costs, there will be “significant benefits”, leading off with the alleged benefits to human health. “People can take action immediately to improve their diet and increase the amount of walking and cycling they do,” the committee says. You don’t need to spend the best part of half a trillion pounds for people to take more exercise or change what they eat.

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