REVEALED: The £1.3 trillion Net Zero cost estimate called ‘more realistic’ by Treasury, suppressed by government
The government fought for two years against revealing what the Treasury has called a “more realistic” internal modelling estimate for the cost of Net Zero.
The newly-revealed modelling estimated the net cost of Net Zero would be £1,275bn by 2050, with annual costs 40% higher in 2050, compared to the Committee of Climate Change (CCC) estimate that government officials were pressured to use.
The Treasury admitted “the cost of transition [to Net Zero] is highly uncertain” whilst they and the CCC continue to withhold details on methodology.
Campaigners have called for greater transparency as the Prime Minister insists Net Zero will not result in new taxes.
The Treasury has at last revealed the contents of an email sent to the then-Chancellor, Philip Hammond, about the high cost of the Net Zero emissions target following a protracted Freedom of Information dispute lasting almost 2 years.
In the email, The Treasury said: “The CCC estimate that meeting net zero will cost £50bn annually in 2050. BEIS [The Department for Business, Energy and Industrial Strategy] estimates put the figure at £70bn per annum. We consider the BEIS figure to be more realistic.”
The “more realistic” BEIS figure is the one that government fought to withhold from publication, before a ruling by the Information Commissioner earlier this year.
They also described No10 and BEIS as having “distanced themselves from the £1 trillion figure” and said they have been “following public lines” including “The Committee on Climate Change say this will cost £50bn annually in 2050.”
Speaking on Monday, the Prime Minister insisted his Net Zero agenda would not result in any new carbon taxes for consumers. He told The Sun he was planning “an agenda for an economic bounce back…”
The existence of internal government estimates of the cost of Net Zero had first been acknowledged in a leaked letter that appeared in the Financial Times in June 2019.
We now know that BEIS modelling estimated that the cost of Net Zero would amount to £1,275bn by 2050. The annual cost was modelled to rise from £15bn a year at present, to approximately £70bn in 2050. This is illustrated by a Treasury graph showing an increasing divergence with the CCC calculations.
The figures presented are net costs, and are partially offset by cost savings in certain sectors. So the total gross cost is even higher still. The Energy Technologies Institute has said that the cost of retrofitting the UK housing stock alone could be in excess of £2 trillion, and a GWPF report puts the total cost in excess of £3 trillion.
The revelations have prompted calls for greater transparency.
Victoria Hewson, Head of Regulatory Affairs at the Institute of Economic Affairs, said:
“To scrutinise new environmental regulations properly, Parliament and the public need access to all the relevant information. It is disappointing that the Government chose to withhold this crucial cost assessment for so long, and that the Treasury’s view seems to have been based on such vague projections. Transparency and rigorous cost benefit analysis is in everyone’s interest, both to minimise costs and to ensure the best policy alternatives are chosen.”
In December, the Institute for Government published a report arguing: “The government must shake up the way it collects evidence to inform net zero policies and consult a broader range of stakeholders if it wants to avoid costly policy failures.”
The civil servants’ estimate contradicts the government’s official advisors on climate change, the Committee on Climate Change (CCC). The CCC is led by Lord Deben, who has admitted receiving hundreds of thousands of pounds from ‘green’ companies. It had put forward a lower estimate of £50bn a year by 2050, but the Treasury said the BEIS figures were ‘more realistic’.
Andrew Montford, Deputy Director of the GWPF, said:
“After almost two years contesting my Freedom of Information request, I am glad that the Treasury has finally agreed to release this information. It shows that despite being aware of a more credible higher estimate for the cost of Net Zero, government ministers and officials chose to conceal vital information. We now need to see the methodology behind these estimates, so that Parliament can properly scrutinise the cost of decarbonisation policies.”
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