If there is one thing we’ve learnt in the last few years, it’s to look beyond attention-grabbing headlines. With media stories warning of the £400-a-year cost of net zero, the figures merit closer inspection. Bills may increase by 2050, but earnings will on average be £15,000 higher. The cost equates to 20p a day for lower income earners – less than the price of a Freddo chocolate bar.
Of course, no one likes paying more, even for something like ensuring your home isn’t under floodwater, a scenario that seems scarily plausible today.
As the chancellor, Rishi Sunak, has pointed out, there is another side of the ledger – such as the cost of dealing with catastrophic climate events. Heat pumps might cost more than a boiler in the short term, but not compared to rebuilding your home when the levee breaks. Even if you’re lucky enough to escape disaster, we will all be paying more in insurance premiums, while gas and petrol prices increase as supplies run out. This is the economic cost of “not zero”.
A report by the National Bureau of Economic Research showed that if greenhouse gases are not sufficiently curtailed, GDP would be cut in every country in the world – rich or poor, hot or cold. The impact would be a cut to UK GDP of 4 per cent, and by contrast there would be a small economic benefit of 0.11 per cent for keeping within the Paris Climate Agreement targets.
Our major economic partners would be even harder hit: France’s GDP would fall by 5.8 per cent and the US by 10.5 per cent, due to impacts like extreme weather and reduced productivity.
In contrast, research by the Climate Change Committee (CCC) showed that if you invest at the levels required for net zero, you will save the economy billions long-term. For instance, it might cost £13bn to invest in cleaner transport, but it would save £39bn by 2050. This is before you calculate the benefits to the NHS and social care budgets of better insulated homes, cleaner air and healthier lifestyles.
There are huge economic opportunities from net zero if we grasp the nettle early. One example is regarding natural gas, of which the UK imports half of what it uses. Every year, we spend nearly £8bn on gas imports. Imagine if we spent that on installing zero carbon heating systems which could be made in Britain? Research shows that the cost of heat pumps could be halved by investing in UK manufacturers, with the costs becoming similar to boilers. Increasing our island’s independence, creating good jobs and protecting our homes.
This requires leadership, in the form of shaping a procurement strategy, giving investors confidence and backing British supply chains.
The UK is now the world leader in offshore wind, and successive governments of all political stripes deserve credit for developing the industry. But offshore wind didn’t become the success it is today by waiting for the market to mature, but because governments decided to shape the market to enable costs to tumble. Offshore wind powers 4.5 million homes annually and the cost has fallen by 50 per cent since 2015 so it is now cheaper than new gas and nuclear power.
That didn’t happen by accident. Nearly £19bn has been invested in offshore wind in the last five years. Government policy cut through regulatory red tape, created “Contracts for Difference” that cut the high investment hurdle rates, provided support through the Green Investment Bank and developed supply chains and skills at a regional level.
That is exactly what is required now to support the shift to clean power for our homes, buildings and vehicles.
We’re in danger of missing the boat. The House of Lords Science and Technology Committee warned that unless we increase the pace and scale of building facilities for new batteries, “automotive manufacturing will most likely move overseas”.
The eyes of the world are upon us. If the UK delays action or dilutes targets, the prime minister and his team will be opening the COP26 negotiations by giving the global community the mother of all get out of jail free cards.
The floods that have ripped through northern Europe and caused chaos in London should accelerate action on climate change. The fear is that the government’s default position seems to be “if it’s too hard, if the markets aren’t ready and if the technology is too expensive, then water down the ambition”.
The waters are going to get rockier than this. It’s time to hold our nerve and ditch the excuses.
Polly Billington is the Chief Executive of UK100, a network of local leaders