In the People’s Emergency Briefing, economist Angela Francis cites the Climate Change Committee’s (CCC) official estimate that reaching net zero is projected to cost an average of around £4bn a year.
Feedback from screenings is that some people find this hard to believe. To understand why the average is so low, we need to look at the substantial investment and large savings behind it.
In their 7th Carbon Budget report, the CCC projects average additional investment of £26bn a year from 2025 to 2050, offset by £22bn a year in operating savings – a difference of £4bn. Cleaner, more efficient technologies reduce the amount we spend running our homes, transport and economy.
We should note first that 2050 is, of course, far too slow, with warming and impacts far ahead of what was expected when the UK made its 2050 plan – but the good news is that moving faster is likely to save even more money.
The investment needed is front-loaded, while savings build up later – and the cumulative outlay needed before annual savings overtake spending is £319bn. That is a substantial sum, but it needs context:
The investment is projected to deliver ongoing net savings rising to about £35bn a year by the time the UK reaches net zero, and which will continue beyond then.
Inaction carries enormous economic risks. The Institute and Faculty of Actuaries warns of an enormous 50% contraction in global GDP from 2070 unless we change course.
The CCC’s projected cost is spread across the whole economy. It includes businesses and households, rather than being solely a government spending bill.
The government spent more during the pandemic. The cost of Covid to the government was £385 billion (excluding private sector costs) – and unlike investing to transition from fossil fuels, that spending was purely about avoiding something bad rather than building something better.
The extra cost to the UK caused by high oil and gas prices following Russia’s oil and gas prices following Russia’s invasion of Ukraine is now estimated at £183bn. Upgrading to renewables would free us of these repeating fossil fuel price crises.
With this context, it’s clear that the £319bn will be possibly the best investment our country has ever made.
HAVE YOU SEEN THE BRIEFING? Find a screening HERE.
