By Paul Homewood

Coinciding with the publication of the Net Zero strategy, the Treasury has also published its own review of the costs and implications:

https://www.gov.uk/government/publications/net-zero-review-final-report

It begins with the usual nonsense that “we must do something”, and how the UK is already suffering from climate change (apparently we never had floods before). But it doesn’t come to the obvious conclusion that whatever we do here will have no impact on climate at all.

They rightly agree that we cannot possibly forecast what the economy will be like in thirty years time, but then proceed anyway to discuss possible economic growth and green jobs that might result from the Net Zero agenda.

But what we do have a pretty good idea of is the costs of the transition in the next decade or so. And they come up with this chart of the additional capital expenditure needed. (Note that this is not TOTAL expenditure, but ADDITIONAL to the base expenditure we would need anyway without Net Zero – eg the extra cost of buying electric cars or heat pumps compared to petrol cars or gas boilers):

So we are looking at between £50 and £60 billion a year up to 2037, about £600 billion. Obviously this is just the start – additional spending on heat pumps will continue at a high level for many years after, for instance.

The Treasury have also assumed that prices of heat pumps and electric cars fall in the next few years, so they may be on the optimistic side.

The next question, of course, is who will pay. The report gives an indication that the cost won’t be loaded onto the National Debt. Instead taxes will have to rise:

I’m not quite sure how handing over to your children a wrecked economy, high taxation and living costs can be described as “intergenerational fairness”!

However the cost will have to be borne ultimately by households one way or another:

The report also discusses the role of green finance, as if it was some sort of panacea:

They clearly expect householders to borrow money to finance heat pumps and the like, which would simply be unaffordable otherwise. It does not seem to have occurred to them that mortgages have to be repaid!

This will no doubt turn into a nice little earner for the banks, but it poses the very real problem that finance will be curtailed for other, arguably more important, uses. While we’re busy installing heat pumps and insulation, where will the money come from to invest in new factories and production lines, technological breakthroughs and infrastructure?

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October 20, 2021