By David Turver

The new chair of the CCC is now complicit in the Carbon Budget deceit

Anyone who was harbouring hopes that the appointment of Nigel Topping as the new chair of the Climate Change Committee (CCC) would herald a new era of realism has had those hopes cruelly dashed. Last month, Shadow Secretary of State for Energy Security and Net Zero, Claire Coutinho, wrote to Topping challenging the cost assumptions in their recent Seventh Carbon Budget (CB7). On Tuesday last week, he responded with a rambling letter full of tendentious drivel and deflection. The Climate Sceptic has the story.

What did Claire Coutinho Ask for?

In her letter, Claire Coutinho noted that CB7 assumed that offshore wind will cost just £38/MWh in 2030. This is less than half the £82/MWh agreed in last year’s Allocation Round 6 (AR6) auction for Contracts for Difference (CfDs) and less than a third of the £117/MWh on offer in this year’s AR7 auction. She also noted that all CfD prices are index-linked, so go up each year with inflation, and in AR7 the contract terms have been extended by five years to 20 years.

Coutinho went on to express concern that the costings the CCC have published do not reflect reality and risk misleading Parliament and the public about the true cost of decarbonising electricity supply. Finally, she urged Topping to correct the costings before Parliament votes on CB7.

The full text of Coutinho’s letter can be found on the download below:

Coutinho Letter to Chair of CCC Nigel Topping, August 2025

Topping’s Response

Topping’s response highlights that there is a difference between the Levelised Cost of Energy (LCOE) used in CB7 and CfD strike prices. He claims that LCOE reflects the underlying cost of generating electricity over a project’s full lifetime, whereas strike prices reflect “a policy-determined revenue guarantee” for a contract period. He justifies using LCOE models instead of actual market data because it enables them to give comparisons across all technologies.

He goes on to say that the CCC applied a temporary 25% uplift to their cost estimates to reflect supply chain constraints. They then estimate that costs decline as learning improves and economies of scale kick in. In the latter part of the letter, Topping acknowledges the importance of making electricity cheaper and reiterates the need to remove levies and policy costs from bills. Finally, he tries to build bridges with Coutinho by noting they are both mathematicians and should have a lot to talk about.

The full text of Topping’s letter can be found on the download below:

CCC letter to Shadow Secretary Of State on energy prices in the Seventh Carbon Budget

Levelised Cost Models are Junk

Perhaps the most alarming thing about Topping’s response is that the CCC uses Levelised Cost models in preference to actual market data from competitive auctions. The CCC made a great play (main report p88) of the total net cost of Net Zero being “only” £110 billion over the period from 2025 to 2050. This overall cost relies on both the low capital expenditure estimates for renewables and solar, and the low energy prices from their LCOE models driving adoption of low-carbon technologies and savings for consumers. It is also worth noting that the cost of capital used in CB7 is only 3.5%, while the cost of capital used for fixed-bottom offshore wind in the latest AR7 strike prices is 8.5% and 10.9% for floating offshore wind.

Contracts for Difference, by contrast, reflect real-world market data from companies bidding in a competition. They also reflect the cost of renewables that we bear in our energy bills. The “policy-determined revenue guarantee” is necessary to persuade real companies to part with real cash to build these monstrosities. However, even the 15-year index-linked revenue guarantees offered in earlier rounds have not been enough to ensure success, as shown in Figure 1.

Norfolk Boreas, awarded a contract at very low prices in AR4, has been cancelled and the other projects have been partially re-bid at higher prices. AR5 received no bids for offshore wind. Hornsea 4, the flagship project for AR6, was awarded a contract at £85/MWh in today’s money, more than double the CCC’s estimate for 2030, and has been cancelled as uneconomic. AR7 projects are being offered 20-year contracts at prices above the £105/MWh currently being paid to Triton Knoll, which won a 15-year contract in AR2 and activated its CfD in 2021. Not much sign of learning curve improvements there.

The CCC did not even mention the costs of floating offshore wind in their report, even though significant deployment of this technology will be needed to hit their capacity targets. The evolution of floating offshore wind costs is shown in Figure 2:

Green Volt won a contract in AR6 at £202/MWh in today’s money, more than five times the CCC’s estimate. Floating offshore wind contracts are being offered at £280/MWh in 2025 prices in AR7, more than seven times the CCC’s estimate.

David Turver writes the Eigen Values Substack page, where this article first appeared.

Read the full story here.