From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

 I ran with the Telegraph story earlier today, on the new report from NESO which calculated that delaying Net Zero could save £350bn.

This is the NESO document:

According to NESO, that aiming for an 80pc reduction in carbon emissions by 2050, rather than the current “net zero” target, could save £14bn a year on average.

NESO have compared two of their scenarios – Holistic Transition (HT) and Falling Behind (FB). The first assumes we go flat out, changing the way we live, whereas the second assumes a slightly slower progress – as NESO note, this is NOT status quo:

It begs the question, if going slow saves so much money, how much more would be saved by doing nothing? Sadly, NESO have not costed the latter! I wonder why.

Below is the Key Stats table from the Future Energy Scenarios, published during the summer, which NESO have now added costings to:

As you can see, there is significantly less electrification on FB  -less capacity, less demand, more CO2.

Below is the key NESO graph from today’s report:

As the mauve line, Net Costs, indicates, the extra annualised cost increases year by year on HT compared to FB, until around 2045. Even then HT remains much more expensive.

Their costings are supposed to recognise all CAPEX and OPEX spend. So, for instance, CAPEX on wind farms, which are capital intensive, will increase the overall CAPEX element of total energy costs, but this is offset by reduced fuel costs – ie. buying gas.

As already noted, if less electrification, fewer renewables, fewer EVs and heat pumps lead to £350bn savings, how much could be saved by staying as we are?

At this point, I should make comment about some unrealistically optimistic assumptions made by NESO:

1) Offshore wind costs:

As the CCC did most recently, NESO have assumed impossibly low costs for offshore wind. According to the Data Workbook, their costs calculations are based on offshore wind costing £70.10/MWh for new projects. Incredibly these will fall even further to £53.20/MWh for wind farms built in 2035. (All costings in the NESO report are at 2025 prices)

This is Jackanory stuff and on its own makes the whole report pretty meaningless.

2) EVs

Again, in common with the CCC, they have assumed that EVs will be cheaper to buy than petrol after 2027:

This has no basis in reality – like for like, EVs still cost many thousands more than petrol.

It is also worth noting that NESO are forecasting a spend of £133bn on upgrading the electricity distribution network, on top of the £75bn already planned by OFGEM for the transmission grid. These upgrades are specifically connected to Net Zero objectives.

With OFGEM dishing out contracts with ROC of 7%, annual electricity bills will increase eventually by about £15bn.

I also take issue with this curious claim by NESO:

They say that CAPEX will be less in the 2040s than it is this year. They appear to assume that we won’t have to build any more wind and solar farms, battery storage, cars or heat pumps. as if they will miraculously last forever!

But the wind farms already operational will all need replacing long before 2050, as will heat pumps and EVs. So why is this cost not shown?

All of this means that we must ignore everything NESO have claimed about the 2040s, when they say that all the savings from Net Zero will miraculously start appearing.

So let’s examine what we do know:

• Renewable energy remains more expensive than fossil fuels
• Extra electricity grid costs – for upgrades, system balancing and storage – will add billions a year to electricity costs
• Heat pumps are more expensive to buy and run than gas boilers
• EVs are more expensive to purchase, with the extra cost more than outweighing savings on running costs.

No amount of dissembling by NESO can alter these basic facts.

We are already paying more than £20bn a year to finance the push to Net Zero. This cost will continue to rise.

It may be that at some time in the future, technology will appear that is cheaper and better than that which we currently have. Just maybe EVs will halve in price. Or nuclear power costs tumble.

If so, society will do as it always has – rush to adopt something which is better. It will need no incentives, no penalties, no coercion, no subsidies.

And it will be better off as a result.