By Paul Homewood
Matt Ridley’s latest article, originally published in GlobalVision:
Britain has uniquely legislated to reach net-zero carbon dioxide emissions in 2050
As Britain relaunches itself as an independent trading nation, its fate will depend on how competitive it is. We have lots going for us, but we also have a heavily regulated economy, high labour costs and low productivity, so we may be in for a shock. And there is one slug of self-inflicted burdens that we are in the process of making much worse, perhaps crippling: our energy policy.
Britain has uniquely legislated to reach net-zero carbon dioxide emissions in 2050, which means going cold turkey on the 85% of our energy that currently comes from gas, oil and coal. That means finding ways to run not just the electricity grid, which is about 20% of our energy, without net emissions, but all our heating, transport and industrial processes too. Surprisingly, the Committee on Climate Change failed to produce a detailed costing of this ambition before recommending it, but reputable estimates put the cost at around £3 trillion in the absence of any breakthrough in nuclear fusion or carbon capture.
The cost of some existing policies is already being passed on to consumers at the rate of £10 billion a year. Subsidies for wind, solar and biomass electricity have made household electricity prices about 35% higher than they would otherwise have been, according to the government’s own estimates. The prices paid by businesses – which are also passed on to consumers in the prices of products and services – are more like 60% higher. Industrial electricity prices here are among the highest in the world. That is a big drag on competitiveness, and is a large part of the explanation of our falling within-country emissions. Carbon dioxide has been one of the most successful exports of the last decade.
The main beneficiaries from these policies are the renewable energy industry, and the government itself, which charges VAT on top of these subsidies. Fortunately for politicians the pain of these increases has been dulled by two factors: first, a fall in gas and oil prices during the past decade; and second, a decline in the quantity of electricity consumed. Had this not happened, as Professor Dieter Helm of Oxford University wrote in 2017, “there would then have been a serious capacity crunch and much higher prices.”
Full post here.
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March 10, 2020 at 09:51AM
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