The net cost for the UK to reach net zero greenhouse gas (GHG) emissions by 2050 is lower than "a single fossil fuel price shock", the country's independent advisory Climate Change Committee (CCC) said today.
In all scenarios, for the UK to reach net zero — its legally binding target for 2050 — was a "more cost-effective path for the UK economy than continued reliance on fossil fuels", the CCC said. The total additional cost of a "single fossil fuel price spike of 2022 magnitude is likely to be as large as the total net additional cost of meeting the pathway to net zero across every year to 2050", it said.
In a modelled fossil fuel price spike, equivalent to 2022 after Russia's full-scale invasion of Ukraine, the average household energy bill would increase by 59pc under a "high-carbon baseline", but by only 4pc in the CCC's pathway to net zero, the committee found. UK financial watchdog the Office for Budget Responsibility estimates the cost of energy bill support in 2022-23 was £41.7bn ($56.1bn).
The CCC has estimated the net additional cost to the UK of reaching net zero GHGs by 2050 at around £4bn annually, on average, in 2025-50, "given the balance between investment costs and operating savings". This is around 0.2pc of annual GDP forecast over the same period, it said.
The CCC found investment on average of £26bn/yr will be needed, to be offset by savings of around £22bn/yr thanks to improved efficiency from electrification, increased use of low-cost renewable energy and reduced gas imports. Additional investment costs are "frontloaded" in the CCC's pathway to net zero, with a peak in 2029 and a decline to 2050.
Avoiding climate damages is the "most significant benefit" of a UK energy transition, with estimated savings between £40bn-130bn in 2050, the CCC found. Several studies have found the cost of inaction on climate change substantially outweighs the alternative.
The UK parliament's cross-party Environmental Audit Committee (EAC) last week said the government must deliver "even benefits to all" through an energy transition, or risk putting public consent at risk.
"Where the costs of cutting emissions are experienced early and unevenly, while benefits arrive later or are less visible, public consent for net zero cannot be assumed", the EAC said.
The UK government must legislate for the country's seventh carbon budget by the end of June. Carbon budgets, which are legally binding in the UK, cap the total GHGs the country can emit over five-year periods. The CCC has recommended the seventh budget, which covers 2038-42, is set at 535mn t/CO2 equivalent, including international aviation and shipping emissions.
