The Emperor’s Net-Zero Clothes
Boris Johnson’s praiseworthy wish to save the planet rests on two ambitions: the UK itself achieving the global goal of net-zero carbon by 2050 and that example inspiring the rest of the world to follow, or at least moving substantially in that direction. The first ambition relies on the British people believing it to be feasible and affordable even for the poorest. My colleagues, Professors Edwards (Oxford), Kelly (Cambridge) and I address those issues in a research paper published by this Institute today.
We discuss whether the government’s strategy is coherent and the numbers add up, then whether it is feasible and, as the government does not seem to know, what the costs might be and, fourthly, whether the achievement can be rescued by new technology. The answers to those questions are “no”, “no”, “maybe £3trn (one and a half years of total UK GDP or over £8,000 per person)” and “only partly”. If you doubt these conclusions, read the paper.
This blog addresses why such a manifestly unrealistic ambition commands such widespread acceptance in the UK and who will be the little boy next door, following the fable, who will shout “the emperor’s got zero clothes.” It concludes with addressing the second ambition, namely that the rest of the world will follow the example of a piffling little country which is responsible for a mere 1% of the problem and cannot even command the support of its European neighbours. Or the Eurovision voters come to that.
The evidence for CO2 and methane rising is clear. Most of the public thinks that it is the cause of rising sea levels, floods and droughts and therefore, as with any threat to our way of life, the public holds government responsible for doing something about it. No one else can. “Doomsday” as the Prime Minister called it at COP26 can be forestalled if we all agree to take the medicine the government is devising: “we gave you vaccines for Covid and we can protect your grandchildren from the effects of climate change.” The medicine, renouncing fossil fuels and having less livestock breaking less wind, is disagreeable. Almost all energy will have to be in the form of electricity supplied by new, green, means. This will involve new science and technology, new green jobs for all at higher rates of pay. In short, the medicine is being coated with so much sugar that swallowing it will be a pleasure. These are the emperor’s net-zero clothes.
The conspicuous absentee from the ranks of the great and good applauding the net-zero attire is the Chancellor. When the Energy White Paper appeared last December, we were told to expect a paper from HM Treasury verifying the maths: none appeared. When the Net Zero Strategy Paper appeared last month in time for COP26, HM Treasury did add a review but it was not the expected support. While Number 10 claimed that the transition meant millions of highly paid new jobs and lower energy bills, the Number 11 review was equivocal: in true Wykehamist fashion, each opinion was balanced by the opposite. While acknowledging the Number 10 claims, Number 11 saw serious economic damage, business leaving the UK and higher energy prices and taxes as being just as likely – the implication was more likely – in short, a rift.
Treasury inaction and actions threaten the transition, notably on nuclear. Renewables are volatile and, with the global warming we will have by 2050, increasingly so. That means the all-electric 2050 will need a “baseload” of up to 40% of total Grid demand. Without fossil fuels, that means nuclear. Fossil fuels and biomass may contribute but we have yet to build a single carbon capture and storage plant and we do not know how effective future ones will be. The Treasury has been blocking new nuclear for over 20 years. All existing ones are due to be decommissioned by 2035. That leaves Hinkley Point C as the UK’s only approved plant by 2050. It is scheduled to produce about 1.3% of our electricity needs. Some way from 40%. If Sizewell C is approved next spring, we will have 2.6%.
Advanced Modular Reactors (AMRs) are more efficient, faster to commission, more environmentally friendly and are being built in the USA, Canada and China. It is a competitive market with at least half a dozen suppliers and you can get ten of them, producing the same amount of electricity as Hinkley Point C, for about a quarter of the price. To get to a 40% baseload, we would require 323, at a cost of £254bn, presumably from multiple suppliers for security.
November last year saw a trace of enthusiasm with talk of investing “£385 million in an Advanced Nuclear Fund [research] for small modular reactors and advanced modular reactors. This is alongside £220 million for nuclear fusion.” Nuclear fusion is very unlikely to be a commercial proposition in this century and the £385M is going on the wrong horse, namely outdated Generation II SMR plants (as used in submarines), not the Generation IV AMRs everyone else will be installing. SMR plants, uniquely, are built by Rolls Royce and therefore, in the mind of the Treasury, must be the best. Lobbying works.
In the corresponding announcement 11 months later, all that had disappeared: the focus was back on big plants. A decision on Sizewell C (only 12 years and counting) was described as “urgent” and the cancelled Wylfa equivalent was back in discussion. The Treasury has refused to purchase even one AMR, allegedly on the grounds that they are new and have never been tried in the UK. More probably, the manufacturers of large nuclear plants do not care for AMRs and are lobbying strongly against them.
Not only is HM Treasury blocking new electrical capacity, it is ensuring that consumers will be ripped off by high energy prices. EDF is being compensated for delays and risks (for which it itself is responsible) by being allowed to charge the Grid prices well above market rates even though nuclear power produces cheap electricity. One of the factors delaying Sizewell C is the Treasury’s wish to try out its new “regulated asset based model”. This is a 2020s version of the Private Finance Initiative only worse: the consumer starts paying for the electricity 10 years or so before she actually gets any and the City makes a ton of money at public, i.e. the consumer’s, expense. The reality is that government can borrow more cheaply than City slickers and the Treasury does not have to bulk up those rates with commercial administration costs and profit margins. Her Majesty’s Loyal Opposition spends so much time being Loyal, there is little left for Opposing such scandals.
Of course, the same thought applies to the Emperor’s net zero attire as a whole: if they shone too bright a light on the plans, the Opposition might be seen as climate deniers.
Being led down the right path for the wrong reasons is preferable to the right reasoning taking us down the wrong path. That may justify the Emperor’s net zero attire but not the Treasury’s wrong-headed approach to nuclear. On the other hand, (and no, I wasn’t at Winchester) the Treasury is surely right to seek to protect the economy and consumers’ pockets. Philip Davies MP is also correct in condemning the net-zero enthusiasts for taking the UK down a road the rest of the world does not take too. Saving only our 1% of global emissions would be simply “futile” as he calls it.
This is a global problem and it has to be solved globally. Assuming that the UK has some sort of divine right to world leadership to save the world is the sort of vanity that cost Charles I his head. In fairness, however, COP26 is proving far more productive than the cynics expected but we must wait to see if pledges are turned into action. Our Chancellor’s attention-getting pledge of making listed companies annually report their greening progress looks to me like more trees having to be cut down. But then the Treasury was always creative when it comes to putting their hands in our pockets.
Calling together 200 world leaders of countries, most of whom with equally little, or even less, contribution to emissions, is just as daft. The few major world emitters need to find the solutions and then the levers to get the necessary (which might not need to be much) acceptance from the rest. Key is to give far more thought to the optimal speed of transition. China has set 2060 as their target date rather than 2050 and they may be right.
The Treasury is right that overall, but not in the case of AMRs, the UK needs to move at the speed of the convoy, not commit kamikaze.