The net zero enthusiasts tell us the costs of net zero will be low. They say a net cost of around 1% -2% of 2050 GDP. They decline to put an annual cash cost on the combination of investment and subsidies, wishing to net a lot of alleged gains from these true costs and express it as percentage of an enlarged GDP they forecast for 25 years time.
There are other estimates. The OBR said the investment cost will be around will be £1312 bn with a net cost of £321 bn. Mr Hammond when Chancellor thought the costs would be £50 bn a year or £1.5 tn over 30 years.
Clearly the gross costs will be huge. 30 m motor vehicles to replace with battery cars. 30 m homes to have electric heating. Thousands of industrial plants to be replaced with new electric factories. A massive expansion of electrical generation. The replacement of all gas fired power stations. A Switch to syn fuels for aviation. A switch of food production away from animal products.
This investment takes three forms. A small amount will be investment in extra capacity for growth, which we would need to do anyway. A bigger amount could be replacement of existing investment when they are worn out. Again that adds no extra cost if the replacement is as good value as the original or it adds marginal cost where the replacement is dearer or less effective. Then there is the big spend on conversion and premature replacement which is all additional cost.
There are large extra revenue costs. The state will pick up large bills for the mounting redundancies as blast furnaces and Grangemouth are closed to be followed by others. There are large subsidies to get people to buy EVs and heat pumps. Renewable generators get favourable prices and terms.
There are obvious targets to save public money on this wildly expensive command. Stop the £20 bn on carbon capture and storage. It is all extra cost. Cut the over generous subsidies to renewables, running at several billions a year. Wait for battery cars or syn fuel cars to become cheaper and better before buying them.
The £1300 bn “investment” is only part investment. Part of it is a wasteful premature replacement of perfectly good machines, vehicles and heating systems. Making them will simply add to costs and world CO 2