Net zero target risks costing uk households billions more study warns

Plans to advance the United Kingdom to net zero carbon emissions by 2050 could impose an additional financial burden of £350 billion compared to a slower decarbonisation pathway. Analysis conducted by the National Energy System Operator indicates that the nation could save an average of £14 billion annually by relaxing the legally binding obligation to reach net zero. This figure equates to roughly £500 per household each year, or 0.4 per cent of the UK’s gross domestic product.

According to the findings, the premium associated with the net zero target is projected to be most acute in the next decade, with costs exceeding £40 billion in certain years. Should gas prices decline below current government forecasts, the annual net zero premium could average £19 billion over the subsequent 25 years. Conversely, even with elevated gas prices, the net zero strategy would remain approximately £5 billion more expensive yearly, although the UK would be better shielded from price shocks similar to those caused by the recent European energy crisis.

These calculations have amplified scrutiny from critics of the current net zero policy, particularly among Conservative leaders and Reform, who advocate for a reassessment or outright repeal of the emissions target. Claire Coutinho, the Conservative shadow energy secretary, argued that the accelerated approach to net zero is significantly increasing the cost of the national energy system.

A spokesman from the Department for Energy disputed the analysis, asserting that these figures do not accurately represent the true costs or the substantial longer-term benefits of transitioning to clean energy. The spokesperson highlighted potential advantages including lower bills, energy security, and the creation of skilled employment opportunities. The department insists that future cost trajectories rely heavily on fuel market developments and the speed of private sector investment in new technologies.

The NESO model examined two distinct scenarios. The first aligns with Labour’s 2030 clean power vision and requires a sweeping transformation including broad adoption of heat pumps, a significant expansion of offshore wind and nuclear generation, and near-complete decarbonisation by mid-century. The alternative scenario maintains current policy momentum, allowing for increased electrification and electric vehicle uptake but retains natural gas as a substantial energy source. Under this scenario, emissions would drop to about half their present levels by 2050, falling short of net zero.

Both scenarios predict a considerable decrease in the share of GDP spent on energy by 2050, declining from around 10 per cent today to 5 or 6 per cent. Net zero would become cheaper than the slower pathway only after 2046, with higher costs in the initial decades. The comparisons do not incorporate carbon tax effects, which, if included, would favour net zero, nor do they fully account for the broader economic and health benefits of domestic clean energy investments. Upgrading the grid and moving to renewable sources could enhance energy independence, insulate the UK from international supply shocks, and create significant new employment in British industry.