Britain told to rethink net zero strategy as costs soar

As well as the report below, the Sunday Telegraph editor has also weighed in, declaring ‘We’ve lost the war against climate change. Time to scrap net zero’ which is called ‘a futile gambit’. Of course the so-called war has never existed except in the heads of those who think carbon dioxide, nature’s vital ingredient for growth and energy, is the problem. The costly policies brought in have had no effect on it. The squeeze on living standards and business activity is unsustainable, says this study.
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A new report has warned the United Kingdom is set to face a £40 billion annual bill by the end of the decade as its drive towards net zero energy continues, says Emerging Risks Media.

In a new study The Prosperity Institute say the costs come from the integration of renewable energy systems into the national grid, but these systems are uncompetitive in a free market.

The report explained: “Britain currently has the highest industrial electricity prices and the fourth-highest domestic electricity prices in Europe. While high gas prices contribute to wholesale costs, this paper argues that the dominant driver of elevated electricity bills is the cumulative impact of policies designed to accelerate renewables deployment and achieve Net Zero.”

It added electricity subsidies (Renewables Obligation Certificates (ROCs), Contracts for Difference (CfDs), Feed-in Tariffs (FiTs), and the Sizewell C Regulated Asset Base (RAB) levy) have risen from £0.5 billion in 2010/11 to £11.8 billion in 2024/25 and are forecast to reach £14.9 billion by 2030/31.

Grid integration costs – covering transmission network charges, balancing services, and the Capacity Market – have increased from £2.8 billon to £8 billion over the same period and are projected to rise sharply to £25.3 billion by 2030/31.

Combined, these subsidy and grid integration costs have grown six-fold since 2010/11 to £19.8 billion in 2024/25 and are forecast to exceed £40 billion annually by 2030/31. This will be equivalent to more than £1,400 per household.

The organisation said additional policy-driven costs from Carbon Capture and Storage (£21.7 billion committed over 25 years), green hydrogen support (potentially £16 billion over 15 years for the first two allocation rounds), the Green Gas Levy, and the Sustainable Aviation Fuel mandate will add further billions per year, largely recovered through energy bills or higher consumer prices.

The paper contends that these costs stem primarily from the large-scale integration of intermittent renewables (wind, solar, and biomass).

“Their full cost and intermittent nature make renewables uncompetitive in a free market, so they need to be subsidised,” The report continued. “Their intermittency drives substantial additional expenditure on grid expansion, balancing services, curtailment payments, and backup capacity. In contrast, the direct fuel cost of gas-fired generation remains relatively modest by comparison.

“Any incoming market-driven government committed to lowering energy prices and restoring national prosperity will need to treat these costs as a ‘Day One’ matter and begin pursuing cuts immediately.”
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To address these costs, the paper recommends a series of measures which should be pursued, particularly if carbon targets and carbon taxes were removed. These include:

— Repealing or amending the Climate Change Act and adjusting carbon budgets on economic grounds.
— Ending or curtailing renewables subsidies, including setting the Renewables Obligation to zero and renegotiating existing CfD contracts.
— Scaling back grid expansion plans and reducing reliance on long-term Capacity Market contracts for battery storage in favour of firm capacity.
— Renegotiating or cancelling contracts for Carbon Capture, green hydrogen, and related schemes, with compensation limited to verified sunk costs up to a clear cut-off date.
— Renegotiating contracts and reforming the Revenue = Incentives + Innovation + Outputs (RIIO) network price-control framework to improve cost discipline.

The paper added that current trajectories are “unsustainable and risk serious economic damage”.

Full article here.