Net Zero was signed into law with barely a debate and no clear price tag. New analysis shows the true costs are wildly uncertain
Decarbonising the economy is a worthwhile long-term goal. It has long been established that CO2 emissions lead to rising global temperatures with real negative effects. Aside from that, given the current state of geopolitics, it’s probably a good idea to leave some energy-dense hydrocarbons in the ground to help whatever civilisation succeeds ours jump-start their own industrial revolution after the inevitable nuclear holocaust.
That said, a desirable objective can be achieved in a more or less disruptive way and at a more or less acceptable cost and pace.For example, it’s probably a good idea for me to lose some of the weight I managed to gain over Christmas. But if I decided to achieve this goal by chopping off one of my feet, it would not require a “weight loss sceptic” to suggest that the costs of this approach will trump the benefits.
The same is true of Net Zero. This was the commitment passed at the scrag end of Theresa May’s premiership which committed the UK government to reduce net emissions to zero by 2050, rather than the 80% reduction previously committed to. It passed Parliament as an amendment to the Climate Change Act with remarkably little debate or open opposition. You might imagine this was because our politicians had rigorous data on just how much this policy would cost. Surprisingly, not.
On Tuesday the Institute for Economic Affairs released a report by energy analyst David Turver outlining the various estimates that the UK state and arms-length bodies have come up with for the cost of Net Zero. What stands out is just how varied the cost estimates are, and how shaky some of the assumptions underpinning them are.
The first government estimate came from the Treasury under then Chancellor, Philip Hammond. In a letter to Theresa May in early 2019 he warned that a transition to net zero by 2050 would cost between £50bn (the estimate of the Climate Change Committee) and £70bn a year (BEIS’s estimate). “On the basis of these estimates”, he wrote, “the total cost of transitioning to a zero-carbon economy is likely to be well in excess of a trillion pounds.”
“On the basis of these estimates”, he wrote, “the total cost of transitioning to a zero-carbon economy is likely to be well in excess of a trillion pounds”
It was actually worse than he outlined. If the higher estimates Hammond got from BEIS (the then-responsible ministry of Business, Energy and Industrial Strategy) were accurate, it would have suggested a total transition cost of £2.1tn over a 30-year period. Well in excess of a trillion pounds indeed.
Then, in 2020, the Climate Change Committee came out with an estimate of 0.5 to 0.6% of GDP per year from 2030. In 2025 they then revised this estimate down to “only” a net cost of £108bn from 2025-50.
In their July 2025 Fiscal Risk Report, the OBR got in on the action, this time in projecting the cost of Net Zero to the Treasury. Once green subsidies and forgone tax revenue are accounted for, they came to a cost of £803bn; almost 8 times greater the CCC’s estimates for the net cost to the whole economy.
Then comes various reports from the National Energy System Operator (NESO). The most recent NESO report was released in July 2025, but NESO waited until just before Christmas to supply the technical annex which outlined the costs — and the assumptions behind those costs.
So, what does this long-delayed annex show? Well, they present the gross costs for two scenarios. The first is “Holistic Transition” (essentially the Net Zero by 2050 approach), which forecasts capital and operational expenditure of £7.6tn over the 2025-50 period. This already compares unfavourably to their estimate for the “Falling Behind” scenario in which the UK continues to decarbonise but at a slower pace. This comes in £7.2tn.
But it gets worse. NESO’s costing of Net Zero, high though it is, includes some heroically optimistic assumptions about the future costs of renewables.
Take offshore wind, which is by a significant margin the biggest expected form of renewable expansion in the UK. NESO’s 2025 study assumes that the cost of fixed platform offshore wind will fall from £70/MWh in 2025 to just £53/MWh in 2035. In this they are a bit more pessimistic than the Climate Change Committee, which estimated offshore wind for 2035 delivery would cost just £37.80/MWh.
The obvious problem is that Ed Miliband announced on Wednesday 8.4GW of offshore wind in its latest CfD round at a much higher average strike price of £91/MWh — a price which is locked in and inflation-indexed for 20 years.
As Sam Dmitrui outlines in an excellent blog post, over the 2020s wind energy (by a huge margin the UK’s largest form of renewable energy) has been rising, not falling in cost. Ironically, this is partly because of high energy costs driving up the cost of steel and tight environmental regulations designed to protect marine life drive up the cost of installation. This being Britain, planning restrictions also play a role.
Some of these of the factors driving up the price of wind could be resolved; but even if they were and the the CfD strike prices did come down, it would not fully address the increased network costs that a greater reliance on offshore wind farms bring.
The point of Turver’s report is not to tell the reader whether they should support Net Zero by 2050. Rather, it is trying to highlight just how uncertain, limited and in some cases misleading the estimates and projections being used to justify the policy are.
As we begin to have the debate about Neto Zero (the one we really should have had before we committed to it in 2019), it’s more important than ever that we have reliable figures for just how much the project is likely to cost. But too late is better than never.
