A new analysis suggests that Labour's commitment to net zero policies could impose an annual cost of over £540 on cash-strapped families in the United Kingdom by 2050. The report, originally commissioned by former Conservative energy secretary Claire Coutinho and later completed by the think tank Onward and advisory firm Transpira Energy, contrasts the cost of the current net zero trajectory with a strategy prioritizing lower energy prices.
The analysis found that the pursuit of current net zero policies could cost the country £320 billion by 2050. It proposes an alternative "Cheap Power" system that would rely more on nuclear and gas, and less on renewables, than the existing strategy. This approach, according to the report, could make electricity a third cheaper by 2050 and nearly 80% clean.
According to the report, a strategy focused on reducing energy costs could save households approximately £540 per year by 2050, while still achieving close to 80% clean energy. This approach would also reduce wholesale electricity costs and decrease the need for extensive new pylons and cables to connect renewable energy sources to the grid.
The authors of the report criticized the government's approach to the electricity sector as "incoherent," stating that it rushes decarbonization through intermittent renewables without fully accounting for the associated system costs, such as grid balancing and transmission infrastructure. This, they argue, drives up electricity prices, making it more expensive for consumers and businesses adopting electrification technologies.
Kemi Badenoch, the Conservative party leader, described the report as offering a "common-sense" approach, advocating for the abandonment of the current strategy. She argued that current net zero targets have increased energy costs, weakened the industrial base, and increased reliance on energy imports without sufficiently enhancing resilience to climate change impacts.
In response, Shadow Energy Secretary Miatta Fahnbulleh stated that the Conservatives, by potentially following the report's recommendations, would "tie Britain to the fossil fuel rollercoaster and keep bills higher for families." She asserted that Labour is investing in clean energy jobs and cutting taxes on electricity bills to provide financial relief. Fahnbulleh also emphasized the need to continue investing in clean power, especially amid global fossil fuel price volatility and climate-related events, arguing that turning away from clean power would not lower bills or address the climate crisis.
The report's findings emerge as Prime Minister Rishi Sunak announced a cut in VAT on electricity bills to offer consumers financial relief. UK electricity prices are among the highest globally, exacerbated by international conflicts.
The UK's commitment to reaching net zero by 2050 was established by the Conservative government in 2019. Labour has maintained this ambition, aiming for a 95% carbon-free grid by 2030, while some within the Conservative party have expressed skepticism about the feasibility of these targets and have proposed repealing the Climate Change Act and removing green levies.