The Real Cost of Net Zero: Former World Bank Economist By James Reed
Professor Gordon Hughes has just released a report on the economic costs of the UK climate change alarmist net zero, sometimes called zero net, project. The report is published by the Global Warming Policy Foundation, and Professor Hughes is a former World Bank economist, and is Professor of Economics at the University of Edinburgh.
This is of relevance to us here in Australia, as we are on the same pathway as the UK. The amount of new investment needed for the transition from fossil fuels to so-called renewables will be at minimum of 5 percent of GDP for the next 20 years and is likely to exceed 7.5 percent. It is not possible to borrow such a large amount, so the only way will be by a reduction of personal consumption by 10 percent. "Such a shock has never occurred in the last century outside war, and even then, never for more than a decade," Professor Hughes notes. "Commitment to the energy transition is a classic 'luxury belief' held most strongly by those who are sufficiently well-off not to worry about the costs… Indeed at least some of those who promote the transition most strongly are among those who expect to gain from the business opportunities."
However, the globalist elites, such as those of the World Economic Forum, have made it clear that radical reductions in the standard of living of us ordinary people, but not for the elites, is not negotiable.While the conflict with the farmers is an early example of this, we are set to see even wider conflict once many of the globalist policies begin to bite against the lifestyle of ordinary folks. If they do not revolt against this, they will not revolt against anything, and will go passively into the night.
"Bankrupt, blackout Britain where the ever-expanding ranks of the poor get clobbered, open borders place intolerable burdens on public spending and services, the rich spivs get richer backing heavily-subsidised energy white elephants – and those of a certain age look back to the good old days of the 1970s. That isn't quite how Professor Gordon Hughes spells it out in his excellent new report that crunches the energy transition numbers of the collectivist Net Zero project, but it might be considered a fair summation of reading between the lines.
The insanity of Net Zero becomes clearer by the day. The idea that hydrocarbons – a natural resource whose use from medicines to reliable energy is ubiquitous in modern industrial society – can be removed within less than 30 years is ridiculous. In his report published by the Global Warming Policy Foundation, Professor Hughes concerns himself with the transition from hydrocarbons to 'green' technologies such as wind and solar. Forget all the politically-inspired low-ball figures of transition, he is suggesting. Looking at you, Climate Change Committee. It is likely that the amount of new investment needed for the transition will be a minimum of 5% of gross domestic product for the next 20 years, and might exceed 7.5%. Gordon Hughes is a former World Bank economist, and is Professor of Economics at the University of Edinburgh.
There is no chance of borrowing such an "astronomical" amount, notes Hughes, and the only viable way to raise the cash for new capital expenditure would be a two decades-long reduction in private consumption of up to 10%. "Such a shock has never occurred in the last century outside war, and even then never for more than a decade," he notes.
Recent polling in the U.S. has shown that the desire of a majority of citizens to pay for Net Zero barely stretches to more than the 'chump' change in their back pockets. "Commitment to the energy transition is a classic 'luxury belief' held most strongly by those who are sufficiently well-off not to worry about the costs… Indeed at least some of those who promote the transition most strongly are among those who expect to gain from the business opportunities." On this latter point, Hughes was possibly recalling the recent activities of rising media star Dale Vince (£110 million in wind subsidies to date, and counting).
Politicians sometimes blather about the pioneering role taken by European countries in Net Zero. Hughes points out that leaders in China and India are not fools. "Posturing about targets that are patently not achievable and might be economically ruinous is unlikely to convince anyone, although most will be too polite to point this out," he observed.
Writing a foreword, Lord Frost identified a make-believe world inhabited by Net Zero proponents where it is claimed costs will magically come down, new technologies will somehow be invented and promised green growth will pay for everything. "But they never give any evidence for believing this – and, where we can check what they say, for example in the real costs of wind power, we can see that these cost reductions are simply not happening," he said.
On the immigration front, Hughes notes a 1% increase in the British population every year. He notes that 4% of GDP must be invested every year in new (not replacement) capital per head. Of course nothing like this is being spent and capital per head is falling rapidly. "Just maintaining the amounts of capital per head will eat up an amount of investment equivalent to that required for the energy transition," he states.
Squeezing domestic consumption, in other words making the already squeezed poor even poorer by removing all their remaining luxuries in life (older cars, cheap foreign holidays, meat), is the only realistic way to fund the enormous sums required for the Net Zero energy transition. Possibly a glimmer of reality is creeping into political circles with the opposition Labour party having gone through "agonies" and ditched its £28 billion a year green deal. "Clearly, they concluded that it was impossible to sell an increase in the tax burden of that magnitude to a reluctant electorate," he said. In fact, the sums involved in the Labour plan were only a fifth of the estimated cost of transition.
Any future Government wishing to travel the path of Net Zero must make the choices of reducing public services and mandating savage cuts in household expenditure. Needless to say, the general population is in almost total ignorance about these realities. Hughes notes that the electorate has given no indication that they are willing to bear the costs involved. "Indeed until now all they have been told is that there are few or no trade-offs required, and technology will somehow magically solve everything."
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