If there’s one thing that this cost of living crisis is making crystal clear, it’s that increasing efficiency and reducing unnecessary use of expensive, volatile fossil fuels is the only sane way forward. This is true before you even consider the costs of doing nothing on climate change.
British households are especially exposed to volatility in oil and gas markets. With eighty-five percent of homes using a gas boiler for heating and the vast majority still using a petrol or diesel car, the 500% increase in the wholesale price of gas and record petrol prices (191p a litre) are biting hard. ‘Electric households’ (with an electric car and heating) are paying £1,200 less per year, despite ‘green levies’ being almost entirely on electricity bills.
The fact is that the UK will never be able to control these astronomical prices because the markets are international. The North Sea is a mature and declining basin (meaning we’ve sucked out the best stuff that is easily drillable), and most of what we extract from it is exported at market prices anyway. Fracking, even if economically viable following cuts to seismicity regulations, property law reforms, and an undetected transformation in British geology and population density, would not cut prices.
Accelerating net zero will help with the cost of living by reducing the burden on gas to keep the British economy going. The economics are simple: more electrification means less expensive gas used. That’s why it was great to see another set of record breaking renewables auction results last week. The energy industry is going to be bringing enough power for 12 million homes online in five years at record low prices - four times cheaper than power produced from gas.
Clean energy means using less expensive gas at the supply end. Insulation can help us reduce the amount of energy we waste when we heat our homes. Even the biggest fan of ruinously expensive fossil fuels would support wasting less of them, especially given the challenge ahead of us this winter where we could see bills as high as £3,300. Insulation helps people stay warm for less. It really is that simple.
Beyond this cost of living crisis, the Office for Budget Responsibility has been clear: unmitigated climate change would have “catastrophic economic and fiscal consequences for the UK”. And, in terms of costs, the sooner we get on with the job of transitioning to a net zero economy, the better.
These days, the transition to net zero over three decades is projected to cost less than what we spent on Covid in a year. At current gas prices, getting to net zero would actually save the UK economy 0.5% of GDP. The difference is that this investment will come with big returns - industrial opportunities, energy security, cleaner air, and warmer homes to name a few. And overall, due to continuous technology improvements, cost forecasts are continuously coming down.
It’s fair to ask if we should invest money in net zero if other countries don’t. But the answer is that we should because other countries are. With 90% of the world’s GDP covered by net zero targets, the UK can grab its share of new markets, from carbon storage to sustainable aviation fuels, but only if we don’t give up.
The current cost of living crisis is directly caused by our reliance on volatile fossil fuels. The global economy is demanding net zero technologies to reduce greenhouse gases in the atmosphere. The question isn’t can we afford to do net zero, it’s whether we could afford not to. Of course the cost of living crisis should be the overwhelming focus of politicians at the moment. Net zero provides some of the best solutions.
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