Andrew Montford is the deputy director of the Global Warming Policy Forum.
According to Claire Perry, the Government’s former Climate Czar, Dominic Cummings doesn’t “get” the green stuff, seeing it as an obsession of southern posh boys that is of little interest to key voters in the Red Wall seats. One of those posh boys is undoubtedly the Prime Minister, whose plan for a “Green Industrial Revolution” was launched this week.
While long on vision, the presentation was very short on detail, but there was plenty to make the humble taxpayer very nervous indeed. For example, item one on the agenda of Boris Johnson’s revolution will be to bring about a quadrupling of offshore windfarm capacity. To call this a major blunder would be to take British understatement to an extreme.
Let me explain why. For the last 20 years, offshore windfarm developers have been moving to sites further and further offshore, in search of more reliable winds, and they have been building bigger and bigger turbines, seeking to extract more power from them.
Unfortunately, the payback has been very disappointing, and the overall cost of a megawatt hour of wind energy has steadily risen, so that now it is perhaps four times that from a gas turbine. To this must be added the cost of dealing with the intermittency of wind power, so the true ratio may be more like five or six times as much.
Worryingly, recent data from Denmark suggests that offshore windfarms are ageing much faster than previously thought, which means that their useful lives are shorter and their costs commensurately higher.
Nevertheless, windfarm advocates argue that a fundamental change in the industry is in the offing, and that costs are about to fall through the floor. In their support, they point to recent bids to supply energy to the grid, which have been at a fraction of any price seen before. If the advocates are correct, then the Prime Minister’s revolution might bring about a mere doubling of electricity prices. This will still be devastating for the UK’s remaining manufacturing base, but it is nothing compared the carnage if he is wrong.
And unfortunately, he is indeed wrong. When they have got all their funding in place, windfarm developers announce the details to the financial markets, so we have a good idea of how much money is being borrowed to build these allegedly super-cheap windfarms. We can already see that there has been no change in the capital costs. Wind power is expensive, and will remain so.
How can we explain the low bids to supply power to the grid then? What the windfarm advocates never explain is that these “contracts” are not actually binding at all. Given what we know about the high and rising bill for running a windfarm, it seems most likely that operators are simply gambling on future market prices being much higher. When the time comes, they will simply tear the “contract” up and walk away.
If that turns out to be the case, what will the impact on electricity prices be? A tripling? Worse? The industrial and commercial carnage is unimaginable. It would be an economic disaster of historic proportions. And don’t forget that the manifesto commitment to decarbonise the economy involves the electrification of pretty much the whole economy.
In other words, the price of everything is going to rocket. So Johnson can speak airily of the transition to electric vehicles (Item Four of the Revolution), but that doesn’t look like an easy sell on the doorsteps of Red Wall seats if the price of power is going to triple – never mind the premium to buy the vehicle or the cost of replacing the batteries.
Decarbonising housing (Item Seven) doesn’t look like a vote-winner either; not when you have taken into account the cost of retrofitting insulation (£65,000 per property to decarbonise by 50 per cent is a rough rule of thumb for a modest dwelling), installing a heat pump (£10-12,000), and upgrading the household wiring and the distribution grid. Oh yes, and you’ll probably need to pay for a secondary source of heat for cold days, when heat pumps tend not to deliver.
There are no silver linings either. While the cost of decarbonising the economy will certainly be many trillions of pounds, the Prime Minister conjures up the prospect of hundreds of thousands of green jobs as some sort of compensation. However, Nigel Lawson has pointed out that such claims are an example of a common piece of economic illiteracy known as the “broken windows fallacy”. In reality, far more jobs will be destroyed by the resulting energy price rises than will ever be created. The gross employment effect of green policies may be positive, but the net effect will be horrifically negative.
Net zero is a fork in the road for the Conservative Party. The economy has suffered grievous damage over the last year and the national debt has surged to levels that were previously unimaginable. The gloss has well and truly been taken off the party’s reputation for economic competence.
That being the case, it’s difficult to understand why the party of Thatcher and Lawson would even contemplate spending taxpayers’ money on the scale envisaged by Johnson’s team – and to do so without even having imagined some of the technological solutions that would be required, let alone put a cost on them. This is a degree of economic irresponsibility that the public wouldn’t even expect from the more eccentric parts of the Labour Party.
No doubt Nigel Farage is watching the government’s developing green obsession with considerable interest. So while Cummings might wonder how well environmentalism plays in Red Wall seats, the reality is that keeping the country on board the net zero ship, and the resultant loss of any semblance of competence, will mean that seats up north will become the least of the party’s concerns.