“I have absolute faith,” energy secretary Ed Miliband has said, that Net Zero will “do great things for our country and our world.” Inconveniently, an investigation by one of Britain’s leading energy experts provides evidence that our growing reliance on Milliband’s beloved renewable forms of energy, not the “rollercoaster” fossil fuels market, is more likely to have a devastating economic effect.

For the past two months, Professor Gordon Hughes, a senior fellow at Washington’s National Center for Energy Analytics and Edinburgh University’s former head of economics, has been working with UnHerd to develop a sophisticated computer model of the UK’s electricity system which provides a robust picture of power generation and why the economic pain is only set to continue.

Miliband, according to Hughes, is starting from a false premise. He is “unambiguously wrong” to claim that the principal cause of rising bills to date has been the price of natural gas. In fact, the wholesale price of electricity, which is where changes in fossil fuel prices are most clearly seen, has generally been constant for the past 20 years. And yet in that same period, electricity bills paid by businesses have almost quadrupled, while those of domestic households have more or less tripled.

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It’s true that Russia’s invasion of Ukraine in 2022 saw the European natural gas price surge briefly by up to 500%, while there was a smaller, short-lived spike in 2008, caused by an imbalance between supply and demand. But to blame, as Miliband does, “petrostates and dictators” for the fluctuations is, according to Hughes, just a “convenient scapegoat”. In fact, it’s the ever-growing thicket of taxes, levies and subsidies, stemming from the switch to renewables, which has caused the price increase for these added extras now comprise more than three-quarters of the cost of electricity on household bills. According to Hughes, “the steady increase in inflation-adjusted electricity prices over the last two decades is largely a matter of self-inflicted harm”.

And his model reveals that under the Government’s 2030 clean power plan, much worse is yet to come.

For true believers like Miliband, this would be a price worth paying if Britain really could become a net-zero paradise. But unfortunately, given the basic inefficiency of renewables, and the fact they often don’t generate power for hours or days at a time, fossil fuels are destined to remain part of our energy mix for many years. This means that if we want to keep the lights on, we are going to have to spend billions of pounds well before 2030 to build new, back-up gas-fired power plants that Miliband claims will only be used 5% of the time, simply because so many in our existing fleet are worn out.

The single biggest element in the coming increase projected by the model is the cost of the planned expansion in renewables. Official estimates of its cost, says Hughes, are too low, and judging by recent market data, the price for constructing new wind and solar farms is likely to be around £150 billion over the next five years — all of which will be added to bills.

Another factor is Britain’s increasing dependence on electricity supplied via undersea cables from abroad. According to the Hughes model, the more electricity we import, the more we pay. But without it, there will be blackouts. In 2024, after all, Britain was a net electricity importer 91% of the time. Yet foreign energy cannot be relied on. Norway has already passed a law allowing its government to block the sale of electricity when its own supply is scarce. Other countries may well follow suit.

You might argue that high prices from European supplies are, in turn, caused by spikes in the natural gas market. But that, Hughes’s model shows, would once again be false: gas accounts for less than 15% of Germany’s energy mix, and less than 5% of France’s. And while Miliband claims his Net Zero plans are needed because gas prices are always bound to rise, that’s also untrue. In Europe, the long-term trend has been stable for 25 years, while in America, the fracking boom has seen costs fall. In other words, to insure against another 2022 — an unusually bad year — Miliband wants to transform British energy in ways that Hughes’s model shows will incur much long-term hardship. That, he notes, “seems like rather a bad bargain”.

Worse is to come, especially once Labour’s green revolution really kicks in. It’s certainly true that wind and solar farms can generate energy from nature, saving operators on fuel costs. But the “full system costs” of renewables wipe out these gains. If, for example, the wind doesn’t blow, turbines will need backup generators. And though Miliband says he wants an eightfold increase in large-scale batteries to store electricity when the weather doesn’t cooperate, the technology only functions for around two hours. This winter, we’ve had days on end without wind, and Hughes’s model suggests batteries would make up just 10-15% of the shortfall.

How, then, would Britain secure the rest of the energy it needs? With natural gas! While Miliband claims gas-powered plants will only need to operate 5% of the time by 2030, Hughes suggests the real figure will be at least three times as high — bearing in mind that the Government says growth in electric vehicles, heat pumps and immigration will increase demand for electricity by 11%. To create a reserve big enough to cope when renewables aren’t functioning and parts of the system “trip off” because of a fault, Hughes says that by 2030, Britain will need some 50 gigawatts (GW) of gas or diesel generating capacity, up from 30 GW now, partly because nuclear stations are due to shut, and we cannot rely on electricity always being available from abroad.

Of course, existing gas plants could remain operational, but only run when needed. But this would ignore another problem. The “open cycle” variety of gas-powered turbines that can be fired up quickly, making them suitable for occasional use, have a lifespan of around 30 years — and almost all in Britain have already reached this limit. By 2030, two-thirds of the less adaptable “closed cycle” type will be similarly aged. Even if we make generous assumptions about how many old facilities might still be available, this means building a whole new fleet over just five years, even though these plants would often lie idle.

All this will obviously cost billions. Current turbine prices come in at some £60 million per GW, so building new back-up plants with a total capacity of 30 GW would cost £18 billion, and 50 GW £30 billion. This implies a further question. With the economy in the doldrums, and the Treasury under pressure to fund budget increases in health and defense, how exactly would Miliband pay for his net-zero dreams? Here, again, the answer is levies on bills, the fees that have already raided pockets so dramatically. Contracts for backup power plants are issued by the Government through what it calls the “capacity market”. This is already skyrocketing, from £120 million in 2017 to £1.1 billion in 2024. With renewables continuing to crowd out reliable alternatives, the capacity market is increasingly needed. And Hughes’s model says these levies are likely to reach an eyewatering £7.4 billion by 2030 — a conservative estimate.

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The model identifies still further costs. One is the permits operators must buy to burn gas and other fossil fuels, and whose prices are constantly rising. Then there’s the so-called “balancing mechanism” — whereby operators are paid to generate energy in an emergency, or else cut off production entirely in the case of grid bottlenecks. Taking in all these factors, Hughes’s model suggests the cost of electricity production could reach almost £60 billion by 2030, between 70 and 80% higher than it would be if the UK stuck with its current, non-Net Zero system.

Nor is this even the whole story. All told, electricity generation only accounts for about half your bill. The rest is formed of “network charges” — paid to the National Grid and energy firms for ensuring the power gets from producers to end users. The exact numbers are more difficult to calculate. But the National Electricity System Operator (NESO), the Government-owned company that runs the grid, has said that to create a Net Zero system, it will need to vastly expand its network to link up new wind and solar farms. The upshot? A potential outlay of £65 billion by 2030, with network charges rising from between 80 and 117%.

The economic impact of all this, it hardly needs stating, would be disastrous. “It is a tax on all of us,” is how Hughes puts it. “Electricity-intensive industries which compete in world markets can only meet it by reducing wages or profits. Since workers are unwilling to accept reductions in their incomes, the result has been that they have closed their activities in the UK and moved elsewhere.” The evidence is already in, with the recent demise of the Bridgend steelworks, the pending closure of the Grangemouth refinery and the likely end of car manufacturing at the BMW factory in Oxford. Vauxhall, Hotpoint, JCB and niche manufacturers of items such as mattresses are also cutting jobs and have warned they may soon leave Britain too.

Not that Ed Miliband seems to mind. Only last week, he reiterated his commitment to Labour’s net-zero targets, stating that “the single most important thing we can do is stick to our clean power mission”. It seems that to a man seeking to build a world-leading utopia, something as transient as Britain’s future prosperity doesn’t mean very much.

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Technical details of Hughes’s model can be found on his website, Cloud Wisdom. He is also willing to share the model’s code with those who want to know still more.    

The appeal lies in the fact that it promises to solve a rather serious problem in the current “energy transition” plan, which primarily concerns decarbonizing electricity, which accounts for 40% of global emissions, and to a lesser extent heating and land transport. But when it comes to aviation, shipping, steel, cement, plastics, fertilizers, agriculture, construction and the arms industry, the prospects for decarbonization remain remote, well beyond the 2050 Net Zero targets. Energy experts — and experts in euphemisms — sometimes describe these sectors as “hard to abate”. Faced with the predictable failure of decarbonizing the economy through an “energy transition”, CCS technology has emerged as an alternative solution. It works by capturing CO2 billowing out of industrial chimneys, transporting it, and injecting it underground. Coupled with biomass electricity generation, it could theoretically pump emissions out of the atmosphere. This would mean that we could protect the climate while also using fossil fuels to produce electricity.

It all sounds miraculous, but the fact is CCS is just another polluting industry — and on top of that, it is astoundingly inefficient and difficult to scale. The amount of electricity required in the process is such that one additional power station would have to be built for every two or three power stations just to capture the emissions. And this is only the first step: all the CO2 still needs to be liquefied, shipped far away and stored underground. A recent study estimates the loss of efficiency for a thermal plant equipped with CCS at 58%.

And not only does it consume a vast amount of electricity, CCS also demands a mass of public money: $8 billion in the United States by 2026 (not counting tax deductions), $5 billion in Denmark, $3 billion in France, and $2 billion in Norway. Yet the prize for big spending still goes to the British government, which is chucking subsidies at companies that profit from the fossil fuel status quo. Thanks to CCS, whole sectors of industry — from cement works to blast furnaces and power stations — can carry on as before, while their spin doctors talk emptily about the climate emergency and Net Zero.

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The proponents of CCS cite the “Net-Zero” scenarios of the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), which each predict that billions of tonnes of CO2 will need to be captured and stored underground in the coming century. This might suggest a bright future for carbon capture technology. Unfortunately, the reality is more complex. When it comes to CCS, it is often difficult to distinguish between neutral expertise and industrial lobbying. And there are many who argue that research into the technology is compromised by financial links to fossil lobby groups.

Carbon capture technology first emerged in the Seventies, in the oil fields of Texas. It was primarily a natural gas purification technique; the CO2 recovered from that process could then be injected into oil wells to increase their pressure. At the end of the decade, when the issue of climate change surfaced in the political arena against the backdrop of a US coal boom, carbon capture began to appear as a possible “solution” to the problem.

At the time, the experts were extremely reserved. In 1979, the World Coal Report, which brought together hundreds of experts from all over the world, agreed that carbon capture at scale was impracticable. In 1985, at a conference of the Air Pollution Control Association, researchers from the Brookhaven laboratory estimated that equipping a coal-fired power station with CCS would increase the price per kWh by 70% to 150%. Initially, IPCC Group III — the panel of experts in charge of studying the solutions to global warming — followed this line of reasoning. Their first report in 1995 said very little about carbon capture, while their 2001 report devoted a section to the subject, but pointed out that nuclear power would be a far cheaper option. Yet more than a decade later, the IPCC had a change of heart, with its 2014 and 2022 reports granting a considerable role to carbon capture technology.

Why the sudden U-turn? In the intervening years, climate experts started paying more attention to emerging research funded by the fossil fuel industry, which began pushing CCS as a solution. Governments liked it, in particular those of the USA, Canada and Norway. In February 1992, the first international conference on Carbon Dioxide Removal was held in Amsterdam, sponsored by the US Department of Energy. In its wake, the oil majors (Exxon, Total, Statoil, BP, Chevron, Shell) joined forces with the International Energy Agency to create the IEA Greenhouse Gas R&D Program, a think tank tasked with studying and promoting CCS techniques. This led to the establishment of a biennial conference: the Green House Gas Control Technology (GHGT). These conferences, still held today, are attended by several hundred people and financed by the major oil, electricity, steel and cement producers.

By the turn of the millennium, the idea of carbon capture had entered the mainstream. In the early 2000s, George W. Bush’s presidency began pushing CCS, creating a “Carbon Sequestration Leadership Forum”, to which the G8 and the European Union signed up. At COP 7 in Marrakech in 2001, the IPCC was asked to study it as an option. The resulting 2005 special report marked a turning point for the technology: no longer was the IPCC skeptical about its scalability. This time the additional cost of power generation with CCS was presented as relatively low — from 1-5 cents per kilowatt-hour — and the natural reservoirs available for storing CO2 as gigantic, of the order of 2,000 gigatonnes.

Yet this glowing report was built on research financed by the fossil fuel industry. Many of its references were taken from GHGT conferences, which were set up to push this technology. Even worse, a number of the IPCC experts on carbon capture were directly employed by oil companies. However, the doubtful pedigree of this expertise was quickly forgotten thanks to the miracle of the peer review process. In 2007, when a new peer-reviewed journal called International Journal of Greenhouse Gas Control was founded, the editors argued that the 2005 report had been a watershed moment in the acceptance of CCS as a serious mitigation option. The following years saw a considerable expansion in the scientific literature on the subject.

In the space of 30 years, in the scientific literature, CCS has gone from being a false promise to a “green technology”. Yet over the same period of time, its history has been one of failure, cost overruns and broken promises. The technology has already swallowed up considerable sums of public money in R&D — including $5.3 billion provided by the US Department of Energy between 2011 and 2020 — with very disappointing results. Worldwide, only two coal-fired power stations capture part of their CO2 emissions, and there is currently not a single blast furnace or cement plant that has successfully implemented the technology.

The discrepancy between the IPCC’s great expectations for CCS and the reality casts doubts upon the nature of expertise. And it reveals the danger of leaving expertise on climate change “solutions” in the hands of modellers, who often fail to take concrete technological difficulties into account. Their models must be taken for what they are — thought experiments on computers — and governments must not hide behind their curves to shower the fossil fuel industries with “green” subsidies. After all, it is hardly democratic to gamble public money on speculative green technology. Perhaps Keir Starmer’s $22 billion would have been better spent elsewhere.