CCC Demands Uneconomic DEEP Cuts to Emissions

The Climate Change Committee is demanding we cut 81% of emissions by 2035, just as new figures show insulation payback times in centuries.

Introduction

Last weekend, the Climate Change Committee (CCC) drew attention to itself again by demanding we cut emissions by 81% from 1990 levels by 2035. Their letter to Ed Miliband came in response to his request for advice on what our Nationally Determined Contribution (NDC) should be at COP30 next year in Brazil.  Apparently, pre-announcing the target now gives Miliband the opportunity to demonstrate “climate leadership” at COP29 later this year.

It is time to set these commitments in a global context and test their feasibility against other recently announced data.

Global CO₂ Emissions

Our World in Data (OWID) helpfully produce a chart and data showing the progression of CO2 emissions over a long period, see Figure 1.

Figure 1 - World, China and UK CO2 Emissions since 1950 (from OWID)

As you can see, the emissions for the world in total and China in particular, have been growing significantly and those of the UK are small by comparison and have been shrinking. In fact, per capita emissions in China exceeded those of the UK in 2014. In 2022, the latest year for which data is available in OWID, the UK emitted 0.86% of the global total and global emissions rose by 333.2m tonnes of CO2, which is more than the UK’s total emissions of 318.7m tonnes. The IEA has published its estimate of emissions for 2023 and shows that global emissions grew by 410m tonnes in 2023, again far more than the UK’s emissions. These statistics make the claim of “climate leadership” look risible.

The CCC’s target of an 81% cut in emissions from 1990 levels by 2035 is another way of saying we need to cut 2022 emissions by 64% to achieve their target. In the unlikely event the target is met, UK emissions would then be 0.31% of the 2022 global total. The UK’s cumulative emissions since 1750 amount to only 4.4% of the global total. Whatever we do to reduce emissions is a rounding error in global terms and makes the CCC’s claim to be informed by the “latest science” look ridiculous.

Cost Effectiveness of Emissions Reduction

The CCC claims their target can be “achieved in a way that benefits jobs and the economy” and that

“The technologies needed to achieve it are available, at a competitive price, today. Investment in low carbon technologies – electric vehicles, heat pumps, and renewables – needs to come now for this target to be achievable.”

The CCC appears blissfully unaware the UK has the highest electricity costs in the IEA, largely because successive governments have followed their advice and installed many of these “competitive” energy technologies.

The CCC repeated the ten commandments in its recent progress report to Parliament. These are the measures it believes should be taken to keep us on track to meet its target. They have called for decarbonisation of public sector buildings and is delighted that the Government has announced plans to reinstate energy efficiency requirements for rented homes.

By coincidence, the Government published its latest report on the Demonstration of Energy Efficiency Potential” or DEEP a few days before the CCC’s latest missive. A team has installed a range of energy efficiency measures in a sample of fourteen homes across the country. The range of solutions implemented included some low-cost measures like loft insulation and air tightness improvements but also included more expensive ideas such as solid wall insulation and combinations of measures. Figure 2, taken from the synthesis report, shows the costs ranged from a few thousand pounds for individual simple measures up to about £48,000 for more complex solutions. Note these costs exclude the installation of a heat pump and larger radiators.

Figure 2 - Cost of DEEP Case Study Retrofits

We have to delve into the more detailed case study report to understand the payback periods of the different insulation measures as shown in Figure 3 (note the log scale on the y-axis).

Figure 3 - DEEP Case Study Payback Periods

The most cost-effective measure in the study is loft insulation with a payback period of about forty years. However, all the other measures, particularly the whole house approach have average payback periods up to three or four centuries. The outlier spikes even show payback periods further away from today than the Roman occupation of Britain. The report does make clear that the payback periods have been calculated using energy costs of 3p/kWh for gas and 13p/kWh for electricity, both of which are roughly half the retail costs today. But cutting the payback period down to “only” one or two centuries instead of three or four makes no practical difference to the economic viability of these measures. Moreover, the report also says that the projects were undertaken during the pandemic, which is prior to the recent inflationary surge, so the costs are likely to be significantly higher than indicated, pushing the payback period back up again.

The report acknowledges this problem when it says these results “illustrate that financial drivers for retrofits may not be particularly strong motivators, and that non-financial motivations for installing retrofits (improving comfort, addressing fuel poverty, and reducing peak heat) may be more compelling arguments for insulating the nation’s homes.” In other words, they want us to spend loads of money to feel better about ourselves, rather than because it makes economic sense.

No wonder the CCC want to begin with spending other people’s money on the decarbonisation of public buildings first, because nobody in their right mind would spend their own money on this stuff. These results also show why the Government wants to force landlords to spend on insulation measures, because a rational landlord would install only loft insulation and leave it at that.

Impact on Electricity System Modelling

These findings cast serious doubt on the modelling of the future electricity system carried out by the National Energy System Operator (NESO) in FES24. As we can see in Figure 4, they assume electricity demand will be cut by about 100TWh through improved insulation and behaviour change.

Figure 4 - NESO estimate of Energy Savings from Insulation and Behaviour Change

By behaviour change, they mean turning the thermostat down by a degree or so. They expect people to spend of the order of £50,000+ on insulation measures and heat pumps with a payback time measured in centuries and after all that spending, shiver in a colder house.

NESO plans for the grid and generation capacity assume these totally uneconomic insulation measures are implemented and generate energy “savings” of around 100TWh. This saving compares to their plan for a total demand of 615-719TWh across Industrial & Commercial, Residential and Transport sectors in their pathways that achieve Net Zero by 2050. Clearly, their grid capacity calculations are underestimating the amount of real demand by a considerable margin.

Conclusions

We can see that the Climate Change Committee has got its head well and truly stuck in the sand, unable to see the economic and social carnage being imposed upon us by its own policies. Yet, they want to double down and impose even more damaging measures in the coming decade.

It is alarming that different arms of Government and policymakers are disjointed, with neither the CCC nor NESO aware that the insulation measures being proposed make no economic sense at all. We discussed earlier that we are not on track to deliver the renewables capacity required to meet the existing targets to 2030 or 2050. We are even further away from delivering the additional 100TWh of electricity required to cover the assumed savings that will never materialise. This makes it more likely that we will suffer shortages, brown outs and blackouts.

We are already paying through the nose for our electricity; not being able to get it at any price because they have not built enough capacity will likely lead to social unrest and catastrophic economic decline. This is even more proof, if any were required, that the Government’s Net Zero plans simply do not add up.

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