Richard North, 25/10/2021  
 


If he sticks to the five-year cycle, Johnson – assuming that he's still prime minister - will be taking us into a general election in 2024. The winner will not then have to submit to another election until 2029.

Theoretically, that could be the year when Johnson finally stands down – although one might recall that, since 2015, when Cameron took office as prime minister for the second time, we're now on our third premier. And while Johnson is not yet two years into his first full term, it already feels like an eternity.

In short, therefore, we have no idea what our politics are going to look like in 2030, still less in 2035 when we'll have gone through another electoral cycle. And by 2050, we'll have had at least another three cycles. There will be a completely new generation of politicians in office, and many of us will be past caring.

And yet, despite the degree of opacity as to future incumbents, the present prime minister, in pursuing his ambitions for "net zero", seems quite content to pursue a policy line which stretches forward for those thirty years to 2050.

In terms of the timeline, this is equivalent to Neville Chamberlain, in his last year of office, dictating policy to Harold Wilson. Politically, it could put us in a completely different framework and, after 30 years of change – including the trauma of a world war, the UK was a very different country. In thirty years' time, the world could be a very different place.

But, the policy reach that Johnson is proposing doesn't just pop up and take effect in 2050. There are stepping stones along the way, the first one set for 2030, and the next for 2035. No doubt there will be others, for the moment undefined, to take us up to 2050.

During that period, Kwasi Kwarteng claims in the foreword to the "net zero" plan that the government will have "mobilised" over £26 billion of capital investment for the "green industrial revolution". This, he also claims, will leverage up to £90 billion of private investment by 2030.

This, however, cannot be the extent of the commitment. Kwarteng claims are simply that this expenditure will "put us on an ambitious path to meet our Sixth Carbon Budget and our Nationally Determined Contribution. That entails us cutting emissions by at least 68 percent by 2030 on 1990 levels, and reaching net zero by 2050.

Taking the business secretary at his word, though, this cumulative expenditure only puts us on the path towards carbon-free virtue. He does not reveal how far down that path the money will take us. By all accounts, that will not be very far.

Looking just at domestic heating, the "net zero" plan proposes that by 2035, "all new heating appliances installed in homes and workplaces will be low-carbon technologies, like electric heat pumps or hydrogen boilers". By that year, no new gas boilers will be sold.

In the meantime, all the government has to offer by way of hard cash is a £450 million three-year "Boiler Upgrade Scheme", giving households grants of up to £5,000 for low-carbon heating systems, "so they cost the same as a gas boiler now".

That alone is highly refined BS, as purchase and installation may cost up to £15,000 for each household. It is estimated, therefore, that this deliver only 30,000 boiler conversions a year – some 90,000 in all – reaching only the well-heeled who are able to meet the unfunded costs.

With that, we then creep into fantasy land, as the government is to spend £60 million on a "Heat Pump Ready programme", providing funding for "pioneering heat pump technologies". By this means, it hopes that costs will be driven down and the public will this be induced into making unsupported purchases so as to meet the government's target of 600,000 installations a year by 2028.

This seems to be relying on Wright's Law of technology, featured recently by Ambrose Evans-Pritchard recently. This holds that the cost of each unit produced decreases as a function of the cumulative number of units produced.

However, applying this to heat pumps is somewhat optimistic. Heat pump technology is mature and there are very little efficiency gains to be made in manufacture, while a significant part of the cost is in installation, where Wright's law will have little effect.

It is most unlikely, therefore, that heat pump "package" costs – purchase and installation – will get close to boiler package costs, by a country mile. And then there are insulation costs to factor in, for a very substantial proportion of the housing stock.

On that basis, there will be very little incentive for the average householder voluntarily to give up their boilers, in which case very few people are going to be seeking replacements until 2035, when they will no longer be available.

Until then, householders will be turning the tables on Johnson, telling him to "go whistle" – a phrase he once used on the European Commission. At the current rate of installation for heat pumps – without the cliff-edge of gas supply termination - it would take over 800 years to complete the programme.

Then, given that there are an estimated 25 million gas boilers in the UK, even if the government's target of 600,000 installations a year by 2028 was met, it would take over 40 years to complete the replacement programme – assuming there had been no increase in boiler numbers in the interim. This puts us closer to 2070 than 2050, the date when the supply of domestic gas is supposed to be turned off.

As to overall costing, assuming that there are very little gains to be made from Wright's Law, we are talking silly money to complete the programme – anything from £250-400 billion, if insulation is included. If government support is required, and the programme doesn't really get under way until 2030 – for completion by 2050 – Johnson, long after he has left office, is committing future governments to an annual expenditure of up to £20 billion a year.

But even then, the scale of the replacement programme, and the speed the government wants it delivered, is such that the market would be hard-pressed to deliver, even if it was fully engaged. In an analytical report, Greenpeace argues that a new government agency would have to be set up, to manage the transition.

It would have to organise the roll-out of sufficient numbers of heat pumps, ancillary equipment such as radiators and pipework, and to oversee the necessary skills development, to ensure that there were enough qualified fitters to complete the work in time.

The key point to emerge here, though, is that just the cost of this programme vastly outstrip the financial resources the Johnson administration is prepared to commit.

To come are the enormous costs of expanding the nation's electricity generation and upgrading the grid. If the hydrogen economy is to be pursued, there are the massive costs needed to develop the necessary electrolysis plant and the replacement distribution system. Untold billions will have to be channelled into carbon capture, into providing the infrastructure for electric vehicles and into development of alternative fuels for aviation and shipping.

Although the climate change committee estimates that the total cost may be £1.4 trillion, this actually looks to be an under-estimate. Expanding and upgrading electricity generation, and improving the grid, could easily cost upwards of £200 billion, and no one is prepared to put a cost on making the gas distribution system hydrogen-ready.

As for the transport system, the additional costs of replacing the national vehicle fleet (over and above ice-engine vehicles, and including infrastructure) could well be north of £600 billion. No one has come up with a single, unified figure and, while much of the cost will be borne by the private sector, this is money taken out of the productive economy.

But just to focus on the overall costs is to miss the point. The real issue is that Johnson may be getting his moment of glory by committing the nation to "net zero", but his administration will not be bearing the bulk of the costs. These are to be deferred to governments which have yet to be elected, and paid-for by generations to come.

The irony is that, by 2035-50, when so much of the costs will come due, the "Greta generation" will be middle-aged, bearing the larger share of the tax burden. Like Johnson, it is a case of "grandstand now, pay later" and, as is so often the case with Johnson, it will be someone else picking up the tab.

Also published on Turbulent Times.






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