The Conservative Party manifesto proposes a “pragmatic and proportionate approach to net zero” with Rishi Sunak, the prime minister, promising to put “security and your family finances ahead of unaffordable eco-zealotry.”
But a closer look at the proposals suggests that they are either poor (and eventually expensive) solutions for people and the climate, or suggest processes that are already in place through existing legislation.
It’s the latest example of politicians focusing on the wrong debate. The question in climate policy is no longer how much adopting net zero technologies will “cost” us. It is how quickly the savings from their adoption can be realised to benefit households, the economy and above all the climate.
For instance, the manifesto proposes continuing to invest in “new fossil fuel extraction through annual licensing rounds” and building “new gas power stations”. But these are unlikely to save money or to make the nation more energy secure, even in the near-term. By 2030, offshore wind power is expected to be 66% cheaper than gas-fired power.
Similar costs savings are possible elsewhere. Our analysis of the investments needed to achieve the UK’s climate targets, shows that in more than 80% of investments, the total lifetime cost of a clean technology is considerably lower than that of a fossil technology, after accounting for cheaper running costs. Electric cars, for example, will by 2030 be 60% cheaper to buy and run than a fossil fuel car.
The manifesto suggests that it will ensure household bills are lower by reigning in “green levies”. These have actually remained broadly stable over time and relatively low as a proportion of household total energy bills, whereas wholesale energy costs have spiked from 40% to 75% of total bills in recent years, driven by volatility in gas prices. Notably, green levies are not just used to finance renewable energy and reduce emissions, but also to support vulnerable households through the winter months.
Our analysis shows that lower bills can be achieved by increasing investments in clean technologies such as electric vehicles sooner rather than later. That means people can benefit from the lower running costs of these technologies over their lifetimes, which we estimate can be up to £380 per year for a household with a car. Reducing or slowing down investment in green technologies will make these benefits harder to attain.
Procrastination: no solution to net zero challenge
The manifesto says little about how the decarbonisation of the household sector will be achieved in the next parliament. This sector has been neglected since 2013, when David Cameron “cut the green crap”, eventually exposing households to a £2.5 billion increase in energy bills in 2022, requiring expensive policy interventions.
In 2023, annual heat pump deployment was around 80% below where it should have been if following the “balanced net zero” trajectory set out by the government’s official advisory Climate Change Committee. Similarly, EV car sales were 50% below where they should have been. Our analysis shows that the household sector will require around two-thirds of the total investment needed in clean technologies to 2030.
The manifesto states it will ensure that “…families are given time to make changes that affect their lives and never forcing people to rip out their existing boiler and replace it with a heat pump”.
The Climate Change Committee’s Sixth Carbon budget states that by the early 2030s, all new cars and vans and all boiler replacements in homes and other buildings be low-carbon – largely electric. This requires policy support.
Many households that are fuel-poor tend to have less cash in the bank and less access to credit, or may be renters and powerless to make those changes in any case. Households also face non-monetary barriers such as time, access to information, and misperceptions around the “cost” of net zero. This means that some will undervalue the savings that heat pumps or better insulation will provide in future and so will see it as a poor investment.
Therefore, solutions that involve simply waiting, or handing households money through tax cuts, are unlikely to influence their decision to invest in these technologies – not just delaying the transition, but denying people the savings and co-benefits.
Reinventing the Climate Change Act
The manifesto makes a number of suggestions to improve the way climate policy is decided. Pretty much all of them are already contained in the 2008 Climate Change Act.
The Conservatives would like to “reform the Climate Change Committee, giving it an explicit mandate to consider cost to households and UK energy security in its future climate advice.” Section 10 of the Act does exactly that.
Similarly, the manifesto proposes “guaranteeing a vote in the next parliament on the next stage of our pathway.” This is how the UK’s carbon budgets are already set. Section 8 requires that carbon budgets, which define the next stage of emissions reduction, are approved by parliament.
Finally, the manifesto wants to ensure that in future “[the] adoption of any new target [is] accompanied by proper consideration of the plans and policies required to meet the target, to maintain democratic consent for the big decisions that net zero will mean for our country.” Section 14 already requires the secretary of state to report this to parliament.
Missed opportunity for investment and jobs
Initial analyses have estimated the tax cuts and spending pledges in the manifesto at around £18 billion, mostly attributed to tax cuts. The spending associated with climate-related policy appears to be orders of magnitude lower than what is needed for the transition.
For instance, the £1.1 billion “Green Industries Growth Accelerator” amounts to £220 million a year over the next parliament. The manifesto proposes to “invest £6 billion in energy efficiency over the next three years to make around a million homes warmer” and to “fund an energy efficiency voucher scheme open to every household in England, to support the installation of energy efficiency measures and solar panels, helping families lower their bills.”
But our study shows that, to align with net zero, £6 billion to £8 billion of public finance will be needed per year, primarily in the buildings sector.
Climate change does need investment, but it is investment with a substantial return.
