Britain needs cheap energy not net zero

Households hoping for some relief from high energy bills should prepare to be disappointed. Not only are they going up this winter, they are probably not going to come down any time soon. Ofgem has announced that its energy price cap will rise by another 4pc in October , from £1,663 to £1,723 for a typical dual-fuel household. This follows the 13pc increase in July. A 4pc increase for the final quarter of the year is not unusual, reflecting seasonal trends, but worse is expected for the beginning of next year with analysts from Cornwall Insight forecasting a further rise of 9pc in January, to £1,872. The Government has responded by removing the already low 5pc VAT from electricity bills for six months. But even after this tax cut, bills are going up. Cornwall Insight estimates the VAT change saves a typical household just £44. There is unlikely to be meaningful relief for consumers until the Government does something radical about the underlying cost of energy. That means confronting the cost of net zero. I have been digging into the numbers on the price cap and have found that while the wholesale cost of energy (including carbon fees but excluding other policy add-ons) has risen by 50pc in real terms since 2017, network costs have risen by the same amount. Gas prices are expected to fall in the coming years as new liquefied natural gas projects around the world come on-stream. Network costs on the other hand are expected to increase significantly. A new report from the think tank Onward has attempted to quantify just how expensive the current policy trajectory will be. Its alternative pathway assumes that a new government elected in 2029 abandons the pursuit of net zero, and instead prioritises cheap and reliable electricity. The results are extraordinary. Onward estimates that its alternative would save £320bn between 2030 and 2050 compared with business as usual. Of this, £137bn comes from lower network spending, £94bn from removing carbon taxes, £67bn from reduced balancing and ancillary-service costs and £22bn from lower generation subsidies and capacity-market costs. By 2035, electricity system costs would be 17pc lower than under business as usual, and by 2050 they would be 31pc lower than today’s system costs. This isn’t a plan to return Britain to some coal-fired past. Onward estimates that electricity would still be almost 80pc clean in 2050. These numbers are strikingly consistent with my own analysis. Last year, I calculated what British households would have spent on electricity since 2006 if the relatively stable relationship between wholesale and retail electricity costs that existed previously had continued. I compared that with what consumers actually spent, including during the gas crisis. My conclusion was that consumers would have been almost £220bn better off, in 2025 money, if Britain had retained its legacy gas-based electricity system rather than pursuing its current decarbonisation strategy. That £220bn has already gone. Onward estimates that continuing broadly along the current path could cost another £320bn relative to a cheaper alternative between 2030 and 2050. We used different methodologies and examined different periods, but our numbers are broadly consistent and demonstrate the staggering economic consequences of Britain’s energy policy – hundreds of billions already spent, with hundreds of billions more potentially to come . At the Reform conference last week, Richard Tice, the party’s energy spokesman, described net zero as the single greatest policy mistake of this century. I’m inclined to agree. The tragedy is that high energy prices don’t just mean larger household bills and more families being pushed into fuel poverty – they undermine almost every part of the economy. Britain has some of the highest electricity prices in the developed world. Energy-intensive businesses must compete against companies in countries where electricity and gas are far cheaper making British industry catastrophically uncompetitive. As a result, factories are closing and the country is deindustrialising. Britain lost two oil refineries last year, leaving just four. Port Talbot’s blast furnaces have closed. Fertiliser production has vanished. Chemicals production fell by 40pc between 2021 and 2024, while 40pc of ceramics sites have closed since 2003. Even carmaking, once one of Britain’s great industrial strengths, saw total vehicle production last year at its lowest level since 1952, with output falling another 7.5pc in the first half of this year. We are steadily replacing things made in Britain with things made elsewhere. Often in countries with dirtier, more carbon-intensive energy systems, and stupidly congratulating ourselves because the emissions associated with making them no longer appear in the UK’s carbon account. Policymakers like to present falling energy consumption and industrial emissions as evidence of successful decarbonisation. But closing a British factory does not reduce carbon emissions, it simply moves them somewhere else. Which is perverse because climate change is, by definition, a global problem. Carbon dioxide emitted in China, India or the Middle East has the same effect on the climate as carbon dioxide emitted in Britain. Many of these countries also have weaker environmental controls, resulting in greater pollution of water and destruction of habitats, as well as poor worker protections and safety standards. So we inflict economic damage on ourselves while potentially making both environmental and social harms worse. Britain needs cheap, reliable energy. That should be the policy starting point, not something policymakers hope might happen after satisfying some arbitrary emissions target. The costs of getting this wrong are already visible in high household bills, factory closures, lost investment and growing dependence on imports. We have already spent huge sums pursuing net zero. Onward’s analysis suggests future costs will be larger still. How much more economic and environmental damage must be done before policymakers abandon this ideologically driven experiment and return to evidence-based energy policy?