The Cops have failed: it’s time for a big dose of climate realism

On the sequestration side, we are destroying the key ecosystems — burning the rainforests, so bits of the Amazon are now net emitters of carbon. Agricultural intensification is turning sequestering potential into net emissions.

• In the Amazon, leaders talk climate while dynamite waits upstream

All of this is on display in the run-up to the Cop30 in Brazil. Brazil is targeting becoming one of the top four oil producers and opening up drilling not only offshore but in the Amazon. It is moving from the frontier to being a mainstay of future oil production. BP is just one of the companies making big new finds.

Brazil’s rainforests continue to be cleared and burnt. Incredibly, Brazil has cut a new road through the Amazon to allow all those delegates flying to Cop30 to get to the meeting. Hard to make this stuff up. Nevertheless, world leaders, to the extent they turn up, will no doubt yet again tell us they are “saving the planet”.

The UK trumpets the Cops as a place to show off its claimed “world leadership”, and no doubt will point to its successes in reducing territorial emissions and promoting renewables. But it is doubtful that when Xi Jinping, Vladimir Putin or Donald Trump think about the climate, they start by studying the UK and think this is the way to go.

China is not closing its coal industry, Russia is not banning new oil and gas licences and the US is focusing on drilling for more oil and gas. But at least China is starting with the critical minerals, their refining supply chains and the manufacture of batteries, EVs, solar panels and wind turbines. Britain starts the other way around: by importing all of the above.

Far from leading the world on the path of righteousness, the UK is an example of how not to do energy and climate policy. While it is true that the UK territorial carbon emissions have been coming down, this reflects more the transformation of the British economy, and not in a good way. Britain is a leader in deindustrialisation in Europe, has little energy-intensive inward investment and has the highest industrial electricity prices in the developed world.

A better way to look at the UK’s performance is to consider what its carbon footprint actually is. If the UK unilaterally wants no longer to cause climate change — and hence no longer contribute to increasing the concentration of carbon in the atmosphere — then a better measure is its carbon consumption, which includes imported carbon. This tells a very different story.

Why? Because climate change is global. It does not matter where a tonne of carbon is emitted or sequestered. Just because the UK has been closing down its energy-intensive industries does not mean it has stopped buying the products. It is just that these products come from the likes of China now, not the old industrial heartlands of the northeast, the northwest, the Midlands and south Wales.

No wonder these are all now happy hunting grounds for Reform UK. China is incredibly coal-intensive. It burns over half the world’s coal. Switching to “Made in China” does not mean our UK carbon footprint has gone down.

Even the numbers on carbon production here, which our politicians are so proud of, are less than they seem. The glaring example is Drax, which is Britain’s most polluting power station and ranks in the top ten in Europe. Its emissions don’t count in our reported emissions because its wood pellets come from overseas, notably the US and Canada. It is hard to know where to begin on this misrepresentation of the UK’s emissions.

Never mind: even if our record is not quite as good as our leaders make out — and will no doubt again trumpet to the world at the Brazil Cop — what we have been doing is claimed to be “good economics” anyway. Ed Miliband, the secretary of state for energy security and net zero, claimed in parliament that wind and solar are “nine times cheaper than gas”.

Pause for a moment. How could Britain have among the highest industrial electricity prices in the world and yet be striding forward with its “nine times cheaper” renewables? Why aren’t the energy-intensive industries of the world stampeding to get access to all this cheap renewable energy?

• 200,000 jobs at risk from Labour’s energy policy, says Jim Ratcliffe’s Ineos

Grangemouth is closing, Scunthorpe’s steel has had to be nationalised, the fertiliser industry has gone, biofuels are closing down, car production has collapsed back to the levels of the 1950s and even 40 per cent of our cement is now imported. Why aren’t the global battery makers flocking to the UK to get access to these cheaper renewables? Why aren’t solar panels and wind turbines made in Britain? Why aren’t data centres locating in northeast Scotland to get access to all that “cheap” offshore wind?

On the secretary of state’s argument, the US should be an industrial disaster zone, lumbered with all those high and volatile gas prices, so stupidly focusing on “drill baby drill”? Asked about this, he said the US has cheap gas and we don’t. That lets the cat out of the bag. Far from coming to the “clean energy superpower”, perhaps these companies will just stay in the US (with its cheap gas) or China, India and southeast Asia (with their cheap coal).

So how come renewables are nine times cheaper than gas in the UK? The answer is that renewables look cheap if you focus only on their marginal costs and exclude all the system costs. Renewables are intermittent, low-energy-density, small-scale and geographically dispersed. This means they need lots of new transmission and distribution infrastructure, batteries and other long-duration storage. And lots of back-up gas.

The inconvenient fact is that we now need roughly 120 gigawatts (GW) of installed generation capacity to meet the same demand that 60GW met pre-renewables — twice the transmission lines and pylons, and all the back-up batteries and storage too. All of these are additional costs. Different technologies have different system costs. It is the very high system costs that you and I — and industry — are paying. These are going up, not down.

It gets worse. As more renewables are added, the system costs of renewables go up. Meanwhile the cost of gas in real terms keeps falling. The European gas price is now below its five and ten-year averages, and much cheaper once inflation is taken into account, despite the constraints on Russian supplies. And it may well get cheaper. Ditto oil.

Miliband is effectively ensuring that if gas prices do stay low or get even lower, he will have protected the UK from benefiting from them, locking in more contracts for 20 years for offshore wind, plus the costs of Hinkley and Sizewell (the most expensive nuclear power stations in the world, at around £12 billion per GW). Getting out of gas has consequences that may turn out to be rather different from the ones he assumes.

The flaws in Miliband’s argument

I wonder what the secretary of state would say about the costs of renewables if he became convinced that the “high and volatile” gas price argument he (and Kwasi Kwarteng before him) trots out is wrong? He might (and does) fall back on the argument that it at least gets us out of the clutches of foreign autocrats such as Vladimir Putin.

But what about liquefied natural gas (LNG) from the US, now very much on offer? And if it is autocrats he has in mind, what about the Saudi leader and Saudi oil? We import hardly any gas from Russia — perhaps it is Qatar that worries him?

The “home-grown” energy argument falls apart too. The wind and the sun may be “British wind” and “British sun”, but the solar panels and the wind turbines certainly aren’t. They depend overwhelmingly on China, which takes “home-grown” seriously. We don’t. Pick your autocrat to suit your argument.

What should we do? The answers are painful but either they are faced up to or we carry on wasting money and without making any difference to climate change. First, if we want to stop causing climate change, our net zero target is the wrong one: it should be net zero carbon consumption and preferably derived from a global target focused on the increase in carbon concentration in the atmosphere. That global target should be based upon ppm, not a target measured in degrees centigrade: 1.5C is for the birds anyway, and we will go through 2C.

• The fight to save Britain’s wildlife after year of climate ‘chaos’

Second, we should dedicate our climate spending to those things that might make a difference to global warming; the things Britain is best placed to help with. Three stand out: offshore wind, carbon capture and storage (CCS), and research and development. The North Sea is one of the best locations for wind and for trying out CCS. Most of the learning that can be globally transferred from North Sea wind has probably already been reaped. But the UK can contribute greatly to research, at which we excel. Though it is unlikely there is a silver technological bullet just around the corner, a lot of more mundane technical advantages are possible.

Third, we should encourage a bottom-up coalition of unilateralist countries on carbon targets at the Brazil Cop (and not the holy grail of a top-down legally binding global treaty), focus on the polluter-pays principle and lead by applying a common price of carbon for domestic production and imports. That would do two things: tell the British public that decarbonisation really costs; and raise revenue. It would stop our contributing to further climate change but it would really hurt — it would tell us there is no magic “cheap energy” that is also “home-grown”. Because it would be an explicit cost, we probably won’t do it.

Perhaps the greatest service Miliband could render is to stop digging an ever-deeper energy policy hole. We should not go hellbent to get to net zero electricity by 2030, with all the costs of rushing forward with renewables before the infrastructure is in place. Even if we make this mad dash, it wouldn’t make any noticeable difference to climate change. No wonder voters are turning away from the climate change problem.

Global climate change won’t be mitigated by halting licences in the UK’s sector of the North Sea and instead importing oil and gas from elsewhere (including the Norwegian sector). Replacing North Sea gas with American LNG is environmentally much worse than “home-grown” gas. It also just makes the balance of payments worse, alongside all the imported gas from Norway and the imported electricity from Europe.

Preserving what’s left of industry

We can take steps to staunch the haemorrhaging of what is left of our energy-intensive industry, and perhaps help to encourage inward investments. Industrial energy prices should reflect the marginal costs and not the full system costs. True, this will mean more has to be paid by consumers, but at least that means some industry is maintained that can contribute something rather than nothing to the bills. It would mean that all those additional system costs imposed by the intermittency of renewables don’t wipe out what is left of our industry and further exacerbate our balance of payments and our carbon footprint.

We could sort out smart meters, which are so far behind and so expensive compared with the rest of Europe’s because of very serious policy mistakes made at the outset. We could just make the existing ones actually work. We could stop covering prime agricultural land with solar panels. We could stop subsidising Drax. We could stop building more offshore wind farms in northeast Scotland. We could get serious about nuclear, including the small modular reactors, rather than build one or two to see if they work.

Best, then, to just stop digging. Better still, Miliband could admit he is wrong on his basic arithmetic, tell the public the realities of the system costs of renewables, that gas prices might not be high and volatile, and stop talking nonsense about “home-grown energy”. He could stop boasting of world leadership, stop claiming to be creating a “clean energy superpower” and use his considerable political talents to get us — and to the extent the UK has any influence, the wider global carbon debates — to face up to the facts that climate change is not getting mitigated; the ppm are still going up; the Cops are not working.

It is time to get serious about what is an environmental tragedy already in the making. Honesty about costs, honesty about our carbon footprints and honesty that we are all living beyond our environmental means would do much to head off what will otherwise probably happen.

The UK’s net-zero consensus has broken down, the next election may see a government committed to repealing the Climate Change Act, and we may all live to regret the secretary of state’s “success” in making it such a divisive political chasm.

Sir Dieter Helm is professor of economic policy at the University of Oxford