Carbon Budget Misinformation – Watts Up With That?

From THE DAILY SCEPTIC

by David Turver

The Climate Change Committee (CCC) recently released the 7^th Carbon Budget, setting out what the UK’s greenhouse gas emissions have to be in the period 2038-2042. Their report mentioned “misinformation” or “misinformed” on five occasions in the context of low-carbon technologies in general and EVs and heat pumps in particular. But, as we shall see, the CCC itself has been peddling misinformation in its own report on a scale that destroys its own credibility.

Heat Pumps

One of the most interesting passages is where the CCC say “one-third of people who said that they were unlikely to install a heat pump stated that it may not be possible to do so in their home and one-third stated that they would rather wait to see how the technology develops. This is despite heat pumps being a well-established technology, found to be suitable for the vast majority of UK homes”.

The trouble is that, in this interview from 2024, the new CEO of the CCC, Emma Pinchback, still did not have a heat pump in her own home. Her predecessor, Chris Stark, said the cost of heat pumps was too high and that it’s very difficult to install them in existing flats like his. Either they have both succumbed to the scourge of misinformation, or the CCC is peddling its own misinformation.

Renewable Electricity Cost Misinformation

More seriously, the whole basis of their costs, particularly for renewables, is very suspect indeed and is perhaps the biggest source of misinformation in the whole report (see Figure 1).

They assume offshore wind costs £51/MWh in 2025, falling to £31/MWh in 2050 and solar costs at £46/MWh in 2025, falling to £27/MWh in 2050. Their figures for 2030 onwards are lower even than the Government’s generation cost report from 2023 which was hopelessly optimistic. Moreover, they seem to have relied on models for their assumptions rather than look at actual data from renewables auctions (see Figure 2).

The orange line is the CCC cost estimate. The magenta line shows the awards and offers for fixed bottom offshore wind, with the shaded box reflecting that parts of contracts awarded in AR4 have been rebid at higher prices. Of course, there were no bids in AR5. The latest awards for new projects in AR6 were roughly twice the cost estimated by the CCC. Moreover, the trend is upwards, completely opposite to the CCC’s assumption. It is also worth noting that the CCC wants us to have 125GW of offshore wind installed by 2050. It is inconceivable that this can be achieved without significant floating offshore wind capacity. The costs of this technology are even more expensive and rising quickly, with the Government recently announcing that the AR7 offer price of £245/MWh in 2024 money will be higher than the contract awards in AR6. The AR7 offer price for floating offshore wind is more than six times the CCC’s assumption for 2030 delivery. The strike prices for solar power in AR6 are also roughly double the CCC’s assumption for 2030 delivery.

This gross under-estimate of electricity generation costs has knock-on effects throughout their calculations and is the source of much of the misinformation in the 7^th Carbon Budget.

However, the danger to our electricity supply does not stop there. The electricity system is “designed around a 1-in-20 adverse weather year (1987), when the report they rely upon also mentions the 1-in-50 year event in 2010. They have repeated the error in the 6^th Carbon Budget by looking at just single year events, not the multi-year wind drought from 2009-2011. This is the error that Chris Stark wanted to kill with technical language. This error means they have vastly under-estimated the amount of storage required to keep the lights on and so their capex costs are far too low.

Jolly Hockey Sticks

The CCC’s Balanced Pathway for Electricity Supply is based on a series of hockey stick charts for a vast range of technologies (see Figure 3).

The rate of delivery of offshore wind and solar must rise substantially. Low-carbon dispatchable generation capacity (gas with carbon capture or hydrogen) must increase almost exponentially from zero to over 38GW by 2050. Medium-duration and battery storage must also expand far more rapidly than they have to date, and interconnector capacity must increase fourfold, despite rising scepticism on the Continent. The amount of “time-shifted demand” – a euphemism for charging penal rates for electricity at peak times on dark, calm winter evenings – must rise from zero today to 32TWh by 2050.

Their plans for industry also show similar hockey stick predictions (see their Figure 7.3.3). Apparently, the proportion of energy for industry coming from electricity will almost triple to 72.8% by 2050, driven by all this supposedly cheap renewable electricity and heat pumps. Residual heat will come from green hydrogen, which costs more than six times UK natural gas and more than 20 times US gas.

This is what happens when you have a committee firmly ensconced in an ivory tower built on Fantasy Island: the Balanced Pathway becomes unhinged from reality.

S-Curves and Price Dislocations

We also have to suspend our disbelief when looking at their plans for our homes (See Figure 4).

According to the CCC, the proportion of homes with a heat pump (chart a) goes up much faster than it ever has, driven by a miraculous dislocation in the price of electricity compared to the price of gas (e), and a dramatic reversal in the trend of the cost of heat pump installations (f).

They believe the proportion of homes with heat pumps is going to miraculously triple between 2023 (0.59%) and 2025 (1.59%), or rise by 290,000 units, and then rise by more than 1.5% per year from 2029 to 2030 and over 3% per year from 2031 to 2032. 3% of roughly 29 million households is about 870,000 heat pumps per year. The latest Heat Pump statistics statistics show just 42,645 heat pumps were installed in 2024, in stark contrast to the over 98,000 claimed by the Heat Pump Association, using “market estimation techniques to extrapolate the data”. Of course, the CCC uses the Heat Pump Association data. The CCC assumes an average cost of heat pumps in 2025 of £11.4K, falling to £7.8K in 2050. However, the average cost of an air-source heat pump in the final quarter of 2024 was £12.5K, and ground-source heat pumps cost £25K. The trend in cost per kW of capacity installed is up too, not down. In addition, the CCC’s costs exclude ancillary costs such as a new hot water tank and radiator upgrades. They expect the take-up of heat pumps to be supported by government subsidy or discounted finance schemes.

The dislocation in the ratio of electricity to gas prices arises because they assume that electricity policy costs (aka subsidies) are moved either to gas or to general taxation. They want to hide the cost of all these “cheap” renewables elsewhere to mask the true cost. In their most extreme scenario, the price of electricity halves relative to gas between 2024 and 2026, going from a ratio of 4.32 to 2 in two years; that is a lot of cost to take from electricity and load onto gas bills. Yet strangely, the cost of home energy for households with a gas boiler falls out to 2050 after peaking in 2026 in all three of their scenarios (see their Figure 8.4). They must be assuming policy costs fall to almost zero because of the false low-cost renewables assumption.

None of these assumptions are remotely credible.

Overall Costs

The Climate Change Committee expresses the costs of their plans as the difference between the gross costs of their balanced pathway and a notional baseline. They do not provide the raw costs of either their pathway or the baseline, so it is impossible to get to the bottom of their actual cost estimates.

As we have seen above, they are under-estimating the costs of renewable generation and heat pumps. This is underlined by their estimate of electricity supply capex to 2030, which is just £88.5 billion (from their Figure 4.1), about a third of NESO’s estimate of £260-290 billion for the cost of Miliband’s Clean Power 2030 plan.

They say that EVs cost 37% more than petrol cars in 2023, but that premium will turn into a discount of 2.7% by 2028, growing to a discount of over 12% by 2050. This, coupled with falling electricity prices, drives an adoption rate of EVs faster even than Norway. But if their electricity price estimates are unreliable, then this prediction must also be consigned to the dustbin.

These faulty assumptions are carried through into their overall capital and operating cost estimates (see Figure 5).

Their assumption of unreasonably low-cost renewables is how they manage to claim that there will be net benefits arising from their plan from 2040 onwards. This extraordinary claim is made despite spending ~£10 billion per year (see their Figure 7.12.2) on “engineered removals,” by which they mean Bioenergy with Carbon Capture and Storage (BECCS), a net energy sink, and Direct Air Carbon Capture and Storage (DACCS). They want us to spend over £30 billion on BECCS capex by 2050 and over £6 billion per year on opex from 2045. In addition, there is nearly £25 billion in capex and over £3 billion per year in opex by 2050 on DACCS machines to suck CO₂ directly from the air. The total cost of all their engineered removals amounts to £180 billion by 2050. They would have us believe that despite this massive spending, their plan is cheaper overall than their mythical baseline of no further climate action.

It does seem rather odd that we need quite so many taxes, subsidies and other Government interventions to achieve these goals. It is almost as if the collective wisdom of the market does not believe the CCC’s misinformation.

You Vill Eat Zee Bugs

Not content with meddling with the energy system, industry and the way we heat and insulate our homes, the CCC also wants to interfere in the food chain. Alternative proteins are mentioned 34 times in the report. This is a euphemistic phrase for things like insect proteins, although they did note that their Citizen’s Panel was not too keen on eating bugs.

They also want to cull our cattle and sheep, calling for the number of livestock to almost halve (see their Figure 5.3), from 44 million this year to 25.8 million by 2050. In essence, they want to sacrifice our sheep and cattle on the altar of Gaia to appease the weather gods. They also want to cut meat consumption by a third, from 1,011g per person per week to just 678g.

Conclusions

What we have in the latest Carbon Budget is a Soviet-style five-year plan, where the Government is being urged to meddle in our lives to an unprecedented extent. The CCC wants more Government interference in energy, homes, industry and even the food we eat. All their calculations are underpinned by woeful cost assumptions, and they have repeated the same mistake about low wind years from the 6^th Carbon Budget. The so-called Balanced Pathway is totally unhinged from reality. They have the brass neck to publicly worry about misinformation, despite propagating obvious untruths in their own report. Misinformation is supposed to be created by mistake, and disinformation is the knowingly spreading of false information. Sadly, we must conclude that the CCC is spreading disinformation.

The renewable electricity cost assumptions are far too low and carry through to much of the rest of the report. It does not take a genius to look at the results of the renewables auctions to check their figures. The NESO plan for Clean Power by 2030 has been in the public domain since November, so it is inconceivable that the CCC was unaware of their cost estimates.

This has not stopped Simon “Nine Times Cheaper” Evans from Carbon Brief promoting the false headline figures as gospel truth (see Figure 6).

We can only hope that Parliamentarians are more diligent than Dr Evans and can muster the analytical skills to pull the Carbon Budget apart and subject it to forensic scrutiny before blindly adopting it as the law of the land.

I have made three FOI requests about the 7^th Carbon Budget. It will be interesting to see the results.

David Turver writes the Eigen Values Substack, where this article first appeared. 

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