Slightly sad, Ambrose Evans Pritchard has gone off the deep end here. For he’s claiming that the UK going zero carbon by 2050 has no costs associated with it. The glory of lots of investment in all things Green will produce economic growth – which it might indeed, investment can do that – and therefore there’s no cost to us all of such a change in how we power our society.
This is of course tosh, utter colei*. This argument would, could, only be true if there were no opportunity costs. And there are always opportunity costs therefore this argument must be wrong.
For those unfortunate enough to have gained their economics at Islington Technical College or SOAS opportunity cost is the second of the two central lessons of economics. If we go and do one thing with this set of our scarce resources then we cannot go and do this other thing with this same set of our scarce resources. The cost of doing the one is the loss of that other that we don’t do.
Say, we carpet Britain will solar panels. We cannot then use that same land to grow butterflies. The electricity we’ve used to purify the silicon metal cannot be used to power the incubators of premature babies. The investment capital we’ve used up doing this cannot now be used to place a statue of Sir Jonny Wilkinson at the entrance to Twickenham.
By doing the one thing we inevitably and by definition have a cost to us, that cost being all the other things we’ve not done as a result. Thus this argument is tosh, colei*:
Three cheers for the Climate Committee, but there is no ‘cost’ to zero emissions
There is no macro-economic cost to a climate target with zero emissions. To claim that we cannot afford to wean ourselves off fossil fuels by 2050 is to rely on primitive accounting fallacies. The switch to a post-fossil economy is more likely to be an accelerant to GDP growth, akin to the successive upheavals of steam power, electricity and digital technology, each with a ripening phase of 30 years or so. The Bank of England argues that green investment is a net economic benefit. It is a way to soak up the glut of excess savings in the global financial system and put idle capital to work.
The argument fails the simple test. It ignores opportunity costs therefore it is wrong.
What else could we build by deploying that same capital? The cost to use of net zero by 2050 is not having that which we’ve not done.
Note something important about this argument. This doesn’t mean doing nothing about climate change. I’m all for doing as much as makes economic sense. In which I’m firmly in the scientific mainstream. Stick on a carbon tax at the social cost of carbon and do as much – and no more – climate mitigation as makes sense and adapt to the rest.
It is logically possible that this means net zero by 2050 although I’d insist it’s empirically untrue. But that net zero by 2050 has no cost is logically impossible – therefore it ain’t true.