Economic impact of Britain’s net-zero climate policies serves as a warning for America

A new report released by the RealClear Foundation and titled The Folly of Climate Leadership analyzes Britain’s climate and energy policies and concludes that increasingly stringent policies that were adopted based on false claims of falling renewable electricity costs drove up the country’s energy costs.

Andy Puzder, senior fellow at the Pepperdine University School of Public Policy and the America First Policy Institute, explains in the study’s forward that the analysis serves as a warning to America.

The report, which was written by Rupert Darwall, senior fellow with RealClear Foundation, “shows what would happen if Democrats and Progressives get their way and inflict net zero climate policies on the country,” Pudzer wrote.

According to the study, British businesses were paying more than double in 2022 what U.S. businesses pay for electricity. " British politicians’ boasts of climate leadership by cutting greenhouse gas emissions faster than any other major economy ignore the unfortunate fact that the British economy has been stagnating since 2008. This luxury net zero policy, which only the rich can afford, has been devastating for ordinary Britons just trying to heat their homes and get to work," Pudzer said.

The report attributes the nation’s increased energy costs and stagnating economy to cap-and-trade policies and carbon taxes. Cap-and-trade policies, which have been proposed in the United States, are regulations that set limits on the amount of carbon dioxide emissions that companies are allowed. When these limits are exceeded, the companies are taxed. Companies that come in under the limits can sell the unused credits to other companies, which can then lower their taxes.

The carbon costs the British government imposed upon businesses, according to the report, amounted to an average $128 per megawatt hour for electricity generated from coal and $51 per megawatt hour for electricity generated from natural gas. Those extra charges are in addition to the costs of the fuels, which averaged $150 per megawatt hour for coal and $160 per megawatt hour for natural gas.

In the U.S. in 2022, fuel costs for electricity generated from coal was $27 per megawatt hour and $61 per megawatt hour for natural gas. “It is no wonder that the energy crisis is causing such hardship to ordinary British people,” Pudzer added.

Additionally, the report explains, Britons paid for subsidies to support wind and solar buildouts. The subsidies resulted in large profits for the country’s utility companies and encouraged overinvestment in renewables and underinvestment in generation sources that aren’t dependent on weather conditions to produce power, such as natural gas and coal.

The report also details how demand has fallen, which averted blackouts as the electricity supply decreased. Between 2010 and 2019, according to the report, electricity consumption in Britain fell nearly 11%. Even with that drop, Britain maintained grid reliability with imports from its European neighbors.

“These options, it should be emphasized, are not an option for the US. We cannot import the equivalent of two-fifths of Canada’s electricity output,” Pudzer explained.

Britain’s Climate Change Act, which set many of the country’s energy policies, passed in 2008 with an 88-minute debate in the House of Commons, without any cost estimates or a vote, according to the report.

Pudzer notes that the United States Constitution provides checks and balances that wouldn’t allow Congress to pass legislation like Britain’s Climate Change Act. But, he wrote, net zero is a stated policy of the Biden administration, setting the goal of decarbonizing U.S. electricity generation by 2035. "President Biden has set an ambitious U.S. goal of achieving a carbon pollution-free power sector by 2035 and net zero emissions economy by no later than 2050", says a White House press release. 

Likewise, proposed EPA regulations on greenhouse gas emissions for power generators would have similar economic impacts on the U.S. economy, as the study says happened with the British economy.

“Renewables are not cheap, nor can they provide the reliability that modern societies expect and on which they depend. This report convincingly demonstrates how Britain was conned into net zero by deceptive and illusory promises of cheap wind power,” Pudzer wrote.

Environmentalists and others point to the UK policy as a model. For example, in an editorial published in Canada's Policy Options newsletter, the head of a think tank specializing in building a "regenerative economy" and an Australian Assistant Professor of Climate Change studies wrote that "The U.K. experience offers important lessons for Canada, where continued fragmentation of climate governance has been a significant barrier to change. More work must be done here to identify how innovative policies, public procurement and demand-side measures can shape new markets and create green jobs, while also supporting communities in transition."

The editorial chides Canada for not matching Britain's net zero goals but never assesses in depth the impact a policy based on unreliable wind and solar power, and necessarily higher energy prices would have on on Canadian business or families.