A new analysis suggests that the gross costs of net-zero could exceed official predictions of £7.6tr.

The true cost of the UK’s net zero commitment has been systematically understated, according to a major new briefing paper from the Institute of Economic Affairs, and current official estimates of the cost of net-zero are often driven by “fantasy assumptions”.

In The Cost of Net Zero, energy analyst David Turver examines official costings from the Climate Change Committee (CCC), the National Energy System Operator (NESO), the Treasury and the Office for Budget Responsibility, finding that headline figures have fallen dramatically not because net-zero has become cheaper, but because public bodies have changed methodologies and relied on increasingly unrealistic assumptions.

The CCC claims that achieving net-zero between 2025 and 2050 will cost just £108bn – down from earlier estimates of over £1tr. Turver shows this is done by changing measuring gross costs to comparing against a notional baseline scenario. It also relies on low projections for the cost of offshore wind, solar power, heat pumps and electric vehicles, alongside borrowing costs well below market rates.

By contrast, NESO’s own modelling implies gross cash costs of £7.6tr for the transition, or more than £9tr once the carbon costs of emissions are included. Even these figures, the paper argues, are likely to be underestimates given recent failures of offshore wind projects and rising financing costs.

David Turver, author of the paper, said: “The various public bodies responsible for working out the costs of net-zero have not been entirely truthful in their analysis. They have made fantasy assumptions about the cost of renewables and low-carbon technologies. The true cost of net-zero is much higher than we have been led to believe. If we are to have a serious debate about net-zero, the various public bodies need to be more transparent and frankly more honest.”

Reactions to the paper have fallen into two camps: those who argue that the cost is irrelevant compared to the need for energy security, with Jess Ralston, head of energy at the Energy and Climate Intelligence Unit (ECIU) saying: "Nobody has a crystal ball on costs of fossil fuels, but history tells us that oil and gas prices are volatile and at the mercy of actors like Putin. The recent gas crisis drove the UK to spend over £180bn, and Treasury and homeowners alike would struggle to afford a repeat in the event of a future conflict or price spikes.”

Alternatively, DESNZ has questioned the figures too, saying it rejected analysis and calling it "fantasy" for underestimating net-zero costs by ignoring the financial risks of fossil fuels, while arguing that clean energy drives savings, with NESO predicting potential £36bn savings annually by 2050.

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