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Rambling Bob Ward’s Response To Peter Lilley

December 27, 2016

 

By Paul Homewood

 

image

http://www.thegwpf.com/report-reveals-300-billion-cost-of-britains-climate-change-act/

 

It is now two weeks since Peter Lilley’s study on the cost of the Climate Change Act was published.

As yet there has still been no pushback from the government, or their lackeys at the Committee on Climate Change.

There has, however, been a rambling, incoherent rant from the Grantham Institute’s Bob Ward in response. More on that in a moment.

First though, a quick rehash of Lilley’s findings.

 

On the basis of figures from the OBR, DECC and the Climate Change Committee
(CCC), the average cost of decarbonising electricity to meet Climate Change Act
targets was or will be (in 2014 prices):

 

Renewable Subsidies
& Carbon Taxes
General Taxation
Measures
System Costs
Total
     
2014 6,292 1,860 740 8892
2015 7,610 1,878 1,076 10564
2016 8,284 1,896 1,412 11592
2017 10,641 1,915 1,748 14303
2018 11,991 1,933 2,084 16008
2019 12,051 1,951 2,420 16422
2020 12,094 1,969 2,756 16820
2021 12,452 1,986 3,089 17527
2022 13,192 2,002 3,422 18617
2023 13,933 2,019 3,755 19706
2024 14,673 2,035 4,088 20796
2025 15,413 2,052 4,422 21886
2026 16,153 2,068 4,755 22975
2027 16,893 2,085 5,088 24065
2028 17,633 2,101 5,421 25155
2029 18,373 2,118 5,754 26244
2030 19,113 2,134 6,087 27334
Total 226,790 33,999 58,117 318906

 

 

This by no means covers all of the potential costs, and as, Lilley points out, only analyses the cost of decarbonising electricity.

His report notes:

Official figures understate the system costs of intermittent renewables, omit the
cost of biofuels in transport fuels, ignore Britain’s share of the EU budget (even
though ‘at least 20% of the entire European Union budget for 2014–2020 will
be spent on climate-related projects and policies), include nothing for DfID
(which is likely to amount to at least £25 billion by 2030) and FCO spending on
climate and exclude the mounting indirect costs such as lost job.

 

I could also add the potentially massive cost of decarbonising heating, as well as the added cost of purchasing electric cars.

Lilley goes on to complain about how successive governments have gone to great lengths to cover up just how much the Climate Change Act could cost the UK, and calls for much more transparency and a proper public debate.

 

Of course, these costs are not set in stone because nobody knows what the future holds, particularly with regard to the price of fossil fuels, and the development of new technologies. The Lilley report is perfectly clear about this.

And an added problem with trying to do this sort of analysis is the lack of information provided by the government.

Nevertheless, the study uses only official data and, with the information available, is not an unrealistic assessment.

 

 

Now step forward our friend, Bob Ward!

 

 

He wrote a commentary, titled “Muddled and inflated figures about power decarbonisation”, for the Grantham Institute. It can be read here.

He seems to be offended that the GWPF did not ask the nice people at the CCC for the answers, instead of using that well known denier, Peter Lilley.

As I say, there is a lot of rant, but Ward’s basic criticisms are:

 

1) According to the Committee on Climate Change, the real cost of the Act is about 0.5% of GDP by 2030. This would be equivalent to about £9bn, about a third of the Lilley figure.

However, Ward perpetuates one of the CCC’s big cons here.

They calculate renewable subsidies as the cost of renewable energy less the long run marginal cost of CCGT, which includes depreciation. (The logic is that, as we need to replace older coal and other plant, new CCGT would be the default option). 

However, crucially, this cost of CCGT includes an ever rising element of carbon tax. This is estimated by the CCC to be adding £27.52/MWh to the cost of CCGT by 2030, raising the actual cost of £56.85/MWh to £84.37/MWh (at 2014 prices).

We end up with the ludicrous situation, for instance, where the CCC say that subsidies for Hinkley Point will nearly have disappeared by 2030.

Of course, this carbon pricing is purely artificial. Households are not financially worse off if more CO2 is emitted.

The overall effect of this trick is to understate the cost of subsidising renewable energy by £7.5bn in 2030. At a stroke, this nearly doubles the CCC’s projected cost.

 

There are as well other costs not built into the CCC calculations, but which have been taken into account by Peter Lilley. For instance, the smart meter roll out, which is expected to cost at least £10bn and bring in very little in the way of benefit.

 

Ward gives the impression that Lilley has made up all of these numbers. The reality is that they are all based on official data. The figures up to 2021 are derived from the OBR’s Economic and Fiscal Outlooks, whilst the ones between then and 2030 come from DECC’s Estimated Impacts of Energy & Climate Change Policies, published in 2014.

 

2) “Carbon taxes” are not the same thing as the “economic cost.”

In a very belaboured paragraph, he seems to be arguing that taxes do not represent an extra cost, as they are simply a redistribution from the taxpayer to government.

If so, he is quite correct here. If no carbon taxes were raised, other taxes logically would rise or public spending would fall.

Nevertheless, the impact of carbon taxes on electricity bills is undeniable, and should at least be noted in any assessment.

As a guide, the OBR estimate that, between now and 2021, carbon taxes will cost an average of £2.1bn a year.

 

3) It is wrong to claim that all the extra costs would ultimately fall on households.

Ward argues that households, businesses and government should be treated as three totally discrete sectors, and that higher electricity costs for the latter two would have no impact on households.

However, this claim has been totally contradicted by the Energy and Climate Change Select Committee, who stated in their report, “Energy Prices, Profits and Poverty” (page 59), published in July 2013:

 

Approximately two-thirds of policy costs would fall on non-domestic consumers, reflecting the share of energy consumption across these consumers. However, the majority of costs are still likely to be passed through to domestic consumers through higher prices for services and products. These extra costs could also impact on the competitiveness of UK exports.

http://www.publications.parliament.uk/pa/cm201314/cmselect/cmenergy/108/108.pdf

 

If it was as simple as Ward claims, all of the costs of decarbonisation could be loaded onto businesses, so that domestic consumers did not have to suffer at all!

 

4) General taxation measures

Lilley claims that the government is understating the true cost of decarbonising by ignoring measures funded by general taxation.

According to the CCC, these amounted to £1860 million in 2014/15 (see Meeting Carbon Budgets – Progress in reducing the UK’s emissions 2015 Report to Parliament – page 38).

Ward complains that Lilley has simply assumed that costs will continue at this level up to 2030.

One of Lilley’s central complaints, however, is the lack of transparency from government. As they have not published any projections of costs, there is little alternative than to assume the continuation of the status quo.

 

5) System costs

These cover costs likely to be incurred in managing a system with high levels of intermittent renewable generation, for example smart grids, interconnection and storage.

Ward questions the origin of Lilley’s figures, but ought to know that they are actually derived from the CCC’s 2011 RENEWABLE ENERGY REVIEW – TECHNICAL APPENDIX.

 

6) Benefits v Costs

Ward also complains that Lilley’s paper lists all of the costs, but makes no allowance for the supposed benefits of decarbonisation.

He states:

These estimates excluded the benefits of avoided climate change impacts and the quantified costs or co-benefits relating to changes in welfare, such as warmer homes or changes in demand for energy services, or impacts on health due to, for instance, improved air quality. Using government valuation methods, the Committee previously estimated (PDF) the monetary value of co-benefits to be between 0.1% and 0.6% of GDP in 2030.

 

Ward is being disingenuous here, deliberately so I suspect. (If he is not, he clearly does not understand the subject matter).

 

Let’s break it down:

 

a) Climate change impacts

UK emissions of CO2 are so tiny from a global perspective that the cuts proposed will have no noticeable effect on the climate.

 

b) Warmer homes

This is a reference to the Warm Homes Discount, an annual rebate of £140 for low income customers, which is funded by energy companies.

However, since it is just a transfer from one group of customers to another, the impact on electricity bills is ignored by DECC, and therefore does not appear as a cost in the Lilley calculations.

 

c) Impacts on health

The impacts referred to in the CCC paper, referenced by Ward, largely refer to those associated with road traffic. Since Lilley does not consider the cost impacts of decarbonising transport, it is clearly illogical to take account of the benefits!

The only possible benefit, as far as power generation is concerned, is from the switch from coal burning. However, in calculating the cost of subsidising renewables, the default option is CCGT, and not coal.

There is no evidence I am aware of that modern CCGT power plants have any negative effect on health at all.

 

 

Conclusions

Nobody knows how much the Climate Change Act will end up costing the country in fifteen years time, as it will depend on so many variable factors.

But what is absolutely clear is that the figure is likely to be a very large one.

Indeed the DECC calculations, that Lilley relies on, currently understate the projected cost, since they were based on a much higher wholesale price of electricity in 2014. At the time they worked on a figure of £63/MWh, whereas the market price has been around £45/MWh this year. This means that the subsidies paid for renewables are greater than estimated two years ago.

And, as Lilley also points out, there are many other costs that his analysis does not take into account, such as:

  • Decarbonising transport
  • Decarbonising domestic heating
  • EU expenditure on climate related projects
  • Overseas aid
  • Lost jobs and international competitiveness

 

Whether you agree with every number and assumption in Lilley’s paper, his central argument is indisputable.

The government needs to be much more transparent about how much the Climate Change Act is costing, and is likely to cost.

And when we have that information, it is time for a proper, grown up debate.

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30 Comments
  1. Broadlands permalink
    December 27, 2016 8:01 pm

    And, once again, not a single part-per-million of CO2 will be captured from the atmosphere and stored by negative emission technology….still in its infancy at global scale. Add in the cost of that? Really big numbers appear.

  2. John F. Hultquist permalink
    December 27, 2016 8:17 pm

    I could be glib and ask about how the climate will react, but …

    … my real issue is with “opportunity costs” — usually meaning the best alternative lost while making a decision. Regarding all this carbon (sic) reduction, there are uncountable “better” alternatives.

  3. December 27, 2016 8:34 pm

    Every £ spent on “decarbonisation” is a £ wasted, because it could be spent on improving resistance to floods and coastal erosion, useful regardless of any changes to those problems.

    Bob Ward and his ilk, not just at the Grantham Institute, but also at many other such wart-like attachments to once respectable universities, exist to exploit the lack of power of consumers of energy. Billions are siphoned from consumer bank accounts by this Green Parasite. What we need is a proper set of regulators to look after the interests of consumers, and legal limits on any bill-payers money allocated to anything other than providing energy. This needs a set of off-the-shelf energy policies that any political party can adopt if they wish, but they should all do so as the policies would be very popular with bill-payers.

  4. Dave Ward permalink
    December 27, 2016 10:05 pm

    Once more, I find myself apologising for sharing the same surname as that odious, gurning, waste of precious resources…

  5. December 27, 2016 11:25 pm

    No one disagrees that the US has reduced CO2 by opening up fracking.
    At a cost inverse of that of the Climate Act.
    ie generating massive tax income.

    Bob Ward isnt interested in reducing CO2 but rather in pushing schemes that benefit the Huge Green hedgefunds run by J Grantham

    • December 28, 2016 10:54 am

      Got it in one, stewgreen!

      And much the same applies across the rest of the enviro-sphere. For example:
      we all know that windfarms produce about one-third as much electricity as the headline figure;
      we all know that biofuels are counter-productive in terms of reducing CO2 emissions and the effect in food costs;
      we all know that biomass is not renewable in any meaningful sense of the word;
      we all know that if we were serious about reducing CO2 emissions we would have been fracking like mad and building CCGT and nuclear power stations for the last 10 years.

      And so on. But it’s not about climate or the environment any more. It’s about money in the case of the business end of the scam and virtue signalling for the politicians. Presumably what the eco-fanatics get out of it is orgasm without the effort but I’d like a psychiatrist’s view on that.

      And the rest if us simply get treated like mushrooms.

      • December 28, 2016 2:49 pm

        Not exactly.
        Yes, it’s about money somewhat but, mostly it’s about power to control the people.

  6. Athelstan permalink
    December 28, 2016 12:55 am

    Well as usual, with Ward’s guff it’s all a bit 8th grade schoolgirly mush, but I hacked my way through it.

    “If one divides Mr Lilley’s £319 billion in costs, which he presents as a precise figure without any uncertainties”

    That assertion is plainly a falsehood in that, Peter Lilley is at pains to point out the “uncertainties”…………………. he is, an arrant liar and mouthpiece for a bloke who maintains the global alarmist mythology, whose bread and butter depends on protecting his master’s interests.

    “But this is a fundamental error. Any economics undergraduate could have told him that taxes and charges to electricity bills are not the same as total economic cost.”

    Ward is familiar with undergrad’ Economics courses? Again and maybe he missed his calling, the propensity to endlessly broad sweep and BS is what all Economists are best at.

    Besides and Total poppycock, electricity bills are what the consumer sees and have to meet. Total economic costs are what the government should bleedin’ worry about but are – HMG pretending not to bloody well notice – dereliction of duty or, is it that they don’t have the bottle to tell it – the green agenda…………HMG can’t admit it! Britain can’t effin afford this eco green mania, its insanity which is leading the whole nation over a chasm and into the abyss of financial catastrophe.

  7. Manfred permalink
    December 28, 2016 3:07 am

    The government needs to be much more transparent about how much the Climate Change Act is costing, and is likely to cost.
    And when we have that information, it is time for a proper, grown up debate.

    A ‘debate’ over the cost/benefit of applying an unfalsifiable article of faith defined by the Green Priesthood at the UN. Doubtless you are aware of their definition of ‘climate change’?
    Rid Gaia of all indirect and direct anthropogenic influence is the only way to zero out UN ‘climate change’. There are no adults here, only eco-zealots.

    • AlecM permalink
      December 28, 2016 8:57 am

      Not possible because all Ministers are all fully paid up into the future carbon trading and renewables’ gravy trains.

  8. AlecM permalink
    December 28, 2016 8:56 am

    How’s the job search going, Bob? Any news on that piezoelectric PhD?

    You never know. Get it to work and you could fit everybody with special shoes so they’d stamp the floor and light their cigarette. Pity people don’t smoke nowadays.

    Furthermore, they’ve got sick and tired of fake IPCC fizzicks. Wot a life mate, a bit short though.

  9. December 28, 2016 9:06 am

    Reblogged this on Tallbloke's Talkshop and commented:
    .
    .
    Paul Homewood critiques the response from the Grantham Institute’s mouthpiece Bob Ward to Peter Lilley’s analysis of the costs of the Climate Change Act by 2030

  10. Tim Hammond permalink
    December 28, 2016 9:06 am

    You are too kind to Ward. Tax is not the same as “cost” if cost is actually the price of something willingly paid. In the latter I am at least as well off as before parting with my money as I exchange cash for goods or services of an equal or greater value to me. With taxes, I am forced to “buy” something I may not want, at a price I may not be willing to pay. At worst, I may be buying something for someone else at a price they may think too expensive.

    Secondly, all costs fall on households, regardless of whether they are seemingly paid by business or government. Nobody else CAN pay them. Increasing costs for companies simply means higher prices and/or lower wages. The idea there are three sectors that can pay taxes or costs is childish economics.

  11. 3x2 permalink
    December 28, 2016 9:53 am

    I could also add the potentially massive cost of decarbonising heating, as well as the added cost of purchasing electric cars.

    Lilley goes on to complain about how successive governments have gone to great lengths to cover up just how much the Climate Change Act could cost the UK, and calls for much more transparency and a proper public debate.

    Seems to me that this is where the game will start to go wrong. Up to now the costs have been cleverly hidden. Difficult to hide future elements though. People will start to notice the very direct costs.

  12. Harry Passfield permalink
    December 28, 2016 9:57 am

    Ward argues that households, businesses and government should be treated as three totally discrete sectors

    And there lies the proof of the socialist thought-process: that ‘government’ has money of its own, no doubt plucked from the money-tree (which is actually suffering with cash-die-back).

  13. Ben Vorlich permalink
    December 28, 2016 10:17 am

    Portugal may have had one windy week in the summer, but Germany has had a (virtually) wind free low sun month in December. Check out weeks 48 to 52 on Germany Grid Data

    • Ben Vorlich permalink
      December 28, 2016 10:25 am

      After posting that, the thought crossed my mind about Germany in May. Germany being a poster child for renewables. That is interesting too. Sunday 8th May at noon was almost 100% “renewables” On the other hand half the month of May seems to have been a low wind month.

      According to the monthly charts, most days Germany appears to export a high proportion of Solar generated power.

  14. AlecM permalink
    December 28, 2016 11:11 am

    As a general conclusion, the worms are waking up to the predatory business interests that have put into power dishonourable politicians like the Millibands, Prescott, Cameron etc., whose allegiance is to Common Purpose and the Totalitarian EU.

    Night of the Long Knives anyone?

  15. Gerry, England permalink
    December 28, 2016 11:39 am

    You have to either be a socialist or a complete idiot not to understand that all costs applied to business will be paid by ordinary people. Prices will increase, salaries will be reduced or jobs lost, or even all three. And if somebody can’t understand that then it makes reading the rest of what they say a waste of time.

  16. Mick J permalink
    December 28, 2016 12:36 pm

    Just today we have this report in the Telegraph via GWPF mentioning the pushing of costs onto consumers. The fly in the ointment appears to be that the EU have not yet given their permission for this to happen. Strange, is this not what Germany does anyway to protect their heavy energy users?
    ————————
    Officials at the European Commission have yet to agree a state aid change that will exempt the industry from punitive green taxes. UK steelmakers struggle to compete with foreign rivals, who enjoy much cheaper power bills.
    Steelmakers have successfully campaigned for an 85pc rebate on their energy costs. In March’s Budget, the Government agreed a deal where the industry paid the green levies, but then got the money back in a rebate from the Treasury.
    The Government has budgeted for the £5m-a-month rebate for steel makers until the end of March 2017. By then, it hopes to have secured European approval for a change in state aid rules, which would allow the cost to be pushed on to consumers.
    This would mean that, rather than pay the cost of the levy and have it refunded, the green taxes would not be paid at all.
    However, the steel industry is worried that European officials have not yet rubber-stamped the change, with a January 9 deadline for UK lawmakers to get legislation.

    http://www.thegwpf.com/new-steel-crisis-threatened-by-delays-to-green-energy-rebate-law/

  17. December 28, 2016 1:05 pm

    Thank you Paul for this analysis. I don’t think anyone disagrees that the Climate change act will cost us ordinary tax payers a fortune if it is allowed to continue the way it is. Not only in our pockets but also in lost jobs. I think we are all agreed that this is not about protecting the environment but about a select group engaging in money transfer. I think many are realising that Climate change is just one part of a bigger picture called globalisation, and it is becoming ever more apparent that this is every bit a disaster for our Western economies as is the Climate change act for us. In a perverse way it is preventing 3rd world economies from taking on the lessons we have learnt and developing their own economies and way of life to suit their own needs.

    I come back to some important lessons that need to be taken on board if we the ordinary tax payers are to stop this sort of tax rape from happening again.

    We need to change politics so that major decisions like the climate change act can not be made by politian’s alone in the future. More referenda are needed on big decisions. Our politian’s have demonstrated beyond any measure that they think they know things that we are too stupid to understand. The aftermath of the Brexit vote is a case in point. I think the opposite is actually true and it is no accident that the first people to call into question climate change were in the main engineering types who very quickly could see we were being feed a line of bull, and all the things we said were impossible or wouldn’t work have been true.

    We need to shift the emphasis of scientific research from trying to prove predetermined answers back into pure discovery. Its not just climate science that is spouting bull, but its probably worse in medical research, and our cosmology, one of the fundamentals to understanding everything, has regressed over the last hundred years. We know this because our technology, which doesn’t rely on complete understanding, has provided us with instruments that allow us to see things that contradict almost everything we thought we knew, and at the same time all the things we thought were out there are still not visible.

    The time is fast approaching for science when the public will reject it if scientists don’t stand up and be truthful. I have meet many scientists in my time and many say one thing in public and quite another in private, all for the sake of funding. We know many NASA scientist go to seminars in their holidays, and anonymously for fear of losing their jobs. Many scientist are frustrated because their discoveries are being either supressed or spun into an ever more fanciful fairy tail of lies. For some reason someone or something does not want us to further our understanding.

    Interesting times ahead

  18. December 28, 2016 2:36 pm

    “If it was as simple as Ward claims, all of the costs of decarbonisation could be loaded onto businesses, so that domestic consumers did not have to suffer at all!”

    If that’s all it takes let’s just increase taxes on the power generators enough to pay for all their power needs and the people will get all the electricity they need for free.

    Then to really save money we could do the same thing with the transportation industry.
    Think of all the stuff we could buy if the government just paid for all of our power needs.
    And then there’s food…free food, too???

    • AlecM permalink
      December 28, 2016 4:33 pm

      Not only is Ward is a first degree wazzock, he’s a congenital dissembler.

  19. Singer beneath bridges permalink
    December 28, 2016 4:39 pm

    Reading your title elicited wonderful memories of Rambling Syd Rumpo from Round the Horne. I then had great pleasure in envisioning Bob Ward trying to adapt Rambling Syd’s “The Ballad of the Woggler’s Moulie” to defend the Grantham Institute’s spin of Lilley’s report.

    Sometimes humour and ridicule are the only ways to react to crass stupidity and deviousness.

    • Nigel S permalink
      December 29, 2016 9:48 am

      Yes, Kenneth Horne and Rambling Bob look quite similar too by eerie coincidence (Horne’s eyebrows are more impressive). I wonder what Julian and Sandy or Binkie Huckaback and Dame Celia Molestrangler (aka Charles and Fiona) would have to say.

      “I was certain, positive, convinced and doctrinaire, and yet… unsure.” perhaps

      https://en.wikipedia.org/wiki/Kenneth_Horne

  20. CheshireRed permalink
    December 28, 2016 10:58 pm

    The silence from the CCC is deafening. They know they’ve been busted by their own figures so have no worthwhile rebuttal, hence they’re saying nowt. Wards response is typically mendacious because in essence he doesn’t question the core issues of truly outrageous costs borne by the public. All guilty as charged, then. Checkmate Lilley.

  21. Vernn E permalink
    December 29, 2016 10:55 am

    I apologise in advance if I am a bit off the point, but here goes. The government’s energy policy seems to be largely based on improving heat conservation in domestic homes. I have had some personal experience with the sponsored cavity wall insulation and a pretty disconcerting picture emerges. In fact, most of the country’s older housing stock has been refused this insulation because of DPC issues. Surely, in the days when billions are being thrown at any and every madcap idea about decarbonisation etc it would be more prudent to invest in some proper R & D to develop a cavity wall insulant (or DPC level barrier) that would not conduct dampness and would enable the older housing stock to be insulated properly. When done properly it really does work – my utility bills have halved since I moved into an insulated property.

  22. 2hmp permalink
    December 29, 2016 4:09 pm

    How many more times does it have to be said to thick civil servants that all costs imposed on business are paid by the customer – you and I.

  23. December 29, 2016 5:14 pm

    Surely the government could cover all these costs themselves by the simple expedient of quantitative easing.

  24. December 29, 2016 8:00 pm

    Bob Ward reveals his true colors: “taxes do not represent an extra cost, as they are simply a redistribution from the taxpayer to government” – which is their core aim, to tax and control. CC just happens to a vehicle for them to do it.

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