Reaching net zero: what will it cost the UK and is it a price worth paying?

2025-12-11 15:32

The cost of hitting net zero targets has been laid bare by the UK’s energy system operator, showing a surge in spending over the coming years.

But investing in clean generation projects, distribution networks and replacing fossil fuel cars and boilers could be many billions of pounds cheaper if the UK was less ambitious, according to Thursday’s report. The downside would be that the benefits, which include far lower energy costs, would be delayed.

Here we look at the cost of net zero – and whether it is a price worth paying.

In the first analysis of its kind, the National Energy System Operator (Neso) set out the cost of meeting a range of scenarios that tally with the government’s green agenda.

The UK already spends about 10% of its GDP on investments related to net zero, and Neso expects those costs will climb over the coming years and remain higher than they are today until the 2030s.

In its most ambitious green scenario, costs peak at around £460bn by 2029 before beginning to decline to about 5% of GDP by 2050 or roughly £220bn a year. In the “falling behind” scenario, which models a future of slow climate action in which Britain misses its net zero target and ignores the cost of climate damage, the total costs are about £350bn lower.

Carbon costs refer to any tax which puts a price on polluting to help disincentivise producing greenhouse gas emissions, and are used help cover the damaging impacts of fossil fuels on the economy. Reform UK has proposed scrapping carbon costs, a move which critics have warned would undermine investment in the UK’s green economy and put the UK at odds with its trade partners in developed economies.

If carbon costs are accounted for, the greenest scenario would have the lowest cost over the next 25 years, saving £36bn a year compared with a scenario in which the UK takes slower climate action.

But it would still mean a sharp rise in costs over the short term.

Not necessarily. The Neso report has sparked headlines claiming that households could save £500 a year under a slower path to net zero but – a) these savings rely on ignoring carbon costs and b) the reality of how energy costs are passed on to consumers is far more nuanced.

First, the total bill includes spending on a wide range of low-carbon investments that are not included in our energy bills. These include replacing old fossil fuel cars with electric models or replacing old boilers and gas hobs with heat pumps and induction stoves.

Second, the way costs are passed through to consumers is a question for the government, which can spread out the bill over a longer period to ease the burden on households, business and industry. Investment in the new Sizewell C nuclear power plant over the next decade could reach £38bn – but the cost to consumers and taxpayers will be spread over the 60-year lifetime of the project.

The government says the energy costs levied on household bills, such as the cost of upgrading networks and supporting low-carbon electricity, will reduce costly bottlenecks in energy grids and lower the need to buy gas on volatile global markets.

However, higher investment costs do significantly raise the chances of households paying more.

The UK’s chief climate adviser warned earlier this year that ensuring that the costs of decarbonisation are shared fairly across society must be a top priority for ministers or they risk losing public support for net zero. Emma Pinchbeck, the chief executive of the Climate Change Committee, the independent statutory adviser, sait this would help the government to make a “strong, confident” case for decarbonisation as an engine of economic growth.

Critics of the government’s green agenda claim the UK could save an average of £14bn a year by dropping the legally binding target to reach net zero by 2050. Instead, the country could take a slower approach to climate action via Neso’s “falling behind” scenario.

But this would ignore the cost of worsening climate damage. The report warns that ultimately the cost of ignoring carbon costs would be higher beyond 2050, owing to the higher cost of fossil fuels.

The UK would also miss out on many of the “non-financial benefits of net zero” – such as improvements to public health, the natural environment, and social well-being – and could see negative trade effects as economic partners target faster emissions reductions.

“It would be wrong to interpret a delay in this cost as implying that the cost is avoided entirely,” the report warned.

Neso is a government-owned authority and its scenarios form the basis of forecasts produced by policy and business leaders. But its report has important limitations and cannot be taken at face value.

The path set by the government is unlikely to follow any one individual scenario produced by Neso, and the final cost will depend on myriad regulatory decisions. Neso said its models were “not fully optimised to minimise cost” meaning further savings could be found. The models are also based on a range of assumptions – including the future market price of fossil fuels and cost of low-carbon technologies such as heat pumps and electric vehicles.

“This implies that the efficient delivery of any given pathway may be as important for cost as the choice of pathway,” the report added.

The government was quick to underline the limitations of the report in estimating the costs of net zero, while backing its findings on its benefits. “We fundamentally reject the idea that these illustrative scenarios accurately reflect the cost of moving to clean energy, which has enormous benefits in bringing down bills for good, energy security and securing well-paid, skilled jobs,” a spokesperson said.

“Neso makes clear that driving for clean energy saves money by protecting future generations, and fundamentally reduces our exposure to fossil fuel markets, which have caused half of all recessions since the 1970s. As Neso points out, they do not reflect or predict the cost of net zero, recognising the likely path is highly dependent on future fuel prices and the advancing pace of private sector rollout of net zero technologies.”

Absolutely, according to world-leading scientists and experts. Greenpeace UK’s head of climate, Mel Evans, said the report set out “the clear and positive impacts of Britain standing firm on its path towards clean energy”.

“Not only will it help eliminate our planet-heating emissions and make the UK a global leader on climate action – inspiring others to follow in our footsteps – but it will also slash our energy costs in half,” he added.

“One thing this report … doesn’t account for, however, is the huge cost of failing to shift to clean energy, and therefore tackle climate change. Damage caused by the climate crisis has cost a whopping £13m an hour globally for the past 20 years, making the economic argument for investing in net zero just as strong as the environmental one.”