The price is right for net zero

There have been endless column inches devoted to one of the country’s favourite past-times in recent years – the cost of energy and rising household bills.

This is often not just the financial cost to homeowners and businesses needing to find the best price from their energy supplier, but also the implications of switching to more environmentally friendly systems and solutions.

The cost of converting to net zero is either an essential investment in the future or a colossal waste of money, mainly depending on your political starting point.

Amidst that, in the last five years or so, the impact of the Spark Gap has exercised minds.

If you pay for your energy at home on a ‘dual fuel’ basis, you may have noticed that there is a significant difference in the kWh cost between gas and electricity – the so-called Spark Gap.

Rising infrastructure costs 

The likes of the Energy Crisis Commission (ECC) have continually campaigned on limiting the impact of this gap and lobbied Government to help all those who are being hit by the energy crisis. Electricity bills in the UK remain some of the highest in Europe, both domestic and non-domestic.

At the same time, costs for vital infrastructure upgrades and other policies are also rising. The ECC found that it’s essential the UK invests in resilience to protect energy consumers from the volatility which occurs when reliant on global commodities in an unstable world. The imperative for the UK to secure reliable energy and protect consumers from future price shocks is as strong as ever, including by reducing demand by upgrading our homes. 

The ECC stated at the end of 2025 that the Government should be commended for its ambitions to improve societal outcomes by transitioning to clean energy, and we have seen great progress and real commitment across the power sector.  This includes setting up Great British Energy, and the collaborative efforts of Government and industry to promote clean technologies like heat pumps, solar and batteries are being installed at record levels.

Bills still too high

But the ECC also added: "Without meaningful action on bills, both for households and businesses, the switch to electrification will stall. The Government is taking steps to boost our clean power capacity and insulate billpayers from volatile international prices again, with renewables already lowering the wholesale electricity price by around a quarter. But bills are high today, and people are unlikely to move to more efficient electric heating if it is more expensive.

"The urgency of this crisis has not abated; bills are still too high while geopolitical tensions and conflicts persist, and the impacts of climate change, such as flooding on food production, are increasingly harming the UK. We need a structural shift towards electrification and away from dependence on gas for power and heat. 

"The fiscal environment is challenging, but it’s important to consider overall costs, both now and in the future. Without concentrated efforts now, the UK remains critically exposed to further energy market volatility and price spikes, which in turn could cost households, businesses and taxpayers billions of pounds more in the long-term.”

Fuel switching support 

The long-awaited Warm Homes Plan has been broadly welcomed, albeit with many across the construction industry in particular, frustrated that once again a flagship Government policy has not quite gone far enough – it is the measures that have been left out of the Plan that are just as significant as the various programmes it has introduced.

Louise Hellem, Chief Economist, Confederation of British Industry (CBI) has said: “The UK’s energy crisis remains a spectre on the cost of doing business, with highly volatile energy prices a continued drag on business investment. Accelerating the energy transition is vital to both national energy security and mitigating the impacts of climate change. It is a defining strategic economic opportunity for the UK and should be the backbone of a competitive, resilient economy in an uncertain world.
 
“This won’t happen unless high electricity prices are addressed. The government must confirm targeted industry support for fuel-switching alongside a serious review of how policy costs, which deliver vital energy infrastructure, are paid for to maintain the UK as an attractive place for decarbonisation investment.”

Fuel price shocks

As the discussions and frustrations continue around the Spark Gap, the on-going debate around the cost of net zero – particularly the growing political rhetoric surrounding investment in long-term, sustainable policies – is also proving a polarising issue.

It was timely, therefore, that the Climate Change Committee recently released a new report highlighting that the cost of net zero by 2050 is less than a single fossil fuel price shock​.

The CCC - the independent, statutory body - tested its cost and energy security conclusions against different scenarios. It found that the total additional cost of a single fossil fuel price spike of 2022 magnitude is likely to be as large as the total net additional cost of meeting the pathway to net zero across every year to 2050. 

More cost effective

In all scenarios, achieving net zero was found to be a more cost-effective path for the UK economy than continued reliance on fossil fuels, bringing a net benefit to society.  

Nigel Topping CMG, Chair of the Climate Change Committee, said: “There has been a lot of public interest in the cost of transitioning to a low carbon economy. Going through an economic transition is exciting, but a sense of uncertainty about the future is completely reasonable. As such, it’s important that decision makers and commentators are using accurate information to inform debates. 

“In light of current world events, it’s more important than ever for the UK to move away from being reliant on volatile foreign fossil fuels, to clean, domestic, less wasteful energy.” 

Huge benefits and savings

The Committee’s key findings are: for every pound spent on net zero, the benefits outweigh this by 2.2 to 4.1 times; avoiding climate damages is the most significant benefit of the transition, with this saving estimated between £40 billion and £130 billion in 2050; energy losses are halved compared to today - losses in a net zero system are valued at £30 billion per year, compared to £60 billion a year in today’s energy system; and the transition is set to deliver far greater health and wellbeing co-benefits than costs.

Cleaner air, warmer homes, more active travel and healthier diets strongly outweigh downsides like extra public transport time or potential congestion from increased EV use. These ‘co-benefits’ are estimated to provide £2 billion to £8 billion per year in net benefit by 2050.  

The price remains right for net zero. But there are still many obstacles to overcome – from the Spark Gap to political mood swings – before we can reap the rewards.

Paul Groves is Group Editor for Specification