06-03-2025
Net zero to cost British workers equivalent of £2,600 each
Net zero will cost the average British worker the equivalent of almost £2,600 as fossil fuel assets worth billions of pounds become worthless.
So-called 'stranded assets' will cost the UK economy £110bn by 2040, analysis by the UK Sustainable Investment and Finance Association (UKSIF) shows. The group said this was equal to £2,595 for every working adult in Britain.
The figures reflect the cost of investments in industries like oil and gas that are set to become worthless as the world transitions away from fossil fuels. This includes untapped reserves and physical infrastructure such as gas pipes in the ground and oil rigs in the North Sea, which much be decommissioned safely at a cost of billions.
Some £15.2bn of pension assets could also become worthless by 2040, UKSIF warned, equal to 0.5pc of the total UK pension pot.
Willemijn Verdegaal, one of the report's authors from Transition Risk Exeter, said: 'Stranded assets have the potential to cause significant disruption to the global financial system, and the UK faces particularly severe exposure.'
Only the US, Russia and China face a bigger blow from these costs, the report warned. Once accounting for population size only Norway is poised to take a greater hit amongst OECD countries.
Full steam ahead
It comes amid growing concern about the cost and speed at which Britain is racing towards net zero carbon emissions. Analysis by Peel Hunt published this week suggested that decarbonisation efforts since 2005 had left families poorer.
Rachel Reeves, the Chancellor, has sought to refocus the government around pro-growth policies, even where they clash with net zero. While Ms Reeves has insisted there is 'no trade-off between economic growth and net zero', she has said carbon emissions have too often been used as an excuse 'not to invest'.
Ed Miliband, the Energy Secretary, continues to wholeheartedly push net zero. He has moved to deliver Labour's manifesto pledge to ban new oil and gas licences in the North Sea, despite warnings about lost jobs and investments.
The UKSIF report warned that individual savers across Britain would bear the brunt of the cost of net zero through their pensions, their savings losing value and the wider impact on the economy.
The world faces a total economic cost of $2.28 trillion (£1.8 trillion) from abandoning fossil fuels, a figure which has nearly doubled in the last five years.
However, the cost of failing to stem climate change would be far greater, the report warned. If global temperatures rise between 2.5 and 2.9 degrees Celsius, it will spark natural disasters inflicting losses as high as $12.5 trillion (£9.7 trillion) by 2050.
Scientists have warned that events like the California wildfires in January and the Valencia floods last October would become far more frequent and intense in such a scenario.
Vast amounts of fossil fuels must be left in the ground to prevent global temperatures from surging beyond 1.5 degrees above pre-industrial levels, the report said.
Recent events suggest this may be difficult to achieve. Oil majors BP and Shell had vowed to focus more on green energy but have recently pivoted back to focusing on oil and gas.
James Alexander, the chief executive of UKSIF, said: 'Too many oil and gas companies are betting on demand that will not materialise in a decarbonising world, and the public are at risk of paying the bill.'
