Net zero retrofit costs will be unmanageable for most homeowners, Citizens Advice has warned.
The average cost of measures such as loft insulation and heat pumps will be just under £15,000 per household, the charity has estimated, a figure it said is out of reach of most households.
OK, 23 million households, that’s £350 billion.
The problem to be soloved is emissions, UK emissions are around half a billion tonnes pa. The costs of those are some £50 a tonne (close enough to Stern’s $80 a tonne). So, the cost we’re trying to stave off is £25 billion a year.
Except household emissions are only 40% of total emissions. So we’re trying to save £10 billion a year. By spending £350 billion. That’s just under a 3% return.
That doesn’t work. Market interest rates are higher than that, or at least the investment hurdle that any sensible investment must clear is higher than that.
No, we can’t then blurt that Stern showed the social interest rate is loower. We’ve already used that in our calculation of $80 as the social cost of emissions. We don’t use that low interest rate twice. Just the once, thank you.
Things that aren’t worth doing aren’t worth doing. Spending £350 billion to stop £10 billion a year of damages isn’t worth doing. Therefore let’s not do it.
We can play with these numbers a bit. But it does always come out to the same answer. Don’t do it.