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Things that are too expensive shouldn’t be done

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.

28 thoughts on “Things that are too expensive shouldn’t be done”

  1. It’s worse than that. All that installation work itself comes with emissions consequences. To be a fair comparison that has to be included, unless it’s de minimis, but spending £350bn on anything won’t have de minimis emissions.

  2. They’re out of low hanging fruit, so it’s all Net Zero punishment beatings from here till the lions.

    Saw ‘Biden’ in the news recently, promising to take away Americans’ dishwashers next. Exactly the same mentality as Gideon, who wants to take orange juice and tobacco away from the proles so they can live like 15th century peasants instead. This is what the “nudge” was always about.

    We’ve all become so used to (theoretically) elected politicians threatening their own constituents that maybe this sadomasochistic relationship with our supposed public servants no longer seems as disgusting and offensive as it should be?

    Our politicians shouldn’t be smugly dictating to us that our chocolate ration is going to be increased by minus 25g again. Our politicians should be fucking terrified of upsetting us.

  3. The Meissen Bison

    There’s no point in using numbers to argue rationally with those not susceptible to reason. If you cavil at spending £350bn or £3,500bn or £35,000bn, the rejoinder will be that you want the planet and everyone on it to die.

    Absent a major and immediate leonine intervention, this might now be the best thing that could happen.

  4. As TMB points out, arguing that this is uneconomic is pointless; this isn’t economic policy, it isn’t even science – it’s religion.

    Of the cargo cult persuasion.

  5. Lions are expensive and innocent creatures. Feeding them piles of shit is naughty. Piano wire is more effort, true. But when was anything so needful effort free? And the CO2 emissions? You get some either way, so who cares?

  6. So, not quite Tim. You are comparing a capital spend of £350bn with a saving of £10bn from reduced emissions each year. But a retrofit would reduce emissions for many years. Say 30. Then, undiscounted, you are comparing £350bn vs. £300bn. Yes, I know, annuities and all that, but the social cost of carbon increases with time, partly offsetting this (in effect, be careful about comparing a real rate of return of 3% vs nominal private market yields). This makes it all a bit closer than you imply. The USEPA are currently proposing that the social cost of a ton of CO2 is $190, which would make your calculations look very different.

  7. A case of money we don’t have being extracted from taxpayers who didn’t vote for it in order to fund a governmental virtue-signalling aspiration of questionable merit using unsuitable technology which is probably ineffective if not downright harmful.

    Apart from that it’s great.

  8. The USEPA are currently proposing that the social cost of a ton of CO2 is $190

    That’s Numberwang!

  9. @Steve. It is there for you to review: Although such agencies do the best they can in compiling all the economics and science into a value, people are just not prepared to pay these types of figures. Even the Guardian recognise this: Tim is basing his argument on the SOCIAL cost of carbon even though it is PRIVATE households that will need to pay the bill. They just don’t value these things the same way. It is this that lies behind the problem.

  10. Yes, I’m using social cost because I want to show that even if government (taxpayers, society as a whole) pays the bill it’s still not worth doing.

  11. Ah, but the thing is, Tim, I think it does work on a social basis. HM Treasury Green Book prices for carbon dioxide are given in Annex 1 here: These are even higher than the EPA values. I take this series, assume that a retrofit will save 50% of household emissions (half of 40% * 500m tonnes = 100m tonnes per year based on your numbers), multiply up by the central carbon values until 2050 (assuming the retrofit will work that long), and discount back at the Green Book rate of 3.5% a year. I make that £550bn in present value benefits (assuming I’ve done my maths right). So, socially it could make sense. Privately, households won’t pay for it. That is the nub. The macro models that agencies use to get the Social Cost of Carbon are inconsistent with the values you get from aggregating up what households will pay (either directly or through taxation) by a lot.

  12. Even if it all works as intended, I still don’t see how making the weather colder is worth £3.50, never mind £350 billion.

  13. Hang on. ‘Most households can’t manage £15,000’?. But households can manage £250,000 to buy an average house. It’s true not all households can afford to buy a house but quite a few can. So it can’t be true that most households can’t manage £15k.

  14. Bill… try to get that extra mortgage/loan to pony up that 15k average
    I think you’ll find it next to impossible to get.

    And it’s needed, since you’ll have to make major structural changes to how your house works, in one go. At a level that DIY-ing it is well outside of the capabilities of most people, or plain forbidden to DIY by local regs at several levels of bureaucracy.
    If you can get your hands on the gear and material needed to begin with.

  15. As I have bored you with before, people are coming up with ever more creative and beautiful economic solutions to the non-problem of CO2 emissions instead of arguing against the blatant insanity of the eco nutters beliefs.
    As JuliaM said, it is a religous cult.

    Bill @ 10.57, “it can’t be true that most households can’t manage £15,000”. Do you really believe that? Really…..?
    “In 2023, almost a quarter (23%) of Brits have no savings at all, rising from 20% in 2022. 50% of Brits have £1000 or less in savings”.

  16. 15 grand for roof insulation? Oh wait…. heat pumps. So, 14 grand for a heat pump and a handful of spare change for roof insulation. I did my house in 1995 myself, total spend about 200 quid for materials, and I think my gas bill dropped by that amount within months.

    I’ve just looked at prices for rockwool insulation. Geez. £35 a roll. My memory of 1995 was about a tenner a roll, and I think I used about ten rolls total. BofE inflation calculator tells me £10 in 1995 is £20 in 2023.

  17. So let’s assume we’re forced to get these heat pumps and the cost is £15,000
    Well as above 50% of Brits have <£1K in savings.
    I guess only a small minority have over £15K

    So we're going to have to borrow it…

    £15,000 for 3 years at 4% means total repayable of £16,000… But the household has to find a spare £443pcm.
    You could take it for 6 years, at 4% which makes it a more affordable £235pcm but rises to total payable of £17,000
    9 years is £166pcm and £18,000

    For something we don't want or need. And how many households can afford an extra £166pcm?
    I was chatting with the Tesco checkout lady last week and as we were discussing the insane food price inflation she volunteered her monthly spare budget after tax, rent, gas, food etc. £90.
    Where would she get the money from?
    Or why should those who have money be forced to pay for upgrades to her house?
    To bring down the amount of plant food in the air?
    Fuck no.

    The whole house of cards will fall down soon.
    Either people will baulk at the cost and demand change, or the government will just print loads of money to pay for it, leading to more inflation and subsequent economic collapse.

  18. You’re basing your figures on Tosser Stern’s imaginary numbers? FFS! He doesn’t even know what sign they should have?

  19. @CD

    Until recently it’s all been academic and most people simply are not engaged with it

    Now the chickens really are coming to roost, it’s going to hot them hard financially and they are beginning to question the logic and the numbers

    The whole Net Zero Ponzi scheme just doesn’t pass the common sense t at

    It’s clearly completely unachievable

  20. Bloke in North Dorset

    If this is such a crucial change what does revealed preference show us? How many advocating the forced swap out have made the personal sacrifice and set an example?

  21. “Our politicians should be fucking terrified of upsetting us.” Why should they fear you? They have all of the guns.

  22. Social cost of emissions!!!!

    Thin end of a very large “multicultural”, cross gender, racially just, reparations based wedge by the sound of it.

    Kill all the lawyers? After that, economists. It doesn’t matter how utterly insane and deluded the madcap scheme, they’re all over it like flies on shite!

  23. Just think how much it would cost to fit out the Regency bits of Bath in such a way as to retain ALL the period features and render the houses draught proof. Maybe £100k per property? And that’s before installing the heatpump

  24. ” Why should they fear you? They have all of the guns.”

    Yes but only maybe 100k policemen and maybe 100k squaddies to use them. Vs maybe 40m of working age people. Thats 200 to 1 odds. In urban environments. And not all those police and army would be prepared to use the guns either. Its a very thin red line……….I wouldn’t fancy my chances if I was a junior member of the political elite and it all kicked off, I wouldn’t be getting much protection, and the mob would be outside my door. Look what happened in Sri Lanka.

  25. @Chernyy Drakon – “Where would she get the money from?”

    As I’m sure you know from following current affairs, she would get it from the rest of us.

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