The true cost of our energy delusions

By Paul Homewood

In its latest Fiscal Risks and Sustainability Report, the Office for Budget Responsibility confirms the consequences of nearly two decades of failed energy policy. Not deliberately, of course. The document is written in the passive, data-heavy language of technocratic forecasters. But read carefully, and one thing becomes abundantly clear: Britain has built an energy system that cannot support its economy – and now the entire fiscal architecture is buckling under the strain.

For years, the political class convinced itself that energy was a secondary concern. What mattered was hitting targets, making announcements, and aligning with the global climate consensus. Meanwhile, fundamental issues such as intermittency were treated as mere afterthoughts. Affordability became someone else’s problem. And firm, dispatchable energy – the stuff that actually keeps the economy running – was quietly sidelined. Even as the cost of living has emerged in recent years as the defining political issue – surpassing climate change, migration, and even the NHS – Westminster persists.

Now the bill has arrived.

The OBR doesn’t shout about it, but the facts are there. Britain’s economic growth is anaemic. Inflation has proven more stubborn than expected. Interest payments on government debt are higher and more volatile than in peer economies. And the government has spent tens of billions responding to crises, with less and less room to manoeuvre each time. You don’t have to squint to see what connects these trends: myopic energy policy has made each one worse.

When the global energy crisis hit in 2022, the UK was uniquely vulnerable. The government was forced to spend £40 billion just to prevent household and business collapse. Not because markets failed, but because Britain had spent the previous decade dismantling its own resilience. It blew up coal-fired power stations. It shuttered gas storage. It blocked domestic production, including banning onshore gas. It let nuclear capacity wither. All while deepening its dependence on low-density, weather-dependent technologies with no serious plan for backup.

The £40 billion spent shielding households and businesses from the energy crisis was the fiscal consequence of a system built on fragility, which left us dangerously exposed to geopolitical shocks such as Russia’s invasion of Ukraine and the resulting spike in gas prices.

But instead of learning the lesson – including the need to invest in firm baseload, large-scale storage, and domestic hydrocarbon supply – the government is entrenching the problem. Miliband’s “clean power by 2030” mission will make the grid more dependent on intermittent generation while deterring investment from vital firm generation capacity. As the respected energy academic Professor Dieter Helm has warned, this rushed strategy is likely to drive up system and network costs, forcing consumers to pay more for an energy system that delivers less reliability and security.

The OBR puts the central government cost of Net Zero mitigation at £803 billion over 25 years – roughly 0.8% of GDP annually. That may sound a lot, but it’s a cautious figure built on highly uncertain assumptions. It excludes household and private sector costs, which could be ten times as much. It assumes smooth delivery and no overruns. And it’s based in part on data from the Climate Change Committee, which has already revised its own estimates down by 65% – not because the transition got cheaper, but because the modelling changed.

In short, it’s not that the number is too high but that it’s probably too low. A best-case forecast in a worst-case world.

Britain has pursued an energy model that is physically fragile and economically inefficient – but politically untouchable. Rightly, that model is now being exposed.

Unfortunately, it is about to get a lot worse. Every structural weakness the OBR identifies – low growth, stubborn inflation, rising debt, persistent deficits – will be made harder to fix by an energy system that demands ever more subsidy, ever more intervention, and delivers ever less reliability.

The political class has spent years ignoring this reality. The OBR, to its credit, cannot. Its spreadsheets may be bloodless, but the message is unmistakable: Britain is in trouble and energy policy is a primary reason why.

The question now isn’t whether the model has failed. It has. The question is whether anyone in power is prepared to admit it and build something better before the next crisis makes that impossible.

Maurice Cousins