Britain’s drive to reach net zero could cost far more than official estimates suggest, with new analysis warning the true bill will fall heavily on energy-intensive sectors such as farming and the wider rural economy.
A briefing paper from the Institute of Economic Affairs (IEA) claims the cost of the UK’s net zero commitment has been consistently understated by public bodies, raising concerns about how the transition will be funded and who will ultimately bear the cost.
In The Cost of Net Zero, energy analyst David Turver examines official projections produced by the Climate Change Committee, the National Energy System Operator, the Treasury and the Office for Budget Responsibility.
The paper argues that headline estimates have fallen sharply not because net zero has become cheaper, but because methodologies have changed and assumptions around technology costs and financing have become increasingly unrealistic.
The Climate Change Committee now estimates that achieving net zero between 2025 and 2050 will cost £108bn, down from earlier projections of more than £1tn.
Turver says this reduction is driven by a shift away from measuring gross costs, instead comparing spending against a hypothetical baseline scenario, alongside assumptions of sharply falling costs for renewables, heat pumps and electric vehicles, and borrowing rates below market levels.
By contrast, modelling from the National Energy System Operator suggests gross cash costs of £7.6tn for the transition. Once the carbon costs of emissions are included, the figure rises to more than £9tn.
The paper warns that even these figures may be underestimates, particularly given recent difficulties delivering offshore wind projects and the impact of rising financing costs.
For farm businesses, the analysis raises questions about future energy prices, grid charges and the cost of complying with decarbonisation policies, at a time when many are already facing higher electricity bills for grain drying, cold storage, irrigation and livestock housing.
The debate comes as British agriculture continues to pursue its own climate ambitions. The NFU committed in 2019 to reaching net zero greenhouse gas emissions across UK agriculture by 2040, a decade ahead of the national target.
The union has previously said achieving this will depend on productivity gains, technological innovation and sustained investment, alongside supportive policy frameworks and realistic assumptions around cost.
The IEA paper also highlights concerns that optimistic assumptions around renewable costs could increase pressure for large-scale developments in rural areas, including solar and wind projects on productive agricultural land, as policymakers seek to meet targets at pace.
Examples cited include offshore wind, where the CCC assumes costs of £1,500 per kilowatt for projects delivering in 2030. Hornsea 3, due online in 2028, is forecast to cost between £10bn and £11bn, equivalent to around £3,682 per kilowatt.
Solar power costs are also questioned, with recent UK projects delivered at close to £1,000 per kilowatt, well above official projections that fall to just over £400 per kilowatt by 2030.
Turver warns that presenting misleadingly low figures risks shutting down serious public debate over what he describes as one of the most expensive policy programmes in British history.
“The various public bodies responsible for working out the costs of net zero have not been entirely truthful in their analysis,” he said.
“They have made fantasy assumptions about the cost of renewables and low-carbon technologies. The true cost of net zero is much higher than we have been led to believe.”
Lord Frost, director general of the Institute of Economic Affairs, said: “Net zero is already one of the most economically damaging policies in modern British history.”
He said the research showed official bodies had relied on “fantasy numbers”, warning that the policy “badly needs a proper rethink before it kills off more of British industry and leaves British households permanently subject to unreliable supply and higher bills”.
Farming businesses, which sit at the heart of the rural economy, have already experienced sharp rises in energy costs in recent years, alongside growing pressure to invest in low-carbon technologies and infrastructure.
Shadow energy secretary Claire Coutinho said: “It beggars belief that none of our ‘independent’ energy bodies can publish an accurate figure for what net zero is going to cost this country.”
The IEA argues that without transparent accounting, net zero policies risk placing further strain on sectors such as agriculture, which are expected to adapt, invest and decarbonise while managing rising costs and ongoing volatility across the supply chain.
