Yes, it’s between £200 and £300 billion. That’s the received wisdom now about the investment necessary to sort out our energy supply, networks, capacity etc. by 2025. I was put in mind of this when, during a seminar I attended this week, sure enough, up popped the figure during a talk by a Green Investment Bank Advisor. Ministers now reel it off routinely as fact during debates: it’s installed as a paradigm: or perhaps shorthand for ‘ its an awful lot of money so we shouldn’t do things that will put it in danger.’ It is also there for contrarians to take pot shots at, being such an unfeasibly large sum. A recent Economic Policy Centre paper, (pdf) for example argues roughly that there’s no way we’re going to be able to invest that much, so let’s settle for a far smaller programme of – say – £70 billion which seems rather to miss the (low carbon) point of the higher figure.
So where does the sacred sum come from? It seems to have emerged from two sources, possibly connected: Ofgem’s ‘Project Discovery,’ in 2009, which modelled a number of scenarios for low carbon investment needs and came up with the £200 billion figure for the most ambitious of their scenarios ‘green transition’. This assumed rapid economic recovery, global agreement on climate change measures, and new nuclear and carbon capture measure operational by 2020, among other things. Other scenarios modelled produced a much lower level of investment requirement. Ernst and Young, at the same time, produced an estimate of £235 billion up to 2025 in their ‘Securing the UK’s energy future.’ This assumed among other things a huge increase in installed capacity (about 122GW) well beyond even the (I think) inflated capacity projections of the Government National Planning documents and a corresponding hike in peak demand of about 15%, also belied by DECCs projections. Both documents, incidentally assume a large amount of new nuclear online between 2020 and 2025, (Ernst and Young almost 13Gw up and running by 2023) which we know now almost certainly won’t happen.
So as with all big numbers they are often not quite plucked out of the air, but rely on some occasionally heroic assumptions, which can be eroded fairly rapidly by the passage of time. the assumptions here are certainly beginning to look rather rusty, and yet just as they do so, they seem to become more embedded in the narrative. I suppose that’s what happens when things go rusty: doors start to seize up and stick.
I don’t think for a moment that we will need to spend ‘between £200 and £300 billion on plant and infrastructure by 2025, even if we did have that sort of money lying about to invest: what I do know is that the investment requirement will be very substantial – probably well above £100 billion, for example – and will need hard work to achieve. I’m not sure that this task is best served by hanging paradigms marked ‘at least £200 billion’ over the entrance to the workplace. Time for some updated, and perhaps more guarded projections to be put on the table, I think.