Thread by @KallumPickering

Net Zero = zero productivity? Today at @PeelHunt we publish analysis which challenges the government’s claim that there is no trade-off between Net Zero and economic growth. Two decades of experience suggests otherwise. A thread with lots of important charts (1/16) #netzero

We begin our analysis with a simple observation - that the decline in UK electricity availability, which started in 2006, coincided with the start of structural weakness in UK productivity growth (2/16) #productivitypuzzle #ukeconomy

Electricity availability has declined by 21% since peaking in 2005. This decline has occurred, by and large, due to the planned decommissioning of various types of electricity production facilities – most notably coal and oil, but also nuclear. (3/16)

The infliction point for electricity availability also coincided another trend - the UK became a net-importer of oil and gas in the early 2000s. (4/16)

At this point the story becomes a bit econ101. Declining supply of a key factor of production (energy) in an economy with growing demand. What happens next? Obvious, a precipitous rise in energy costs. Here are industrial energy prices - which had been steady until 2005 (5/16)

And here are consumer prices for energy. . . same story. Roughly stable until 2005, and then everything gets worse as electricity supplies begin to decline (6/16) #ukeconomy #ukmacro #netzero #rachelreeves

The UK now has the highest domestic electricity prices in the advanced world (7/16)

Next question - why care about productivity at all? That is easy. Productivity is the major driver of living standards - the broadest measure being GDP per capita. Here we see the same trend as we do in the productivity data - i.e. structural weakness since the mid-2000s (8/16)

At this point we broaden our analysis to look at a broader sample of economies - 189 to be exact. Here is the relationship between per capita GDP and per capita energy consumption. The conclusion is clear - energy matters for prosperity (9/16)

We then compare the UK to the US - here we see two very different choices in the recent past. While the US has been growing living standards while keeping energy consumption stable, the UK has been holding its living standards stable while cutting energy consumption (10/16)

Let us ask then, yes the UK has paid a price in terms of living standards - but it has it at least made a difference to global emissions? Sadly not. The UK has halved its territorial C02 emissions versus peak - but accounts for less than 1% of the global total
(11/16)

Here is a look at the broader global picture for CO2 emissions (12/16)

The UK’s decarbonisation efforts, so far, have resulted in weak economic growth, high energy prices, stagnant productivity and no significant impact on global emissions. (13/16)

The silver lining of hope is that official projections indicate a steady rise in electricity available into the middle of the century - which should ease this headwind and (hopefully) help to bring energy costs down (14/16)

But it hinges on a successful build-out of renewables (and some gas capacity) - which so far have been hampered by planning delays and will require imports of critical minerals from far away places. It won't be easy (15/16)

Thanks for reading - please follow if you like this thread. (end)
And for the full report please see shorturl.at/cFv2Y