A trillion dollar question?

It has been an undeniably good week for the government's occasionally-sighted green recovery agenda. Even the Prime Minister's most loyal allies would be hard pushed to argue he has delivered on last summer's promise of a Roosevelt-style stimulus package capable of remaking the British economy along net zero lines. But the past few days has offered a timely reminder that progress is being made, pieces of the jigsaw are starting to fall into place, the huge potential for a transformational green recovery has not yet been squandered.

Yesterday, two major offshore wind turbine component suppliers announced plans for around £180m of investment to expand their production capacity in the north east. The moves, which were unlocked by confirmation of government grant funding and on-going port upgrade plans, are expected to create and safeguard around 1,000 jobs, alongside a further 1,000 jobs in the wider economy.

The news came just hours after Vauxhall announced its Ellesmere Port factory is to be the focus for £100m of investment to kit it out for electric van production. That in turn followed news last week that Nissan is at the heart of a coalition looking to invest up to £1bn in the UK's first battery gigafactory in Sunderland.

These are welcome and hugely encouraging moves for which the government and the companies involved deserve considerable credit. But they also present an intriguing "what if" hypothetical.

If this is the investment and jobs that can be delivered when there is a near universal consensus that the UK's net zero policy framework remains insufficiently ambitious and its green recovery package hugely underpowered, what would happen if the government were to deliver the bold decarbonisation policies myriad businesses, investors, and advisors insist are urgently required?

The answer presents absolutely massive challenges and similarly enormous opportunities. As a new report from EY highlighted yesterday, simply building out the current clean power projects pipeline could create 625,000 jobs. The CCSA trade body today predicted still nascent carbon capture projects could support 10,000 jobs by 2025. Monday's report from think tank Onward put the number of net zero related jobs that need filling through improved training at 3.2 million. Other analyses would argue this barely scratches the surface of the level of industrial transformation that is coming, bringing with it unprecedented levels of investment and economic stimulus, coupled with significant skills challenges and inevitable disruption.

The big upside for businesses and government is that if an effective net zero policy framework and supporting investment plans are delivered, then Ministers will be making announcements similar to this month's from Sunderland, Teesside, and Ellesmere Port every single week. Millions of good, rewarding, well-paid jobs will be created right across the country. There will be missteps along the way, but there will also be countless good news stories.

This is all worth remembering as the debate over the costs of achieving net zero emissions continues to intensify.

With crushing inevitability the Office for Budgetary Responsibility's (OBR) detailed report this week on the fiscal risks associated with climate change and net zero, was disingenuously spun by certain media outlets to suggest delivering net zero emissions would land each household with a £50,000 bill - a misleadingly simple calculation that deliberately ignores the huge savings on offer from the transition.

These wilful scare stories risk fuelling political and public opposition to the green recovery, even as it starts to unleash multiple visible benefits. The debate will only get more fractious when the Treasury eventually publishes its long awaited review of the costs of net zero and normal political divisions start to re-emerge post-pandemic.

But as these rows escalate it is worth remembering the limits of such economic modelling exercises. As I've argued before, economic models have enormous value, but they are essentially exercises in crystal ball gazing. They may be better than perusing tea leaves, but they have their limits.

Anyone who reckons they can predict the precise cost impact of the exact technology and infrastructure mix that will deliver net zero emissions 29 years hence has a bridge to sell you. There are simply too many variables to make such predictions with real confidence. The policy decisions taken by other countries, the public reaction to clean technologies, the pace at which cost curves are moved along, the risk of future pandemics or worse - all these variables and many more will have a huge impact on the cost of decarbonisation, but they are intrinsically difficult to predict. 

What can be ascertained with greater confidence are the general trends. The cost of clean technologies will continue to fall. As the OBR made clear you have to consider the benefits as well as the costs of the transition - most notably in the form of reduced fuel and energy bills. When these upsides are taken into account the overall costs of decarbonisation are likely to range from the manageable to the non-existent. Most importantly, it is vital to remember that the immense costs associated with unmitigated climate impacts - witness North America's killer heatwave - are many times greater than the costs of cutting emissions and bolstering climate resilience.

More broadly, amidst the latest wave of green jobs announcements there are grounds for even greater optimism. Economic modelling exercises always struggle to quantify the co-benefits that come with decarbonisation - the cleaner air, richer soils, safer water, quieter streets, all of which add up to enhanced security and improved health outcomes and well-being. It is entirely conceivable that the net economic impact of delivering net zero emissions will be net positive.

There are costs associated with retiring the fossil fuel economy - costs that will increase many times over if we botch the transition. But to date every industrial and technological revolution in history has served to boost productivity and enhance economic performance. It would be strange indeed if a green industrial revolution focused on improving efficiency, removing polluting externalities, and driving tecnological progress did not achieve similar results. 

Net zero won't cost the £1tr-plus some have predicted - not even close.