Institute of Economic Affairs uses absurd assumptions to mislead the media about the costs of net zero for the UK
A new pamphlet by the Institute of Economic Affairs (IEA) has misled political reporters in many UK national newspapers by misrepresenting the work of the National Energy Systems Operator (NESO). Bob Ward, who has urged the withdrawal of the pamphlet, details the errors and the damaging false impression they give.
The IEA published an error-strewn pamphlet on ‘The Cost of Net Zero’ on 13 January 2026 that received prominent coverage in many newspapers, including the front page of the Daily Express. Written by David Turver, the most serious of its errors was its misrepresentation of analyses by NESO.
The summary of the pamphlet states: “The cost of net zero is highly likely to be above the 2020 estimate of roughly £3 trillion from the National Electricity System Operator (NESO), and could even be above this year’s attempt, which calculated gross cash costs of £7.6 trillion or over £9 trillion including the carbon costs of emissions.”
In addition to the obvious error in NESO’s name, this claim misrepresented its findings.
In December 2020, the then Energy System Operator (ESO), NESO’s predecessor, published an analysis of the costs of four ‘Future Energy Scenarios’ (FES) for the UK, three of which were consistent with reaching net zero emissions by 2050, and one which was not.
The ESO analysis stated: “The aim of our project was to cost the scenarios for the energy sector to enable comparison across these four Future Energy scenarios. Importantly, our project doesn’t provide the total cost of meeting net zero to UK Plc and does not include costs related to energy demands from a number of areas such as aviation, shipping, rail, agriculture and industrial and commercial heat demand.”
These costs were expressed in terms of net present value, which provides a means of evaluating capital projects, such as interconnectors, accounting for positive and negative cash flows spread over time, with future cash flows discounted into present value.
The three scenarios that were consistent with net zero had projected costs by 2050 ranging from £2.8 trillion to £3.2 trillion. The one scenario that was not consistent with achieving net zero by 2050 had a projected cost of £2.9 trillion.
Hence it was clearly wrong for the IEA pamphlet to claim that the 2020 analysis found the cost of net zero was “roughly £3 trillion” as this ignores all the costs associated with the energy system even if it is not consistent with the net zero target.
This point was made explicitly clear in the ESO analysis, which stated:
“The costs on their own are large but it’s important to put them into context. The energy system is vast and complex and the scale and importance of its operation means the costs involved are sizeable. Therefore, significant costs will be incurred across the energy system between now and 2050 in any event and the key insight we are providing here is enabling a comparison of what those costs might be under different assumptions, or in different scenarios.”
The IEA pamphlet repeated the same fundamental error in its treatment of NESO’s most recent analysis.
On 11 December 2025, NESO published its ‘FES 2025: Economics Annex’. This outlined economic analysis of four Future Energy Scenarios, three of which, the ‘Holistic Transition’, ‘Electric Engagement’ and ‘Hydrogen Evolution’, were consistent with the target of net zero emissions by 2050, and one, ‘Falling Behind’, which was not.
Among the report’s findings was:
“When carbon costs are included (at the UK Government’s Green Book values), the Holistic Transition pathway has the lowest cost over 2025-2050 and enduring savings beyond 2050. If carbon costs are ignored, the Falling Behind scenario is cheaper over 2025-2050, saving the equivalent of around 0.4% of GDP on average annually. It would have higher costs beyond 2050, given higher ongoing fuel costs and the need for further investment if net zero is to be achieved later.”
It also warned about misinterpretation of its findings:
“The comparative costs should be seen only as indicative given the uncertainties and differences between pathway assumptions detailed later in this report. The numbers cannot be compared directly to those published earlier in the year by the Climate Change Committee (CCC) and used by the Office for Budget Responsibility, as their costs represent the cost of reaching net zero compared to a no-action baseline, which our numbers do not.”
The IEA pamphlet ignored this warning and indeed the findings of the NESO report. Instead, Mr Turver referred only to spreadsheets that were published alongside the NESO report. Mr Turver aggregated himself some of the figures for operating and capital expenditure contained in the spreadsheets. This aggregation resulted in numbers that can be found nowhere in the NESO report or its spreadsheets.
The IEA analysis claims that this aggregation showed that the in-year “gross cost” of net zero from an aggregation for the ‘Holistic Transition’ was £7.6036 trillion. The pamphlet further suggested that when “carbon costs” were included, this total rose to £9.0476 trillion. However, these figures represented an aggregation of total costs for the energy system between 2025 and 2050, and not just those associated with achieving net zero.
The IEA pamphlet was fundamentally wrong to claim these figures provided the cost of net zero because they included investments required regardless of whether the net zero target is achieved. It was based on the absurd assumption by Mr Turver that the energy system would require absolutely no new investment over the next 25 years without the 2050 net zero target.
This point should have been obvious from the aggregation for the ‘Falling Behind’ scenario, which the IEA pamphlet presented alongside those for the ‘Holistic Transition’. These aggregations indicated costs of £7.2294 trillion and £9.9631 trillion.
Press coverage of the inaccurate IEA pamphlet
The IEA promoted its flawed analysis, based on an absurd assumption, through a press release that stated: “New analysis suggests gross costs of net zero could exceed even the highest official predictions of £7.6 trillion.”
Unfortunately, the IEA pamphlet was covered by political reporters, rather than energy or environment reporters, which meant that it was not properly scrutinised, and the fundamental errors were not detected.
Christian Calgie, Senior Political Correspondent of the Daily Express, wrote a front-page story that started with the sentence “Ed Miliband’s net zero project could land the taxpayer with a huge bill of £9trillion, a report has claimed.”
Claire Ellicott, Whitehall Editor of the Daily Mail, wrote an article for page 2 of the newspaper, stating: “Government estimates are based on ‘fantasy assumptions’ and the real cost could exceed even the highest official predictions of £7.6trillion, according to the analysis.”
Genevieve Holl-Allen, a Political Correspondent at The Daily Telegraph, wrote a story for page 7, stating “The gross cost to the UK economy of achieving the 2050 target could exceed even the highest official predictions of £7.6tn, an Institute of Economic Affairs (IEA) paper said.”
Geraldine Scott, Assistant Political Editor of The Times, wrote an article for page 2 about the IEA pamphlet, but she did not cite the misrepresented NESO figures.
Raising concerns with Lord Frost
I have written to Lord Frost, the Director General of the IEA, to point out the fundamental flaws in the pamphlet, and to urge him to withdraw it.
“I note that several media reports uncritically covered the publication of your pamphlet, and include quotes from politicians and commentators who appear to have accepted your inaccurate and misleading figures at face value.
“I urge you to withdraw the document and to review your internal processes to ensure that your documents receive a rigorous quality control check before they are published.”
An email in response from Lord Frost’s office demonstrates that the IEA does not understand, and does not care, why the pamphlet was fundamentally flawed, stating: “Gross numbers are a well-understood way to discuss the costs of major capital projects. The paper’s author is clear throughout when he is using such figures.”
Yet Mike Thompson, the Chief Economist at NESO, confirmed in a post on LinkedIn that the IEA pamphlet was wrong. He wrote:
“Some wild numbers have been used in the media this week for ‘the cost of net zero’. Reports have said that net zero will cost £4.5 trillion, £7.6 trillion – the list goes on. None of these are the cost of net zero… Oops – we’d still spend most of this without net zero… Unless you think we’ll stop driving cars, stop heating homes and stop using energy – for anything!”