Should Canada Emulate the UK's Net-Zero Pathway?

The answer? Run. Run away, fast.

Should Canada Emulate the UK’s Net-Zero Pathway?

Although I wrote this in response to a “fact-finding mission” back in April 2024, when the UK was still governed by the incorrectly named “Conservative” party, the situation has actually deteriorated since Labour won the national election in July. Nevertheless, the advice to run not only still stands, it is more applicable than ever.

Earlier in the year, there was some chatter within certain circles in Alberta and Canada that the UK’s net-zero framework is a plan to emulate. This position was ostensibly informed by an invitation-only whirlwind tour of handpicked UK net-zero projects and initiatives attended by a group of Canadians. The Canadians were duly impressed by what they were shown and came away with the idea that the British people and industries are united in a “Team UK” approach. There were a number of key “takeaways” from the tour but the top three included: an aggressive net-zero timeline that “everybody appears to be on board with”; the UK has a new type of increased decarbonized industrial production guided and driven by government industrial planning; and a serious concern with energy security.

As someone who lives in the UK, it might be helpful to offer some perspective on what is happening across the pond. Undoubtedly, it may seem like “Team UK” from the Canadians’ perspective since they were in the company of transition boosters. Notably, all of the major parties in the UK, except for about one quarter of the Conservative Party, fully support the idea of net-zero. In other words, the story being told was from a narrow band of companies and politicians that are benefiting from and promoting net-zero.

But if one were to speak with the British people who are being forced into changes that have a negative impact on their standard of living and quality of life it would be clear there are many who are not on board with the changes. In fact, many within the British population feel like they’ve been duped or deceived about the net-zero transition. For example, like Canadians, the British people were told it would be an easy thing to swap from a diesel car to an electric vehicle (EV) or to swap out natural gas heating for an electric heat pump or to shut down coal power plants and build wind projects to lower electrical bills. It turns out none of those things were easy and did not lower costs.

First, EVs have proven to be expensive and unreliable leading to a plummeting of purchases. The actor, Rowan Atkinson famous for his role as Mr. Bean, was an early adopter of EVs and wrote a scathing piece in The Guardian explaining how he felt duped. Then there are the heat pumps which have turned out to be very expensive, loud, and not very effective when the temperature drops below 5C, even in temperate England. Lastly, the unreliability of wind power in the UK, combined with the closing of coal power plants, has dramatically increased the cost of electricity in the country. Initially, the higher costs were pinned on Russia’s war with Ukraine and the rise in natural gas prices, but it also had to do with the UK relying on interconnections with Scandinavia and Europe to supply electricity shortfalls. This has forced people in the UK, in some circumstances, to choose to “heat or eat” and go to a collective public place known as “warm spaces” for warmth and food.

One of the pillars and promises of the UK’s net-zero commitment is “decarbonized industrial production” guided by government industrial planning: this is a euphemism for a type of command-and-control central planning. What precisely is the new “industrial production” being created in the UK? Good question; perhaps it is “green steel”. Tata Steel is shutting down and supposedly retooling the Port Talbot foundry to make it run on an electric arc furnace. But it is unclear if the plant will reopen unless it receives significant government subsidies. Another “green steel” company just received a huge injection of capital from Blackrock and other investors; it remains to be seen if there will be a profit made or reasonable return on investment. The promise of “decarbonized industrial production” seems to be illusory since UK data shows a steady decline of manufacturing as a percentage of GDP even with the net-zero industrial planning. For an example of the manufacturing decline due to unreliable and expensive energy, the UK subsidized the building of BMW’s Mini EV plant, but when energy prices increased and there were additional net-zero uncertainties, BMW moved the plant to China. Next year, China will be exporting those Minis to the UK. Some celebrate the shift to a service economy, but if a nation like the UK only provides services that means another country is providing the actual goods of a nation.

As for energy security, the UK does not seem to be taking it very seriously

given that it implemented a windfall profits tax on oil and gas companies –a 35% surcharge on profits—that has been extended through March 2029. (In October, the new Labour government increased the surcharge to 38% and extended it until 2030. It also removed a 29% investment allowance on oil and gas firms.) UK North Sea oil and gas production has been declining for a number of different reasons, but there has been about a 30% drop in both oil and gas production since 2019. Even with the war in Ukraine, exploration and development has not increased. There is great uncertainty because of net-zero, the disincentive of windfall taxes, the ban on fracking, among other reasons.

To sum up, it is folly to want to emulate a false perception of “Team UK” in pursuit of net-zero. It is incorrect to denigrate or deride Canadian jurisdictions like Alberta and Saskatchewan for wanting reliable, affordable, secure energy and resisting the economic train wreck that is unfolding in the UK. Let’s learn from the mistakes of the UK and not emulate the costly, disruptive, and economy destroying net-zero pathway.