This post is by Caterina Brandmayr, head of climate policy at Green Alliance.
An energy security strategy developed in response to Russia’s invasion of Ukraine should be judged on two grounds: its denial of UK fossil fuel revenue to Putin’s regime in the short-term, and its contribution to overall UK and European energy security in the medium-term. Cutting demand for fossil fuels in the near term is essential to shield households facing record high energy bills, and is vital to the economics of the conflict. Europe has sent €35 billion in energy payments to Russia since it invaded Ukraine, and around €1 billion in foreign aid to the Ukrainian defenders. The long-term need to bolster energy security will be crucial to the UK’s prosperity and that of its closest trading partners over the next decades.
How does the so called British energy security strategy fare against these tests?
A missed opportunity to boost near term energy security
In short, the strategy fails the first test. It contained no short-term action to lower UK fossil fuel demand, and thereby to cut the need to import the 4 per cent of gas and 8 per cent of oil that Russia supplies to the UK.
The strategy could have met the £9.2 billion investment in energy efficiency promised in the 2019 Conservative Party manifesto. Doing so could have cut the equivalent of 80 per cent of our imports of Russian gas. But the Treasury chose to hold back the funding needed to deliver on this commitment.
The strategy could have pushed onshore wind, one of the cheapest and more rapidly deployable forms of energy, and one that is actually supported by the majority of the UK public. But fringe fears in the cabinet put paid to this.
The consequence is higher bills for households. The de facto ban on onshore wind and cuts to energy efficiency policies over the last decade means we now pay £2.5 billion more for our energy than if government had not withdrawn its support for these measures. Yesterday’s strategy suggests government still hasn’t learnt its lesson.
The medium term looks more promising
Despite some poor choices (namely new oil and gas licences, which take on average 28 years to get to production and lock taxpayers into an expensive deal) and grandiose ambitions (24GW of nuclear power looks implausible, given the industry’s track record of delays and high costs), the strategy includes some important steps to accelerate the switch to clean energy in the medium term. The energy plan may not fail its second test.
The 50GW offshore wind target, and plan to address bottlenecks with the planning process, should help speed up delivery of the 86GW pipeline of offshore wind projects at various stages of development. Building all of this would produce enough power to displace all the Russian gas used to generate electricity across the UK and the EU.
A dedicated 5GW target for hydrogen made with clean electricity is also welcome. A demand side strategy is now needed to ensure this hydrogen is directed towards those sectors that really need it, such as long duration power storage, e-fuels for aviation and steel.
But there are some less flashy commitments that could bring about significant change. The Future System Operator, announced the day before the strategy, could support a more strategic approach to delivering a clean energy system, making the transition more efficient and cost effective.
The Review of Electricity Market Arrangements could finally move the UK away from a capacity market that procures mostly polluting and volatile fossil fuel power (with fossil fuel capacity accounting for 78 per cent of purchased capacity in the most recent auction), to a market that scales up zero carbon flexibility and firm power to complement a high renewables grid.
And there seems to be some slow progress towards setting minimum energy efficiency standards in buildings, which, while insufficient to drive near term action, are an important part of the mix of measures needed to futureproof our building stock.
Positive steps on cutting oil demand in road transport over the medium term
Bizarrely, transport did not feature in the strategy, despite being heavily dependent on oil and the sector where the UK is most reliant on imports from Russia.
However, on the same day of the strategy, the government published its proposed design for the zero emission vehicles mandate, which will drive up sales of battery electric cars. This is not only a win for climate, but it will ensure more people can benefit from cheaper to run, clean cars (especially if government increases ambition on near term sales targets) and help bolster UK manufacturing and jobs.
Electric vehicles accounted for 16 per cent of cars sold in March 2022, and prices are falling too. But the government should also help the rest of the transport sector move away from oil, by expanding access to public transport and extending the infrastructure and incentives needed to switch away from diesel trucks and buses.
What next to cut energy costs and increase energy security this parliament?
The strategy doesn’t secure the UK’s energy in the short-term but this doesn’t have to be the last word. A further increase in energy bills is expected later in the year. Although it would make more sense to start insulating now, the chancellor must not miss the political window this year to respond to the next price rise by insulating the UK economy against high energy prices and volatile fossil fuels.
There is certainly no lack of options or understanding of what works. Investment in energy efficiency, expanding the new boiler upgrade scheme, shifting levies off energy bills, publishing a clean power plan to deliver a decarbonised power system are all vital elements that would strengthen this strategy. Now it’s up to government to show that it understands people’s needs and can rise to the moment.