HomePolitical leadershipWill the government’s announcements make it ‘green day’ or ‘fossil fuel Thursday’?

Will the government’s announcements make it ‘green day’ or ‘fossil fuel Thursday’?

If the government wants energy security day tomorrow to be a success, it should start by making good on the name of its new department. Energy security and net zero are two sides of the same coin.

If the last year of the energy crisis has taught us anything, it’s that we’re vulnerable to countries that wish to do us harm. We don’t control fossil fuel prices, we don’t own oil and gas, and the energy companies, quite simply, have us over a barrel. The Rosebank oil field, expected to be sanctioned this week, will enrich Equinor, a company of the Norwegian state, and do nothing to lower UK consumer energy bills. Due to the investment allowance in the oil and gas windfall tax, the UK government will effectively subsidise Rosebank’s development and pay well over £500 million (as much as 90 per cent of the total development cost). Eighty per cent of the oil will be exported.

Cheap renewables and efficiency are the answer to energy security
For energy security, domestic action on energy efficiency and maximising the deployment of cheap renewable energy are clearly the answer. However, as our Green Alliance Net zero policy tracker showed last week, fewer than a third of policies needed to meet the UK’s fifth carbon budget are in place, including on heat and buildings as well as power. The UK is off track, in danger of ducking the big decisions and storing up problems for future governments to deal with.

If this government has any hope of bringing about its aim of the “cheapest energy prices in Europe” or “taking back control” of power, then it should unblock onshore wind development for energy security and instigate a war-like effort to speed up grid connections. Onshore wind has the potential to be even cheaper than offshore wind, can be built quickly and, as we heard this week from Greg Jackson of Octopus Energy, is more popular than beer, pizza or the royal family.

The government would also be smart to bring forward energy efficiency investments planned for the next parliament. During an energy crisis, the UK should realistically be doing everything in its power to accelerate the rollout of insulation and heat pumps, which will reduce gas demand and save consumer’s cash. The Energy Company Obligation (ECO) and the Boiler Upgrade Scheme should be extended, but there are also cheaper moves for the balance sheet. Regulating the private rented sector to ensure landlords invest in energy efficiency upgrades by 2028 can help drive private capital into these markets, whilst providing sensible lead in times and minimum disruption to tenants. For tenants, they will get a saving on their energy bills once the house is upgraded. For landlords, Rightmove have shown that better EPCs mean higher sale prices. And, at the same time, we are creating green jobs and reducing the carbon footprint of homes. It’s a no regrets investment.

Charging consumers for hydrogen and CCS development is regressive
Big investments in hydrogen and carbon capture, utilisation and storage (CCUS) will be needed for the move to net zero, but putting the cost on consumer bills is regressive. These technologies should be prioritised for the hard to decarbonise sectors like heavy industry, not home heating. If bills are to rise, then network charges for grid investment, or more money for energy efficiency schemes for the poorest, should be the priority. It’s not beyond the pale to suggest that energy companies should fund net zero technologies like hydrogen and CCUS out of their own record profits, effectively investing in the sustainability of their business models, rather than offering billions of pounds in share buybacks to investors. The government’s own net zero tsar has highlighted this issue, but the Treasury appears to have won out.

Meanwhile, Labour has clearly seen the political benefit of going big on Britain being a clean energy superpower by 2030, calling for an end to the moratorium for onshore wind, for energy regulator Ofgem to have a net zero duty and arguing for a new state backed Great British Energy company, to reap the investment rewards of harnessing Britain’s abundant renewable energy. Ed Miliband’s speech in London to Green Alliance on Tuesday laid down the gauntlet.

The government could seize the initiative from Labour
Tomorrow should be the chance for the government to seize back the initiative from Labour on clean energy and net zero but, if ministers are platformed by oil and gas companies in Aberdeen, it won’t be ‘green day’ as flagged but ‘fossil fuel Thursday’. A dramatic own goal must be avoided. When the Department for Energy Security and Net Zero was first announced, it was warmly welcomed, giving net zero a seat at the top table of government. Since the dissolution of the COP26 unit and the dismissal of Alok Sharma’s services, the UK’s climate leadership has been rudderless, to say the least. The IPCC report, published last week, was a ‘final warning’. If ministers aren’t interested in talking about climate change anymore, despite the urgent need to take fast action and the political popularity of doing so, then a reckoning at the ballot box surely awaits. At the very least, they should engage in the economic arguments of going green.

The EU has proposed its response to the US Inflation Reduction Act commitment of $369 billion in support of clean tech, meaning two of the world’s biggest emitters and economic regions are now competing to attract and grow net zero industries. Elements aimed at maximising investment in the US and EU mean the UK is faced with decisions about how to change its regulatory and policy environment. Lifting the de facto ban on onshore wind in England, or introducing an ambitious zero emission vehicle mandate, would be smart moves in this context, providing incentives for continued net zero investment in the UK. We can’t compete in every sector, but not all the answers require big subsidies. Many of the policy frameworks needed are planning and regulatory changes, with government inertia preventing billions in private capital flowing into the green economy.

The clocks went forward this week, but we are in danger of hitting the snooze button, just when we need to grip the huge environmental and economic challenges the UK faces. Time is ticking for Britain’s green industrial revolution. A Whitehall debate over whether Thursday is ‘energy security day’ or ‘green day’ is the least of our worries.

Written by

Joe joined Green Alliance in April 2021 as senior political adviser on our Political Leadership theme. He works to help build on our exceptional relationships and networks in Westminster to advocate for action on climate and nature. He previously worked as a senior parliamentary assistant to Neil Parish MP, chair of the Environment, Food and Rural Affairs Select Committee. In parliament, Joe helped Neil to campaign for higher environmental standards, including cleaner air, and to amend the Agriculture and Trade Bills to protect standards in trade deals. Joe has also worked for Rebecca Pow MP. Joe read history and politics at Newcastle University and is a qualified barrister.