‘Efficient and equitable’: ETC urges policymakers to promote energy-efficient behaviour changes in face of price crisis

That is one of the recommendations of a new briefing paper from the Energy Transitions Commission think-tank, outlining short-term and mid-term solutions to the current energy price crisis and assessing their likely impacts on the global transition to net-zero.

The paper outlines that gas prices in Europe are currently 250% higher than they were in February 2022. It states that, while prices began rising last summer due to global discrepancies in supply and demand, Russia’s invasion of Ukraine, which began on 24 February, has “greatly intensified” the rate of the price increase.

Responding to the price crisis “may involve some unavoidable trade-offs as policymakers balance energy security, consumer living standards and climate concerns” in the short term, the ETC is warning. Some nations may wish to keep some coal-fired power plants in operation for a few years more than originally planned, for example, to maintain energy security.

But the paper calls on nations to ensure that, in the medium-term, they are not making choices which will lock in emissions that would jeopardise the achievement of the Paris Agreement. The most recent reports from the Intergovernmental Panel on Climate Change (IPCC) confirmed that a third of the global population will face an ‘unliveable’ future without concerted efforts to drive down emissions, including major scaling back of current and planned fossil fuel extraction and use.

The paper also implores national governments to select, where possible, options which both improve living standards for those most affected and accelerate the low-carbon transition across all timelines. It states that “all options should be pursued” from the International Energy Agency’s (IEA) Ten-Point Plan for cutting oil use.

Most options recommended by the IEA will require individuals and businesses to change their transport-related behaviours. The Agency’s plan includes the introduction of work-from-home guidelines for three days a week, for example, to reduce the use of petrol and diesel cars for commuting. It also includes car-free days in large cities and a scaling of options that reduce the need for individual petrol and diesel car use, such as car-sharing, cycling and public transport.

For businesses specifically, the IEA is urging businesses to improve the efficiency of their goods delivery supply chains and to move business meetings online where possible to cut flights.

The ETC paper states that behaviour change measures, when combined with direct financial support for low-income people, “could deliver a more efficient and equitable outcome” than “relying solely on high prices to curtail demand, which has severely adverse economic and distributional consequences”.

This is the approach which has, to date, been taken by the UK Government. The recently-published Energy Security Strategy details no behaviour change measures. Chancellor Rishi Sunak has stated that he will “wait and see” what is likely in terms of further energy price increases this autumn before confirming more targeted financial support for consumers.

The ETC is also discouraging tax reductions, subsidies or price caps on gas and electricity. The paper argues that “income support delivered in this form, rather than via direct income transfers to poorer households, undermines incentives for energy efficiency and demand reduction, and provides an effective financial subsidy to the Russian government.”

Guiding star

The report provides an in-depth look at the likely upfront cost, future cost savings and displacement of Russian fossil fuels from a variety of options for European nations in the short and mid-term. These include increasing liquid natural gas (LNG) imports from nations other than Russia, increasing domestic fossil fuel and/or biofuel production and accelerating the deployment of new nuclear and renewables.

Whichever mix of options nations select, the ETC’s overarching recommendation is that they should definitely not dilute their long-term commitments to net-zero.

Here in the UK, former UKIP leader Nigel Farage is campaigning for a referendum on the 2050 net-zero targets, on the grounds that plans for delivering them would be too costly. This is despite the fact that all major UK parties included a net-zero target of 2050 or sooner in their 2019 General Election manifesto. Moreover, Farage is not factoring in the costs of inaction. Perhaps more dangerous is the work of the Net Zero Scrutiny group of MPs, who claim not to be climate science deniers but, again, are questioning the economics of the transition.

European nations are also discouraged by the ETC from any major investments in new natural gas extraction or gas-fired power plants. The paper states that carbon lock-in and the risk of stranded assets are “a large concern”. It also emphasises how natural gas always poses the risk of methane leaks.

The EU this week tabled its €300bn ‘RePowerEU’ plan, designed to end Russian fossil fuel imports to the bloc’s member states by 2027 and to help deliver its 2030 emissions goals. Many key organisations and individuals in Europe’s green economy have expressed disappointment that the plan will likely cause a temporary rise in emissions due to its support for domestic fossil fuel production and for fossil fuel imports from the US and Canada.

Similarly, the UK is planning to increase oil imports from the US, the Netherlands and the Gulf to end Russian oil imports by the end of 2022. It is also bringing forward a new leasing round for North Sea projects and exploring whether its ban on fracking should be lifted, despite being advised not to by its advisors at the Climate Change Committee (CCC).

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