Energy price crisis: BEIS denies accusations that UK hasn’t moved fast enough on clean energy
The Government has published a blog explaining why more domestic fossil fuel production is not the solution to the ongoing energy price crisis. However, the blog skirts around the issue of past policy failures on renewable energy and energy efficiency.
Published today (4 February) by the Department for Business, Energy and Industrial Strategy (BEIS), the blog comes amid reports that Cabinet members are asking the Government to rethink its net-zero plans in light of the energy price crisis. The Daily Telegraph’s front page today states that reporters have heard of Ministers arguing that more renewables would “increase costs for consumers” and that the solution is to consider additional domestic gas production, as well as potentially changing the 2024 coal phase-out date.
Green groups and sustainability professionals will be all too aware that this line of argument would not solve the problem at hand. New renewable capacity in the UK is currently cheaper than new gas and, in any case, the rise in prices is down to a rise in global gas prices due to supply and demand discrepancies rather than a rise in renewable electricity costs. The UK’s electricity costs are largely up because gas accounts for around 40% of electricity generation.
However, the argument has gained popularity in recent months, with the Net-Zero Scrutiny Group of around 20 backbench Conservative MPs and peers using tactics taken from climate denial to argue against the net-zero transition on the grounds of the upfront cost and the potential for social disruption and an unjust transition.
BEIS’s new blog builds on Chancellor Rishi Sunak’s statement yesterday that “energy costs are rising because it is more expensive to buy gas, coal and oil”.
It states that “closing coal plants is not increasing energy prices”, with plans already in place to make up the generation gap set to be left by the closure of the UK’s remaining two coal-fired power stations.
The blog also explains why increasing domestic oil and gas production is not the answer; because it is an internationally traded commodity, imported and exported in line with price signals. In other words, countries cannot simply choose to keep a larger portion of their domestically generated gas. Eyebrows were raised last week when BEIS figures for September, October and November 2021 revealed a year-on-year increase of more than 90% in gas exports by the UK.
“The biggest factors influencing gas prices are attributable to international activity extending beyond Great Britain’s domestic production,” the blog summarises.
However, despite the anger expressed by green groups in recent times over the UK’s failure to sign up to the Beyond Oil and Gas Alliance at COP26 – and subsequent approval of the Abigail oil field – the blog does not contain any indication that BEIS is considering capping domestic gas production.
To the contrary, it states: “While we are working hard to drive down demand for fossil fuels, we cannot turn off our domestic source of gas overnight and there will continue to be ongoing demand for oil and gas over the coming years as we transition to lower carbon, more secure forms of energy generated in this country.
“We have been working with oil and gas operators in the UK to develop additional fields. Three new gas streams came online at the end of last year, with more upcoming.”
The International Energy Agency (IEA) has stated that, to give the world the best chance of reaching net-zero by 2050, all new oil and gas extraction capacity needs to be blocked. An early transition, it has repeatedly maintained, is especially important in wealthy, developed nations such as the UK.
Renewables and energy efficiency
At the end of the blog, BEIS responds to claims that the UK has not moved swiftly enough in years past to increase clean energy generation.
This point has been raised by dozens of individual sustainability experts, green groups and think-tanks including the Energy and Climate Intelligence Unit (ECIU), RenewableUK and the Association for Renewable Energy and Clean Technology (REA).
The blog does not acknowledge this as a valid criticism. It points to the recent commitment to end unabated fossil-fuelled electricity generation by 2035 and to decrease gas heating in homes, as well as the success of the recent Contracts for Difference (CfD) auction round for renewable developers.
It glosses over the fact that onshore wind and solar were effectively excluded from the CfD agenda between 2015 and 2020, and the fact that subsidies for solar have been gradually phased out while subsidies for oil and gas remain. Historic failures to decrease gas heating and cooking in homes, summarised by MPs on the BEIS Select Committee this week, additionally go unmentioned.
There is also no mention in the blog of energy efficiency. Energy inefficiency in homes and other buildings has repeatedly been raised as a major cause for concern on the road to a low-carbon future by the Government’s own advisors, the Climate Change Committee (CCC). Insulation installation rates are currently lower in the UK than they were in 2012, before the Energy Company Obligation (ECO) scheme launched. Campaign groups are pointing to a string of policy failures over the past decade, culminating in the recent Green Homes Grant debacle.
— George Eaton (@georgeeaton) February 3, 2022
Labour’s Shadow Chancellor Rachel Reeves this week accused the Conservative Government of overseeing “a decade of failure to regulate the energy market, a decade of failure to make the most of solar, tidal and wind energy, and a decade of stalled progress on insulating our homes”.
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