Energy Security Bill ‘a further missed opportunity’ to boost energy efficiency, green groups say
The Energy Security Bill is having its first reading in Parliament today (6 July), with Ministers promising “secure, clean and affordable” energy for the long-term. But does the Bill really deliver on this promise and provide a chance to plug major remaining green policy gaps left by the Energy Security Strategy?
Key stakeholders across the UK’s green economy believe not. The Bill, first promised in 2021 and confirmed for 2022 in the most recent Queen’s Speech to open Parliament, contains 26 measures which Ministers claim will address the energy trilemma of security, affordability and environmental sustainability.
The Bill is being introduced today, as Westminster deals with a string of resignations within and beyond the Cabinet, including Rishi Sunak and Sajid Javid. Aside from the obvious fact that this resignation crisis will overshadow the Bill’s first reading, some have pointed out that the measures detailed largely mimic the focus areas of the recent Energy Security Strategy, showing little evidence that the Government has heeded repeated calls to go further and faster on issues such as onshore wind, solar power and energy efficiency.
Regarding the low-carbon technologies which are supported in the Bill, the Government claims that its inclusions will help to unlock £100bn of private sector investment in the UK’s energy sector by 2030. The lion’s share is expected to go to offshore wind. The Bill proposes measures to streamline grid connections for offshore wind farms.
Ministers are also speaking to investment opportunities in emerging technologies such as green hydrogen production and carbon capture, use and storage (CCUS).
The Bill sets out measures to formally create new business models for firms deploying hydrogen and CCS, as previously promised through the Hydrogen Strategy in 2021. The aim is to follow the model used for offshore wind, encouraging private investment by de-risking early investments. Measures are also set out to establish a licencing framework and regulatory system for hydrogen and carbon dioxide transport and storage infrastructure.
On hydrogen specifically, the Bill will play a key role in ensuring that the Government can complete its hydrogen village trial by 2025, scaling trials thereafter to larger urban areas. Findings from these trials will inform the Government’s decision on the role that hydrogen should play in building heating in the late 2020s and beyond.
Also on heat, the Bill would enshrine Ofgem’s appointment as the UK’s regulator of heat networks and pricing, as the heat pump and district heat network markets grow. It will play a key role in providing consumer advice and protections. Additionally, the Bill would start the creation for a market-based mechanism for scaling investment in heat pumps. It would also see the implementation of a new mandate for electric heating technologies to meet various ‘smart’ specifications.
And another key technology mentioned is energy storage. The Bill promises that the Government will review and seek to remove obstacles remaining for the developers of battery-based and pumped hydro energy storage projects. Both of these sectors have seen strong progress in recent years, and storage will be crucial to maintain energy security as more intermittent renewable generation comes online.
Price cap and protest crackdown
A key measure included in the Bill which will certainly dominate headlines in national news outlets regards the energy price cap. Should the Bill pas, the Government will be able to require Ofgem to keep the energy price cap on dual-fuel home bills beyond 2023.
The price cap rose by 54% this April, to a maximum of £1,971 per home. Approximately 22 million homes are now paying bills around this level. A further rise is set for October 2022 and homes can expect another jump of between 40% and 52%.
The Government argues that, without the cap, homes will have seen even higher bills.
The Bill also contains controversial new measures to deter and end protests which have the potential to disrupt the energy supply in the UK. In its current form, it would give the Government powers to deem protests which would lead to oil supply disruptions as “malicious” and prevent them ahead of time. Earlier this year, climate protests led by Extinction Rebellion blocked oil refineries across the UK for the best part of a week. Protestors were urging the Government to end all public investment in the fossil fuel sector.
Green economy reaction
The Bill, described as the biggest reform to energy systems policy in a decade, has broadly been welcomed across the green economy. Nonetheless, it has been pointed out that there are still major policy gaps regarding issues such as energy efficiency. Some campaign groups have also pointed out that the announcement comes shortly after the Government gave final approval to the Jackdaw oil and gas field, accusing the Government of hypocrisy.
The Aldersgate Group’s executive director Nick Molho said: “We welcome the development of clear business models for key low carbon technologies and fuels, such as hydrogen and CCUS, both of which have an essential role to play in supporting the decarbonisation of heavy industrial sectors such as steel and cement.
“The focus on accelerating the development of low carbon heat – and in particular heat pumps – is essential if the UK is to remove all avoidable emissions from the built environment by 2035. However, it must be accompanied by clear regulatory standards and incentives to improve energy efficiency in homes and buildings, both of which are still lacking.
“The renewed commitment and focus on delivering the 50GW target of offshore wind capacity by 2030 is also positive, as clean electricity will be vital to decarbonise sectors such as buildings, transport and heavy industry. However, the UK’s offshore wind ambitions must go hand in hand with providing greater predictability and efficiency in the planning process to ensure the underlying grid capacity is in place to support the achievement of this target.”
Policy Exchange’s senior fellow Josh Buckland wrote on Twitter: “[This is] a wide-ranging set of sensible reforms that will modernise the energy system. Good to see new financing models for clean infrastructure [like] CCUS and hydrogen, as well as new consumer protections and governance reform.
“But there will be questions asked as to whether the changes set out sufficiently address the scale of the challenges ahead. Major reforms to electricity market to deal with net-zero power system [are] still to come, and how you fairly cover costs of transition for poorer households absent.
“Therefore, expect a difficult passage for the Bill.”
The Tony Blair Institute’s head of net-zero, Daniel Newport, tweeted: “The lack of any new real powers on energy efficiency realistically means, due to regulatory lead-times, that [the] Government has now only two options left – give up on the EPC C by 2035 target or pay for it themselves. I wonder which one they’re thinking…”
RenewableUK’s deputy chief Melanie Onn said: “The measures set out in the Bill will accelerate the UK’s transition to energy independence by enabling us to deploy innovative home-grown renewable technologies at scale. These proposals will help consumers by cutting expensive gas imports and replacing them with locally-generated clean power which we control.
“But to speed up this transition, we need a new approach to how the market is regulated and that should start with a net-zero duty on Ofgem so that all decisions on the future of the market are aligned with our decarbonisation targets.”