When will the UK’s energy security strategy be published, and what will it include?
The UK Government pledged last week to set out new energy supply measures amid the price crisis and Russia's war in Ukraine. But where is it? And what is set to change on renewables, nuclear and fossil fuels?
Last Monday (7 March), following weeks of pressure amid skyrocketing energy prices, UK Prime Minister Boris Johnson confirmed that the Government is drawing up an updated energy supply strategy. It has also been described as an ‘energy security strategy’ and ’emergency energy strategy’.
The strategy was promised by the end of the week but is yet to materialise, with media reports that there is a rift between Johnson’s views and those held by the Department for Business, Energy and Industrial Strategy’s (BEIS) most senior staff.
Here, edie summarises all you need to know about the forthcoming strategy, including its likely publication date and what it will mean for the UK’s net-zero transition.
EDITOR’S NOTE: This article was first published on 14 March and has been updated on 16 March to include new information on publication dates, fracking and renewables.
When can we expect the strategy?
As noted above, the strategy was initially set to be published before Sunday (13 March).
After much speculation of a new date in the press, Johnson delivered an address during a visit to the United Arab Emirates on Wednesday 16 March confirming that the strategy will now be published some time during the week beginning 21 March. The Treasury is notably due to deliver its Spring Statement on 23 March.
Delays are believed to be partly attributable to rifts between Number 10, BEIS and other parts of government on whether fracking should play a role, with Johnson voicing support for a halt to projects designed to seal off the UK’s wells.
Environmental groups, residents’ groups in Lancashire and the Government’s own advisors at the Climate Change Committee (CCC) have cautioned against this step. Extra pressure to keep the ban on fracking in place has been levelled upon Johnson this past weekend by former UN Secretary-General Ban Ki Moon. However, the small but influential Net Zero Scrutiny Group of Tory MPs has been pushing for the wells to be kept open.
As well as the environmental issues regarding fracking, organisations including the CCC and Energy and Climate Change Intelligence Unit (ECIU) have pointed to the fact that restarting fracking may be uneconomical. Gas is an internationally traded commodity, meaning that the UK – or any nation – cannot simply produce more domestically and keep it to themselves.
What will be included on fossil fuels?
Johnson has already indicated that he is in favour of increasing the domestic supply of fossil fuels in the short-term, to reduce the UK’s reliance on Russian oil and gas. Russian oil imports are set to be phased out by the end of this year.
Johnson has stated that the changes “do not mean in any way” that his Government is changing its long-term net-zero commitment. However, he said: “We have got to reflect the reality that there is a crunch on at the moment.”
The Daily Mail is reporting that the strategy will detail the launch of a new energy task force, with UK fossil fuel production as its main remit. Modelled on the Covid-19 vaccine task force, the task force will also reportedly look at increasing imports from other locations than Russia, including Canada and the Gulf.
On fracking, Johnson has reportedly voiced support for keeping the UK’s remaining two wells uncapped, with a view to potentially restarting production in the future. This has caused disagreement. There has been a moratorium on fracking in England since November 2019. When that was introduced, Wales and Scotland had already introduced such measures.
A survey of 138 MPs representing constituencies with fracking licences, conducted by the Guardian, found that only five would support a U-turn. Moreover, in response to an urgent question on fracking, Energy Minister Greg Hands stated that “fracking is not the solution to near-term issues”. Nonetheless, Cuadrilla has recieved communication from the Oil and Gas Authority asking whether it would like a year-long extension to the deadline for sealing its UK wells.
Another field in which we may see a U-turn is coal. Johnson is understood to support keeping the UK’s commitment to end coal-fired power generation by October 2024. However, The Times is reporting that Number 10 is in discussions with EDF to assess whether its West Burton A plant in Nottinghamshire, which is due to come offline this September, could extend operations.
On oil and gas, the Government recently granted Ithica Energy consent to extract oil and gas from the Abigail field off the east coast of Scotland. Ministers are reportedly on the cusp of giving the green light to a further six projects. The CCC recently cautioned against this move, arguing that it sends the wrong message internationally after COP26 and predicting that the cost savings for UK energy bill payers would be minimal.
What will be included on renewables?
Johnson is understood to be drawing up plans to increase domestic renewable energy generation alongside domestic fossil fuels. BEIS Secretary Kwasi Kwarteng has stated that increasing domestic wind and solar generation is now “a matter of national security”.
“Putin can set the price of gas, but he can’t directly control the price of renewables and nuclear we generate in the UK,” Kwarteng Tweeted.
Johnson himself subsequently penned a column for his former employer The Telegraph, stating that “our ambition to go for net-zero is not the problem.” This is significant, as the paper has hosted several opinion pieces in recent weeks with writers arguing to the contrary.
Johnson’s article reads: “Renewable power – which is getting more efficient the whole time – is a crucial part of the solution. We are going to double down on new wind power and greatly accelerate the rollout of new offshore farms. We will do more to exploit the potential of solar power. Even in this country, solar power is remarkably cheap and effective. We will modernise our grid and our distribution networks.”
The Conservative Government has, to date, supported offshore wind farms more than any other kind of clean energy generation. It is the only renewable energy sub-sector with a Sector Deal and with a 2030 commitment to increase generation capacity; this is currently set at 40GW, but the new strategy may well include an increase.
The strategy is expected to mirror the approach taken by the Government around the Contracts for Difference (CfD) auction schemes, providing a boost for onshore wind, solar and tidal, but with the lion’s share still going to offshore wind. There will likely be changes to planning rules which will make the development process easier. BEIS notably eased planning rules for battery energy storage during Covid-19 lockdowns in a bid to spur investment.
Other measures will, of course, be needed if the UK is to deliver on its pledge to bring all unabated fossil-based electricity generation offline by 2035. It is unclear whether the strategy will have all the answers, or whether BEIS will need to follow up. Some outlets are reporting that the strategy may pull the 2035 date, announced late last year, forward.
Will nuclear be supported?
The task force on fossil fuels, as mentioned above and in the Daily Mail, is set to also look at the benefits of nuclear. The UK Government is reportedly poised to increase support for both large-scale nuclear generation and small modular nuclear reactors (SMRs) using the strategy, with Johnson and BEIS seemingly in agreement in this field. We can expect additional funding and accelerated timelines for new nuclear to potentially be included.
Earlier this month, BEIS asked the Office for Nuclear Regulation to begin the approval process for Rolls-Royce’s 470MW SMR design. Rolls-Royce is hoping to bring 16 of the units online by 2025, at a cost of £2bn each. The Government has, to date, provided £210 of support to SMRs, with the entirety going to Rolls-Royce.
On large nuclear, the Government confirmed £100m of funding for Sizewell C back in January. This support is intended to “ready the project for future investment” from the private sector.
The UK currently generates around 16% of its electricity from nuclear – down from 20% before the recent closure of Hunterston B. This proportion will likely fall further in the coming years, as almost half of the UK’s nuclear capacity is set to be retired by 2025, and much of the remainder after that by 2030. It remains to be seen whether the strategy will see the Government asking the operators of the UK’s remaining nuclear plants to consider extending their working life.
What about energy efficiency?
The Government has been facing mounting pressure to develop and launch a national energy efficiency drive for homes for the best part of a year. The Conservative Party pledged in its 2019 General Election manifesto to spend £9.2bn on energy efficiency this Parliament and is yet to have launched and delivered successful schemes backed with this level of funding.
The Green Homes Grant closed last spring and the Government is yet to announce a home energy efficiency scheme of the same magnitude to replace it. A total of £950m has been promised by 2025 under the Home Upgrade Grant, but the Green Homes Grant had £2bn. Ministers have also been asked by the CCC to provide more clarity on, and support for, making public and private sector buildings more energy-efficient – beyond what was announced last October in the Heat and Buildings Strategy.
These calls to action have only intensified since energy prices first started increasing exponentially in the latter half of last year. Ministers are being advised, by green groups and charities representing the elderly and fuel-poor, to temporarily scrap VAT on things like insulation and triple glazing.
It is unclear at this stage whether the strategy will definitely change taxes or detail extra grant or loan funding for retrofitting. Former Energy Minister Andrea Leadsom MP has stated that there will be an “urgent package for home insulation”.
ECIU research has suggested that Johnson would do well to take note of calls for these measures. A report from the Unit, published last month, revealed that household energy efficiency is below the UK average in 37 of the UK’s 40 most marginal constituencies. The Unit is warning that failure to act could lose the Tories the vote at the next General election.
What has Labour proposed as an alternative?
The Labour Party has slammed Johnson for favouring a short-term increase in domestic fossil fuel production and outlined an alternative approach with no support for fracking or North Sea extraction.
Published late last week, the Party’s own energy security plan is focused on:
- Delivering an ‘energy efficiency revolution’ including the retrofitting of 19 million homes by 2030
- Increasing onshore wind capacity to 30GW by 2030, up from 15GW at present
- Increasing offshore wind capacity to at least 75GW by 2035
- Tripling solar generation capacity by 2030
- Increasing investment in tidal power and low-carbon hydrogen
- Confirming the go-ahead for Sizewell C and also increasing support for SMRs
How does the UK’s approach differ from the EU’s?
The European Commission announced last Tuesday (8 March) that the EU will now strive to become independent from Russian oil and gas imports “well before” 2030. Russia notably accounts for 39% of the bloc’s annual oil imports and 30% of its annual gas imports. The EU is more reliant on these imports than the UK.
In announcing that ambition, the European Commission proposed increased support for including gas storage within Europe; accelerating the rollout of wind and solar; improving building energy efficiency and helping businesses to electrify manufacturing and transport. On renewables, there are proposals to speed up the permit process for grid-scale arrays and to explore improvements to programmes delivering rooftop solar combined with domestic energy storage and heat pumps.
There are also measures to diversify gas supplies, including a doubling of the EU’s current ambition on biomethane.
These measures were put to the leaders of EU Member States later last week. It was concluded that the bloc can decrease Russian fossil fuel imports by two-thirds by the end of the year and end them by 2027, while keeping to its 2050 net-zero target and interim ambition to cut emissions by 55% by 2030. There is not expected to be a short-term increase in EU oil and gas production, or a reversal on any key pledges on coal. However, several member states are reportedly rethinking their approach to nuclear power.
Sarah George and Matt Mace