The government’s ‘British Energy Security Strategy’ released on the 7th April 2022 has raised more questions than answers for those in interested in energy policy. While it claims to offer solutions to the dual problems of rising energy prices and threats to natural gas supplies, it adopts an outdated method that runs conversely to net zero targets. In this blog, Professor Matthew Paterson discusses the newly published British Energy Security Strategy, its flaws and lack of effective solutions, and suggests key ways to move forward successfully.
- Decarbonisation needs to be at the heart of the UK’s energy strategy. The British Energy Security Strategy is antiquated in its ‘predict and provide’ proposals, and the strategy does not work if the UK is to achieve net zero targets.
- Two energy strategy mind-sets have traditionally been used in energy policy design: expanding supply versus tackling demand.
- Forward-thinking solutions to tackle current energy crises and advance towards net zero should include: the pursuit of energy efficiency and conservation in buildings, focusing all new supply on renewables, and accelerating programmes to decarbonise buildings and transport.
A flawed energy strategy
The British Energy Security Strategy purports to be a response to the intertwined crises of energy prices and threats to natural gas supplies. The former was already underway, and has intensified under the Russian invasion of Ukraine, while the latter is bound up fundamentally with the invasion. However, the solutions proposed in the strategy will do very little to resolve either high prices or supply.
The strategy is framed within the government’s pursuit of net zero emissions in response to climate change. The UK does, despite some important caveats, have a good claim for world leadership in this area. But this new strategy is, in practice, a significant departure from previous approaches and risks undermining progress on net zero.
The role of energy policy
Instead of using the Ukraine crisis as a turning point for the government to wean the UK off fossil fuels, the core of the strategy is a return to an older philosophy of energy policy focused on ‘predict and provide’. Long embedded in energy ministries in the UK and elsewhere, the ‘predict and provide’ approach assumes the job of energy policy is simply to predict demand and then ensure adequate supply is met. If problems are anticipated in the supply chain, the job of the energy policy is to circumvent them. By contrast, in the context of climate change, energy policy needs to focus on actively minimising demand through efficiency and conservation strategies, while shifting supply over to zero carbon sources.
The climate policy embedded in the Green Industrial Revolution government plan from late 2020 was much more multidimensional, attacking both supply and demand. In contrast, this document is dominated by expansion of UK-based supply, including in high carbon production of North Sea oil and gas.
This might have an effect on the supply issue provoked by the invasion of Ukraine, but it will be slow – oil and gas projects take a few years to get up and running, and nuclear and hydrogen are on even longer timeframes. It will have no effect at all on gas prices, since those will be determined by global market conditions, and the additional supply from the North Sea will not be adequate to shift those. And on the carbon-side, the government’s claim that this will help decarbonisation – since UK oil and gas is lower carbon than imported – is probably true but tenuous. Any new oil and gas production infrastructure will lock in emissions for over 40 years, which is beyond the period when we aim to have eliminated oil and gas from our system to achieve net zero. Being more carbon-efficient is irrelevant if the goal is to get to zero.
This is a broader issue with all ‘expand supply’ aspects of the strategy. All of that extra supply – hydrogen, nuclear, oil and gas, fracking, even renewables, requires huge significant upfront energy or carbon costs in steel, cement, rare earth minerals mining, and so on. Dealing with the climate crisis can’t be solved without attacking energy demand, and attacking energy demand is the single best way to reduce people’s energy bills in the short and long term, and to reduce vulnerability to Russian geopolitical pressure.
An antiquated policy mind-set
Without attacking energy demand, you can’t reduce the impacts of energy price spikes on UK citizens and you also can’t pursue decarbonisation effectively. Decarbonisation needs to be at the heart of the energy strategy. Instead, we seem to be going back to a strategy developed in the 1940s and 1950s, which cannot possibly align with current goals.
Solutions for policymakers
An integrated set of policies to actually respond to the Russia-Ukraine crisis, the energy price spikes, and climate change, should entail:
- A gung-ho pursuit of energy efficiency and conservation in buildings, aptly termed by Caroline Kuzemko the ‘Great British Retrofit Programme’. There is money in the strategy – repackaged from previous programmes – for this, but it needs to be rapidly and radically scaled up. A rapid building retrofit programme would simultaneously reduce gas and electricity bills, reduce energy poverty and create large numbers of new jobs (many more than for supply investments). Loans and grants are the typical policies used to incentivise this but there is evidence this both only impacts relatively affluent citizens able to pay the rest of the upfront costs, and isn’t adequate to the rapid pace of change needed. Direct programmes by governments – local and national – are needed in particular to spread retrofit benefits to low and median income households.
- Focusing all new supply on renewables. New wind and solar are now significantly cheaper than any other source of electricity, and they can be deployed very rapidly. This is of course one reason why investment, if left to the market alone, is slow – they have become too cheap to be profitable to commercial investors looking for much higher rates of return. Wind and solar have expanded fastest where they are community-owned – partly because such owners are less concerned with rates of return, partly because the community benefits help overcome objections that led to the moratorium on onshore wind. But there is no justification for any other new source of supply – either because it locks in high carbon energy for decades, or in the case of nuclear, which it is extremely expensive and takes too long to address the short-term supply and price crises.
- Accelerating the programmes to decarbonise buildings (through heat pumps, principally) and transport (through electrification and some ‘green hydrogen’) that are there on paper, but slow to implement. This could rapidly address oil and gas demand and vulnerability to Russian supply insecurity and global price rises, as well as create large numbers of ‘green jobs’ in installation and manufacturing.
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