Here are the winners and losers from the UK Energy Security Strategy

With the dust having settled on the UK Government’s Energy Security Strategy and the first substantial piece of legislation affecting the energy sector since the Energy Act 2013 being put forward in this week’s Queen’s Speech, now is an opportune moment to review a fuller gamut of UK energy policy.

It is first important to note that without the backdrop of the war in Ukraine, it is unlikely that the Energy Security Strategy would have been published this year. The Government had intended that the raft of Net Zero policies post-COP 26 would provide the coherent roadmap and long-term vision to deliver Net Zero by 2050.

However, as ever – “events, dear boy, events”. 

The original aims of the Strategy were laudable: to confront rocketing energy bills and transition away from Russian fossil fuels after the invasion of Ukraine. Though significantly at this stage in the electoral cycle, judged against these metrics, the strategy is unlikely to deliver in the short term.

The winners: nuclear, offshore wind, and hydrogen

  • The Government is betting big on nuclear – with an ambition to deliver up to 24GW of capacity by 2050. This proved a major point of contention between No 10 and the Treasury, who were resistant to the costs associated with producing new sites. A recent Intergovernmental Panel on Climate Change’s (IPCC) report seems to support this conclusion, only citing nuclear once, as an example of a technology with high upfront costs.
  • The real centrepiece of the Strategy is increased ambition for the scaling up of offshore wind capacity and reforms to the planning system to cut approval times for new projects. The sector has become a national success story in the UK and is proof of the concept that with the right level of Government support, renewable technologies can experience rapid periods of growth.
  • The Strategy cements hydrogen as the Government’s long-term technology of choice to decarbonise industry and transport, as it set out an ambition to double hydrogen production capacity by 2030. The Government has delayed the decision on whether hydrogen is safe to use for heating homes until 2026.

The losers: onshore wind and fracking

  • The Business Secretary, Kwasi Kwarteng, failed to push through radical reform of the planning system to allow more onshore wind in the face of backbench opposition, one of the quickest and cheapest short-term salvos to high energy bills. The fact that one of the only options that could plausibly be effective in the short term died a death in the face of nimbyism is symptomatic of the inherent tensions between traditional Tory orthodoxy and the sort of fundamental change required to deliver Net Zero.
  • Notably, the Strategy does not mention fracking, the panacea offered by a small number of right-wing Tory backbenchers as well as Nigel Farage, and though the Government has asked scientific advisers to reassess the safety of fracking, few in Whitehall see any real future for fracking in the UK.

The glaring omission: a demand-side strategy 

The Strategy is silent on one fundamental issue – reducing energy demand. The first step for any energy security plan should be to reduce demand, by retrofitting homes or using energy more efficiently, but these measures are said to have been vetoed by the Treasury.

A national retrofit strategy may not be as glamorous as wind turbines or hydrogen, but it would be an essential piece of the energy security puzzle that has again been overlooked.

The Government urgently needs to strike a balance between increasing supply and reducing demand – it is vital that we swiftly see policy turn into action or there will be no change.

A missed opportunity

In the near term, the Strategy does little to assuage the concerns of the electorate about soaring energy prices. In the longer term, it sets ambitious targets for green technologies, yet fails to provide a coherent plan for delivery.  

The result is a strategy that fundamentally does not address what it was created for in the first place: to confront rocketing energy bills and transition away from Russian fossil fuels.

Recent polling from the centre-right think tank Onward reveals that despite the ongoing cost of living crunch, voters still overwhelmingly support the Government’s Net Zero policies, finding that two-thirds of voters (67%) think the Government is not being bold enough in tackling climate change.

This should empower the Government to go faster and further, and the pursuit of both goals need not be mutually exclusive. The rapid roll-out of renewable infrastructure is our best course of action to future-proof the UK against external shocks to the energy market. There may be political benefits for the Tories as well as economic ones for voters if they act on this.

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James van der Graaf

Account Manager