Quest for Net Zero has left us with a failed energy policy
WITH average energy bills set to double to £2,000 next year, it makes sense that the Government should cut 5 per cent VAT on household power to help us cope with a massive price hike that could push 1.5 million of us into fuel poverty.
Increased winter fuel allowances and a relaxation of green levies could help those most vulnerable to plunging temperatures and rocketing bills.
Business Secretary Kwasi Kwarteng met energy bosses on Monday and the news was dire. Wholesale energy prices are peaking just as storage facilities are at their lowest for years and wind power generation has hit a ten-year low, falling by 15 per cent this year despite there being more turbines. Russia playing politics with gas supply lines has not helped, just as the EU and UK is embracing a NetZero policy that puts all their eggs in a renewables basket.
It’s a perfect storm that is going to hit consumers and industry hard next spring when price caps are raised by Ofgem. Already 30 energy suppliers have collapsed this year in the UK and many experts say this is only the beginning of an energy crisis similar to 2008’s financial crash that rocked the world.
IF BORIS Johnson has seen his approval ratings dip recently, they’ll go into freefall when we receive our inflated household fuel bills in April, yet this has been a crisis waiting to happen.
Governments across Europe should have been preparing for it but buried their heads in the sand, preferring ideology over common sense.
Even the USA, a net exporter of energy just a few years ago, has seen President Joe Biden forced to beg Arab states to pump more oil to bring down gas pump prices at home or face annihilation in next year’s midterm elections.
The UK, however, appears to have been more blind than other nations, and for longer, to the problems we now face.
Energy expert Clive Moffatt has warned governments since 2010 to take a more balanced approach to decarbonisation, but a Conservative fixation with green targets has skewed their judgment. “We were getting the message very clearly from [government] officials they were very reluctant to endorse any possibility there was even a medium-term future for natural gas,” he says.
But with North Sea production of gas and oil going down and imports going up “we become extremely vulnerable,” says Moffatt. Add to that a plunging energy storage capability of just 1.7 per cent when anything goes wrong with European pipelines or failing renewables, and our present crisis was inevitable whatever else was going on in the world.
“You have to look at it in terms of carbon reduction, affordability and security,” says Moffatt. “You can’t simply dump two of those and focus on one. If you do that the least well off in society will suffer most.”
After ten years of such advice, you can’t say the Government wasn’t warned and yet it merrily carried on its path towards Net Zero, depending more and more on importing energy to allow it to offshore its carbon emissions.
Despite shale gas being put on hold from 2019 and energy giants such as Shell discouraged from exploring the North Sea, latest figures from National Grid ESO reveal that in 2021 we depended more on carbon energy to keep our lights on than previous years.
Wind declined to 19 per cent of our energy mix, while nuclear power fell by 10 per cent to its lowest proportion since 1982. The gap was filled by natural gas which, of course, is now subject to rocketing international prices as we import almost twice as much from abroad.
FOR a nation that made its industrial wealth from a lucky access to cheap carbon energy beneath our feet, it’s an energy policy that is unsustainable. As a result, our government is now having to use taxpayers’ money to subsidise power providers to lessen the impact on customers.
“Expecting consumers to shoulder that volatility without any support from government is unrealistic,” said Stephen Fitzpatrick, founder of Ovo Energy, this week. “It’s a £25billion hit to consumer spending.”
Potentially the single biggest hurdle to growth next year, it could easily have been avoided by government taking a longerterm, common-sense approach to energy production.
Taking years to build up our storage capacity and a greater variety of energy generation, the Government is now left with little choice but to cut VAT, reduce green tariffs and widen winter fuel allowances or face a hurricane of resentment from voters.
‘UK appears to have been blind to the problems we now face’