Why Britain is spending £37billion to worsen its energy supply crisis


Jess Shankleman 05/31/2022

(Bloomberg) — As he opened the COP26 climate talks in November, Boris Johnson warned that “it’s one to midnight” in the race to curb global-warming carbon emissions. His government has since announced £37billion in funding focused entirely on subsidizing energy use, much of it fossil fuel.

The Prime Minister did not come here by choice. It is responding to a cost of living crisis that has impoverished millions of Britons. But his government has been forced to tackle this problem with both expensive and anti-climate tools, largely because of past policy failures.


Over the past decade, a series of energy efficiency measures such as home insulation have been botched or abandoned under successive Conservative Prime Ministers. Onshore wind expansion has also slowed markedly due to their restrictive policies. British consumers’ annual energy bills would be £2.5 billion ($3.2 billion) lower today if these things had not happened, according to an analysis by Carbon Brief.

The support for households announced this week was “absolutely necessary and the right thing to do,” said Luke Murphy, associate director for energy and climate at the Institute for Public Policy Research, a progressive think tank. “But that should have been accompanied by investment in home insulation and an expansion of onshore wind to lower bills, increase energy security and tackle climate change.”

The failure of those policies has left the Johnson administration “going from crisis to crisis, coming back with increasingly important short-term solutions,” Murphy said.

Climate promises

At the end of COP26, Alok Sharma, the conference president and British minister, told the roughly 200 national delegations leaving Glasgow that he would pressure them to keep their climate pledges. Six months later, it is the hosts themselves who are reconsidering the commitments signed at the United Nations summit.

This week has brought the clearest example. Chancellor of the Exchequer Rishi Sunak has announced £5billion in funding to help consumers cover rising energy bills, paid for with a windfall tax on oil and gas producers. In an attempt not to deter investment, he said companies will be able to avoid some of this tax by making new investments in oil and gas extraction – breaking the COP26 pledge not to subsidize. the production of fossil fuels.

On Friday, Johnson was promoting the revitalization of North Sea oil and gas, urging companies to increase investment.

“I don’t think we can completely turn our backs on hydrocarbons,” he said in an interview with Bloomberg TV. “You have to fix the supply issues” and make the North Sea work, he said.

The windfall tax comes on the heels of a series of other policy decisions which contradict Britain’s pledge to achieve net zero carbon emissions by 2050. They include the 5p reduction in the price of a liter of gasoline to help drivers, and potentially reopening the door to fracking for the natural. gas. Despite its desperation for new energy supplies, the government has not lifted restrictions on new onshore wind farms, which are the cheapest form of new energy.

In total, the Treasury has pledged to spend around £37billion to help Britons pay their energy bills.

“I’m not sure this is what was envisioned in the Glasgow Climate Pact,” Chris Stark, chief executive of the UK government’s independent watchdog, the Climate Change Committee, wrote on Twitter immediately after the news. Sunak tax announcement.

There have been no notable new policies to help people reduce their energy consumption, which in the long term will be essential to protect them from price shocks. Insulation rates remain well below peak delivery rates reached before 2012, when major policies were scrapped, the Climate Change Committee said.

The UK government has repeatedly failed to deliver a successful home insulation scheme. In 2013, then-Prime Minister David Cameron slashed energy efficiency spending after apparently telling government departments to “cut the green crap”.

Instead, it introduced the Green Deal, which tied the cost of loan repayments to a property. This was dropped two years later due to low adoption rates, alongside the zero-carbon house standard for new buildings. In 2020 ministers introduced the Green Home Grant, but this was scrapped less than a year later due to administrative issues.

It is possible for governments to create a support package that helps people both now and in the longer term, said IPPR’s Murphy. For example, Ireland offers homeowners a 50% discount on deep renovations to improve efficiency. Germany and New Zealand offer commuters cheap public transport fares, while some US cities have made them free.

“At the end of the day, the only way out of this long-term challenge is to reduce the demand for energy and fossil fuels,” said Tim Lord, a former UK government energy official who is now responsible. climate change at Phoenix Group Holdings. Plc, which provides pension and insurance services.


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