My five ideas for solving the energy crisis
Putin’s aggression has done more to unite NATO than anything post-World War II, but economic sanctions rightly imposed by Western allies will have major consequences for our own cost of living as well as for the energy security of European neighbours.
UK ministers have always balanced what’s known as the energy ‘trilemma,’ - keeping the lights on, keeping bills down and decarbonising. Now the balance is at risk.
Our energy security is good - 4% of our gas comes from Russia, but both gas and oil are subject to global prices, so we and other European nations are facing spiralling costs as sanctions begin to bite.
So the Prime Minister’s hotly anticipated energy security strategy faces both immediate and longer term challenges. In the short term we should use the next six months of warmer weather to reduce this winter’s demand for energy.
First, we should ramp up support for home insulation. The success of the Energy Company Obligation provides a template for what works, having installed measures in 2.3millon homes since 2013, cutting bills by £1.2bn a year. Over the next few months, the government should kick start mass insulation of homes, including the millions of houses that would be cheap and easy to insulate, thereby helping to reduce our energy demand (and costs) this winter and for the future.
Second, the UK is making great strides in our transition to Net Zero – we already boast almost half the entire world’s deployed offshore wind. National Grid has said it can effectively run a zero-carbon grid by 2035, backed in part by large scale batteries to store wind and solar power. But also ‘demand side response’ which introduces more of the supply and demand signals, the market, that will bring down whole system costs. This is used in the US, is already the case for some UK commercial users and could be extended to homes.
Third, the Chancellor will be looking closely at the Spring Statement to provide targeted support for those who will struggle with energy bills when the ‘cap reset’ takes place in October. I would like to see him increase support through the council tax mechanism, as well as considering increasing direct subsidies like the Warm Homes Grant and the Winter Fuel Allowance.
Fourth, we should maximise economic recovery in the North Sea basin to shore up our energy security. That means new exploration licences for oil and gas, and recognising that our Net Zero commitment requires a transition period of continued fossil fuel use until we have sufficient reliable zero carbon energy sources.
In the medium term, the government should look to diversify our energy mix. During my time as Energy Minister then later Secretary of State for BEIS, I was promoting many different projects - offshore wind, Hinkley Point C, Small Modular Reactors and the emerging shale gas industry.
The latter remains a highly controversial subject, but in my view, regulation around the exploration of shale gas was always too restrictive, and spelled doom for UKOOG (UK Onshore Oil and Gas). The tremors that the process of fracturing can induce are relatively small, and methods of extraction continue to improve. The ‘frack pad’ is not the industrial blight that is feared – it is the size of a netball court, with well heads the size of a tall letter box. The 2019 moratorium was right because of community opposition. However, we are now in a different situation, and some communities in shale gas areas might wish to consider new schemes in return for secure energy at zero cost. I hope the government would give a deal its blessing.
For those who ask ‘how dare anyone consider new sources of gas?’, I say that meeting our Net Zero commitment will require the ongoing use of natural gas. Even the Committee on Climate Change acknowledges that to generate sufficient electricity to the transition will require using gas until an adequate baseload capacity from low carbon sources is reached.
From hydrogen to wave power, geothermal energy to nuclear fusion – there are many sources that can tackle the energy trilemma. But in the short term, there is no doubt that energy security must be prioritised. I urge the Prime Minister to explore all options.
