The Secretary General of the Ministry of Finance claims that it would be “positively irrational” to postpone the transition to zero rates in the current crisis
This week the government sent the clearest signal that it does not intend to reduce its climate policy in response to calls by several Conservatives and their allies in the media to reconsider the UK’s zero strategy in response to gas growth. prices.
As gas and oil prices rise sharply again amid Russia’s invasion of Ukraine and growing fears of a protracted energy security crisis across Europe, ministers have spoken out broadly, arguing that Britain and its allies must respond accelerating efforts to increase clean energy capacity.
Speaking to the All-Party Parliamentary Group on the Environment this week, Treasury Secretary-General Simon Clark offered perhaps the strongest defense to date of the government’s zero-value plans in response to criticism from the newly formed Net Zero Scrutining Group. . Clark argued that the government should “fight back” against the idea that climate action is a “shirt movement,” dismissing accusations that moving to zero would make the population “poorer and colder.”
“We need to avoid this feeling that all we’re doing is increasing the costs and challenges that people are already facing in their daily lives, and that it’s just a necessity,” he said, adding that it would be “positive”. irrational ”for the UK is diluting its net zero ambitions at a time when high gas prices are raising energy bills.
“We need to calmly and deliberately win the debate over what is actually cost-effective for us to make this transition, that it actually helps mitigate those high costs we’ve reduced our dependence on, like gas, by a quarter over the last 11 years.” He explained. “Honestly, this is a significant benefit in terms of cost reduction, and now it has happened that supplying new offshore wind farms is cheaper than building new gas-fired power plants. This is the logic that now applies to investment. Therefore, it would be positive for us to abandon our pure zero obligations. “
Clark also pointed to growing evidence that decarbonisation can help reduce energy bills by increasing dependence on low-cost renewable energy and improving energy efficiency. “There is no environmental or economic benefit from returning,” he said. “Indeed, if anything, we will only be able to truly reduce costs by being at the forefront of the global shift away from excessive hydrocarbon dependence.”
Clark’s comments echoed those of business secretary Quasi Quarteng in recent weeks, who welcomed new figures for a sharp drop in solar costs as a “silent revolution”, approved plans to speed up the schedule of clean electricity contracts and repeatedly argued that the safer the electricity we generate at home, the less we will be exposed to expensive gas prices set by international markets ”.
Meanwhile, in comments ahead of the Russian invasion, Prime Minister Boris Johnson reiterated Europe’s need to respond to the crisis by urgently reducing its dependence on imported gas. Welcoming the German government’s decision to block the Nord Stream 2 pipeline, Johnson said the continent “must ensure that by making full use of alternative suppliers and technology, we make threats to Russia unnecessary.”
Widespread support for the government’s strategy of scratch in the face of growing criticism from its own ranks has been welcomed by green groups, but concerns remain that the escalation of the crisis in Ukraine may still hamper decarbonisation efforts on several fronts.
First, there are fears that the rapid deterioration of the geopolitical landscape could hamper climate diplomacy efforts and eat up even more government capacity, leading to further delays in making important political decisions as ministers focus on deteriorating threats to national security. devastating humanitarian crisis within Europe.
Second, it remains to be seen how the government will respond to the long period of high and still rising energy prices. Oil topped $ 100 a barrel this morning amid news of Putin’s invasion, while gas prices rose again as European governments considered whether to extend sanctions on Russian energy exports. Some analysts warned this morning that if gas prices remain at current levels, the average annual electricity bill in the UK could exceed £ 3,000.
So pressure on the government will intensify to bolster the support package announced by the Treasury earlier this month to help bring down £ 200 from an impending increase in electricity bills. The German government this week signaled this week that it would withdraw its green fees from electricity bills to protect households from rising bills. This was stated by German Economy Minister Robert Habeck, who is a member of the Green Party in the country’s new coalition government. Deutschlandfunk radio. “As for the short-term rise in prices and the burden on consumers and businesses, we will provide relief elsewhere,” he said. “We can hardly interfere in the world market prices for gas or oil. But we will abolish the EEG collection [charged to electricity consumers to help pay for the country’s transition to renewable energy]. We will counteract this with social policy. “
The move was immediately grabbed by Conservative MPs at Net Zero Scrutiny Group, and Craig McInlay and Steve Baker said The sun that the UK government should emulate the German government and “abolish” green levies on energy bills. “Germany’s economy minister has announced the abolition of environmental taxes on domestic fuel bills, as spending on consumers is exacerbated by the Ukrainian crisis,” McKinley said. “We need to do the same to achieve a significant reduction here in the UK as this is a cost lever that is under the absolute control of the government.”
Green fees add around £ 160 – or about eight per cent – to the UK’s average electricity bill, and the total price falls as the first wave of clean energy contracts ends. The Treasury has previously considered proposals to finance the green tax system through general taxation, but declined the move, despite the fact that many energy companies and some environmental groups have supported the proposal on the grounds that it is a more progressive means of financing projects on clean energy and efficiency.
A sustained period of high energy prices – which now seems almost inevitable – means the government can expect to face increased calls from net Zero Scrutiny Group to abandon green fees, as well as similar vocal calls from green groups to increase increase investment in energy efficiency and switch some green fees to general taxation.
However, even if the government keeps its line and remains committed to its policy of pure zero, the current crisis could have a long-term impact on the UK’s decarbonisation trajectory, stimulating increased investment in new gas projects. Ministers may have rejected calls to resume fracturing projects, stressing how unpopular the practice is, but they also signaled that they are open to new projects in the North Sea.
Energy Minister Greg Hands said yesterday that the government sees a “good, solid” future for the North Sea oil and gas industry and will issue new licenses to expand production in the future. His comments were backed by Quarteng, who tweeted today that “in an uncertain world it would be complete madness to cut off oil and gas in the North Sea.” “The UK government will continue to support domestic production for our energy security as we move to cheap, clean energy,” he added.
Today’s letter from the Committee on Climate Change (CCC) Encouraging the government to tighten the licensing regime for new gas and oil projects to better take into account the need for decarbonisation could hardly have come at a less convenient time, even if, as CCC chairman Lord Deben noted, the government considered impact on decades of any new projects.
To date, the government has responded to both criticism of climate policy from its own ranks and the crisis in energy markets caused by Putin’s aggression, doubling the need to accelerate the transition to zero. He accelerated plans for renewable energy and nuclear development, justified the development of green infrastructure and resisted calls to abandon green fees and energy efficiency funding. In a broader sense, she stressed how decarbonisation can serve to strengthen energy security and meet the economic interests of the UK for several reasons. However, it has not yet taken serious steps to step up energy efficiency efforts and seems increasingly committed to a new wave of oil and gas development in the North Sea, despite CCC warnings.
If the government really wants to fight the criticism of the zero-rate transition and protect the UK from the escalation of the global energy crisis, it needs a truly coordinated and radical response that maximizes domestic clean energy production and energy conservation on all fronts.
Want to learn more about how going to zero will affect your business? You can now register to participate in the virtual Net Zero Financial Summitwhich will take place live and online on Tuesday, March 29, and will be available to delegates upon request after the event.