Energy companies want the government to implement policies to achieve net zero greenhouse gas emissions, the industry’s leader has said, despite claims from some on the political right that high energy prices should spark a rethink.
Emma Pinchbeck, chief executive of Energy UK, which represents the industry, said: “The government should press on with net zero policies. That’s something they still need to do. We are missing the carbon budgets.”
She called on ministers to “tighten energy efficiency”, by insulating more homes, and changing planning and construction rules, while developing a strategy for decarbonising the UK’s fleet of gas-fired power stations.
She rejected claims that renewable energy had increased costs, saying the problem was clearly an over-reliance on gas, especially for heating. She told a meeting hosted by the Energy and Climate Intelligence Unit: “The UK is exposed to gas because we have a huge amount of gas burned in our homes, and so helping people get off gas boilers on to other forms of heating technology is critical over the next decades to reduce our reliance on places like Russia.”
She added: “But [it’s also necessary] to make our building stock much more energy-efficient. The reason we have high rates of fuel poverty in the UK isn’t just about the commodity we burn, it’s the volume of it we burn because our energy efficiency rates here are much lower than other countries.”
Households are facing an energy price cap rise this April, likely to amount to £2,000 for the average bill, and possibly a further rise to £2,400 in October. The cost-of-living crisis has embroiled the government in calls from its own backbenches to scale back or abandon measures to promote renewable energy and pay for home insulation for poor households, even though renewable energy is many times cheaper than gas and improving home insulation would cut bills for the most vulnerable.
Bim Afolami, Conservative MP for Hitchin and Harpenden, called on his fellow Tories to get behind net zero policies, saying only “a very small number” of MPs were questioning them.
“Let’s be clear, in terms of delivering net zero, there is no real option other than what the government has set out. It’s a shame that it needs saying, but everyone should rest assured that the bulk of the Conservative party and the government is four-square behind this, and committed to getting it done,” he said.
Michael Grubb, professor of energy and climate change at University College London, said consumers were paying unnecessarily high prices for their electricity, as well as their gas, because of the way the UK energy market works. Electricity prices are set by the gas price, even though gas makes up only about 40% of electricity generation and renewable energy prices are far lower.
He said the government could ease this by changing the way the UK energy market is structured, allowing for a “pool” of green energy contracts.
Ministers should levy a windfall tax on fossil fuel producers, which have seen bumper profits from the global rise in gas prices and Russia’s constraint on European supplies, added Tessa Khan, founder of campaigning organisation Uplift. Taxes on fossil fuels in the UK were far too low, and tiny compared with those of other countries, at about $2 (£1.47) a barrel in the UK compared with more than $20 a barrel for Norway.
Even at such low rates, thanks to favourable rules, some fossil fuels had received payouts from the government in recent years, rather than pay tax, she said. Oil and gas producers faced no extra costs but were reaping “windfall profits” from the gas price. “These profits are being privatised. The UK tax regime has made this the most profitable country in the world for oil and gas companies,” she said.