How the UK’s reliance on gas turned an energy furore into an energy crisis
By failing to reduce demand for gas, the government left us at the mercy of the world’s chaotic fossil fuel system. But how did we get here, and what’s the best way forward?
As the effect of the gas price shock starts to seep into the lives of ordinary people over the coming weeks and months – causing bills to rise, energy suppliers to go bust and supermarket shelves to empty – many will be left wondering how the government could have allowed this to happen.
While it is true that a global surge in demand, coupled with geopolitical games and electricity supply issues in the UK – from low wind speeds, an interconnector fire and five reactors being offline – have resulted in a squeeze on supply and subsequent price hike, this is only half the story.
What ministers are failing to talk about as they reassure us that they do “not expect” supplies to run out this winter, is that it is not supply but the UK’s dependency on gas, and the failure of successive governments to wean us off the stuff years ago, that has left the UK dangerously exposed.
Wasted energy and missed opportunities
More than four fifths of homes are still heated by gas in the UK and almost half of our electricity is still produced by burning it. We are one of the most gas-dependent countries in Europe. Our unhealthy obsession with gas, stemming from a history of labour disputes, a nascent North Sea industry and the hydrocarbon industry far too close to the heart of government, has left us shackled to it, and so at the mercy of its price volatility.
Failed government policy over decades must shoulder much of the blame. The UK has the least energy efficient housing stock in Western Europe. Yet, we still don’t have a programme in place to insulate the millions of homes across the country that desperately need retrofitting. This wasted energy is almost as shocking as the government’s reluctance to do anything about it.
“The UK has the least energy efficient housing stock in Western Europe. This wasted energy is almost as shocking as the government’s reluctance to do anything about it.”
There’s a pattern to these mistakes. Earlier this year the government botched its Green Homes Grant programme, scrapping it after just 6 months. Before that George Osbourne decided to bin the Zero Carbon Homes initiative after years of development, which has cost the UK more than £2bn in wasted energy. Before that, David Cameron ordered ministers to ‘get rid of the green crap’, which derailed the UK’s thriving energy efficiency industry and ultimately stopped onshore renewables contributing as much as they could to reducing our islands’ gas dependence.
Heating homes without heating the planet
Whether or not you support Insulate Britain’s motorway blocking tactics, it’s hard to argue, given the current gas price crisis, that insulating the UK is such a bad idea. Doing so would undoubtedly reduce our dependence on gas and our exposure to such price shocks.
At the same time, it would also slash carbon emissions, create warmer homes, reduce fuel poverty and health conditions that result from poor housing and, as Greenpeace UK’s recent report pointed out, could create up to 138,000 new jobs and inject almost £10bn into the economy across all regions of the UK. The list of positives are endless.
The latter economic benefit would also require a mass roll-out of heat pumps, which would further reduce our dependence on gas. But once again, poor policy decisions over many years have gotten in the way. The UK is last when it comes to the sale per household of these sources of clean heating, behind Poland, Slovakia, Estonia and almost everyone else in Europe.
Why we can’t drill our way out of this crisis
Those calling for an increase in domestic supply by expanding production in the North Sea or having another go at fracking are completely wrong. This is a price shock, not an availability shock so more domestic gas production can’t and won’t affect global or regional prices – and will have zero impact on the present crisis, save trashing the UK’s already tarnished reputation for climate leadership.
It also won’t reduce the UK’s carbon emissions, which is fundamental to tackling the climate crisis and something the government is legally bound to do. Climate change and creating economic resilience means we desperately need to reduce demand, not go looking for more supply. In fact it is the knee jerk response of only looking for more supply when faced with energy security challenges that has left us in this mess. Demand reduction is the only option to solve the problems of the UK’s gas exposure and the climate crisis simultaneously.
Clinging to North Sea offshore jobs in oil gas as justification for continued gas dependency fails to seriously address the actual working conditions in that sector. A decade of price shocks and sell-offs to private equity firms has seen wages and contracts disintegrate, with a majority of workers now employed ad-hoc and carrying the burden of training costs and periodic unemployment. Only a clear pathway out of fossil fuels can offer these workers and communities a proper just transition.
Ramping up renewables
For the electricity the UK will certainly need, we need to rapidly ramp up the roll out of renewable energy projects and the job opportunities for ex-oil workers that should come with them. The government loves to boast about its record on offshore wind, but it has stalled repeatedly when it comes to onshore wind and solar. The sooner we have a renewables sector that can cater to our energy needs the faster we relieve ourselves of the risks of gas dependence.
Investment in renewables must come with investment in a smarter, more flexible grid and better storage, so that even when the wind isn’t blowing or the sun shining energy supplies and prices don’t become a problem.
New nuclear power cannot realistically help. Continual cost escalation and ever-increasing delivery timeframes, as well as reliability problems, have proven that it is not a viable alternative to fossil fuels. According to EDF the next UK plant wouldn’t be up and running until 2034 and that’s assuming no decade long delays, which have chronically plagued nuclear projects in Finland and in France. We can’t wait 13 years or more for a magic nuclear bullet, even if the issues of waste and terrorism can be solved (and there’s no sign of them being).
A chance to get on the right path
Aside from taking the shackles off the construction of new renewables power, the upcoming Spending Review is the government’s chance to start righting past wrongs on energy efficiency. Rishi Sunak must commit to an extra £12bn of public investment for the rest of this Parliament to improve energy efficiency, green our homes and properly fund a just transition for fossil fuel workers.
Failure to deliver this level of investment, on top of existing commitments, will result in a missed opportunity economically, and result in the government failing to deliver the green housing revolution that the UK desperately needs.
Boris Johnson has spoken at the UN this week of his “frustration” with world leaders at not taking climate change seriously enough. So he must be livid with his government departments and especially the Treasury for the botches and mis-steps over the last few years which have over-exposed the electorate and economy to expensive, climate wrecking fossil gas.
Let’s hope that in the final weeks before vital international climate talks in Glasgow our political leaders show that, although there can be no quick fixes to this crisis, they’ve finally understood the way through.
Climate change is already an urgent threat to millions of lives – but there are solutions. From changing how we get our energy to limiting deforestation, here are some of the key solutions to climate change.
How do we tackle the climate crisis without harming workers in polluting industries? The answer is a ‘just transition’, that transforms the economy in a way that’s fair to everyone.
Properly integrating climate risk into companies’ financial statements and auditor’s reports would help to shift capital away from climate destroying activities. However, most UK companies and their auditors are failing to meaningfully disclose these risks and their financial implications.
