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Following spikes in global wholesale gas prices, the recent failure of 29 energy suppliers, Ofgem’s price cap rise and the Russian invasion of Ukraine, the future of the UK’s energy supply is uncertain. There is growing concern over security, affordability, and sustainability of supply.
In response, the Government published a British Energy Security Strategy in April 2022, proposing to accelerate the UK towards a low-carbon, energy independent future.
This Insight gives an overview of the strategy, responses from stakeholders and outlines policy aiming to create a smooth transition from fossil fuel to low-carbon energy.
What is the Government’s Energy Security Strategy?
A major focus of the Energy Security Strategy is expanding home-grown, low-carbon sources for UK energy supply over the next 20 years, alongside commitments to completely remove Russian oil and coal imports by the end of 2022, and Russian gas “as soon as possible thereafter”.
Where will the UK’s fuel come from?
According to the Department for Business, Energy and Industrial Strategy, Russian imports supplied only 2.2% of energy used in the UK in 2021. However, the disruption to the global energy market following Russia’s invasion of Ukraine has created market uncertainty, wholesale price volatility and an increased demand for non-Russian energy sources.
To account for future changes to gas and oil supply and secure more domestic resources, the Government plans to further utilise North Sea reserves alongside commissioning a scientific review of shale gas extraction.
To ensure compatibility with a proposed ‘climate checkpoint’ for oil and gas licensing, the plans include four new carbon capture, utilisation, and storage (CCUS) clusters by 2030 alongside proposals for an over 40% reduction in gas consumption by 2030.
Where will low-carbon energy come from?
To meet the UK’s projected 50% increase in electricity demand by 2035, the targets for low-carbon power generation have been increased in the Energy Security Strategy paper, compared to previous targets in the Energy White Paper. The table below includes both targets, alongside the Climate Change Committee (CCC) recommended capacity targets and current operational capacity for each energy type.
Low-carbon target capacities
|Energy type||Energy Security Strategy target capacity||Previous policy target capacity||CCC target capacity||Current operational capacity|
|Offshore wind and floating offshore wind||Up to 50 GW, with up to 5 GW floating offshore wind by 2030||40 GW with 1 GW floating offshore wind by 2030||45 GW by 2035||11.3 GW|
|Onshore wind||N/A||N/A||35 GW by 2035||14.5 GW|
|Solar photovoltaic||Up to 70 GW by 2035||N/A||54 GW by 2035||13.8 GW|
|Hydrogen||Up to 10 GW by 2035||5 GW by 2030||N/A||0 GW|
|Nuclear||24 GW by 2050||5 GW by 2030||10 GW by 2050||7 GW|
How will targets be met?
The strategy introduces policy to reduce consent times for offshore wind planning from four years to one. It also introduces Great British Nuclear, a new delivery body for the proposed eight new large nuclear reactors to be brought to final investment decision by 2030. The North Sea Transition Deal sets out plans for necessary investment and infrastructure to aid ‘decarbonised’ oil and gas extraction.
Further details of how the Government propose to implement the strategy targets will be included in The Energy Security Bill announced in the Queen’s Speech 2022.
Responses to the Energy Security Strategy
A Government press release featured widespread industry support for the targets set out on nuclear, offshore wind and hydrogen, and the CCC’s initial response credited the “hugely ambitious” strategy for going beyond its own recommendations in The Sixth Carbon Budget. The CCC’s full response will form part of its next annual Progress Report to Parliament, due to be published on 29 June 2022.
The Institute for Government (IfG) said the security of the UK’s physical supply will “likely hold up” following possible Russian gas export disruptions to the EU, even without measures from the strategy, due to diversity of supply.
State involvement in nuclear development was welcomed by the Nuclear Industry Association. However, Citizens Advice stated consumers can’t be left to “pick up the tab” if deployment is delivered “late and over-budget”, as has previously been the case with cost overruns and delays to the Hinkley Point C nuclear plant.
Carbon Brief highlighted conflicts between the Government’s energy strategy and the latest Intergovernmental Panel on Climate Change (IPCC) report, stating the UK’s current plan for cutting emissions from North Sea oil and gas is “not ambitious enough” to reach Net Zero targets.
Lack of energy efficiency, financial assistance, and onshore wind measures
Commentators also highlighted omissions from the strategy, such as energy efficiency measures, onshore wind deployment and a lack of additional measures to help households with the current energy price rise.
Responding to a perceived “limited focus” on energy efficiency measures in the strategy, E.ON CEO Michael Lewis called for more investment in the Energy Company Obligation scheme to tackle fuel poverty. The Energy Saving Trust put forward the case for a new “home energy efficiency programme” for energy consumers. The CCC additionally labelled the lack of energy efficiency measures “disappointing”.
Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng, responded to similar criticisms in a House of Commons debate on the Energy Security Strategy stating energy efficiency measures were covered in the earlier Heat and Buildings Strategy.
The IfG stated that further financial assistance will be required to account for “unaffordable” future energy prices, as it believes current measures such as the £150 council tax rebate and £200 energy bills support scheme are “insufficient”.
How will the UK transition to low-carbon energy?
The Government’s Net Zero Strategy outlined plans to promote the decarbonisation of power, industry, heat and transport. The December 2020 Energy White Paper laid out policies to encourage the energy sector to cut emissions and promote low-carbon energy generation.
The Government has set out market and regulatory reform for a smart, flexible energy system in the Smart Systems and Flexibility Plan, with a complementary strategy and action plan to digitise the energy system.
Additionally, the Government plans to launch a new Future Systems Operator as an independent body to oversee long term planning of the electricity and gas network, including integrating the grid with emerging technologies such as hydrogen.
To support a domestic transition to low-carbon heat, a Government focus on heat networks is being supported by a Green Heat Network Fund. Regulation proposed in the Heat and Buildings Strategy and Future Homes Standard plans to cut emissions and improve the energy efficiency of new and existing homes.
- Imports of energy from Russia, The House of Commons Library
- Alternatives to Russian oil: Saudi Arabia, the Gulf and Venezuela?, The House of Commons Library
- Domestic energy prices, The House of Commons Library
- Ukraine Crisis, The House of Commons Library
- Energy price rises and the Energy Bills Rebate, The House of Commons Library
- Energy Policy: An overview, The House of Commons Library
- Mitigating climate change: Electricity and beyond, The House of Commons Library
- Flexible Electricity Systems, Parliamentary Office of Science and Technology
About the author: Chloe Forrester is a POST Fellow working with the House of Commons Library and PhD researcher of green hydrogen production at Queen Mary University of London.
House of Commons Library publications on the rising cost of living in the UK, including causes of inflation, the effect on households, and Government support.
A debate has been scheduled in Westminster Hall for 9.30am on Tuesday 19 July 2022 on new pylons in East Anglia. The subject for this debate has been nominated by the Backbench business Committee, and the debate will be opened by Sir Bernard Jenkin MP.