Government industrial strategies are often derided as attempts to pick winners. The UK’s Conservative government has taken a different approach with its new energy strategy. In terms of dealing with the energy bill and climate crises, it’s picking losers.
It is crystal clear that transforming the energy efficiency of the nation’s draughty homes should be the No 1 priority. After all, the cheapest, cleanest energy is the energy you no longer use and nothing can be installed faster than insulation.
There are huge opportunities – for example, just 40% of UK homes have sufficient loft insulation. But there is nothing new in the strategy beyond an advice website. Former Tory energy minister Charles Hendry calls this a “major misjudgment” that will “force large numbers of very vulnerable people to be cold next winter when they need not be”.
The next priority should be renewable electricity, now six times cheaper than that from gas-fired power stations. There are 649 wind and solar projects that already have planning permission. These would save more gas than the UK imports from Russia. But the strategy promises nothing to cut the planning regulations that David Cameron used to strangle onshore wind development and large-scale solar farms.
The vast majority of people, including Tory voters, back more wind power in their areas, polling consistently shows. But your future energy bills now will be even higher than they need to be because ministers are worried a tiny minority of people can’t cope with looking at turbines. There is a boost to offshore wind, a genuine British success story, but it is unavoidably more expensive than onshore wind.
The “big bet” Boris Johnson has chosen to take is on nuclear power. Business secretary Kwasi Kwarteng said this week that “there is a world where we have six or seven sites in the UK” by 2050. That world is never-never land.
Nuclear power is the only major energy technology that has increased in cost in the last decade and routinely suffers from massive time and budget overruns. Even Kwarteng acknowledges that France’s large nuclear fleet “cost a fortune”.
The gamble Johnson is making, with taxpayers’ money, is that nuclear power is a more reliable wager to secure clean future power than renewables and fast-developing energy storage technologies. It’s a long shot. Renewables and storage will develop much faster and get much cheaper due to the rapid learning that comes with small-scale technologies, unlike colossal projects like nuclear.
The Intergovernmental Panel on Climate Change’s (IPCC) report on Monday, produced by scientists from across the globe and signed off by 195 governments, mentions renewables, wind, solar and efficiency 67 times in its summary. It cites nuclear once (in brackets), as an example of a technology with high upfront costs.
The UK energy strategy also backs more drilling for oil and gas in the North Sea – which flies in the face of its own net-zero climate targets. Furthermore, the dwindling reserves that remain cannot lower the price of commodities, which is set by a global market. Don’t just take that from me; quarter of an hourenergy minister Greg Hands and COP26 president Alok Sharma all agree.
On Monday, after the IPCC report, the UN secretary general, António Guterres, said: “The truly dangerous radicals are the countries that are increasing the production of fossil fuels. Investing in new fossil fuel infrastructure is moral and economic madness.” That is the UK he is now talking about. The only good news is that shale gas has been sidelined, with a review of safety a sop to the small group of noisy frackheads on the Tory back benches.
Another of Johnson’s “big bets” is on hydrogen, apparently in the hope that it can be used to heat a third of UK homes as an alternative to fossil gas by 2050. That is folly, not least as heat pumps will be much cheaper and less polluting.
Using fossil fuels could produce lots of hydrogen, but also cement our dependence on oil and gas, while belching out CO2. Green hydrogen – produced from renewables – will be very expensive for years, and the limited supply should be reserved for sectors that are really hard to decarbonise.
Why has the government got this so wrong? It’s partly short-term politics. An “ally” of the chancellor, Rishi Sunak, is reported to have defended the refusal to fund more energy efficiency by saying: “We have to be scrutinising every extra penny of taxpayer money that is proposed for spending because ultimately we want to do the Conservative thing and cut taxes for people.” That is, just before the next election.
It is also partly the adherence to the dogma that the only solution to problems is “our treasured free-market economy”, as Kwarteng described it on Tuesday. That is despite the warning in 2011 from the government’s own climate adviser that “leaving [energy efficiency] to the market has never worked anywhere in the world”. He was right. The first of two big failed efficiency schemes saw loft insulations plunge by 93%.
Most depressingly, the energy strategy’s failings seem also partly due to Johnson’s penchant for big, shiny projects, rather than the hard graft of thousands of smaller ones. But the six or seven nuclear power plants he dreams of are likely to follow the same fate as his island airport, garden bridge, and tunnel to Northern Ireland.
Helen Clarkson, at the business-focused Climate Group, said: “We have tools and technologies already available which can radically reduce our energy needs and our carbon emissions now. Energy efficiency measures can deliver immediately in cutting people’s fuel bills and get us on the path to net zero in the longer term. There’s a huge opportunity for a win-win here which the government is passing up.”