This week we will find out how government intends to end any UK reliance on Russian energy and tackle rising household bills. While the war in Ukraine has brought the problems with our energy policy into sharp relief, it has highlighted issues that have been decades in the making.
The government’s long-awaited ‘energy independence plan’ has been delayed, not just by wrangling between No. 10 and the Treasury over how it will be funded, but because the Conservative party is fundamentally split on the best way forward.
Business Secretary Kwasi Kwarteng is a sworn enthusiast for green energy sources, yet Brexit Opportunities Minister Jacob Rees-Mogg has urged Boris Johnson to press ahead with fracking. The Prime Minister has become a vocal proponent for expanding domestic nuclear production, while Rishi Sunak reportedly pushed for North Sea oil and gas fields to be fired up back in February.
Reconciling these positions has not been made easier by the myths propagated by politicians or commentators. Here is an attempt to bust some of them.
The energy market is unregulated
This is arguably the most absurd claim made by those convinced the current mess is the result of insufficient state regulation. If you have quite a lot of spare time you could try, like economist Dieter Helm recently did, to list all the current interventions and bodies regulating the energy sector down on paper. Targets, regulations and strategies like the Energy White Paper, the Net Zero Strategy, the Net Zero Review, Green Finance Initiatives, battery plant subsidies, and heat pump subsidies – overseen by BEIS, the Treasury, No 10, the Climate Change Committee, Ofgem, the Nuclear Decommissioning Authority, the Commission for Shale Gas – go on and on.
As Helm points out, ‘no one could name all, or indeed even most, of the main items on the list… no energy policy with this degree of complexity could work if no one understands it all’.
We have plenty of regulation: the real question is how effective it is, and how many unintended consequences these layers of bureaucracy are creating.
The UK can be net-zero, and have secure and affordable energy
Regrettably, we cannot have all three with the current technology and capacity.