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Energy crisis: Industry reacts to Government’s £150bn plan

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Earlier this week, under the leadership of the country’s new Prime Minister Liz Truss, the Government, unveiled its plans to tackle the energy crisis.

The plans include a price cap of £2,500 p.a. for typical households for the next 2 years from 1st October, in addition to the existing £400 energy bill rebate. The price cap had been due to rise to more than £3,500 in October.

Those using heating oil, such as many rural and off grid homeowners, and businesses are to receive “equivalent support”, with the latter being supported for 6 months. Additional details are expected to be announced soon.

Organisations from across the energy and environmental sectors have however expressed dismay at other measures announced to try and combat the energy crisis, including a new wave of licencing for oil and gas drilling in the North Sea and a lifting of the ban on fracking. A windfall tax on energy companies, something that was called for by many and recently introduced by other countries, has been ruled out. 

Renewables were mentioned by the Prime Minister, who vows to “speed up our deployment of all clean and renewable technologies”, however energy efficiency measures were once again a surprising omission from the Government’s latest strategy.

“Farcical” and “beggar’s belief” are 2 expressions used by organisations when commenting on the measures – below Energy Now rounds up some of the reaction:

Mike Thornton, chief executive, Energy Saving Trust said:

“The scale of the emergency measures announced today serves to further highlight the depth and breadth of the energy crisis. We welcome the resolve to take immediate action to reduce costs and increase energy security for both the short and long term, whilst remaining committed to net zero carbon emissions by 2050.

“The freeze on energy costs will give a welcome reprieve for many households and businesses concerned about paying their bills this winter. However, we need more detail on what targeted support will be available for the most vulnerable, as hundreds of thousands still risk being plunged into fuel poverty with bills set to rise further.

“We also need urgent clarity on what support will be available to those who are off the gas grid and use fuels such as oil to heat their home. However, our continued over reliance on fossil fuels is the catalyst for high costs, energy insecurity and a warming planet. The commitment to further fossil fuel extraction is therefore concerning and a step in the wrong direction, it is not the solution to the problems we face.”

Dr Nina Skorupska CBE, Chief Executive of the REA said:

“Our sector is ready to play our part and work with government to urgently design a mechanism that helps reflect the lower generation costs of renewables for peoples’ homes and businesses.

“However, I fear that, in a few years’ time, we will look back at today’s announcement with a great deal of regret. It is beggar’s belief that even though the current energy crisis is being caused by price volatile fossil fuels, the Government has doubled down on oil and gas production.

“These decisions come just less than a year after the UK hosted COP26, and questions the Government’s commitment to Net Zero. Economic growth and tackling climate change go hand-in-hand – it is not an either/or.”

“The Government must now focus their plan beyond the winter to help deliver the real solutions to this crisis. A national scale energy efficiency programme, and helping homes and businesses transition to renewable alternatives. Delivering well thought-through wholesale market reforms to decouple electricity prices from the cost of gas. Filling the wide gaps in energy policy, investing in the grid, and offering expanded CfD schemes. Renewables, not more of the same, is the route out of this crisis.”

Hannah Martin, Co Director of Green New Deal Rising commented:

“This isn’t a real energy prize freeze if people’s bills are still rising to unaffordable levels and the cost is going to be paid by the public for years to come. We need a windfall tax now that puts cash back into people’s hands and public ownership that stop companies profiting off the public purse whilst ordinary people pay the price. The only way to deal with this crisis in the long term is a Green New Deal to rapidly get us off dirty and expensive gas and onto clean and home grown renewables whilst creating millions of good green jobs.

“New fracking and North Sea oil and gas will make flooding and droughts here and everywhere more likely, accelerating the climate emergency. That will be Liz Truss’ legacy and that is why movements like Green New Rising will be organising young people en masse to vote her out at the next election.”

Mike Childs, head of science, policy and research at Friends of the Earth said:

“The government’s energy plan is farcical in its detachment from reality. It does nothing to tackle the root cause of the energy crisis – our reliance on costly, polluting fossil fuels – and only lines the pockets of the oil and gas companies driving the cost of living and climate emergencies.

“Most of us will be relieved about the cap on energy bills ahead of this winter but with energy, food and fuel costs remaining high many people will still struggle to heat their homes and put food on the table.

“To bring down bills for good, we need a street-by-street insulation programme targeted at the neighbourhoods where most homes are poorly insulated. There are five million homes without even basic insulation, such as loft or cavity wall insulation, and the Committee on Climate Change has said 15 million homes would benefit from other insulation measures.

“The biggest winners today are the oil and gas companies. Not only will they benefit from the green light for more fossil fuel extraction but the tens of billions of pounds of public expenditure on the energy cap will go into their pockets and further fuel their eye-watering profits.”

Nick Wayth, Chief Executive Energy Institute said

“The news on consumer energy bills from the UK’s new PM, Lizz Truss, is welcome for the millions of households and businesses struggling to keep up with rising energy bills. It provides essential relief ahead of the coming winter months.

“However, it’s only a temporary escape from underlying international gas prices which remain at record levels and are likely to do so for the foreseeable future. For the UK (and all countries) to have a secure, affordable and clean energy system, and escape the triple energy crisis for good, we also urgently need to see ministers put in place permanent solutions: to end energy waste through renewed and sustained investment in energy efficiency for homes and buildings; to accelerate the deployment of affordable, shovel-ready renewables and reform the market so those cost reductions feed through to the bills consumers pay and to decarbonise our use of oil and gas.”

Prime Minister Truss’ full speech is available to view on the Government’s website.

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