Conservatives can still tackle climate change and it not cost the earth

The Conservatives are looking for a new policy on the energy transition.

Sam Hall | Director

As Kemi Badenoch rightly pointed out to kick off the party’s policy renewal process, the current approach to decarbonisation has seen too little progress on emissions reduction, too high costs, and too much reliance on Chinese imports. These are the legitimate concerns. And she’s right that Labour’s plan will make these problems worse.

But that doesn’t mean the Conservatives should turn their backs on the energy transition, or indeed action on climate change, which remains vital for passing on a good inheritance to our children and grandchildren. They must challenge the flaws in Labour’s expensive and statist policies, but offer an honest and ambitious alternative that lowers prices, leaves our nation more secure, rejuvenates industry, and lets the market take the lead.

That is why the Conservative Environment Network has published its first policy options paper, Market-led green growth. The paper responds directly to the important challenges set out by Kemi Badenoch.

It begins by arguing we need to get serious about becoming self-reliant with truly homegrown energy sources.

This means being realistic about our North Sea oil and gas reserves. Of course it makes good sense to use our own fossil fuels while we have demand for them, but they cannot give us energy independence anymore. We don’t have enough left in the North Sea to meet our needs. We haven’t been net exporters of oil and gas since 2004, and production has been declining ever since. Even if we hadn’t over-taxed the sector and ended new licences, output would still be in terminal decline.

Similarly, fracking has struggled to take off, because of our population density, deeply sceptical local communities, and uncertainty over how much shale gas could be extracted commercially. It can’t be relied upon to power our economy in the decades ahead.

We must also recognise that, even with our own gas supplies, our market is still linked via subsea interconnectors to the European gas network. Putin’s gas reserves are the biggest in Europe, which gives him effective control over the price, even if he doesn’t directly supply us. For as long as we rely on gas, we will therefore be at risk of energy blackmail.

So if we want energy self-sufficiency and security, that means we need an honest plan to build more British renewables as well as reinvigorate our nuclear industry and switch more industries over to electricity.

As we can see, the government doesn’t understand any of this, with the rumoured cuts to the small modular reactor (SMR) programme, deals with Chinese firms to build offshore wind farms, and their singular focus on carbon capture and storage technology to decarbonise industry.

Therefore, our paper calls for more urgency about the nuclear rollout, finally ending delays to the SMR competition and reforming the red tape that is making them unnecessarily expensive to build.

And, to shed our reliance on China for renewables, we call for enhanced freeport tax breaks, critical mineral partnerships, and trade deals to onshore and ally-shore much more of the supply chain for clean energy technologies.

Secondly, we need to stop wasting scarce taxpayer money on elements of the energy transition that are awash with private money. Our paper critiques the failed strategy of increasing public spending on decarbonising electricity through the creation of GB Energy. In particular, this state-owned energy firm with its vague remit risks crowding out the private sector in established sectors like offshore wind.

That is why we call for unlocking private finance to expand our clean energy capacity. By running competitive renewables auctions and removing taxes from privately negotiated power purchase agreements, we can bring new investment into renewable energy whilst providing cheaper energy for companies and keeping the bill for taxpayers to a minimum.

Thirdly, we need a timeline for the clean energy transition that is compatible with affordable energy. The rushed 2030 timescale for clean power risks pushing up electricity prices, undermining the competitiveness of the wider economy, and leaving us more reliant on imported fossil fuels for transport, heating, and industry. In pursuit of hitting a deadline even the Climate Change Committee does not think is necessary to meet climate goals, inefficient central planning, squeezing out of competition, and lock-in of currently high capital costs for projects will leave us with higher energy costs.

Cheap electricity is essential for our prosperity, national security, and our environment, as it enables faster electrification, reduces demand for imported fossil fuels, and accelerates economic growth.

Yet even before the headlong rush to 2030 began, our energy costs were far too high. This is for a variety of reasons – such as high gas prices, expensive planning red tape, punitive taxes and levies on bills, and outdated market design. All of these factors can be addressed while still advancing the energy transition.

Our paper calls on the government to pull a range of levers to bring down electricity prices, from radically reforming planning and regulation to make it much cheaper to build new infrastructure, to reducing the taxes we put on electricity through the levies.

Kemi Badenoch was right to highlight the failings in our current approach to decarbonising the economy. The benefits of the energy transition will be limited if it causes sky-high energy prices and increases dependence on China.

With a conservative plan to build more cheap, clean energy, electrify industry, and secure supply chains, we can make the UK safer and more prosperous, while protecting our environment for future generations.

First published by ConservativeHome. Sam Hall is Director of CEN.