The global race to Net Zero is well and truly on. The UK faces a pressing need to make our energy supply affordable and secure again, and it is for this reason that we must hasten the transition to a low-carbon economy and energy system. The past year and a half have proven to us that fossil fuels offer volatility and insecurity while transitioning to clean energy will bring sustainability in every sense of the word. Oil, gas, and coal are on their way out, and low-carbon energy has well and truly arrived, writes Virginia Crosbie MP.
As Conservatives, we have a moral obligation not to squander our natural inheritance and to leave the world in a better state than we found it for future generations. Conservatism also means pragmatism – dealing with the world as it is, not as we want it to be. A pragmatic approach means facing up to the basic fact that the age of fossil fuel dominance is over, and we are entering a new era of low-carbon energy.
The weaponisation of oil and gas markets against democracies has certainly catalysed the transition away from fossil fuels. BP is projecting that global oil demand has already peaked and will soon start to decline, echoed by the International Energy Agency’s assertions that natural gas is now following suit. Although Europe is also diversifying its gas supply in favour of American, Qatari, and Australian liquefied natural gas, little doubt now remains as to which way the wind is blowing. Debates about future oil and gas licensing miss the key point: clean energy is now cheaper and more secure. As we scale up nuclear and renewables, oil and gas will inevitably decline.
However, we must remember that the original reason that the UK led the way on low carbon energy was to tackle climate change. It still looms large as a serious threat to our economy and security. The Office for Budget Responsibility has stated that the cost of remaining reliant on gas would hit taxpayer and government finances twice as hard as hitting net zero.
It would be folly to risk betting the house on adaptation alone when we can make our strategy much more effective by pairing it with investment in cleaner and more efficient technologies to mitigate climate change. We should not downplay the role that fossil fuels have played as building blocks in the UK’s history, but times have changed. Gas is no longer the economic mainstay it once was; if we do not now fully embrace the energy transition, we run the very real risk of being left in the dust by other advanced economies who do so. We should not risk gambling our future by continuing to depend so heavily on fossil fuels when we have such a natural advantage in generating low-carbon energy.
On Ynys Môn – once called the ‘Mother of Wales’ and now known as ‘Energy Island’ – thanks to tireless campaigning by myself and my constituents, we have projects in the pipeline spanning tidal, solar, offshore wind, battery storage, and nuclear to boot. This is to say nothing of the Celtic Sea, down the coast from Anglesey, with its enormous potential to harness the power of Atlantic winds with floating offshore turbines. Whereas the North Sea is home of the world’s largest offshore wind farms, hosting an abundance of vast caverns in which we can sequester carbon, and a prime destination for investment into clean hydrogen.
This is to say nothing of Anglesey’s long-running advantage when it comes to the UK’s nuclear skillset. At the Wylfa power station, workers built up a wealth of knowledge begging to be put to good use in the UK’s nuclear renaissance. We must not waste the time and money that has been invested into developing these skills over decades by giving them an outlet with new nuclear at the former power station site.
At the start of 2023, the Prime Minister set out five objectives for the government: halve inflation, grow the economy, bring down debt, slash NHS waiting times, and tackle illegal migration in the English Channel. The government should view the need to transition away from oil and gas as an opportunity to achieve at least three, if not more, of these goals. Bringing cheaper sources of renewable energy online faster, moving away from the marginal gas pricing model in our electricity markets, and insulating homes will cut energy bills and reduce inflation.
To make attracting this investment as easy as possible, the Treasury should use tax incentives and fiscal policy to make low-carbon energy more lucrative for investors. The government’s new full expensing policy, by which firms can deduct 100% of their investment costs from their corporation tax bill, will help make clean energy cheaper. But the tax break is set to end in three years’ time, causing many companies to hesitate before investing. Planning and approval processes take several years, and making full expensing permanent would give businesses some long-term certainty and make the UK more welcoming to green investment.
Ofgem’s current remit in the Electricity Act 1989 prevents investment in the grid ahead of demand in order to keep short-term costs down. But this risks an inefficient transition which would result in higher bills in the medium to long term. The Department for Energy Security and Net Zero (DESNZ) has taken the welcome step to update Ofgem’s statutory advice to allow more anticipatory investment and include net zero in its remit. Ofgem now needs to change its approach accordingly – this is particularly important for investment in transmission infrastructure to get power from the wind turbines to people’s homes and businesses.
However, there are still other planning and regulatory barriers that stand in the way of upgrading our national grid and moving our energy system away from fossil fuels. The Energy System Operator (ESO) has brought forward sensible measures to reduce problems with the grid connection queue, which is seeing some of Anglesey’s projects having to wait until the 2030s to connect. However, there is only so much the ESO can do; DESNZ must produce a new planning policy statement and boost funding for the planning bodies that deal with requests. This will help us to both electrify faster and reduce our dependence on fossil fuels.
This period will go down as a turning point in the history of energy due to the Russian invasion of Ukraine, and the government should make sure it puts the UK firmly on track to regaining our energy sovereignty. Relying on dwindling reserves and increasing imports of oil and gas will fail to restore our energy security. This is a transition, and security will remain the priority to keep our homes, businesses, hospitals, and schools running. Only by transitioning to clean energy can we do so affordably and sustainably into the future.
First published by CapX. Virginia Crosbie MP (Ynys Môn) is a member of the Conservative Environment Network.