It's time to put Britain's energy policies on a war footing. If Russia cuts Europe's supplies this winter, we face eye-watering bills and energy rationing and risk blackouts. The time to act is limited. Further direct financial support is inevitable. But if we act urgently, we can help people through the next two years and accelerate progress towards a cheaper, more secure energy system.
According to the latest estimates, the typical household will pay £300 per month for their energy from October and £500 from January. It will push millions of households into fuel poverty and drive inflation across the economy, making us all poorer. The Kremlin hopes the crisis will create social unrest - and with some justification, as a grassroots campaign to boycott energy bills is growing.
Energy prices are forecast to stay high for at least a couple of years - if not more. There will be further, irresistible calls for the Treasury to step in and help people with their bills.
Vladimir Putin no doubt hopes the political and economic damage will undermine our resolve to stand with Ukraine. He’s gambling that Europe will give in when this winter bites, ease sanctions and stop sending arms to Ukraine.
In response, long-standing critics of UK climate policy have blamed net zero. They say we built too many renewables and didn’t double down on domestic gas. It is true the UK is more vulnerable to this crisis because of past energy policy mistakes. But the mistakes were not moving away from gas fast enough.
Europe relies on Kremlin-controlled fossil fuels, importing 40 per cent of its gas and 30 per cent of its oil from Russia. While the UK imports little gas directly from Russia, we are part of the European energy market and so feel the impact of Putin’s manipulation of supplies. For this reason, increased UK gas production is unlikely to significantly dent bills, even if it diversifies supply.
Our energy policy has traded security and resilience for short-term savings and efficiencies for too long. Before 2010, the UK was too slow to build renewables and failed to replace ageing nuclear power stations. Since then, we've thrown up excessive planning barriers to onshore renewable energy and cut back schemes to insulate the 19 million energy-inefficient homes across the UK.
We did get some things right. For example, Conservative-led governments since 2010 heavily backed offshore wind. Thanks to innovation, private capital, and competitive auctions, the newest offshore wind projects will produce electricity four times cheaper than gas power. Ministers should be applauded for new plans to streamline the planning process for offshore wind in the British Energy Security Strategy in April. The sooner these projects start generating the sooner our bills will come down.
But past mistakes have made us more reliant on gas than we could have been, exposing us to Putin’s malign influence. If we had gone faster on renewables, insulated many more homes, and installed heat pumps along with Scandinavia, we wouldn't rely on gas to generate 40 per cent of our electricity or heat 85 per cent of our homes.
When the next prime minister takes office, they need to learn from their successors’ missteps and successes. That means continuing the government’s work to rapidly build new cheap renewables and doubling down on net zero by 2050 to reduce our gas dependency.
In particular, they should back three short-term, practical solutions to combat the gas crisis this winter: rolling out quick-to-install and cheap insulation measures, ramping up heat pumps, and turning down piping hot boilers.
Firstly, ministers should invest £1 billion to expand the successful Energy Company Obligation. This would enable energy firms to insulate 500,000 fuel-poor homes this winter and a million a year from April 2023. Simple measures like cavity wall and loft insulation can quickly be installed and cut the average home's bills by up to £500.
Secondly, ramping up the Boiler Upgrade Scheme, which grants households up to £5,000 to install low carbon heating, could replace hundreds of thousands of gas boilers. Octopus Energy estimates that an additional investment of £650 million means firms could install around 775,000 heat pumps by 2025, cutting household bills by £250 and reducing their gas usage by 80 per cent.
Finally, requiring energy firms to contact their customers and offer to turn down piping-hot boilers to more efficient temperatures could shave up to 8 per cent of household bills. Many people are unknowingly running their boilers at unnecessarily hot temperatures. This simple fix will produce sizeable savings without sacrificing warmth or comfort levels.
These three policy suggestions would start to benefit households by this winter. They do not negate the need for further financial support for households or longer-term policies to insulate homes, install heat pumps, or roll out renewable energy. But they’re our best chance of softening the blow over the next two winters.
First published by the Times Red Box. Sam Hall is the Director of the Conservative Environment Network.