The eye-watering cost of our reliance on gas is being laid bare in the scale of the Prime Minister's energy price guarantee. We won't know how much until we see how high prices soar. But the bill will likely be more than the furlough scheme, possibly reaching over £100bn in the next year alone.
While in regular times, a Conservative Prime Minister would baulk at adding such a hefty bill to the national credit card, the scale of the situation demands an equally drastic response. Without this action, two-thirds of households could have been plunged into fuel poverty by January and countless businesses forced to close.
For the next two years, the government will freeze the average household's energy bill to £2,500 as it fixes the price of electricity and gas for consumers, picking up the tap for the remaining energy costs, whatever they may be. It will also cover businesses for the next six months until a review identifies vulnerable industries that need ongoing support.
As Vladimir Putin continues to weaponise Russia's vast energy supplies to punish Europe for standing with Ukraine, the cost of this unprecedented intervention will become astronomical. That's why the Prime Minister was right to pair the announcement with a determination to ensure we're never in this position of vulnerability again.
But the Prime Minister will need a more comprehensive approach to achieve this. We cannot strengthen the UK's energy security by securing our supply of fossil fuels alone; the North Sea doesn't have sufficient reserves, and fracking is unproven and deeply unpopular. Instead, we need to focus on building renewables and improving energy efficiency.
Firstly, the government should unleash onshore renewables, which are now nine times cheaper than gas power. We needn't do this at the expense of food security or local wishes. We're already leading the world in offshore wind power and the development of floating turbines. But we've tied the hands of communities and businesses that want to build renewables onshore.
If the government is going to end the moratorium on fracking, it should listen to public opinion and lift the de facto planning ban on onshore wind in England. According to a poll conducted by Survation, 83 per cent of the party's supporters back onshore wind and 64 per cent support lifting the ban. In comparison, fracking splits Conservative voters with 44 per cent in favour, and 40 per cent opposed.
Despite some comments in the leadership contest, solar power is the most popular energy source among Conservative voters, with 89 per cent backing it. The government should reform burdensome planning rules to allow solar panels to be quickly installed on rooftops. But it should also actively support solar farms on unproductive land where they could be deployed alongside grazing livestock, providing cheap, clean energy and a new income source for farmers and landowners.
Secondly, the government needs to use demand-side solutions to the energy crisis. Starting to fix the 19 million draughty homes would not only help put us on track to achieve net zero by 2025 but lower bills and strengthen our energy security. Some estimates suggest that poorly insulated homes are paying an inefficiency penalty of around £1,000 for wasted energy.
The Conservative Environment Network's (CEN) industry-led proposals could make a difference this winter and next if introduced. Investing an additional £1bn of taxpayer funding in the Energy Company Obligation could insulate 500,000 fuel-poor homes this winter and a million a year from April 2023. As the Energy & Climate Intelligence Unit's analysis found, every £1 invested in insulating homes can save the government £1 in financial support by the end of the Parliament.
The government should also expand the Boiler Upgrade Grant by £650m could help install 775,000 heat pumps by 2027 instead of 90,000, cutting bills by up to £250. Finally, requiring energy firms to help customers run boilers efficiently by setting the correct "flow temperature" can cut bills by up to sight per cent. The three measures proposed by CEN would cut bills and conserve gas, saving taxpayers and billpayers while strengthening our energy security.
As the Prime Minister looks to disarm Vladimir Putin, lower bills and build a resilient economy, there's no better path than unleashing renewables and insulating homes. So long as the UK relies heavily on gas, the UK will be exposed to its volatile prices and the malign influence of the Kremlin. She must deliver on her promise to "double down" on net zero.
First published by BusinessGreen. Cameron Smith is CEN’s Head of Communications.