New UK Prime Minister Liz Truss said she aims to break the link between green power and gas prices on a seismic day for British energy policy that saw her make a renewed commitment to reach net zero while simultaneously promising fresh North Sea fossil licensing and shale gas fracking.
Truss fired off a volley of plans to bolster future security of supply as energy dominated her first days as Prime Minister, centering on a pledge on Thursday in the House of Commons to cap consumer and business bills.
The new Prime Minister’s statement to the House of Commons included plans for “a review to ensure we deliver net zero by 2050 in a way that is pro-business and pro-growth”, to be conducted by Chris Skidmore – a prominent Conservative supporter of the green agenda.
She said the UK will “speed up our deployment of all clean and renewable technologies including hydrogen, solar, carbon capture and storage, and wind… where we are already the world leader in offshore generation”, but did not reference onshore wind turbines.
Truss’s statement also, however, confirmed plans to lift a ban on shale gas fracking “which could get gas flowing in as soon as six months, where there is local support” and to sanction a new North Sea oil & gas round “which we expect to lead to over 100 new licences being awarded”.
Nuclear was additionally confirmed as a key plank of Truss’s newly-announced ambition to turn the UK into a net energy exporter by 2040.
'Green levies' on energy bills will be suspended as part of moves to cut consumer bills, but the UK government confirmed it will continue to separately fund the schemes they supported “to ensure the UK’s investment in home-grown, secure renewable technologies continues”.
Break link with gas prices
A key element of Truss’s agenda concerned plans to move renewables and nuclear generation from legacy support mechanisms that match sky-high wholesale prices onto the long-term contract-for-difference (CfD) deals that have underpinned government auctions since 2015.
The capacity involved accounts for some 40% of total UK generation, according to industry estimates.
Industry body RenewableUK said after the announcement: “We’re already working closely with ministers and our member companies on proposals to break the link between the unaffordable cost of gas and the price of electricity.
“Renewable projects which have gone live since 2015 are already on these ultra-low cost contracts which actually pay money back to consumers. A new scheme would see older renewable energy projects moving onto new fixed-price contracts, and this would be open to include as many generators as possible.”
RenewableUK CEO Dan McGrail added: “Although the Prime Minister’s announcements set out various measures, we’re confident that accelerating renewables will prove to be the only scalable solution which delivers meaningful and sustainable savings for billpayers and helps UK be a net energy exporter.”
I fear we will look back at today’s announcement with a great deal of regret.
The UK’s Association for Renewable Energy and Clean Technology slammed Truss’s decision to back increased fossil fuel activity.
CEO Nina Skorupska said: “I fear that, in a few years’ time, we will look back at today’s announcement with a great deal of regret. 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.”