On Monday, as war in Ukraine caused turbulence in the European energy market, and just before the publication of the “bleakest warning yet” from scientists on the climate crisis, the UK’s secretary of state for business, energy and industrial strategy, Kwasi Kwarteng, took to Twitter to set out his case for a clean energy future for the UK.
It was a major intervention from the business secretary, at a vital juncture. Kwarteng is joining many of the biggest voices and leading experts in the UK energy industry in arguing for clean energy and rejecting fossil fuels.
But this new emphasis from the government will need to be backed up by further policy and action if it is to mean real change.
So what should we make of Kwarteng’s statements?
Please read: thread on energy security 🧵
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
The North Sea is our single largest source of gas, with the bulk of our imports coming from reliable Norway.
Unlike Europe, we're not reliant on Russian gas.
But like others, we are vulnerable to high prices set by markets.
(1/9)
The invasion of Ukraine has led to a huge upheaval of the energy markets, as the International Energy Agency chief Fatih Birol predicted. Gas prices in Europe were already soaring, owing, in part, to Vladimir Putin’s tightening of gas supply to the EU – a move that now seems a clear precursor to his invasion aims.
Germany has announced a suite of new energy policies alongside its historic foreign policy reversals, and the country’s Green party – in the ruling coalition – is even reconsidering its implacable opposition to nuclear power.
EU nations are ramping up their low-carbon energy efforts, and businesses have been affected too: earlier this week BP gave up its stake in Rosneft, and on Monday Shell did the same with Gazprom.
In the UK, the war has added impetus to the claims of many Conservative politicians and rightwing commentators, fuelled by soaring gas prices, that the UK must put off the goal of reaching net zero greenhouse gas emissions in favour of fostering domestic fossil fuel supplies.
Kwarteng’s statements, in response to these issues, acknowledge that North Sea oil and gas are totemic for many opponents of the UK’s net zero plans – the UK’s own fossil fuel resources are seen as a bulwark against energy insecurity and economic threats.
However, this overlooks the fact that much of the UK’s production of North Sea oil and gas is sold overseas to the highest bidder – in fact, the amount exported doubled late last year.
Firstly, the UK has no gas supply issues.
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
The situation we are facing is a price issue, not a security of supply issue.
Put simply: we have lots of gas from highly diverse and secure sources - but it is very expensive.
(2/9)
The UK has no gas supply issues, but what Kwarteng carefully leaves out is that the UK certainly does have a gas storage issue. The Conservative government decided in 2017 to allow the closure of major gas storage facilities, meaning that the UK now has puny storage capacity compared with EU countries such as Germany and the Netherlands. Being unable to store large quantities of gas makes the UK more dependent on imports and vulnerable to price shocks, like the current one.
Secondly, we back North Sea production.
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
Good for jobs, energy security, tax revenue to fund public services, and kick-starting a hydrogen economy and CCUS.
However, additional North Sea production won’t materially affect the wholesale price (certainly not anytime soon).
(3/9)
Kwarteng is absolutely right – but why then is he planning a big expansion of exploration in the North Sea? The Committee on Climate Change found last week that granting new licences to explore for oil and gas in the North Sea would do nothing to alleviate high prices, as those new fields would take decades to come into production.
But although the CCC clearly “favoured” a moratorium on new licences, the government’s response made clear it was minded to press ahead with them anyway.
The wholesale price of gas has *quadrupled* in UK and Europe.
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
Additional UK production won’t materially affect the wholesale market price.
This includes fracking – UK producers won’t sell shale gas to UK consumers below the market price. They’re not charities.
(4/9)
Again, Kwarteng is right – those calling for a return to fracking as the answer to the UK’s energy problems are deluded. Fracking failed because the industrialisation of densely populated countryside for meagre returns was always a doubtful business in the UK.
But it’s notable that Kwarteng, one of the authors of Britannia Unchained, chooses an entirely different argument to slap down the frackers – the fact that any gas produced would not reduce the market price.
So what can we do?
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
Yes, we’ll continue to back North Sea gas for energy security.
It would be complete madness to turn off our domestic source of gas.
But the long-term solution is obvious: gas is more expensive than renewable energy, so we need to move away from gas.
(5/9)
The UK led the dash for gas, and away from coal, in the 1990s, which is the main reason why UK greenhouse gas emissions have fallen further and faster than many comparable developed countries over that time. But gas cannot be the long-term answer if we are to tackle the climate crisis.
However, as the energy commentator Michael Liebreich also pointed out on Twitter on Monday, moving away from gas needs to be planned and carefully executed – otherwise, consumers will face price shocks.
The UK could have ramped up renewable energy much sooner, but chose to rely on North Sea fossil fuels for much longer than necessary.
How?
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
Firstly, new nuclear. Needed when the the wind doesn’t blow and the sun doesn’t shine.
We are reversing 30 years of drift with the first new power station in a generation, more cash for future large projects, and our Nuclear Bill to unblock financial obstacles.
(6/9)
Why does nuclear come first? Building new nuclear power stations will take even longer than new North Sea oil and gas fields, or new fracking wells.
The only new nuclear power station currently being built in the UK, at Hinkley Point C in Somerset by French energy giant EDF, has taken the best part of two decades to move from planning to construction and is still years away from producing electricity. Financial backing for new nuclear is also in serious doubt, as critics say it is likely to be the most expensive form of generation.
Remember: renewables are cheaper than gas.
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
UK renewable capacity is up 500% since 2010 - but way more to do.
So we are accelerating renewables with annual CfD auctions.
The more cheap, clean power we generate at home, the less exposed we’ll be to global gas markets.
(7/9)
Again, Kwarteng is absolutely right: renewables are cheaper than gas. Onshore wind is one of the cheapest forms of renewable energy.
Why then has the UK made onshore windfarms almost impossible to build in England? Solar prices have also plummeted. So why has the government failed to mandate solar panels on new housing, and reduced the incentives available for households to install them?
Lastly, the best way to keep energy bills down is through energy efficiency upgrades so we use less gas.
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
In 2010, just 13% of homes were rated EPC C+, now it’s 48% - but more to do.
That’s why we are investing over £6.6billion in efficiency upgrades over this Parliament.
(8/9)
The case for energy efficiency is abundantly clear. The UK has the leakiest housing stock in Europe, so insulation will cut energy bills, reduce greenhouse gas emissions and make people healthier.
But since the scrapping of the ill-administered green homes grant last April, households across England have been left without any assistance scheme. In fact, apart from the short-lived green homes grant scheme, there has been no nationwide insulation programme for the last seven years, and meanwhile more than 1m new homes have been built to high-carbon standards, and will have to be retrofitted.
Ed Matthew, of the thinktank E3G, says: “The business secretary is right to flag that energy efficiency investment is the best way to bring down energy bills. There is potential to cut UK home energy use in half with energy efficiency.
“But the £6bn the government has committed is only half of the investment needed to get on track to net zero and reach the target to end fuel poverty by 2030. The Ukraine crisis is a reminder of the price we pay due to our addiction to gas.
“For energy security, for net zero, for energy bills, the solution is the same – we need a bold new infrastructure programme to insulate every UK home within a decade and massively accelerate the switch to electrified heat. There is no greater patriotic mission.”
Now more than ever we must focus on generating cheaper, cleaner power in Britain, for Britain.
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
All while helping our European allies move away from their dependency on Russian oil and gas.
This is how we become energy self-sufficient in the long-term.
(9/9)
Jan Rosenow, director at the Regulatory Assistance Project, applauds Kwarteng’s intentions but says that the UK is coming at this from a slow start.
“The government rightly identifies an expansion of renewables and home energy efficiency upgrades as important levers to move away from imported fossil gas,” he says.
“Whilst on renewable energy the UK has achieved a lot and recent announcements of annual auctions are welcome, on energy efficiency the UK is trailing far behind its European neighbours. A well-funded, long-term energy efficiency programme is still nonexistent and this needs to change.”
Nothing that Kwarteng says in this thread represents a departure in government policy. What’s important is that he has chosen to say it, at this time and in this way.
He is not alone: Alok Sharma, the cabinet minister who presided over the Cop26 climate summit last year, has repeatedly called for more climate action. Other Conservatives are also joining the fray: Samuel Hall of the Conservative Environment Network told Darren Grimes on GB News on Monday that renewables would work better than fracking in bringing bills down.
These interventions have come amid renewed concern over the UK’s energy future, sparked by the war in Ukraine. They also come as a belated riposte to attempts by the right wing of the Tory party to turn net zero into a culture war.
For months now, almost as soon as the last delegate departed from Cop26 in Glasgow last November, the UK’s right-leaning press has been full of attacks on the government’s climate policy by the opponents of net zero.
The wounding of Boris Johnson in the partygate scandals gave rightwing Conservatives and commentators the opening they needed, as the “green agenda” has long been closely identified with the prime minister. Soaring energy prices fanned the flames.
For Kwarteng now to take such a public stand in favour of green energy, slapping down fracking enthusiasts and deflating claims for North Sea gas, marks a significant ramping up of green rhetoric. Perhaps the fightback starts here.
