Can the Conservative manifesto tackle the energy crisis?
Sunak has repeatedly committed to delivering the Conservative Manifesto’s 2019 environmental policies, but with the energy landscape having changed so significantly over the last year, what does this mean for energy policy in 2022/2023?
In his first PMQs, Rishi Sunak was immediately questioned on energy policy and his Government’s commitments to renewable energy. Throughout the half an hour questioning, Sunak indicated that there would be commitments to the urgent need for investment and strategy in delivering the UK’s net-zero targets and to respond to the environmental crisis we face both in the UK and globally. Particularly, he referenced the environmental policies set out in the 2019 Conservative Manifesto. After initially stating he wouldn’t attend COP27 before u-turning on this decision, it’s yet to be seen whether addressing the environmental crisis will be of high priority for Sunak.
Here we take a closer look at each of the key energy policies announced in the 2019 manifesto, providing a status update on each policy, and highlighting where the energy crisis and political pressure for bill intervention has overridden the manifesto.
The 2019 Conservative Manifesto:
‘We will lead the global fight against climate change by delivering on our world-leading target of Net Zero greenhouse gas emissions by 2050, as advised by the independent Committee on Climate Change.’
Sunak has emphasised the Government commitment to achieving Net Zero.
A Net Zero Review was launched by Liz Truss and is currently being led by Chris Skidmore MP. This looks to evaluate the approach to delivering Net Zero to ensure it is focused on incentivising businesses to deliver a “green industrial revolution” efficiently and in the most pro-growth way possible.
This follows the ruling by the High Court that the Net Zero Strategy previously published is ‘unlawful’, as there was insufficient evidence to show how the UK would meet the carbon budgets set out in the strategy. A refined strategy must be reissued by March 2023.
The Climate Change Committee’s (CCC) latest Progress Report’s plans only credibly address 39% of emissions that need to be cut. But importantly, renewable electricity supply was assessed to be part of that 39%. Flexible low-carbon electricity generation, industrial carbon capture storage, and low-carbon home heating were not. The CCC’s next report will be a key indication of whether Sunak’s Government has made any progress.
The Government has also recommitted to the previous administration’s licensing round for oil and gas in the North Sea, which grant over 100 licences to explore parts of the North Sea for fossil fuels. The International Energy Agency’s roadmap to Net Zero by 2050 makes clear that there should be “no new oil and gas fields approved for development.”
‘Our first Budget will prioritise the environment: investing in R&D; decarbonisation schemes; new flood defences, which will receive £4 billion in new funding over the coming years; electric vehicle infrastructure including a national plug-in network and gigafactory; and clean energy.’ ‘We will invest £800 million to build the first fully deployed carbon capture storage cluster by the mid-2020s, we will support gas for hydrogen production and nuclear energy, including fusion, as important parts of the energy system, alongside increasing our commitment to renewables’.
Sunak addressed world leaders at the opening summit for COP27, highlighting that "we need to move further and faster to transition to renewable energy”. Grant Shapps, recently appointed as Secretary of State for Business, Energy and Industrial Strategy, has also stated that “if there's one thing for certain we cannot carry on relying on, as the world has done so many times, is hydrocarbons”.
A core element of delivering on this Decarbonisation plan and our Net Zero strategy will be passing the Energy Security Bill, which aims to deliver on targets such as improving energy efficiency in our homes, increasing domestic production of solar and our leading offshore wind energy, developing CCS and Hydrogen production technology and transitioning away from oil and gas.
The Energy Security Bill, however, was put under review to give Parliament time to consider the Energy Prices Bill that was prioritised to make provision to control energy prices. There has been dismay about the technologies and pricing proposals left with the now stagnant Energy Security Bill, but in the meantime the Government has pledged to accelerate the second phase of the UK’s carbon capture storage roll out.
Not mentioned in the manifesto, but a further piece of Government work running alongside new energy pricing powers and the Energy Security Bill is the longer-term review of Electricity Market Arrangements. This considers the long-term pricing structure of the market and how renewables and fossil fuels should be priced and paid for by consumers. The initial consultation phase of these proposals has just been completed.
‘In the next decade, we will work with the market to deliver two million new high-quality jobs in clean growth. We will invest £500 million to help energy-intensive industries move to low-carbon techniques.’
The Government has outlined that the UK has delivered 68,000 green jobs as of April 2022. However, the Big Issue reported that data obtained by the organisation shows that nearly 6,000 of those jobs were counted from schemes or projects that had already been scrapped and others will not materialise until 2029.
To reach the manifesto targets, we need to see cross-department collaboration within the government across BEIS, DLUHC and Treasury to ensure the skills, workforce and demand/supply of green products and services drive the inward investment needed to support the jobs long term. In June 2021, the Environmental Audit Committee heard that the target shows the right level of ambition, but more targets and the development of a skills pipeline is needed.
A Green Jobs Taskforce reported back evidence on the skills needed for the transition. As one way to support the demand needed for the skills, The Environment APPG have suggested a successor scheme to the Treasury super-deduction, focused on providing tax relief to businesses investing in green skills training.
‘Our world-leading offshore wind industry will reach 40GW by 2030, and we will enable new floating wind farms.’
Offshore wind is the leading success story of the Government’s net zero agenda. Since 2019, the UK Government has increased its offshore wind target to 50GW by 2030 as per the Energy Security Strategy. It also confirmed £31million of Government funding for offshore floating wind.
The UK currently has 14 GW of operational offshore wind. The UK’s fourth Contracts for Difference auction round awarded 11GW of renewable power, including 7GW of new offshore wind.
This progress is encouraging, however offshore wind may face some barriers to growth. Industry experts have noted the requirement of investment in long duration energy storage capacity to support the proposed increase in offshore wind generation. Investment will also be needed in the National Grid, who have already laid out £54bn plans to upgrade their network to support the increased offshore wind capacity.
There has been continued commentary that with major oil and gas companies such as Shell and BP recording record profits as a result of this energy crisis, matching a tax contribution to Norway could reportedly raise up to £33bn in additional government funding through to 2027.
‘We placed a moratorium on fracking in England with immediate effect. Having listened to local communities, we have ruled out changes to the planning system. We will not support fracking unless the science shows categorically that it can be done safely.’
Sunak stated in his PMQ’s that he will stand by this manifesto commitment when asked directly about fracking, which has since been confirmed by No10.
‘We will help lower energy bills by investing £9.2 billion in the energy efficiency of homes, schools and hospitals.’
After the failed Green Homes Grant, improving energy efficiency of our homes will be crucial to tackling the energy crisis the UK is currently facing.
The Energy Company Efficiency Programme has scope to deliver on a £3 billion investment, enabling up to 2.1 million households over 3 years to upgrade their energy efficiency rating and consequently use less gas.
In September, the Truss Government also opened £1.5bn worth of funding for energy efficiency to local authorities and social housing providers, with the intention of reaching some 130,000 properties.
Current commitments fall far short of the £9.2 billion promised, and we wait to see if Sunak will respond to broad-based calls for more home insulation to address fuel poverty.
‘We will consult on the earliest date by which we can phase out the sale of new conventional petrol and diesel cars.’
In 2021, the UK government made a strong stance on its commitments to sustainable transport by banning petrol and diesels cars by 2030, as part of the government's Transport Decarbonisation Plan, which proposes strategies to phase out fossil fuels in cars by 2030, net zero domestic aviation by 2040 and a net zero rail network by 2050.
However, the rate of charging points installed for EV’s has been much slower than proposed and the UK isn’t on track to meet 2030 targets of 300,000 charging points. Moreover, the ratio between electric cars to charging points has grown from 5:1 to 15:1 in the last 3 years – so a revised strategy is required from the new Secretary of State for Transport, Mark Harper, to ensure investment is centred around charging point builds.
Sunak must now re-prioritise efficiency and renewables:
The UK is in a pivotal moment in shaping the future of our commitments to renewable energy. The most recent energy-focused legislation, the Energy Prices Bill, is a short-term ‘solution’ specifically focused on alleviating high prices felt by the public up until April 2023, but it is not a long-term plan.
The previous Energy Security Bill which has been placed on hold, built based upon the 2019 manifesto, therefore needs to be updated in consideration of the 2022 energy crisis. Within any revisions to the bill, the UK Government should ensure that they are paving the pathway to achieve the renewable energy targets being verbally made, backed-up by spending commitments in the new November budget. Specifically, a revised energy strategy should focus on:
Continued investment in renewable energy generation, upgrades/development of renewable energy facilitators (such as the National Grid or EV charging points) and energy efficiency schemes.
A public information campaign to inform the public on how to reduce their energy consumption, saving households nearly £400 and the Treasury £9bn, a plan which was rejected by former PM Liz truss.
Ensure that contradictory actions such as the granting a proposed 100 new oil and gas exploration licences in the North Sea, or approving the proposed new coal mine in Cumbria, are scrapped.
Given the aforementioned 11GW of renewable power will generate electricity at a cost of 9 times cheaper than gas, renewable energy investment will be the key to getting back on track to deliver our Net Zero targets, but also alleviating the effects of the energy crisis in both the short and long term.