A missed opportunity: Lessons from the UK’s new energy security strategy
Following the UK government’s publication of its energy security strategy in early April, IIGCC CEO Stephanie Pfeifer looks at what was — and wasn’t — included, and what this means for investors:
The abhorrent invasion of Ukraine by Russia is now into its second month. Alongside the humanitarian tragedy which continues to unfold daily, Ukraine’s neighbours and global partners are now beginning to feel the economic and energy security impacts of the conflict. As governments sanction key Russian organisations and individuals, and draw up proposals to move away definitively from Russian oil and gas, the question remains – how should they implement these measures in a way that provides a stable, sustainable and affordable future?
The UK government is one such administration seeking to address this challenge. Its plan on a way forward was published on 6 April in the form of a long-awaited energy security strategy, alongside a British energy security policy paper. Given the unenviable job of drawing together the geo-political and economic concerns flowing from Ukraine, growing public anger over the rising cost of living, and ambitious longer-term objectives for emissions reductions, the strategy seeks to boost UK energy independence, tackle rising energy costs and create upwards of 480,000 jobs in clean industries. It takes ambitious steps forward in prioritising approvals for new offshore wind farms, doubling targets for hydrogen production, and increasing solar capacity fivefold by 2035 – all of which contributes to a long-term goal of ensuring at least 95% of the UK’s electricity could come from low-carbon sources by 2030, in line with the UK’s net zero strategy.
However, despite various politically sensitive competing aims, the strategy takes a controversial turn in allocating funding to new oil and gas fields in the North Sea. Notably – and somewhat inexplicably – it lacks any focus on energy efficiency and short-term supply solutions.
The strategy does provide clarity for investors in several areas, including the planned state-backed funding to be directed towards offshore wind farming, heat pumps and nuclear energy sites. This is especially relevant given the short-term turbulence in energy markets and opportunistic political attacks on climate action. Yet, the strategy falls short in delivering ramped up efforts to move rapidly towards a much greater share of renewables in the energy mix and a reduction in inefficiencies in key sectors – particularly buildings.
The UK government published the strategy just days after the IPCC released the third part of its damning Sixth Assessment Report on Climate Change, urging public and private bodies to move away from fossil fuels in order to limit warming to around 1.5 °C. It is striking that given the clear mutual benefits of acting jointly on energy security and the climate crisis, that the UK – in their COP26 Presidency year, no less – have chosen not to unleash the full potential that wider climate and energy policies can offer. If nothing else, the fallout from the war in Ukraine has shown us that if it wasn’t urgent enough already, achieving net zero is now a matter of national security.
IIGCC members can access more detailed analysis on the UK energy security strategy in this member briefing.
The views expressed in this article are those of Stephanie Pfeifer, CEO at IIGCC, and may not represent those of all IIGCC members.