Decarbonisation and The Cost of Living Crisis
Owing to the Russian invasion of Ukraine, like many European countries, the UK has suffered greatly in the energy sector following Russia’s shutdown of Nord Steam 1, a crucial natural gas pipeline. This cut Europe’s supply of natural gas massively, and this reliance on no longer available outsourced energy has had a colossal impact on the energy matrix of the United Kingdom. This happened in tangent with rising electricity prices: the cost of electricity in the UK rose sixfold between January 2021 and November 2022.
Former Prime Minister Liz Truss launched the Energy Price Guarantee, a two-year initiative aimed at easing the burden on households. This scheme set to cap energy prices, so households would pay around 2,500 GBP over these coming two years, but as of April 2023 has been estimated to range closer to 3,000 GBP. The government proposed compensation for suppliers for the difference in usage versus per-unit cost. This was to ensure the public does not carry these energy burdens, as members of the British population expressed concern over balancing their grocery bills with rising energy charges.
However, critics have suggested this is too costly, and rather these public funds should be allocated to supporting households more directly whilst continuing to make progress towards the 2050 net-zero emissions targets. Domestic usage of energy accounts towards approximately 20 per cent of the UK’s emissions, and it is estimated that efforts to reduce these are moving far too slowly. For example, over five million properties require improved insulation in their walls, nearly three million require roof insulation, and 7.1 million need floor insulation. Moreover, three million properties require upgrades to their boiler.
Rather, it is proposed that the most effective, direct course of action should support households directly, particularly those which are energy-poor, such as those with low energy-efficiency ratings as per the Energy Saving Trust’s guidelines. This reduces energy loss through poor insulation or usage, as well as ensures the needs of lower-income houses are met. 14,000 high-income households use more than fifty per cent of the energy as other households in this tax bracket, while low-income households suffer greatly from energy loss and inefficiency.
Moreover, capital allocated for compensating producers could be better served in re-investment to developing renewable energy sources within the UK. This can best be guaranteed through developing domestic and renewable energies, to reduce the country’s reliance on finite sources provided for by another state. As renewable sources are nearly cost-comparable to that traditional fossil fuels, there should be public policies adapted to encourage investment in them. Energy sources such as solar power, hydroelectric energy, and bioenergy, are key to securing the UK’s energy production and ensuring the county meets its net-zero goals and reduces costs long term.
Resources could be allocated to research and development of energies such as carbon capture and storage and hydrogen fuel. These provide clean energy, reducing the carbon dioxide in the atmosphere, and storing excess energy produced through renewable production. There could be an introduction of renewable energy targets, and incentives should be created to promote investment in its infrastructure, especially in the private sector.
The UK has made advances in this area, such as exempting electric vehicles from road tax and the congestion charge in London, but ultimately the country’s energy demand must be balanced with its supply, which can be achieved through the expansion of renewable energy. There must be a focus on investment and public policy to generate transformative change, allowing an energy transition to gain the momentum it needs to succeed whilst making sure no domestic consumers are left behind. Decisive action is essential, with significant investment in renewable and low-carbon energy technologies. This can be achieved through supportive public policies. Governments and businesses must ensure they are deterring the use of polluting fuels.
Overall, policy considerations must be careful to not fall victim to short-term, quick fixes. Rather, there must be decisive action to promote sustainability – to provide for the needs of today without compromising the ability to provide for populations of the future,
by Carolina Beirne