Energy Bill: Government commits to renewable ramp up but lacks plan for cost-of-living crisis
Confusion has spread across Westminster after Prime Minister Boris Johnson told the House of Commons that he and the Chancellor Rishi Sunak would have to more to say about the energy crisis “in the days to come”.
That led to media speculation Sunak could deliver a surprise emergency budget to help people cope with soaring energy bills.
This has since been denied by Downing Street, leaving energy experts to comment only on what was actually announced today.
Industry commentators have responded to the inclusion of the Energy Security Bill in the Queen’s Speech, largely praising its commitments to boosting domestic energy production, but raising concerns over the lack of immediate support for low-income households amid the deepening cost-of-living crisis.
The bill was read out by Prince Charles in the House of Lords earlier today, establishing plans for “cheaper, cleaner and more secure energy” alongside plans to publish draft legislation to “promote competition, strengthen consumer rights, and protect households and businesses.”
Downing Street has also confirmed it intends to continue capping household energy bills beyond 2023, when current legislation is set to expire.
It argued the cap is the best way of protecting millions of households across the country, despite energy bills rising to a record £1,971 per year last month, alongside industry carnage that has seen 29 suppliers collapse since last September.
The government bill is primarily focused on continuing pledges from last month’s energy security strategy, aiming to support a low-carbon energy system and reduce dependence on gas over the long term, particularly from overseas buyers.
It is also looking to provide measures to help the industry step up investment in electric heat pumps – a clean alternative to gas boilers.
This follows earlier announced plans to ramp up nuclear, wind and solar power generation in the coming decades, alongside North Sea oil and gas exploration and investment in heat pumps.
It said it would give business rates relief for low-carbon heat networks and some exemptions for machinery used to generate renewable energy.
Energy bill fails to provide immediate support to households
Andy Mayer, energy analyst at the Institute of Economic Affairs, criticised the government’s continued commitment to the price cap, and suggested it would not ease the high energy prices for consumers.
He said: “In extending the energy price cap and picking winners in supply the government is committing to higher energy prices for years to come. The cap temporarily suppresses headline prices, but not underlying costs. For that you need competition, not Soviet-style technology targets.”
Meanwhile, Myron Jobson, senior personal finance analyst at Interactive Investor, suggested the bill failed to provide sufficient support for households, with no new financial packages to cut down energy bills and ease living conditions.
He said: “It seems that after two years of Covid support measures, households have now largely been left to go it alone, a terrifying prospect given inflation forecasts of up to 10 per cent for the rest of the year.”
Alongside concerns over a lack of immediate support, there were also calls for more ambitious plans to ramp up domestic energy production.
Joe Tetlow, senior political adviser at environmental think tank Green Alliance, told Morning Wire clean energy was the best long-term pathway for cheaper bills, but suggested more needed to be done to boost the UK’s national grid and insulate the country’s housing stock.
He said: “The UK is facing one of the greatest economic crises in a generation driven in large-part by its exposure to volatile fossil fuel markets. We welcome the opportunity presented by today’s Energy Security Bill to ensure this is the last energy crisis the UK ever faces. Through doubling-down on clean energy, insulating homes and building a flexible grid we can bring down costs for consumers, create jobs across the UK, and play our part in tackling the climate crisis.”
Joshua Marks, senior researcher at Bright Blue, praised the commitments to renewable infrastructure, but suggested the government should back heat pumps to ensure the UK’s energy independence.
He said: “Further support for the expansion of the heat pump market and incentivising consumers to switch away from gas boilers will be necessary to reduce our dependence on foreign gas imports and reach net zero by 2050.”