Energy strategy will not resolve cost of living crisis

A new dawn for the UK’s energy sector will be unveiled today, when Prime Minister Boris Johnson finally announces the country’s long-awaited energy strategy.

Following Russia’s invasion of Ukraine and pandemic-driven instability across global markets and supply chains, Downing Street is desperate to reduce its reliance on overseas energy supplies and is set to initiate a historic boost to domestic energy development.

Business Secretary Kwasi Kwarteng is aiming to ramp up renewables, revive nuclear power and greenlight further North Sea exploration for oil and gas.

The government has also commissioned the British Geological Survey to investigate whether fracking is viable in the UK, pushing back the ordered abandonment of two shale wells in Lincolnshire until July 2023.

Fracking friction

Fracking has become a major campaign issue for a chunk of the Tory party’s right-wing, with former cabinet minister Lord David Frost and prominent backbencher Steve Baker banging the drum for the controversial practice. It comes as the Net Zero Scrutiny Group, a group of 29 Conservative MPs, has become increasingly vocal about the cost of Boris Johnson’s policy to make the UK carbon neutral by 2050.

South Thanet MP Craig McKinlay, head of the Net Zero Scrutiny Group, said the government’s fracking review announcement was “a welcome sign that attitudes within the Cabinet may be shifting”.

“Why there was ever a ban on an industry that has proven its safety many times over, and has delivered such extraordinary benefits in the US, is still baffling to me,” he said.

“However, the need to secure domestic energy security in light of events in Ukraine and the energy price crisis has only made the absurdity of the ban even clearer.”

The chair of Net Zero Watch, a think tank working with Tory MPs to fight the government’s green agenda, Dr Benny Peiser said “no government will survive” without fracking. Spieser said it was “inevitable” more Tory MPs would join his rearguard action and that “the split in the Conservative party will only grow as the anger goes up about energy price rises”.

At the other end of the split, there is Conservative Environment Network, who are pushing Number 10 to further embrace the green agenda. Tory MP and network member Mark Menzies said: “The government has made it clear that fracking can only take place where there is local consent. I know my constituents well and I can say now that there would be no local consent.

Instead of eyeing up shale gas as a short-term solution we need to focus on scaling up the cheapest energy sources available to us, wind and solar power, and make sure we are investing now in new UK nuclear generating capacity.”

There are also splits within cabinet about energy policy. Kwarteng wants to build new onshore wind farms across the UK, while other ministers are reluctant due to the concerns of local constituents.

Transport secretary Grant Shapps told Sky News he does not support a “vast increase” in onshore wind, because they are “something of an eyesore for communities”.

Energy strategy finally set for unveiling

Nevertheless, it appears the government has finally settled on an energy plan despite cabinet tensions, with the strategy set for publication today.

Emma Pinchbeck, chief executive of industry body EnergyUK, told City A.M it was important the government focused on “enabling and accelerating the actual delivery of projects” rather than merely outlining ambitious targets.

This includes tackling delays from the planning system and improving the National Grid’s infrastructure.

While she believed the quicker the UK expands domestic renewables, “the quicker we can reduce the effect of volatile international gas prices on customer bills”, Pinchbeck recognised it was unlikely any new offshore wind projects will be built “fast enough to make a difference over the next few months.”

Energy bills have soared to £2,000 per year this month, with a further price hike expected this winter.

She concluded: “Government needs to look again at the existing support package for customers, given projections of further bill rises later this year.”  

This reflects the central problem for the government – which is that no matter how enthused Johnson is about the strategy, its dividends will only be reaped in the long-term, while the current crisis escalates.