Reaching net zero at a faster rate has never been more important
13 August 2021
Ian Preston, CSE's Head of Household Energy, reflects on a significant week for the UK energy sector and tells us how a transition away from gas and an increased effort to insulate homes will help households now and in future...
Last week, Ofgem, the UK’s energy regulator, announced the biggest increase in energy bill costs in a decade. At a time when millions of people are struggling financially due to the pandemic, many groups, CSE included, hit out at the effect on fuel poverty and people in vulnerable circumstances. Meanwhile, the media generally focused on Ofgem as the bad guy. But what’s the real reason behind these price increases and what could this mean for the UK’s net zero targets?
The energy bill price hike is largely driven by gas wholesale prices which, when you dig into it, ring a fair amount of energy security alarm bells. Once lockdown restrictions eased, the demand from China and India for oil and gas rose significantly. Russia has subsequently met this demand whilst reducing gas flows to Europe, making it harder for European nations to refill depleted storage sites after winter.
The UK no longer has any long-term gas storage and has almost fully phased out electricity generation from coal. According to energy consultancy Wood Mackenzie, as we head to 2030 the UK’s demand for imported gas will rise 1.5 times, so it’s likely we’ll see high energy prices and increasing volatility over the next decade.
Stuck on gas
This brings challenges because the UK energy system, including infrastructure, suppliers and jobs, is built around gas. The UK currently has 22m gas boilers – including in the vast majority of British homes – and these make a significant contribution to carbon emissions.
The International Energy Agency (IEA) estimates that, globally, around half of all energy consumption is used for providing heat, mainly for homes and industry. In the UK, energy used for domestic heating and hot water accounts for around 15% of national greenhouse gas emissions.
How we decarbonise our heat and move away from gas is one of the biggest challenges facing the UK and is not being tackled fast enough through policy, industry or consumer awareness. Long-term gas prices and the recent Intergovernmental Panel on Climate Change report on the impacts of climate change should surely kick start the Government into further urgent action to accelerate progress towards net zero.
Transition to net zero
The scale of change required to end reliance on gas is significant. Our systems and patterns of consumer and supply chain behaviour have been dedicated to gas since the 1970s, so the transition away will be challenging but by no means impossible. We need urgent investment in home and building insulation to ensure we treat fabric first, reducing the demand for heat. Once we’ve done this, we can deliver low carbon heat via heat pumps or, in dense urban environments, heat networks generating heat from a low carbon source.
If we act now and do the work needed to engage the supply chain, retrain skilled tradespeople and generate new jobs through apprentices and training schemes, then we may be able to reach our net zero ambitions. The Government should also be prioritising insulating homes of those in fuel poverty to reduce their heating costs and supporting them to contribute to the country’s carbon targets, not via their poverty, but through their use of low carbon heating.
Instead, the way things stand currently will see the energy advice sector facing a tsunami of demand from people needing support once furlough ends, benefits go down and bills go up. This price increase on energy bills is hitting at the worst possible time, just before winter, when millions of people are already struggling to pay their bills, winter approaches and people are spending more time at home.