UK MPs propose bold policy wishlist for super-charging the energy transition

The report covers energy efficiency, the oil and gas sector and renewables

The Environmental Audit Committee (EAC) of MPs has today (5 January) published a new report assessing the short-term interventions that could be made to accelerate the transition away from fossil fuel production and use in the UK, in a manner that also contributes to energy security efforts and has positive social outcomes.

The report has been described by climate justice organisating group Uplift as a “clear rebuke of the Government’s outdated and costly approach to energy efficiency”, timed to coincide with the end of Parliament’s winter recess next week.

First and foremost, the EAC is calling for a national mobilisation to improve the energy efficiency of buildings.

The report gives the Government credit for shielding homes and businesses from rising energy prices through the Energy Bills Guarantee and Energy Bills Relief Scheme respectively. The creation of an Energy Efficiency Taskforce is also welcomed.

Nonetheless, the Government’s failure to bring forward a national home retrofit scheme – and its decision to delay the allocation of further energy efficiency spending to 2025 – is criticised by the EAC. The Committee’s report outlines how energy efficiency installations in the UK have fallen sharply in the UK over the past decade, from 2.3 million in 2012 to less than 100,000 in 2021. This is partially attributed to a series of failed policy interventions including the Green Deal and Green Homes Grant.

The Committee on Climate Change’s (CCC) most recent annual progress report to Parliament on net-zero concluded that building energy efficiency is one of the two areas, along with agriculture, where progress has been the slowest. This report concluded that the UK had scant hopes of ensuring that all homes meet Energy Performance Certificate (EPC) grade ‘C’ or higher by 2035, as the Government had committed.

“There is a shocking gap in policy for better-insulated homes,” the CCC said in a statement. “The Government promised significant public spending in 2019 and committed to new policies last year, neither has yet occurred… the average annual energy bill for UK households is around £40 higher than if insulation rates from pre-2012 had continued for the last decade.”

The EAC’s report echoes this concern. It recommends that the Government targets at least one million energy efficiency installations in UK homes annually by 2025, increasing to 2.5 million homes annually by 2030. Funding for this work could be derived, in part, from the Energy Profits Levy, the EAC is recommending.

Chancellor Jeremy Hunt confirmed last November that the levy, which applies to oil and gas producers, was increasing from 25% to 35% from 1 January 2023. At the same time, a 45% levy was brought in for all electricity generators – including renewable generators.

“To reduce the UK’s demand for fossil fuels, we must stop consuming more than we need. We must fix our leaky housing stock, which is a major contributor to greenhouse gas emissions, and wastes our constituents’ hard-earned cash: we must make homes warmer and retain heat for longer,” said EAC chairman Philip Dunne MP.

“To help fund this, the Government should funnel some of the revenue from the new Energy Profits Levy to crack on with the task at the earliest opportunity.”

Energy generation mix

As well as promoting a ‘war effort’ to improve energy efficiency, the EAC is proposing bold measures to decarbonise and downsize the oil and gas sector while scaling up a broader mix of renewable technologies.

On fossil fuels, the EAC has heard from environmental researchers and campaigners who have questioned whether any oil and gas expansion can be compatible with the UK’s long-term climate goals and global efforts to limit the temperature increase from pre-industrual times to 1.5C, in line with the Paris Agreement.

A report published by the International Energy Agency (IEA) in 2021 concluded that any new fossil fuel extraction capacity, beyond that agreed by the end of the year, would jeapordise the transition.

On the other hand, the EAC has heard from industry representatives and other researchers who recognise that, while fossil fuels will generate a declining proportion of power in the UK and their use for road vehicles will decline, they will remain part of the energy mix for decades to come. Some argue that a brief increase in production in the UK now would not derail climate targets. This has been the line of argument taken by Liz Truss and now Rishi Sunak, who both selected Graham Stuart as climate minister. A major oil and gas licencing round, the UK’s 33^rd, is being held this season and is due to close next week.

The EAC’s conclusion is that the Government should set a clear date for ending future licencing rounds for oil and gas fields.

In the meantime, the Committee is recommending new measures to ensure that the oil and gas sector cuts its operational emissions, including methane emissions.

“The upstream emissions reduction targets currently set under the North Sea Transition Deal are not stretching enough,” the report states. “The Committee is calling on the North Sea Transition Authority (NSTA) to insist on the electrification of all new oil and gas projects in the 33^rd licencing round and is also calling for routine flaring to be banned outright. NSTA should publish a league table of the best and worst performing companies, so that progress can be clearly monitored.”

The report recognises that fossil fuels will need to be replaced by clean electricity in sectors such as road transport and heat. This will necessitate an increase in renewable energy generation.

The EAC welcomes the UK Government’s decision to increase its 2030 offshore wind energy capacity target to 50GW in the Energy Security Strategy. It also welcomes plans to make onshore wind development easier in places where there is strong local support.

Yet, like many other organisations have done over the years, it accuses the UK Government of taking too narrow a view of renewable energy development, prioritising offshore wind at the expense of onshore wind and tidal energy. The EAC argues that the Government’s updated Net-Zero Strategy, due by the end of March, could be a credible vehicle for introducing new renewables deployment targets for onshore wind, tidal and rooftop solar. The Committee also floats an opportunity to change the Future Homes Standard to mandate developers to fit solar panels as standard on new builds.

A ‘no-brainer’

Responding to the report, the Energy and Climate Intelligence Unit’s head of energy Jess Ralson called many of the recommendations “no-brainers” for driving down energy costs and related emissions.

She said: “With the price of fossil fuels the main driver of the cost of living crisis, many of these recommendations are no-brainers – cheap wind and solar power are helping to limit bill increases now so a rapid roll-out of more can only be positive. Reducing energy waste from homes by upgrading insulation is popular and sensible, and demand for moving away from gas boilers is growing as people see their gas bills rise while alternative heating systems costs fall.”

Ralston highlighted the ECIU’s own report, published this week, revealing that UK homes are paying £1.750 more each year for energy and road fuel bills than they would have with bold green policy interventions.

Uplift’s public affairs manager Gwen Buck added: “The Committee is right in calling for ambitious action on energy efficiency now, not in three winters time, starting with using excess oil and gas profits to upgrade Britain’s cold and draughty houses.

“Calling out the oil and gas industry’s foot-dragging over emissions is also long overdue. Banning flaring and toughening emission reduction targets are reasonable, common sense asks that the government should adopt, given the worsening impacts of the climate crisis.

“It is welcome that the committee has called for an end date for new oil and gas licensing, but the government must go further and set an end date for all North Sea production, not just licences. The committee received powerful evidence from experts, like the International Energy Agency, who firmly said that any new oil and gas supply creates a ‘clear risk’ of breaching safe climate limits.

“What’s heartening as we start this new year is the clear message from Parliament that the only route to a safe and secure energy supply that’s in our control is to speed up the transition away from oil and gas.”