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Following the announcement of the government’s energy price cap, Edgetech Managing Director Chris Alderson argues that, while welcome, this latest policy makes a major error in ignoring energy efficiency.
It says everything about the tumultuous times we live in that the first version of this article started by cautiously welcoming one new Prime Minister, and I’ve now had to rewrite it to cautiously welcome another.
Liz Truss will go down as the shortest-serving – and quite possibly one of the worst – Prime Ministers in British history.
Which is unfortunate for her, because she came into office saying she’d take immediate action on Britain’s worsening energy crisis, and she did.
At the start of September, Truss revealed plans to freeze energy prices.
From October the 1st, she pledged that the government would cap annual household energy bills at £2,500 for two years.
She also committed to cutting business energy bills by more than half for the next six months.
Then, as we all know, she announced a highly controversial budget, triggered an economic crisis, and was forced to resign.
Within a week, Rishi Sunak was Prime Minister. At the time of writing, it appears that the substance of the energy cap policy will remain the same, except that it will now only last six months rather than two years.
Despite the dramatically shortened timespan, the measures are still welcome.
They reduce the likelihood that Britain will enter recession – or if, like some economists believe, we’re in recession already, they increase the chances that it will be a mild one.
They’ll also provide relief for millions of households and business owners around the country, who were previously facing a very tough winter.
However, it’s also important to stress that these measures aren’t a magic bullet solution.
Rocketing energy prices had already seen the energy cap rise by 54%, taking it from £1,277 a year to £1,971 – and causing more than 25 energy suppliers to go bust.
That means there are thousands of families and businesses struggling under the weight of bills that are more than double what they were at the start of the year.
It will still be a difficult winter for many – and it remains to be seen what support will be available when the policy expires in 2023.
But what about energy efficiency?
Britain has the least energy efficient homes in Europe. It’s mostly soaring fuel prices that’s caused the cost of living crisis, but this winter, our draughty homes will certainly exacerbate it.
The measures the government have announced so far will do nothing about that. That’s not just a huge missed opportunity as far as cost of living is concerned – it’s another failure to grasp just how critical energy efficiency will be in our collective attempts to reach net zero.
The UK’s Climate Change Committee has already commented on what it sees as a “shocking gap in policy for better insulated homes”, particularly criticising the fact that “there are no policies for energy-efficiency in owner-occupied households which are not fuel poor”.
According to Bankers for Net Zero and the Green Finance Institute, 29 million UK properties need retrofitting to make net zero a reality – something which would require Britain’s retrofit sector to increase by at least ten times.
This is a challenge that, for the moment at least, the government seems totally unprepared for.
The Climate Change Committee believes we’re currently on track to cut just 40% of the carbon we’d need to eradicate to meet net zero.
In recent months, the government hasn’t exactly been crystal clear on its commitment to the environment going forward either.
Liz Truss intended to reverse the ban on fracking, which releases large amounts of methane – a greenhouse gas with 80 times the warming power of carbon dioxide.
She also wanted to grant licenses for new oil and gas drilling projects in the North Sea.
At the time of writing – that phrase is more important than ever these days – Sunak has said he’ll keep the ban on fracking, but has yet to comment on oil and gas.
I don’t expect the government will turn its back on the net zero agenda entirely. Even if it wanted to, I don’t think the public would allow it.
But if ministers follow through on their pledges to re-embrace fossil fuels, that only increases the role energy efficiency will have to play if we have any chance of achieving net zero.
Until the government commits to a radical, wide-ranging home retrofitting programme, I suspect progress towards that goal will be far too slow.
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