Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
Environment
Toby Helm and Fiona Harvey

Top UK energy firms to warn Rishi Sunak: ‘Don’t back off green agenda’

Former Cop26 president Alok Sharma wants to reform planning rules to allow more onshore wind turbines such as the Causeymire windfarm in Caithness
Former Cop26 president Alok Sharma wants to reform planning rules to allow more onshore wind turbines such as the Causeymire windfarm in Caithness. Photograph: Doug Houghton/Alamy

More than 100 of the UK’s biggest energy companies will tell Rishi Sunak this week not to back off the green agenda after a report by the Office for Budget Responsibility (OBR) warned of catastrophic effects on the economy of continued overreliance on gas.

The energy sector is becoming so alarmed at what it sees as the Sunak government’s mixed messages on switching to more renewable energy that big UK companies are ready to go public with a letter to Downing Street within days.

Among their main fears are that investment in green industries will go abroad, to the EU and the US, and that the Tory party now appears more interested in using climate issues to promote a culture war with Labour than it is in tacking the climate emergency and seizing the economic opportunities it presents.

On Saturday night, two of the most prominent “green” Tories – former ministers Alok Sharma and Chris Skidmore – said the OBR’s findings showed that failure to embrace fully the net zero agenda would not only lead to an environmental crisis, but also severe economic consequences for the UK.

Speaking to the Observer, Sharma, the former president of Cop26, said it was time for the government to stop dithering and reform planning rules to allow more onshore windfarms. “The OBR report reinforces the economic case to move much faster on deployment of renewables in our energy system, which will ultimately help to bring down household energy bills and protect us from future fossil fuel price shocks,” Sharma said.

“One quick win to unlock green energy investment would be for the government to stop prevaricating and reform the planning system now to allow for more onshore wind to be built, which is one of the cheapest forms of energy available.”

In its latest report on fiscal risks to the economy, the OBR said the UK remained one of the “most gas-dependent economies in Europe”. It added that about £327bn of investment would be needed to reach the target of net zero by 2050, but noted that the government had so far only committed the equivalent of £22.5bn.

Richard Hughes, the OBR’s chairman said: “This has left us particularly exposed to changes in wholesale gas prices and has already brought with it considerable fiscal cost.”

The report said that if the UK failed to reduce its reliance on expensive gas “these shocks could cost the exchequer between 2% and 3% of GDP per year. Taking account of additional debt interest costs and the impact on economic activity, such recurring gas price spikes would add about 13% of GDP to public debt by 2050-51. This is about twice as much as the 6% of GDP central estimate for the total cost of public investment to complete the transition to net zero by the middle of the century.”

It added: “Until the UK reduces its dependence on gas, the country is likely to remain heavily reliant on gas imports from abroad, given declining North Sea reserves. In the event of further gas price spikes similar to the scenario covered at the end of this chapter, the UK, as a large net importer of gas, would see further significant negative terms of trade shocks in the future. Households reliant on gas for both heating and electricity would be among the worst affected.”

Former Tory energy minister Skidmore, who led an independent review of net zero for the government, said the OBR report was a “landmark intervention” that underlined the “devastating reality that to follow a ‘not zero’ path would lead not only to further environmental crisis but a future economic crisis also”.

Skidmore added that the dangers had been spelled out in his report. It was now “imperative” that the chancellor, Jeremy Hunt, used the autumn statement to heed the warnings.

Sunak and the energy secretary, Grant Shapps, held an “energy security day” in March, publishing thousands of pages on the government’s green strategies.

But the policy measures contained little to boost renewable energy, with the centrepiece pledge being an investment in carbon capture and storage, a controversial technology that the head of the world’s climate science body, Hoesung Lee, described as “no free lunch”.

Sunak appears to have performed a U-turn on a pledge to relax the planning laws to allow for the construction of onshore wind turbines. The Guardian has revealed that fewer onshore wind turbines have been built in England this year than in Ukraine.

Shapps has also come under fire for attempting to ignite a culture war over the climate, calling Labour “the political wing of Just Stop Oil” and vowing to press ahead with new licences in the North Sea, despite evidence that new oil and gas fields will do little for the UKs energy security.

The UK’s own Climate Change Committee recently delivered a withering verdict on the lack of progress on the UK’s future plans to hit net zero emissions.

Other leading Tories, including former prime minister Theresa May, who legislated for net zero during her last weeks in office, have also said that Sunak’s government has “been slow to act in the face of intense competition from abroad … where the UK once led, we are now falling behind”.

Simon Cran-McGreehin, head of analysis at the Energy and Climate Intelligence Unit, said the OBR analysis was “highly significant”:“This paints a picture of starkly different futures. In one future, if we remain, as the OBR calls us, one of the most gas-dependent economies in Europe, households and businesses will carry on burning money on fossil fuels, including in sudden price shocks, and increasingly to overseas producers and governments as the UK North Sea continues its terminal decline. In another future, we could spend less on fuels and more on capital investments in energy efficiency and clean energy that support jobs and increase our energy security.”

Tory MP and chair of the House of Commons environmental audit committee Philip Dunne said the government needed to “get on with the transition”.

“It is critical to use everything in our toolbox: from solar farms to onshore wind, tidal to floating offshore wind. The government must double down on efforts and meet its ambitions for renewable energy to power our economy and to electrify heat for buildings.”

The shadow climate change secretary, Ed Miliband, said British businesses were calling out Sunak and the Conservatives on the climate crisis “because they know that this failure is an act of national economic self-sabotage”.

Miliband said the OBR had been “clear that by locking Britain into expensive and unstable fossil fuels, the Tories risk imposing the spiralling costs of future energy shocks and the climate crisis on the British people”.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.