An extra £50 billion has been spent on gas by the UK since Russia invaded Ukraine, a new analysis suggests. Gas is used to produce around 40% of the country’s electricity as well as to heat 85% of British homes, which are among the least energy efficient in Europe.
Analysts at the Energy and Climate Intelligence Unit said the impact of the current crisis would have been less severe if the UK was further ahead with its net-zero policies of improving energy efficiency in homes, building more onshore wind and installing more heat pumps. Wholesale gas prices exploded after the invasion and have been in a volatile state ever since, with many British households now burdened with much higher bills.
The ECIU study estimates that the UK paid between £50-60 billion more for wholesale gas in 2022 than in a typical pre-pandemic year. Dr Simon Cran-McGreehin, the unit's head of analysis, said: “As the IMF has pointed out, the energy crisis hit UK households harder than those in other western European countries because as a nation we’re incredibly dependent on gas. The price of gas is largely set by international markets, so the only way to protect yourself is to use less.
“The onshore wind ban has been one of the barriers to this. We’re also running behind places like Sweden, Poland and Estonia on installing electric heat pumps. As renewables and heat pumps proliferate, less imported gas is needed, which in turn benefits our balance of payments and energy security.”
ECIU’s analysis used data from the Department for Business, Energy and Industrial Strategy to estimate non-domestic gas costs.
While wholesale prices have fallen in recent weeks, consumer prices are still high because they are based on trades made last year at very high prices and are unlikely to come down soon because analysts are still wary of market volatility.
Alethea Warrington, energy campaigner at the charity Possible, said the cheapest and quickest way to reduce people’s energy bills outside of a windfall tax would be to change the planning laws around onshore wind. The Government is currently consulting on local support after lifting a 2015 ban on subsidies.
Ms Warrington described the Government’s reliance on gas as “stupid” and “unhelpful”, and said a lot of people support onshore wind and the need to achieve net-zero.
She said: “It’s frustrating that the Government is quite willing to give these huge tax breaks to companies that want to drill for more oil and gas but they’re not willing to let communities – which have already done the local outreach and got people on board – have proposals for projects that would be being beneficial to the local community. They’re not able to go ahead with them because they’re just sort of snuggled up in a planning system that’s not fit for purpose.”
Labour has said it would rip up the planning laws around onshore wind and shadow climate change secretary Ed Miliband has previously criticised the Government’s target of installing 600,000 heat pumps a year by 2028 as “way short of where they need to be”.
Heat pumps are an alternative to gas boilers and use a network of water pipes to channel heat from underground into homes. Octopus Energy CEO Greg Jackson said in an interview with the Telegraph last week that the company has designed a heat pump which can be installed for the same price as a gas boiler.
