The Government should switch its focus from clean to cheaper power by the end of the decade, Sir Tony Blair’s think tank has said in the latest salvo in the energy debate.
A report from the Tony Blair Institute (TBI) has called on ministers to continue backing net zero, but re-prioritise the Government’s efforts to achieve clean power by 2030 towards growth and value for money.
After a row erupted earlier in the year when the former prime minister claimed the current climate approach was not working, and limiting fossil fuels in the short term was “doomed to fail”, the latest intervention from the Tony Blair Institute takes care to distance itself from anti-net zero rhetoric.
But coming ahead of announcements on the latest offshore wind contract auctions and the Government’s strategy for meeting emissions cuts targets, both expected next week, it is likely to fuel further debate about the direction of current energy policy.
In response to the paper, environmental groups called for efforts to remove the UK’s reliance on fossil gas which is behind much of the high energy costs.
Labour came to power pledging “clean power by 2030”, with almost all of Britain’s electricity coming from clean sources such as renewables and nuclear by the end of the decade, as part of efforts to secure energy supplies, curb bills and tackle climate change.
But the agenda has faced significant push-back from the Conservatives and Reform UK, who have pledged to ditch “expensive” net zero policies and the Climate Change Act under which targets to cut emissions to zero overall by 2050 are set, and maximise extraction of oil and gas from the North Sea.
The TBI paper says walking back the Climate Change Act or net zero targets “would amount to rolling back progress”.
But it warns that achieving clean power must be delivered in a way that is “cost-effective and commands public support”, and that pushing the system too quickly risks driving up costs and undermining confidence.
It calls for a strict cost cap for the next round of auctions for offshore wind contracts and the introduction of zonal pricing with different electricity prices in different parts of the country – which has already been ruled out by the Government.
The report also calls for efforts to cut red tape and more radical planning reform to fast-track projects, and to allow developers to build clean power schemes on a “first ready, first connected” basis.
The National Energy System Operator (Neso) should identify the most affordable balance of renewables, nuclear and flexible capacity, and carbon prices should be removed from gas to cut bills, it argues.
It also suggests energy efficiency schemes should support home batteries, as part of a suite of measures to help cut domestic bills.
The paper’s author, TBI’s energy policy adviser Tone Langengen, said: “Launched in the middle of the gas crisis and in a low-interest environment, clean power 2030 was right for its time, but circumstances have changed – the UK now needs more than a decarbonisation plan, it needs a full-spectrum energy strategy built on growth, resilience and abundant clean electricity.
“These are not problems of the current Government’s making, but they are problems the country must now solve.”
The Department for Energy Security and Net Zero (DESNZ) said it was delivering many of the policies the report calls for, but zonal pricing would not have been “fair” to customers or businesses.
A spokesperson for the DESNZ said: “This report rightly recognises that clean power is the right choice for this country.
“This Government’s clean power mission is exactly how we will deliver cheaper power and bring down bills for good.
“Our mission is relentlessly focused on delivering lower bills for the British people, to tackle the affordability crisis that has been driven by our dependence on fossil fuel markets.
“That’s why we have launched a golden age of new nuclear, consented a record amount of clean power, and welcomed the announcement of over £50 billion private investment into the UK – as our mission delivers economic growth and good jobs across our country.”
In response to the TBI paper, environmental think tanks were quick to point out the role of gas – which sets the price of electricity the majority of the time in the UK – in high energy bills since Russia’s invasion of Ukraine.
Ed Matthew, UK programme director for the independent climate change think tank E3G said: “The only solution to get off the gas price rollercoaster is to get off gas.
“Our research shows that it is possible for the Government to reach its 2030 clean power target whilst reducing electricity bills by more than £200.
“But that requires urgent action by government to implement cost cutting policies, including moving levies off electricity bills into the Exchequer,” which he urged Chancellor Rachel Reeves to do in the Budget.
Jess Ralston, energy analyst at the Energy and Climate Intelligence Unit (ECIU), said: The public may be more interested in their energy bills than what percentage of clean power the UK reaches in 2030, but renewables are already lowering wholesale power prices by around a quarter, or £25 per megawatt hour.
“A bumper couple of renewables auction rounds could increase this further by kicking less efficient, older gas plants off the system – which is good for energy security too as we’ll need to import less gas from abroad.”
And Greenpeace UK’s political campaigner, Angharad Hopkinson, said: “There’s no doubt that our dysfunctional electricity market is in need of urgent reform.
“But the TBI is unhelpfully stirring the pot with divisive ideas.”
The environmental charity called for gas plants to be moved into a strategic reserve to stop them setting electricity prices, Crown Estate seabed leasing costs for offshore wind to be slashed, cuts to VAT on energy and levies to be shifted to general taxation.
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