A gap in policy?

Following the announcement of the government’s energy price cap, Edgetech’s managing director, Chris Alderson, questions whether this latest policy makes a major error by ignoring energy efficiency.

Britain, like much of Europe, is entering a worsening energy crisis. In order to address the impact this is having on the British public, Prime Minister Truss revealed plans to freeze energy prices.

From 1 October, the government would cap annual household energy bills at £2,500 for two years.
The government under Truss also committed to cutting business energy bills by more than half for the next six months.

Now Rishi Sunak has taken over as Prime Minister, the question arises: will these plans change? 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 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 have 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 current policy does not address this and does not account for how critical energy efficiency is to tackle the cost-of-living crisis and how important it will be for Britain’s long-term goal to reach net zero.

The UK’s Climate Change Committee has already commented on what it sees as a ‘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.

The return of fossil fuels?

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.

However, policy addressing Britain’s commitment to the environment and reaching net zero going forward is unclear.

Whilst there was discussion to reverse the ban on fracking, which releases large amounts of methane (a greenhouse gas with 80 times the warming power of carbon dioxide), the government has decided to keep the ban on fracking. However, there are questions surrounding the government’s plans for new oil and gas drilling projects in the North Sea.

If Britain does re-embrace fossil fuels, the role of energy efficiency will become more critical if we are to achieve net zero. However, without a wide-ranging home retrofitting programme, I suspect progress towards that goal will be very slow.