Weekly News Review - 13th February 2023
Grant Shapps appointed secretary of new energy and net zero department
Prime Minister Rishi Sunak has reshuffled his cabinet with the Department for Business, Energy and Industrial Strategy (BEIS) being replaced by the Department for Energy Security and Net Zero. The new department will be led by former Business Secretary Grant Shapps.
The government said: “The changes will ensure the right skills and teams are focussed on the Prime Minister’s five promises: to halve inflation, grow the economy, reduce debt, cut waiting lists and stop the boats. A new Department for Energy Security and Net Zero, has been tasked with securing our long-term energy supply, bringing down bills and halving inflation.”
Rishi Sunak said he wanted “the country to have greater energy security and independence because we can’t be held to ransom by hostile foreign countries”. During his Conservative leadership campaign last summer, Sunak promised to re-establish a separate department for energy.
Ana Musat, Director of Policy at RenewableUK, said: “A Department for Energy Security and Net Zero can provide the clear focus we need on securing investment in renewables to cut energy costs and grow our economy. Global competition for clean tech supply chains is intensifying and we have a long way to go in our transition to net zero and industry wants to work with ministers to respond to this challenge.”
“Ministers and officials in the new Department have big decisions that need to be taken very soon if we’re to grow renewables fast enough, so industry will be pushing for the Spring Budget and upcoming Contracts for Difference round to boost the UK’s attractiveness for investment.”
However, opposition parties have raised concerns about the cost of the government reshuffle saying it would cost taxpayers millions of pounds. Ed Miliband, shadow climate and net zero secretary, said: “rearranging of deckchairs on the sinking Titanic of failed Conservative energy policy will not rescue the country”.
BP scales back climate targets despite record annual profits
Energy company BP has announced that its annual profits for 2022 have more than doubled to a record $28bn (£23bn). This follows rival energy giant Shell reporting record annual profits of $40bn last week. Following the massive rise in profits BP announced that it would be scaling back its plans to reduce oil and gas production by 2030.
BP were one of the first oil and gas companies to set ambitious climate targets with the aim of reaching net zero emissions by 2050. To meet this target they had aimed to lower emissions by 35-40% by the end of the decade, compared to 2019 levels. However, the announcement on Tuesday reduced this figure to a 20-30% reduction.
Secretary-general of the UN, Antonio Guterres, was critical of the fossil fuel industry during a speech on Monday. He said: “If you cannot set a credible course for net-zero [emissions], with 2025 and 2030 targets covering all your operations, you should not be in business. Your core product is our core problem. We need a renewables revolution, not a self-destructive fossil fuel resurgence.”
The rationale behind the decision to lower its emissions target was the need to maintain investment in oil and gas to meet current demands. Chief executive, Bernard Looney, said: “We need continuing near-term investment into today’s energy system – which depends on oil and gas – to meet today’s demands and to make sure the transition is an orderly one.” As well as announcing record profits, BP increased its pay-out to shareholders by 10%.
Climate campaign group Greenpeace said: ““BP is yet another fossil fuel giant mining gold out of the vast suffering caused by the climate and energy crisis. What’s worse, their green plans seem to have been strongly undermined by pressure from investors and governments to make even more dirty money out of oil and gas. This is precisely why we need governments to intervene to change the rules.”
Chancellor Jeremy Hunt rules out extra energy bill support
Chancellor Jeremy Hunt has said it is unlikely that households will get extra support with energy bills from April. Currently, a typical household bill is capped at £2,500 a year under the government’s Energy Price Guarantee. However, this figure is set to increase to £3,000 a year from April after the level of support was decreased.
Energy Consultancy Cornwall Insight has predicted that Ofgem’s energy price cap will have fallen from the current level of £4,279 to £3,208 in April and then further decrease to around £2,200 in July. This level of reduction would mean that from July household energy bills would again be determined by Ofgem’s price cap with the government’s Energy Price Guarantee becoming largely redundant.
Since the start of the year wind generation has averaged over 10GW which has reduced the need for gas-fired power generation. Above seasonal average temperatures and high gas storage levels across Europe as well as the return of French nuclear power have also helped to subdue wholesale gas prices.
The predicted fall in prices from July would help to lower the cost of the scheme to UK taxpayers. The estimated cost of the scheme is now expected to be less than £37bn which is significantly lower than initial estimate of between £72bn and £140bn. This has led to calls for the government to maintain the level of the Energy Price Guarantee until July.
Martin Lewis, founder of Money Saving Expert, has written to the chancellor, warning him an increase in the price cap would mean another 1.7 million people will enter fuel poverty, taking the total to 8.4 million. Mr Lewis said that allowing the bill increase would be a “national act of harm”.
Mr Hunt said: “We always look at what else we can do. But we also have to be responsible with public finances, because if we’re not, we’ll just see interest rates go up, and people will face a different kind of cost, and that’s why we have to get that balance right.”
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