Weekly News Review - 9th December 2022
Onshore windfarm ban to be lifted after government U-turn
Rishi Sunak has pledged to relax rules on building onshore windfarms in England in an attempt to prevent a rebellion from Conservative MPs. Former cabinet minister Simon Clarke had tabled an amendment signed by over 30 Conservative MPs to end the de facto ban introduced by David Cameron in 2015. Among those to have signed the amendment were former prime ministers Liz Truss and Boris Johnson.
Onshore wind is now seen as the cheapest form of electricity generation following the rise in gas prices over the past year. It is also far quicker to build windfarms onshore than offshore. However, since Cameron’s change in planning laws it has become much more difficult and time consuming to obtain planning permission.
Following Russia’s invasion of Ukraine there has been a greater urgency to reduce gas imports and improve energy security. Many MPs are now realising that onshore wind offers the most cost effective way to reduce energy bills whilst also helping to meet the UK’s net zero obligations.
Tuesday’s U-turn is the second in two days following Sunak backing down on compulsory housebuilding targets in the Levelling Up Bill on Monday. This has led to doubts within parliament over Sunak’s leadership qualities, given his tendency to give in to pressure from Tory backbenchers. Sunak had promised to keep the onshore wind ban in place during his unsuccessful summer campaign to replace Boris Johnson as Tory leader.
Former minister Simon Clarke, said the concessions offered by the government were a “really sensible package”. However, the amended rules would still require local approval for new wind farms. The exact method of measuring local opinion will be part of a wider consultation which is due to be completed by next April.
Labour believes that Clarke’s proposals were still too restrictive. Lisa Nandy, the shadow levelling-up secretary, said: “We will need to see the detail, but if it is a fudge that leaves in place a very restrictive system for onshore wind – the cheapest, cleanest form of power – it would continue to deny Britain lower energy bills and improved energy security during an energy crisis.”
Major economies cap Russian oil at $60 a barrel
A $60 per barrel price cap on Russian oil has been implemented by G7 countries and some allies on Monday. The price cap is intended to “prevent Russia from profiting from its war of aggression against Ukraine”. The cap will stop all G7 and EU oil tankers, insurance companies and credit institutions from shipping Russian oil sold for more than $60 a barrel.
The decision by G7 countries to cap Russian oil prices was supported by the US with Treasury secretary Janet Yellen saying it would “help us achieve our goal of restricting Putin’s primary source of revenue for his illegal war in Ukraine while simultaneously preserving the stability of global energy supplies.”
However, Russia has rejected the price cap saying that it would not sell its oil under the cap. Russia’s Deputy Prime Minister Alexander Novak said Russia would rather cut production than supply oil under the price cap and said the cap may affect other producers.
The price cap was introduced the day after OPEC+ announced that it would stick to its policy of reducing output to support global prices. OPEC+, which includes Russia and Saudi Arabia, agreed in October to cut output by 2 million barrels per day from November until the end of 2023.
Following the implementation of the cap and the announcement from OPEC+, Brent crude oil had increased by almost 2% to $87.25 a barrel on Monday morning. Jorge Leon, senior vice-president at Norwegian energy consultancy Rystad Energy, said: “Russia has been very clear that they will not sell crude to anybody signing up to the price cap.”
“So probably what’s going to happen is that we will see some disruptions in the coming months and therefore probably oil prices are going to start increasing again in the coming weeks.”
UK and US announce new energy partnership
The UK and US will work together to increase energy security and drive down prices, as part of a new energy partnership. The deal announced on Wednesday will also include collaborations on decarbonising the aerospace industry, boosting the electric vehicle market and developing energy efficient appliances.
Russia’s war in Ukraine has created a spike in European energy prices over the past few months. To help deal with the resulting rise in the cost of living, the new UK-US Joint Action Group will work to ensure the market delivers sustained increases in the supply of Liquefied Natural Gas (LNG) to UK terminals from the US and will collaborate on energy efficiency measures.
As part of the deal, the US will aim to export at least 9-10bn cubic metres (bcm) of LNG to the UK in 2023. However, questions have been raised about how much this will increase UK gas imports. The deal is said to be doubling US LNG exports compared to 2021 levels, which stood at 3.9bcm. But over the past 12 months the US has exported 9.7bcm of LNG to the UK.
Biden and Sunak issued a joint statement, saying: “During this global energy crisis, brought on by Russia’s illegal invasion of Ukraine, it is more important than ever for allied countries to deepen their cooperation to ensure resilient international systems which reflect our shared values.
“Working with our allies, the United States and United Kingdom commit to intensify our collaboration to support international energy security, affordability, and sustainability, as Europe reduces its dependence on Russian energy.”
The announcement comes a few days after UK gas exports to Europe hit a six year high. According to data from Elexon, the flow of natural gas through the UK’s interconnector pipeline to Belgium were at the highest levels since 2016 on Sunday and Monday. The continued import of gas from the UK over the past few months has allowed many EU countries to reach 95% storage levels before the start of winter.
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