Energy Policy Announcement - What does this mean for net zero buildings?
The new Prime Minister has today (8 September 2022) made a series of announcements on energy policy, in response to the soaring rise in energy prices. The focus of the announcement is quite rightly on helping people with their energy bills through the current energy crisis. The announcement also includes new commitments on energy supply and on reviewing how the UK achieves its net zero targets.
What is in the announcement?
The key point is that energy prices will be capped through a new Energy Price Guarantee which limits the price suppliers can charge for units of gas. This means a typical household should pay no more than £2,500 a year on energy bills from 1 October 2022. The Guarantee will last for two years and apply across the UK.
Similar support will be made available to businesses, who will see their energy costs capped at the same rate. However, this will only last for six months, after which support is likely to be targeted at certain industries and sectors.
The new Prime Minister spoke about the Government’s ambition to make the UK a net exporter of energy by 2040 by issuing new oil and gas licences, expanding nuclear generation, permitting fracking and accelerating renewables.
The Prime Minister also announced a review to ensure that the target to reach net zero by 2050 is delivered in a way that is “pro-business and pro-growth".
What isn’t in the announcement?
As expected, the focus was on supply-side policies to help address energy costs, through increasing energy supply. There was no mention of policies to reduce demand and nothing on home insulation or on support for retrofitting. The only reference to energy efficiency was in relation to business, where the Prime Minister stated that “companies with the wherewithal need to be looking for ways they can improve energy efficiency and increase direct energy generation”.
What does this mean for the sector?
The support for consumers and for businesses is very welcome and will help our tenants and residents.
The measures are likely to be hugely expensive, with estimates of up to £150bn. The new Chancellor will set out the expected costs of the energy package in a fiscal statement later this month. No new taxes to fund these costs have been proposed and a windfall tax has been expressly ruled out. The Prime Minister, however, has claimed that this intervention will curb inflation by up to 5%.
The lack of focus on demand-side policies is disappointing and was commented on by members on both sides of the House during the debate on the statement. Improving the energy efficiency of our homes and buildings will be key both to bringing bills down and to achieving our net zero ambitions.
And on net zero, we will be looking to engage in the net zero review announced by the Prime Minister today. The review will be led by Chris Skidmore MP, who chairs the Net Zero Support Group of Conservative MPs and is supportive of meeting the Government’s net zero targets. However, the sector is already asking - what will the review mean for the Government’s existing Net Zero Strategy and for the Heat and Building Strategy?
