Campaign Reply: Energy Prices and Net Zero

The Net Zero Strategy sets out the Government’s long-term plan to cut emissions by 2050, including how a secure, home-grown energy sector will end the UK's dependency on foreign gas, and will protect consumers and businesses from volatile price hikes.

The wholesale price of gas and energy has increased in the UK and Europe due to various factors, including an increase in demand following the end of lockdowns in various countries and in light of Russia’s unjustified invasion of Ukraine. High global gas prices are hiking up bills, and the Government has been clear that it’s right we move away from dependence on Russian gas and increase our self-reliance in our energy security.

Learning from the mistakes of the past, the Government is taking action to accelerate domestic energy supply, increase our energy resilience and to make the UK an energy exporter by 2040.

As outlined in the Energy Security Strategy, Britain's focus will be to accelerate the deployment of wind, nuclear, solar and hydrogen power, while supporting the production of domestic North Sea oil and gas in the nearer term - which could see 95 per cent of UK electricity by 2030 being low carbon. These measures will be central to weaning Britain off expensive fossil fuels, which are subject to uncontrollable and volatile prices, and will provide both cleaner and more affordable energy, and energy security.

While the UK is driving down demand for fossil fuels on the path to net zero, it is important to recognise that there will continue to be ongoing demand for oil and gas while we transition to low carbon energy. I am reassured, however, that producing gas in the UK has a lower carbon footprint than importing it from abroad, and that is why I welcome the continuation of support for oil and gas in the North Sea.

I am encouraged that in the recent revisions to the net zero strategy, the Government decided to go even further for households and investors by embracing new green industries. This includes: providing additional funding for Sizewell C and support for small modular nuclear reactors; promoting both offshore and onshore wind; and new funding for green technologies. This should contribute to increasing our domestic energy supply, while also forging a credible path to net zero that brings people with us.

Current inflation is being driven by rising energy costs, which in turn has put pressures on living costs. The Government has taken significant steps to help the lowest-income households through these extraordinary times: reducing the Universal Credit taper rate; increasing the National Living Wage; freezing fuel duty for the twelfth consecutive year; introducing an Energy Price Guarantee and extended the Household Support Fund by £1 billion, on top of the existing £1.5 billion of support.

More broadly, Ofgem is working to stabilise the market and to diversify our long-term sources of energy to protect customers from similar future price shocks. In addition, I welcome that consumer bills will be lower this decade than they otherwise would be as a result of the measures the Government has taken.

We need to protect ourselves from price spikes in the future by accelerating our move towards cleaner, cheaper, home-grown energy, and I am glad to see the Government is delivering on this.