What should the government do to change the energy system and protect UK households from another Energy Price Crisis?
As explained previously, the main factor driving the Energy Price Crisis is rocketing global gas prices.
However, whilst the UK can’t solve this global crisis on its own, there are loads of things the government could be doing to change our energy sector in order to protect ordinary people from being affected by such price spikes.
Divest away from gas towards renewables
The first and most obvious way to ensure we protect ourselves from global gas price spikes is to simply stop being so reliant on gas.
As explained earlier, the UK is currently one of the most gas-reliant countries in the world – and this means that Brits will see much larger price rises than other comparable countries.
Electricity bills in countries such as Iceland, whose grid is powered almost entirely by renewable energy, have been almost entirely unaffected by soaring global gas prices – and citizens in Iceland continue to enjoy some of the lowest electricity prices in the world.
Yet, whilst the UK has increased the percentage of energy it produces from renewable sources to around 40% – up from around 10% a decade ago – the government could easily go far further in speeding up the transition.
In addition, the government could also increase investment in new renewable energy storage technologies – to ensure that when the wind stops blowing or the sun stops shining, we don’t have to fall back on dirty sources such as gas to cover the shortfall.
And, in terms of reducing reliance on gas for domestic central heating, the government could do much more, including:
- Speeding up the phasing out of gas boilers
- Directly funding carbon neutral gas boiler replacements such as heat pumps
The UK also has some of the oldest housing stock in Europe, with some of the lowest energy efficiency. To solve this, the government could prioritise measures – especially for those on low incomes and in social housing – to fund retrofitting and the installation of insulation and/or double glazing.
And, as for new build housing, the government could easily legislate to ensure all new homes are carbon neutral.
Run energy in the interests of people, not profit
And then there’s the huge problem of who controls our energy sector.
Energy is an essential utility, and we all need it to live. Yet, since the 1990s, the UK government has allowed our energy sector to be run by private companies purely to make profits for their shareholders – rather than in the interests of British people.
As a result, our entire energy network – from the power stations which generate it, to the distribution networks that transport it, to the energy suppliers who sell it – are now all owned and operated by a huge range of private companies, investors, private equity firms, wealthy individuals, and even foreign governments.
Analysis has found that UK energy bills are now around 10-20% more expensive because of privatisation, whilst electricity bills have increased in real terms by around 67% alone since the turn of the century.
Moreover, research analysing the last 30 years also shows that energy bills in countries whose systems are publicly run are typically around 20-30% lower than bills in privately run systems.
Around 60% of Brits think energy should be in public hands, with just 13% of people opposed – and, when you really dig into the details, it’s extremely easy to see why.
Under the UK’s privatised energy system, when profits are plentiful, private Energy Suppliers gladly lap them up. Yet, when times get hard, the government routinely hands these firms public money until they start raking in profit from our bills again.
In addition, a large proportion of the UK’s energy system actually is run by a government – but not our own!
EDF, a state-run French firm, owns and operates all eight of the UK’s operational nuclear power stations, as well as 37 UK onshore wind farms. These activities regularly net the firm 100s of millions of pounds – money that is generated from us through our ever-increasing energy bills, and which ultimately only benefits French taxpayers.
Whilst National Grid PLC, the private firm who own and maintain the national energy transmission infrastructure in England and Wales, as well as the national gas transmission network across Great Britain, are also making huge profits – paying out £1.4 billion in dividends to shareholders just last year.
Whilst research has found that the UK’s regional electricity distribution networks – private firms that own and operate the infrastructure which transmit energy from the national grid into our households – are making the biggest profit margins of any sector in the entire country, paying out a total of £6 billion in dividends to shareholders over the last 5 years.
If our energy system was brought back into public hands, these huge sums of money could either be taken off our our bills to begin with, or invested back into the system to make our bills even cheaper in the long run – not simply pocketed by wealthy shareholders.
In addition, a democratically-run energy sector would also allow the UK government to directly intervene in order to ensure energy bills stayed low in the event of any future energy crisis – much like the French government, who control the state-run energy firm EDF, have just done for their citizens.