In our latest round-up of the weekend papers Boris Johnson is to chair a meeting on how to increase the UK’s nuclear power output and the North Sea regulator plans to hold the first oil and gas licensing round since 2020.
Elsewhere several groups are calling on the chancellor to move environmental levies off household bills and into general taxation to help ease the pain of soaring gas prices.
PM to chair roundtable on boosting UK’s nuclear power output
Boris Johnson will chair a meeting on how to increase the UK’s nuclear power output on Monday, as he prepares to publish his energy security strategy this month amid soaring prices.
The prime minister will discuss domestic nuclear projects with leaders from the nuclear industry at a roundtable meeting at Downing Street, No 10 said.
Johnson is expected to publish the government’s energy security strategy later in March, against a backdrop of rocketing energy bills, which were already creating a cost of living crisis even before Moscow’s invasion of Ukraine led ministers to pledge to phase out Russian energy.
The UK generated less than half (43%) of its electricity from renewable sources in 2020, and gas-fired power plants still play a significant role, with Britain reliant on gas for heating as well as electricity. Nuclear power plants currently provide about a sixth of the UK’s electricity.
Johnson has previously announced that he intends to remove fossil fuels from UK electricity generation by 2035, and has also argued that the country should invest in more domestic nuclear and renewable energy in order to become more self-sufficient.
No 10 officials said topics expected to be discussed at the roundtable meeting include how government and industry can work together to remove barriers and progress future nuclear projects in the UK more quickly and cheaply. Downing Street added that nuclear power is a “safe, clean and reliable energy source”.
Last November, the government agreed to invest in a new generation of mini-nuclear reactors, being developed by engineering firm Rolls-Royce.
Ministers hope that these small modular reactors, or SMRs, will be quicker and cheaper to build than traditional large-scale nuclear reactors – such as the Hinkley Point C project – which pose considerable construction risks and are often beset by spiralling costs and delays.
Johnson told Conservative members at the party’s spring conference in Blackpool over the weekend that the government was going to place some “big bets on nuclear power”, including backing SMRs and larger projects. However, some environmental experts have raised concerns over how to safely dispose of nuclear waste after the decommissioning of nuclear power plants.
Labour has said it supports building more nuclear sites, and shadow chancellor Rachel Reeves called on Sunday for ministers to “get on with the investment in new nuclear”, as well as renewable energy.
The Guardian
UK looks to North Sea oil and gas in race to secure domestic energy supplies
The UK’s North Sea regulator plans to hold the first oil and gas licensing round since 2020 this year, as the country races to secure more domestic energy supplies in the wake of the Ukraine war.
Andy Samuel, chief executive of the Oil and Gas Authority, told the Financial Times the regulator was preparing licences that include existing discoveries, which would be “pretty much ready to go” if oil and gas companies would be willing to exploit them.
Issuing new licences to drill for oil and gas in UK waters will be highly controversial; climate campaigners argue that the North Sea fossil fuel industry should be wound down and investment prioritised in clean energy technologies.
But prime minister Boris Johnson hopes fossil fuel companies will be able to increase indigenous production as he prepares to publish an updated energy strategy later this month aimed at bolstering the UK’s domestic energy sources.
The UK, along with its European allies, is racing to phase out Russian oil and gas and reduce its exposure to highly volatile international oil and gas markets, which are forcing up domestic energy bills to record highs and exacerbating a cost of living crisis.
The OGA, which on Monday is changing its name to the North Sea Transition Authority (NSTA), has not been able to hold a licensing round since 2020, when the government undertook a review of whether its policies were compatible with climate objectives.
Ministers have since been drawing up a “climate compatibility checkpoint” against which they promised all future licensing rounds would be tested. The draft text for those checks was hastily rewritten last week to include clauses allowing the government to bypass environmental considerations in the event of urgent national security concerns.
When asked when he believed the regulator would be able to resume licensing, Samuel replied: “Certainly this year”.
“The team are getting ready some packages of licences that have discoveries that are pretty much ready to go,” he said.
Samuel insisted the content of the climate compatibility test, and whether energy security concerns should trump emissions targets, was a “policy matter” for the government.
But he insisted he did not believe the two worked “in opposition” given the UK’s dependence on overseas imports of oil and gas, which are often produced at a higher cost to the environment. Last year the UK met 40 per cent of its gas requirements from domestic supply.
“We know that our good developments have a lower carbon footprint and we need them,” Samuel said.
Climate groups and some academics have questioned Johnson’s courtship of fossil fuel producers given the North Sea is one of the most mature oil and gas basins in the world and is currently forecast to decline at an annual rate of 5-7 per cent. They have also pointed out it can take years after a reservoir is discovered to produce any oil or gas.
Samuel accepted the North Sea was a “declining basin” but he argued the regulator’s work to improve production efficiency since its establishment in 2015 had helped to slow the pace of decline.
Financial Times
Add levy to tax, not bills, says green energy industry
A coalition of green energy organisations and suppliers is calling on the chancellor to move environmental levies off household bills and into general taxation to help ease the pain of soaring gas prices.
Measures offered by the Treasury so far “do not go far enough to address a severe increase in energy bill costs” that will hit most households next week as the price cap on energy bills increases by 54 per cent to £1,971 a year, they say.
April 1 will be “a cliff edge for many households”, according to a letter to Rishi Sunak signed by suppliers including Octopus Energy, Ecotricity and Good Energy.
They add: “We know that many people are already having to make the devastating choice between heating and eating, and the energy price cap rise of nearly £700 will severely worsen the cost of living crisis.”
The letter was co-ordinated by the Association for Renewable Energy and Clean Technology and the Electrical Contractors’ Association, and has also been signed by groups such as the Energy Saving Trust.
Subsidies for wind and solar farms and the costs of energy efficiency programmes are currently levied on bills, accounting for most of the “policy costs” of £153 a year that households will pay from next month.
As well as calling for these costs to be moved to general taxation the groups want VAT on energy bills suspended, more targeted help to be offered to those most in need, and a new drive to encourage home insulation and domestic renewable generation.
Labour is also calling for VAT to be taken off energy bills, and instead funded by a windfall tax on North Sea oil and gas suppliers.
At the beginning of last month Sunak unveiled a £9 billion package of support for household energy bills including a £150 rebate on council tax bills for four fifths of households next month, and a £200 discount on all energy bills from October to be repaid over the following five years.
The Times
Boris Johnson frustrated with Rishi Sunak over ‘resistance’ to new nuclear power plants
Boris Johnson is privately frustrated with Rishi Sunak over the Chancellor’s apparent resistance to the Prime Minister’s push for a dramatic increase in the number of nuclear power plants in Britain, The Telegraph can disclose.
Government sources said Mr Sunak’s refusal to endorse the Prime Minister’s “big bet” on a radical expansion of the Government’s plans for nuclear power risked derailing a key element of the energy security strategy promised by Mr Johnson earlier this month.
Mr Johnson is understood to be frustrated that Mr Sunak appears reluctant to embrace a “dash to nuclear” that the Prime Minister believes is needed to shore up Britain’s energy supplies long-term in the face of a crisis fueled by Vladimir Putin’s invasion of Ukraine.
The Prime Minister is said to believe that the Treasury was at least partly responsible for scuppering earlier attempts to get nuclear energy into place, on account of its cost, and Mr Johnson urged the Chancellor to overcome resistance by officials.
Mr Johnson is due to meet nuclear power companies on Monday to discuss how quickly new plants could be rolled out.
The tension between Mr Johnson and his Chancellor comes days before Mr Sunak’s spring statement on Wednesday, when he is expected to unveil measures to address the cost of living crisis. The Chancellor’s aides have refused to share details of Mr Sunak’s announcements with their counterparts in No 10.
Government sources believe it is increasingly likely that Mr Sunak will need to raise the threshold at which National Insurance Contributions (NICs) are paid in order to counter some of the effects of the NICs increase due to take effect next month.
Ministers are split over how to respond to the crisis and, this weekend, senior Tories descended into open criticism of each other over the Government’s approach to the 2050 net zero target.
Lord Goldsmith, the environment minister, ridiculed Oliver Dowden after the Conservative chairman and Cabinet minister warned that the public wanted to see “less net zero dogma” and endorsed the Prime Minister’s nuclear ambitions.
Last year, Lord Goldsmith warned that nuclear was “the most expensive form of energy in the history of energy” – a criticism that Mr Johnson appeared to tackle head on last week. In an article for The Telegraph, the Prime Minister said: “So now is the time to make a series of big new bets on nuclear power. The 1997 Labour manifesto said there was ‘no economic case’ for more nuclear – even though nuclear is in fact safe, clean and reliable.
“It is time to reverse that historic mistake, with a strategy that includes small modular reactors as well as the larger power stations. It was the UK that first split the atom. It was the UK that had the world’s first civilian nuclear power plant. It is time we recovered our lead.”
On March 7, Mr Johnson said he would set out an energy supply strategy “in the days ahead” after Russia’s invasion of Ukraine pushed oil and gas prices to multi-year highs.
One government source suggested that Mr Sunak’s resistance to the Prime Minister’s nuclear plans was a significant factor behind the delay publishing the strategy – a claim denied by another source. The strategy is due to be published at the end of this week, or early next week.
Defending Mr Sunak, one government source said that Mr Johnson’s plans amounted to “high level ambitions”, adding: “Obviously you can’t sign off funding for a policy when you don’t have the detail of how it’s going to work yet.”
A No 10 spokesman said: “The entire Government is working in lockstep in considering how we can support and ramp up our domestic clean renewable energy, nuclear and gas supply, because they will all play a vital role in achieving our ambitions for people, businesses and the whole of the UK.”
Full story in The Telegraph
Two in five households with children to be in fuel poverty. Where will be worst affected?
Two and a half million households with children will be in fuel poverty once the new energy price cap comes into effect on 1 April, according to estimates from the End Fuel Poverty Coalition.
That’s equivalent to two in five households, and it rises to more than half if we look just at single-parent homes.
Overall, more than a quarter of homes in England – representing more than 15 million people – will be fuel poor as of Friday after next, when the cost of a standard bill will rise by 50%.
A household is in fuel poverty if more than 10% of its income is spent paying energy bills.
A study published in the British Medical Journal last week explored the “intimate” link between fuel poverty and poor health.
“Children growing up in cold, damp, and mouldy homes with inadequate ventilation have higher than average rates of respiratory infections and asthma, chronic ill health, and disability. They are also more likely to experience depression, anxiety, and slower physical growth and cognitive development.”
Where will be worst affected?
Other estimates published today predict which areas of the country will be worst hit by the price rises.
Up to nine in ten people will be fuel poor in the Bushbury and Low Hill area of Wolverhampton, the worst affected neighbourhood in the country.
People there are 25 times more likely to be in fuel poverty compared to the least affected neighbourhoods, which are mostly in the southeast.
Although these figures only represent England, the issue could be even more severe in other UK nations.
In Scotland, 900,000 households – just under 40% – are expected to be fuel poor under the new cap, with 600,000 of those in “extreme fuel poverty”, according Energy Action Scotland.
Almost three in five people living in the Western Isles will soon be spending more than 10% of their income on energy.
Extreme fuel poverty is when a household has to spend more than 20% of its income on energy.
The Scottish government target is that no more than 5% of households should be in fuel poverty, and fewer than 1% should be in extreme fuel poverty.
Northern Ireland is not subject to an energy price cap, and figures for Wales are not available as although the price cap for Wales is set by the regulator for the whole of Great Britain, energy policy is devolved to the Welsh government and the UK government does not publish figures for local authorities there.
What is the government doing to help?
The government has announced plans for a loan of £200 to help pay these bills, which would be paid back by adding £40 to bills for the next five years. There is also a £150 council tax rebate for qualifying homes which will not need to be repaid.
These short-term measures were announced on the assumption that recent rises in the cost of resources, like gas and oil, were also going to be short-term.
Since that announcement, Russia’s war in Ukraine has destabilised the energy market further and is likely to push bills higher still when the price cap is updated next, in October.
Full story on Sky News