This year the Review of Energy Policy focuses on the energy crisis and explores the impact of volatile energy prices on the energy sector and society. Covering five key areas of energy efficiency and affordability, resilience and gas supplies, impacts on industry, impacts on transport, and the UK and EU energy relationship, it reviews developments over the last year and highlights key issues that need attention in 2023.
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For too long our response focused on new sources of supply and subsidies for consumers. Britain’s belated energy saving campaign is therefore very welcome. But we need far more action on energy efficiency to improve our leaky buildings, while also ensuring the poorest have access to affordable energy.
In future, renewable energy will dominate our electricity supply, minimising our dependence on gas. But it requires a plan for the existing gas network, and must ensure that the energy system has sufficient production, network and storage capacity, and is adapted to future climate extremes.
Industry has been hit hard. The UK already had high industrial electricity prices and there is significant risk that companies could fail. UKERC analysis also shows that continued high energy prices could delay decarbonisation, and lead to higher cumulative emissions to 2050.
We need to reduce road traffic and accelerate the switch to electric vehicles. Yet the cost of running an EV is increasing as power prices rise. To accelerate the EV transition we need more careful policy design and higher ambition, with different approaches at national and local levels.
UKERC has long argued for energy co-operation with our European partners, and its importance is now increasingly understood. The overall relationship has been thawing for some months, and it remains vital that the UK and EU renegotiate electricity trading rules, which would be positive for costs in the UK.
The UK’s energy crisis response has been mixed. Plans for energy independence offer a cleaner and more resilient system – but not yet. Collaboration will be key to helping us through this winter. Whilst moving swiftly to protect consumers through subsidies was essential, neglect of the demand side was a hugely wasted opportunity.