Think Tank Urges Shift from Green Energy Maximisation to Cheaper Power Strategy
A prominent think tank, associated with former Prime Minister Sir Tony Blair, has issued a stark assessment of the UK’s current green energy strategy, urging a fundamental pivot from maximising renewable sources to prioritising the reduction of energy prices. The report, critical of Labour’s approach, suggests that the current focus on wind and solar power is jeopardising Britain’s global standing and economic competitiveness.
The analysis contends that the government should reconsider its approach, advocating for the removal of the windfall tax on oil and gas companies, a reversal of the ban on North Sea exploration, and a renewed emphasis on making energy more affordable for consumers and industries.
The think tank argues that a strategy which consistently drives up electricity prices, erodes industrial capacity, and diminishes national competitiveness is unsustainable and unlikely to be adopted elsewhere. It frames the current policy as “climate theatre” rather than genuine leadership, particularly for a nation responsible for less than 1% of global emissions.
The report proposes replacing the government’s “Clean Power 2030” mission with “Cheaper Power 2030,” suggesting this shift would better align with the nation’s economic and environmental objectives.
The Cost of Intermittency
A significant concern highlighted is the substantial financial burden incurred due to the intermittent nature of renewable energy sources. Last year alone, the country reportedly spent a staggering £1.5 billion on “balancing costs.” This refers to the expenses associated with managing the grid when renewable energy generation fluctuates – essentially paying to switch off wind farms when there’s an oversupply of wind and to switch on fossil fuel power plants when there’s a deficit.
While the report acknowledges the national commitment to achieving Net Zero by 2050, it posits that a focus on delivering cheaper energy would, in fact, be a more effective pathway to reaching this ambitious target. The argument is that affordable power is not just a desirable outcome but a prerequisite for several key developments.
The Economic Imperative of Affordable Energy
The think tank underscores the critical role of cheap energy in facilitating decarbonisation efforts. Furthermore, it highlights the necessity of affordable and abundant power to support the burgeoning data centre industry and to ensure the UK can fully capitalise on the transformative potential of artificial intelligence (AI) and other future technologies.
The report also points to the escalating costs of new clean energy infrastructure. Factors such as persistent inflation, elevated interest rates, and intense global competition for essential components are contributing to a material rise in the price of clean power. Specifically, the cost of offshore wind projects has seen significant increases, and the continuous addition of more clean energy to the grid, without a corresponding reduction in other costs, could inadvertently lead to higher overall energy prices.
Energy as a Geopolitical Tool
Beyond domestic economic considerations, the report asserts that access to cheap energy has become a crucial determinant of “hard power” on the global stage. It draws attention to the energy production strategies of major global players like the United States and China, both of whom are actively prioritising and investing in their energy output.
In this context, the UK’s current energy strategy, which the report describes as narrowly fixated on meeting a single decarbonisation target, appears to be unduly limited. The think tank warns that a decline in economic strength, driven by unaffordable energy, will not translate into greater influence or effectiveness in addressing climate change.
Reconsidering North Sea Exploration and Windfall Tax
The report advocates for a policy reset, urging ministers to end the windfall tax levied on oil and gas firms and to reverse the ban on issuing new licences for exploration in the North Sea. It presents data suggesting that the North Sea still holds significant reserves, with estimates of 7.5 billion barrels that could contribute £165 billion to the economy. Crucially, the report notes that even under the most ambitious Net Zero scenarios, oil and gas will likely remain necessary beyond 2050.
The windfall tax, currently set at 38%, was introduced in May 2022, following a surge in profits for energy companies in the wake of Russia’s invasion of Ukraine. The government has initiated a consultation on replacing this levy, with industry stakeholders frequently citing it as a deterrent to investment and a contributor to job losses. Labour’s policy also includes a ban on new North Sea drilling licences, although the government has indicated that extraction in areas adjacent to existing fields will still be permitted.
The think tank also cautions that maintaining a reliance on higher-priced wind power could inadvertently lock the UK into elevated energy costs, even if global gas prices were to decline.
Tone Langengen, the Energy Policy Advisor at the think tank and author of the paper, stated: “A reset in Britain’s energy policy is the most effective contribution the UK can make to tackling climate change.” He elaborated, “At the moment, its narrow focus on whether power is clean means the system has lost sight of whether it is cheap, secure, and capable of powering a modern economy.”
Langengen concluded that energy policy is “drifting away from the fundamentals that it must serve” and should ultimately be measured by its ability to deliver “abundant, affordable electricity that sustains growth, enables electrification, and maintains public consent for climate action.”
A spokesperson for the Department for Energy Security and Net Zero (DESNZ) defended the government’s approach, asserting that the clean power mission is the most effective way to achieve lasting reductions in energy bills. They argued that alternative strategies would render Britain reliant on “petrostates and dictators,” whose market control has exacerbated the cost of living crisis. The spokesperson maintained that achieving energy sovereignty, lower bills, and creating numerous jobs within communities is best achieved by becoming a “clean energy superpower.”
