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Gas: A strategic reserve, or a big part of the mix?

Good Energy, explains Dixon, also believes it would be possible to decouple the cost of renewable energy from international gas prices to bring down bills – in as little as two years.

The company is calling for the UK to break the gas–electricity link by creating a ‘strategic reserve’ for gas power stations, meaning they would only operate when needed – such as in peak demand – rather than setting daily prices. In return, gas providers would receive a stable, regulated return, allowing power prices to reflect the lower cost of renewables. “We need to think about how we can move quite radically and quickly to ensure we can stop the gas price influencing the price of wind and solar,” Dixon says.

Others envisage gas playing a much bigger role in the energy mix for decades to come. As the government kicks the can down the road when it comes to a decision on drilling in the North Sea, Ed Hezlet, the head of energy at think tank Onward, says deciding not to exploit the remaining reserves would be a face-saving exercise.

“I think the UK is going to be using oil and gas for quite some time. I am very much of the view that we should get as much value out of that resource [the North Sea] as we possibly can. That doesn’t mean we should stop electrification. If you have got an energy import dependency, you want to be attacking it from both sides at once.

“You can walk and chew gum.”

Using North Sea oil and gas could reduce emissions from importing LNG. Hezlet also believes that advances in technology may mean more oil and gas is recoverable than estimates suggest. “There is no real risk to the government. There’s no actual inherent cost to the government in doing that [relaxing exploration] – it’s purely climate leadership loss of face. And it depends on how much importance you put on that.”

(Some organisations do place a lot of importance on maintaining current policy. Or as the IPPR says: “…political leadership cues matter more than ever… If progressive leaders downplay climate commitments in response to populist rhetoric, they risk signalling that net zero is indeed politically problematic and miss out on the opportunities to demonstrate progress on an agenda with popular appeal.”)

Hezlet points out that he is very much in favour of domestic low-carbon technologies such as EVs and heat pumps but that the cost of electricity has to come down to make them more attractive. “Pragmatically, I think the new government should focus on cheap power, not clean power. You should still try and make improvements on emissions… But if you tolerated 10% gas, or 15% gas, or 20% gas, you have to do a lot less on the transmission side and you could focus on electrification.”

He says that installing a heat pump and buying an EV may entail an 80% reduction in emissions even with the current carbon intensity of the grid. “I am much more in favour of trying to get those things [heat and transport] electrified and that making financial sense for consumers. If you make the sums add up, people will adopt the technologies.”

As indeed they already are. Woodward of Good Energy says there are plenty of reasons to be cheerful when it comes to fighting climate change. “We have seen a 60% increase in Google searches for renewable energy year-on-year. That doesn’t speak to consumers walking away from renewables.”

She adds: “It may be a little bit of a British trait, but there can be a lot of pessimism. In fact, when we stand back from it, in Britain we have already transformed our energy system. Since Good Energy was founded, we have gone from five or six percent renewables on the grid to over 50. That’s in 20 years.

“I think we need to talk much more about the great strides that have been made in very practical terms.

“People buy into things that are positive and are working.”

“If you tolerated 10% gas, or 15% gas, or 20% gas, you have to do a lot less on the transmission side and you could focus on electrification.”

Ed Hezlet, head of energy, think tank Onward

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