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21 September 2021

Why the gas price hike can trigger a clean energy revolution

Focusing on making energy-leaky homes more efficient should be a political priority.

By Philippa Nuttall

Imported oil accounted for 90 per cent of Denmark’s energy supply in 1973. By 2020, over 50 per cent of the country’s electricity was powered by wind and solar. In more recent years, the move to green energy was a response to the climate crisis, but the initial impetus was the oil crises of 1973 and 1979.

Today’s soaring gas prices could be a similar tipping point, the moment when countries start to seriously phase out fossil gas in favour of renewables and energy efficiency. Such a decision would ultimately benefit people and the planet, but politicians are reluctant to break their gas addiction, even as they negotiate stringent emissions reductions targets ahead of COP26.

The reasons behind the global gas price hike are myriad, as the New Statesman’s Will Dunn has explained. Economic growth after the pandemic slump, a cold winter in Europe and Asia, local unplanned-for events (such as a fire at an interconnector bringing electricity into the UK from France), and complicated geopolitics have all played a role. 

The UK, which relies on fossil gas for 37 per cent of its electricity production, is especially affected. The price rise comes at a particularly bad moment for the country as inflation soars and government support to the poorest in society is cut. “Continued reliance on fossil gas for power generation has caused substantial increases in electricity bills when people can least afford it,” says Phil MacDonald from Ember, a UK energy think tank. 

In the minds of many consumers, renewables are costly. Yet this is patently not the case. Generating electricity from existing UK fossil gas power plants is three times more expensive than from new onshore wind and almost twice that from new solar, highlights Ember in a study published today (21 September)

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Despite such evidence, and the urgency to reduce emissions in line with climate targets, countries and companies everywhere are moving too slowly, preferring to “remain hostage to a global gas market and countries like Qatar or Russia that may decide to increase or decrease production,” says MacDonald. Only around half of gas consumed in the UK comes from the North Sea.

The price rise “could be a real tipping point”, believes MacDonald. “The kind of shock that can drive the clean energy transition” and get politicians to focus on what needs to happen today, not in 2050 – by when countries have pledged to produce net zero emissions. “If you only set long-term targets, nobody appreciates what they mean in practice,” he says.

“The current crisis could be a tipping point if we make it one,” says Julian Popov, fellow of the non-profit European Climate Foundation and former environment minister of Bulgaria. If the coming winter is mild, and gas – and potentially coal – prices have stabilised by the spring, “we may all relax and miss the opportunity to learn our lesson”, he warns. Future lower prices will not mean the problem is solved, says Popov, urging politicians to “think in a more complex way”. 

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“It would be very silly if we try to find all sorts of mechanisms to push down electricity prices without doing anything else,” he comments. Popov believes a “demand-side revolution” is needed. Instead of focusing simply on energy supply, he underlines the importance of a wholesale overhaul of our power systems: from the type of energy we use, to where it comes from and how we use it. “We need more clean generation, more electricity infrastructure and more storage,” he says. “If the gas price surge triggers this, it would be a good use of the crisis.” 

A big concern in the UK and elsewhere is that energy companies will pass the price rise on to consumers, many of whom are already struggling to pay their bills. And bringing renewables, or even nuclear power, online to replace gas in the system will not happen overnight. One relatively simple and fast way of reducing energy demand and bills, while creating jobs, is to renovate Europe’s leaky building stock. Both the UK and the EU are failing miserably at this task. 

Dustin Benton, policy director at Green Alliance, suggests a three-step approach to make this happen. “First, cut gas demand with clean heat grants to upgrade home efficiency and replace gas boilers with heat pumps,” he says. “Second, reinvent the way we retrofit with new modular construction techniques. Third, follow in President Biden’s footsteps by phasing out gas from the national grid by 2035 and ramping up investment in renewable energy.”

An outdated understanding of “energy security” is also making governments more reluctant than they should be to wean themselves off gas, believes Popov. “We need to move away from the obsession that alternative pipelines and liquid natural gas [LNG] terminals are key,” he says. “Redefine energy security in accordance with the complexities of decarbonising modern energy systems.” For him, this means politicians focusing on issues such as cybersecurity, critical materials sourcing, funding for research and development, and expanding electricity grids if they want to ensure the lights stay on.

Interestingly, the European gas industry seems to have already accepted its role will be somewhat curtailed in the future. EU legislation aimed at mitigating the climate crisis is “our chance to scale up deployment of new renewable and low carbon gases, bringing more storage capacity and flexibility to the EU gas market, while incorporating the renewables we need in the energy system,” says Bronagh O’Hagan from Eurogas, a lobby group based in Brussels. “Natural gas will remain an element of the energy sector, though a reduced one.”

How fast this transition happens will depend on the speed at which politicians face up to the reality of energy geopolitics, and of what is needed if emissions are to be brought down in line with internationally agreed climate targets. Continuing to rely on gas means “people’s bills will rise every time Russia meddles and China’s energy demand goes up”, says Benton. “We can’t fix this problem overnight but unhooking ourselves from fossil fuels in the medium term can put an end to worries about gas prices.”

[See also: Gas price crisis: is Brexit, Russia or Covid-19 to blame?]

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