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The end of BEIS: why mixing business and energy didn’t work

Grant Shapps’s new Department for Energy Security and Net Zero will need clout and cross-government reach to turn around the UK’s faltering green transition.

By India Bourke

In, out, shake it all about: such has been the fate of British energy policy over the past few decades. And with Rishi Sunak’s latest reshuffle, this vital portfolio has once again been allotted its own department. Instead of continuing as secretary of state for the Department for Business, Energy and Industrial Strategy (BEIS), Grant Shapps will now solely preside over the separate Department for Energy Security and Net Zero (DESNZ).

The move is a reversal of the creation of BEIS in 2016, which merged the Department of Energy and Climate Change (DECC) with elements of the business department. But will the end of BEIS result in an apocalyptic relegation of the energy secretary’s clout? Or will its new independence present an opportunity to resurrect the green transition?

Seven years ago, Ed Miliband decried the loss of DECC as “plain stupid”. The concern, as I suggested at the time, was that the reduction of emissions would play second fiddle to business interests pushing short-term (and short-sighted) economic growth. Time has borne those fears out, to the detriment of both climate and the economy.

Today’s sky-high energy bills are attributable to war in Ukraine, but 12 and a half years of Conservative policy haven’t helped: David Cameron’s emphasis on “cutting the green crap” led home insulation rates to plummet – and energy prices to soar. Meanwhile, de facto bans on onshore wind and solar farm development have hamstrung the renewable transition. Both the US and EU are surging ahead in the race to attract green investment.

Will separating the energy brief from business help ensure the move to a clean energy economy? Numerous think tanks think so. A tighter departmental brief may mean greater efficiency: “The size of [BEIS] could mean that the delivery of specific policies to realise these [net zero] ambitions were often delayed,” Frank Gordon, director of policy at the Association for Renewable Energy and Clean Technology, told Spotlight. Plus, the new set-up is more proximate to foreign equivalents: “The division of BEIS moves the UK closer to the departmental configurations of our peers across Europe and North America,” added Alex Simakov, senior fellow of energy and environment at Policy Exchange.

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But an independent department will not by itself be enough to overhaul the UK’s faltering green transition. For that it must be “allocated the power to coordinate action on net zero across Whitehall”, Chris Skidmore MP has advised in his role as chair of the all-party parliamentary group on environment. And what constitutes “security” – the “S” in DESNZ – should be quickly clarified, with the jury still out on the viability and sustainability of options like nuclear and BECCS (bioenergy with carbon capture and storage).

An early test of the new department’s reach will be its response to the Retained EU Law Bill currently passing through parliament. Most laws inherited from the EU will expire at the end of this year, unless they have been specifically restated, revoked, replaced or updated. This is a huge task that puts vital pieces of regulatory protection at risk. “The [departmental] change is a chance for the government to reconsider its approach to this misguided bill,” Richard Benwell, CEO of Wildlife and Countryside Link, told Spotlight. “The new net zero and energy department will be responsible for many of these laws and should step up to defend and strengthen our environmental statute book.”

Some are optimistic that the personal clout Shapps holds in government will help ensure the department’s narrower brief doesn’t result in less influence. He will need to advocate “for a sizeable capital investment budget” to make the department a success, said Sam Alvis from the Green Alliance, but will be helped by his “respect in the Conservative Party” and prior cross-brief experience at BEIS. “If Grant Shapps stays on it will provide continuity and stability, and ensure that the new political department still has significant influence with No 10,” added Ed Matthew, campaigns director at the independent climate change think tank E3G.

As ever, the challenge will be in clawing enough financial support from the Treasury. “The Institute for Government estimate that £50m is required to set up a new department,” said Jess Ralston, an energy analyst at the Energy and Climate Intelligence Unit, which could be difficult to attract “at a time when households bills are soaring”. “However these bills can be lowered by things like energy efficiency, which BEIS has struggled to deliver – eg, the Green Homes Grant – so the hope may be that DESNZ can be more effective.”

The absence of climate change from the new department’s name could imply a slippery interpretation of the brief, especially in light of how disputed the definitions of “net zero” and “carbon neutral” have been in the past. The nation’s climate ambitions hinge on DESNZ’s ability to play it straight. Such slippery interpretations would condemn the UK’s green prospects, as Miliband warned in his response to the announcement: “A rearranging of deckchairs on the sinking Titanic of failed Conservative energy policy will not rescue the country.”

[See also: Britons are reducing energy use to save money – and the environment]

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