Government’s gas power announcement is much ado about little new – something else in it may impact bills more
What exactly has the government announced about gas power?
Actually rather little.
It said the UK needs to build some new gas capacity, partly to replace old plants, and partly to provide back up in case renewable power is intermittent.
That was long assumed to be the case, and Labour has said it might do the same too.
So why the big fuss?
Since the summer, Prime Minister Rishi Sunak has been carving out a divide between the Tories and Labour over climate action, ahead of the upcoming general election.
Remember when he decided licences for new North Sea oil and gas projects should be given out annually? And the regulator pointed out it pretty much does that anyway.
Or in September when he pledged to be more “proportionate and pragmatic” on net zero?
But his rhetoric perhaps did more harm than the tinkering.
Given today’s announcement was also thin on detail, it seems to follow suit.
In that sense the government’s announcement on gas has so far been much ado about little that is new. The energy industry though welcomed the certainty.
However, climate groups have sounded the alarm on the impact on the UK’s climate goals.
The government argues new gas power is compatible with its net zero target, because although new gas projects will be built, overall running hours would reduce.
Green groups have said the UK may have to wave goodbye to its plan to make the electricity system net zero by 2035.
And they said the government’s previous policy failures in energy efficiency, onshore wind, nuclear, updating the grid and designing an industrial strategy are what left it having to add more gas – though other back up power options exist, such as hydrogen and battery storage.
One key worry is the government isn’t demanding that new capacity must be fitted with technology to capture the carbon emissions and store them underground (known as CCS), though the UK has suitable empty gas fields to do this, and an ambitious 2030 CCS target.
As Professor Myles Allen from Oxford University pointed out, even Saudi Arabia – not exactly known for being progressive on climate action – has announced all its new gas power stations will be built with CCS from now on.
So it’s not a great look for a “climate leader”, though the UK has done particularly well on cutting emissions so far.
But there is something else in the announcement that could impact household bills far more.
The government is proposing wholesale electricity prices could vary by region.
The idea is it would attract industry to build in low-cost areas, and incentivise new electricity projects in regions where people need it most.
But ministers haven’t yet decided how this would be passed on to household bills, with the potential that people in different parts of the country would pay more than others elsewhere – though bills already vary to some extent.
Zonal pricing is fairly popular with industry, and some communities could be rewarded for hosting cheap renewable projects.
But it won’t go down so well with voters in more expensive areas.
With an election looming, it’s not surprising then that the government made much less noise about that part of today’s update.