Some initial responses to the Autumn Statement

On Thursday 17 November 2022, Jeremy Hunt, the UK’s Chancellor of the Exchequer, made his anxiously awaited autumn statement. In doing so, he announced a number of energy-related polices for the United Kingdom, including green-lighting the Sizewell C Nuclear power plant, a new windfall tax on low-carbon electricity generators, targeted support on energy bills for the most vulnerable, new energy demand reduction targets, and additional funds to improve energy efficiency. 

I spoke to some of the Sussex Energy Group’s energy policy experts to see what they made of it. Here’s what they said. 

The Windfall Tax

Several SEG members were pleased to see an expansion to the windfall tax. But some questioned how the funds will be used, or whether extending it  to include low carbon electricity generators, but not gas fired electricity generators, was the right move. 

An expanded windfall tax is certainly helpful. However, it needs to be used effectively. The last windfall tax, announced in May, was partly used to fund tax breaks for companies investing in oil and gas in the North Sea. These oil and gas resources won’t help address energy prices for years to come, and are de facto unusable if we are to limit catastrophic harm from climate change. Windfall tax revenues should be applied directly to energy bill support measures, and used to fund energy retrofits and other demand reduction measures.”

Dr Marie Claire Brisbois,  Senior Lecturer in Energy Policy

The rate increase and extension of the windfall tax on oil and gas firms, and the reduction on the investment allowance is welcome. The new temporary tax on low carbon generators (Electricity Generator Levy) makes sense.  However, it’s also clear that gas-fired power generation is fuelling extraordinary profits, but no action has been taken on this. This unequal treatment risks slowing the transition to low carbon electricity.

Dr Matthew LockwoodSenior Lecturer in Energy Policy

Energy Efficiency and Energy Demand Reduction

Many Energy Group members welcomed the energy demand reduction targets, and the scale of investment in energy efficiency. Others were sceptical about whether the approach to energy efficiency is well designed. 

It is welcome to see a task force focusing on energy efficiency being brought forward. It is essential that we focus on energy demand reduction and take every opportunity to improve energy efficiency across society. Fuel poverty has been a persisting problem for years and it is time that this gets fixed for good.

Professor Mari MartiskainenProfessor of Energy and Society

The additional £6bn over 2025-2028 for energy efficiency and an indicative goal of 15% reduction in energy use by 2030 is a major shift in policy. This level of support would take spending on energy efficiency back to levels last seen a decade ago in the late 2000s.

Dr Matthew LockwoodSenior Lecturer in Energy Policy

Attention and money for a 15% energy demand reduction by 2030 is very welcome. However, the lack of new investment before 2025 is a problem. We urgently need spending in the near term to roll out a massive home energy retrofit scheme. This would mean that households would be insulated from further energy price shocks when the energy price cap goes up again in April.

Dr Marie Claire Brisbois,  Senior Lecturer in Energy 

Energy retrofits can be a very good investment, as it ties in to reducing energy bills and creating new jobs, in addition to addressing energy demand. But the government’s scheme has to be carefully designed to ensure it’s a success (like the Kirklees Warm Zone) and not an expensive failure (like the Green Deal). 

Dr Noam BergmanLecturer in Energy Policy 

These energy efficiency proposals  are very welcome. However, getting all those buildings effectively retrofitted  will require large dollops of trust in government both from the businesses involved in the retrofitting work or supply chains, and from homeowners and landlords. If this is to work, both suppliers and customers will need assurance that the scheme is well desgned, and will not be open to cowboys, offshored, or abandoned quickly.But if the big problem for a retrofit scheme is ta lack of trust in government, then this statement is exactly the wrong thing to do. While this statement announced an additional £6 billion for energy efficiency, when you read the fine print, you see that none of this money will be spent before the next general election, when everything will likely change again.  This surely generates more cynicism and caution among key actors.

Dr Marc HudsonResearch Fellow in the Politics of Industrial Decarbonisation Policy

Sizewell C

Philip Johnstone weighed in on Sizewell C. He said:

New nuclear is too costly and slow to make a difference to the UK’s energy challenge and the need to rapidly decarbonise. Forcing energy bill payers to subsidise the cost overruns of the deeply troubled nuclear industry under the proposed RAB model when energy costs are already so high and when there are far faster and cheaper low carbon alternatives, makes little sense. The record of the UK’s own recent attempts at nuclear construction, as well as the disastrous record of EPR construction programmes in Europe, suggest that this commitment will be a very costly mistake

Dr Phillip JohnstoneSenior Research Fellow

Targeted Support

Finally, Mari Martiskainen had this to say about the government’s announced approach to energy bills from April 2023 onwards. 

The recent energy price has seen people’s bills going through the roof. It is important that we as a society support those who are most vulnerable, but the government must also ensure that the help is targeted well – so that people who may be left out of initial help, but still struggle with their energy bills, are not left in limbo.

Professor Mari MartiskainenProfessor of Energy and Society

 Disclaimer: Opinions expressed in this blog are those of the authors alone and do not necessarily represent the opinions of the University of Sussex, or the Sussex Energy Group as a whole.  

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