Government energy price plan and net zero policy review

Energy Price Plan

Prime Minister Liz Truss has pledged to freeze the “typical” annual energy bill at a maximum household rate of £2,500 in a response to concerns about rising heating costs. 

The proposed price freezes will come into effect from 1 October and will automatically apply to UK domestic energy bills for a two year period as the government also pledges to review how it should deliver on its net zero carbon targets.

Ms Truss, who assumed the role of prime minister earlier this week, has stopped short of implementing incentives to improve household efficiency and ramp up adoption of alternatives to natural gas boilers as requested by a range of campaigners and construction trade bodies. 

Instead, the broad proposals have outlined several measures intended to reform the UK energy market and how power is generated and distributed for functions such as heat.

In a speech outlining the broad aims of the government’s two-year Energy Price Guarantee, Ms Truss stated that she would also be suspending ‘green levies’ – at least temporarily.

These levies have previously been imposed on consumer bills to help fund projects such as renewable energy generation schemes and fuel poverty alleviation measures.

The government’s proposals also aim to accelerate “all sources” of domestic energy production that will include extraction of fossil fuel power such as North Sea oil and gas. 

This will also see the end of a ban on shale gas extraction pending local consultations and approval. 

Ambitions to accelerate the generation of new sources of renewable energy such as nuclear, wind and solar power were also set out in the government’s energy price plan.

The prime minister added that businesses would also receive comparable price guarantees on their energy costs.

These would be introduced to help offset concerns about projected rises in energy costs that could increase by over 500 per cent.

The government has pledged to introduce a six-month package for non-domestic buildings such as schools and businesses that would offer “equivalent support as is being provided for consumers.”

A review will be conducted in three months to consider what industries may remain vulnerable to current energy prices and identify if additional government assistance is needed to cover their costs.

Net zero review

Another commitment that could have a significant impact on future heating and energy policy was a plan to review how the UK’s legal target to become a net zero carbon economy by 2050 could be realised in an “economically-efficient way”. 

This review will be chaired by MP Chris Skidmore and is expected to be published by the end of the year to assess the impact of higher energy prices on sustainability targets.

Ms Truss said: “We will conduct a review to ensure we deliver net zero by 2050 in a way that is pro-business and pro-growth.”

The prime minister has rejected calls from the Labour Party to partly fund the energy price proposals through a ‘windfall tax’ on the revenues of gas and oil producers.

There was also no mention of a plan to insulate millions of UK homes to reduce overall energy demand for heat that has also been put forward by Labour..

New UK Chancellor Kwasi Kwarteng is expected to provide further details on how the Energy Price Guarantee will be funded later this month in a fiscal statement that will reflect a change of leadership in the Treasury.

UKGBC response

The UK Green Building Council (UKGBC) said it welcomed the new prime minister’s pledge to take action on the soaring price of energy. 

However, the organisation said it also hoped to see action to reduce energy waste in the long-term when heating homes, business and other buildings.

Simon McWhirter, director of communications for policy and places at the UKGBC, said that a failure to introduce a national plan to insulate and improve the energy efficiency of building risked large amounts of public money being needed to directly cover energy bills for many years to come.

He said: “The prime minister can fix many problems by announcing a national programme to upgrade our buildings and shift our heating systems from gas to renewable energy.

Not only will it reduce the need for government borrowing, the skilled jobs and economic boost this would bring would make a real contribution to levelling up and national recovery.”

“Next on the prime minister’s agenda must be to gets to grips with the opportunities and challenges which lie within the built environment industry.

Despite being the cause of some of the most pressing environmental and social issues confronting the UK, and the second largest source of carbon emissions, no significant progress has been made towards decarbonising the country’s buildings in a decade.”

Another concern about long-term building and heating policy was the need to ensure that all new construction work was being performed in line with the legal requirement to decarbonise the economy.

Such an approach would also limit the need for additional retrofit work to ensure newer buildings were able to adapt to the impacts of climate change resulting from the risks of floods, droughts, heatwaves and adverse cold, the UKGBC added.

Mr McWhirter said: “The Future Homes and Buildings Standard, set to be introduced in 2025, is one short-term opportunity to move in the right direction, yet proposals to date are woefully inadequate.”


Dave Stroud
Author: Dave Stroud