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SUSTAINABLE MATTERS
| 3 minutes read

Energy security: are all approaches equal?

The European Commission’s REPowerEU plan (“EU Plan”), published on 18 May 2022, shares common decarbonisation and security of supply objectives with the UK government’s British Energy Security Strategy (“British Strategy”). Nonetheless, the Commission’s proposed means to achieve these objectives differ significantly in some key respects from the British approach.

Same problems, different solutions

The EU Plan is based on two main pillars: 1) diversifying gas supplies, including by higher LNG imports, larger volumes of biomethane, and renewable hydrogen imports and production; and 2) accelerated reduction of fossil fuel use, including by boosting energy efficiency, increasing renewables, and addressing infrastructure bottlenecks.

The British Strategy also targets diversification of supply, but through domestic production, focusing on supporting new investment in nuclear power and North Sea oil and gas, as well as fast-tracking the development of renewables (particularly offshore wind) and low carbon hydrogen. For a detailed discussion of the British Strategy please see our previous article.

Energy imports

Diversifying energy imports is the cornerstone of the EU Plan. A newly-created EU Energy Platform could facilitate the common purchase of gas, LNG and hydrogen for uncontracted volumes. The EU Plan also hints at future market intervention through ‘legislative measures to require [energy supply] diversification over time’, which could mark a departure from the EU’s current liberalised energy market policy. Due to its domestic oil and gas reserves, the UK Government has not intervened in this way. Critics highlight that, as well as being hard to reconcile with the UK’s climate goals, the global trade in oil and gas may mean North Sea oil and gas may be consumed outside the UK, if prices are higher elsewhere. The Government is, however, seeking to adopt enabling powers to ensure core fuel sector resilience as part of its Energy Security Bill (please see our previous article).

Renewables and nuclear power

Both plans emphasise an accelerated rollout of renewable energy and recommend streamlining permitting for major projects. The Commission published detailed recommendations to this effect alongside the EU Plan. A key distinction is the renewable technologies targeted. The EU Plan aims to promote all renewables, particularly solar and biomethane: the EU Solar Strategy proposes to double solar photovoltaic capacity by 2025 and install 600GW of capacity by 2030, while a €37bn Biomethane Action Plan proposes an increase in production to 35bcm by 2030. The British Strategy focuses largely on increasing the UK’s offshore wind ambition to 50GW by 2030 (including up to 5GW of floating wind projects). This is a significant commitment; the EU ambition, across all member states, is 60GW by 2030. Onshore wind policy, however, remains largely unchanged and, rather than revise restrictive planning policy in England, the focus is now on ‘local partnerships for a limited number of supportive communities’ in return for local benefits (e.g. lower energy bills). The UK is also seeking to develop new large-scale and small modular nuclear reactors (barely mentioned in the EU Plan).

Energy efficiency

Strikingly, the British Strategy does not materially develop energy efficiency measures beyond those outlined in the 2021 Heat and Buildings Strategy. The 2022 Progress Report published by the Climate Change Committee specifically calls out this inaction. By contrast, the European Commission proposes to raise the binding energy efficiency target under the Energy Efficiency Directive from 9% to 13%. The International Energy Agency has called on all governments to do more: it found that doubling the rate of energy use per unit of GDP globally (a key measure of countries’ energy efficiency) would reduce energy use by an amount equivalent to China’s consumption each year.

Energy networks

The British Strategy also makes little mention of physical energy network infrastructure, focusing instead on electricity network planning, governance, and market arrangements. Initiatives are underway, however, such as the development of models for greater co-ordination in offshore electricity networks. The EU Plan, by contrast, prioritises European infrastructure development, estimating that, by 2030, €29bn of investment will be needed in the power grid to accommodate higher electricity use and €10bn will be needed in gas infrastructure.

Low-carbon hydrogen

Regarding low-carbon hydrogen production, the UK is supporting a range of low carbon production methods and doubled its ambition to 10GW of domestic production capacity by 2030. The EU Plan focuses on production using renewable electricity, targeting 10M tonnes each of domestic production and of imports by 2030. However, at the member state level the picture is more nuanced, with some countries promoting other low carbon production methods, depending on the nature of their economies (e.g. significant industrial sectors) and their available energy sources and geological storage potential. With increased ambition for hydrogen production, both the UK and EU are reviewing the need to scale-up hydrogen pipeline infrastructure. The EU Plan focuses particularly on an ‘EU-wide hydrogen backbone’. For more details, please see our European hydrogen guide.

Conclusion

The UK’s focus on developing domestic energy sources is understandable. Having left the EU’s internal energy market, it can no longer rely on EU member states for its energy security, and must develop its own resources. However, the UK’s lack of action on energy efficiency is hard to reconcile with the security and decarbonisation objectives of the British Strategy. And, as the EU considers how to proactively position itself as an active player in global energy markets, the UK may find itself increasingly buffeted in the wake of the EU’s energy policy.

Tags

decarbonisation, alternative energy, renewable energy, government

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