It is only fair that all homes benefit from clean, affordable energy. As ensuring a fair transition for everyone is a key policy priority within ENA's election manifesto, we asked National Energy Action's Policy Manager, Matt Copeland to share his thoughts on the issue.
It is a national injustice that in the UK at least 11,400 people die, on average, every year because they live in a cold home. The challenge in addressing this, by reducing fuel poverty, is well known and accepted. Another challenge, that might well be a more difficult one to solve, is the climate emergency. We have legislated to reach net zero carbon emissions by 2050. As the Committee on Climate Change (CCC) has said: “this is a tough, but achievable target”.
Billions of pounds will have to be spent in order to meet our new, ambitious climate targets. Common sense would suggest that this is bad news for our attempts to combat fuel poverty. We don’t agree, but work needs to be done to ensure that the transition is fair – a priority for the industry, as shown by ENA’s own manifesto. Three issues stick out as beng in need of urgent consideration: prioritisation of measures; distribution of costs; and distribution of benefits.
You cannot reach net zero without ensuring that every single home is well insulated and emitting as little carbon as possible. Insulating the homes of fuel poor households has many added benefits: lowering bills; better health due to living in a warmer home; reduced air pollution; and even benefits to the wider economy. If these homes are not prioritised then we will miss out on years of benefits, and thousands of people will continue to die each year from living in a cold home. These homes must be better insulated, and it makes sense to do this as an absolute priority.
Decarbonisation will cost billions, and we must consider where this money will come from. Up to now, much of the funding for decarbonisation has come out of energy bills in the form of levies. This is true for the Feed-in-Tariff (for domestic and smaller power generation) and Contracts for Difference (for larger generators like offshore wind farms). Our carbon tax is ultimately paid for through energy bills too. As the UK Energy Research Council have shown, this is a very regressive practice. This has been problematic up to this point and will become unbearably so if it continues to be the preferred way of raising funds.
NEA has therefore welcomed HM Treasury’s commitment to “identify mechanisms to create an equitable balance of contributions” – effectively assessing fair ways to pay for the transition. This needs to be completed as a matter of urgency in order to avoid an exponential increase of policy costs in energy bills.
As well as costing billions, decarbonisation will bring about countless opportunities, from jobs and investment to directly benefitting from contributing to the energy system. This area is particularly prevalent for energy networks. Although the gas currently transported through networks is not carbon free, it is lower carbon than most of the alternatives. Poorer households should not be excluded from accessing this relatively cheap fuel, and so maintaining the Fuel Poor Network Extension Scheme, whilst it is consistent with what the CCC say on gas, is essential.
Electricity networks are undergoing massive changes to adjust to a lower carbon world, creating Distribution System Operators that contract with their customers to provide flexibility. This an opportunity for their customers to financially benefit by providing services to the energy system. It is crucial that everyone has the ability to do this, but this will only happen if properly incentivised.
Innovation is being carried out within both Gas Distribution Network Operators (GDNs) and Distribution Network Operators (DNOs) to better understand the low carbon transition and we are pleased to see that the draft Network Innovation Strategy has a theme on consumer vulnerability that will work to ensure that vulnerable customers “experience the benefits of the energy transition”.
NEA’s Manifesto for Warmth sets out the first things that we think any new government needs to do in order to ensure a just transition. It provides a good start to ensuring that our journey to net zero is inclusive, not only fairly distributing the costs of doing so, but also ensuring that all can enjoy the benefits.
Notes to editor
About Energy Networks Association
Energy Networks Association (ENA) is the industry body representing the electricity wires, gas pipes and energy system in the UK and Ireland.
ENA helps its members meet the challenge of delivering electricity and gas to communities across the UK and Ireland safely, sustainably and reliably.
Its members include every major electricity and gas network operator in the UK and Ireland, independent operators, National Grid ESO which operates the electricity system in Great Britain and National Grid Gas which operates the gas system in Great Britain. Its affiliate membership also includes companies with an interest in energy, including Heathrow Airport and Network Rail.
What are energy network operators?
Energy network operators manage and maintain the wires, pipes and other infrastructure which delivers electricity and gas to your home, business and community. They are private companies which are regulated by Ofgem and employ around 40,000 people in Great Britain.