A critical gap in the government’s energy policy means the UK could be on course to miss its target to zero out emissions by 2050.
In a report published today, the House of Lords Industry and Regulators Committee claims there is insufficient policy detail to incentivise the £50 billion needed yearly to overhaul the energy system.
A lack of clarity could also be stymying investments needed to fund new technologies for both industrial and domestic use.
To fix this the government cannot rely on regulators and must make decisions over the range of low carbon options available and their consequences for consumers, taxpayers and security of supply, the committee said.
It also called for the urgent establishment of a transformation taskforce that would be housed within the Cabinet Office and report to the Prime Minister.
The body would work across departments, including the Treasury, to set out a clear roadmap for the development and implementation of energy policies.
Moreover the committee is demanding the government urgently to explain how the transition to net zero will be funded.
It calls on minister to consider the full range of funding options for energy investment, including reviewing its opposition to the use of government borrowing.
Expecting the costs of net zero to be met exclusively by energy users through bills is “regressive” and would place a “severe burden” on many consumers, the Lords group warned.
Lord Hollick, chairman of the committee, said: “The Government has set ambitious targets for net zero including a carbon-free power system by 2035; however there is no point planning a carbon-free energy future if you haven’t got a clue how you will get there or how it will be paid for.
“We now need urgent action from the Government to answer outstanding questions on issues such as how they will incentivise households to replace gas boilers with heat pumps – and what plans there are for the 6 million homes where heat pumps may be unsuitable – what funding mechanisms will be established to encourage investment in small modular nuclear reactors and how the upgrade of our infrastructure to allow the use of hydrogen for heating will be funded. These are basic questions that need to be answered before we will get the investment we need to get to net zero.
“The amounts that can realistically be raised via surcharges on energy bills is not enough. Bills are regressive as the poor pay more of their income on energy costs; it is also unfair to the current generation as we are asking current billpayers to cover the huge costs of something that is designed to mainly benefit future generations. The Government should look again at using greater public borrowing to fund what are huge and long-term infrastructure costs. That would give investors confidence to invest in new technologies and ensure the public aren’t hit immediately with higher bills at a time that many are already struggling with fuel poverty.
“While money is a key challenge it isn’t the only one. We need better co-ordination across Government and a real drive and focus to deliver net zero. This requires tackling highly sensitive, political decisions that affect all consumers and taxpayers.. That is why we are calling for a new Energy Transformation Taskforce within government that will report directly to the Prime Minster and take the lead in setting and co-ordinating net zero strategy and policy across government.”
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