The war in Ukraine, Brexit and the UK’s energy crisis

Sussex’s own Rampion wind farm, off the coast of Newhaven, Seaford, Brighton, Hove, Shoreham and Worthing. Photo credut: Nicholas Doherty

The reality of war in Europe has given the lie to Brexiteers’ fantasies about ‘Global Britain’ aligning itself with the Indo-Pacific: India, which has recently signed a 10-year defence cooperation agreement with Russia, has failed to condemn the invasion of Ukraine.The UK’s energy security is linked to Europe

Geography determines that not only our existential security, but also our energy security in the short to medium term, is inevitably linked to that of Europe.  Although Brexit means that the UK is no longer part of the EU’s internal energy market (IEM), the country remains dependent upon imports which come largely from Europe for roughly 35% of its overall energy supplies. 

Almost half of the UK’s gas comes from its North Sea reserves, but they are now depleting.  Roughly a third comes from Norway, regarded as a reliable supplier as it is in the European Economic Area (EEA) and abides by EU market rules.  Around 10% arrives as liquified natural gas supplies, including 4% directly from Russia,and much of the rest from Qatar and the US.

Rising energy prices

Rising gas prices have partly reflected actions by Russia, which during the past year has been limiting gas exports to its contractual minima.  The International Energy Agency noted that this coincided with heightened geopolitical tensions over Ukraine.

The war in Ukraine has highlighted how dependent the rest of Europe is on fossil fuel supplies from Russia. As Russia provides 35-40% of the EU’s gas supplies, one of the most important impacts on European and UK consumers of the conflict in Ukraine will be dramatic increases in energy prices.

The UK is not protected from rising prices because it relies less on direct supplies of Russian gas than the EU.  As the UK market is closely connected to that of mainland Europe, a price rise on the Continent will inevitably lead to higher prices here too.

On 24 February, wholesale gas prices rose 28% on the news that Russian forces had invaded Ukraine, with some experts predicting that average UK consumers’ energy bills for gas and electricity could rise to £2,500 or even £3,000 a year.  The UK Office of gas and electricity markets (Ofgem) operates a price cap which will rise 54% from 1 April, and there are likely to be further increases in the autumn. 

The UK is one of the biggest users of gas in Europe, as not only does natural gas fuel 85% of our domestic heating, but our gas and electricity supplies are linked.  Recently, because of unplanned maintenance and the closure of ageing nuclear stations, up to half of the UK’s electricity has come from gas-fired power stations.

Brexit hasn’t helped

Unfortunately, Brexit has been unhelpful to the UK’s potential resilience of supply and price of energy in a number of ways.  Although the Trade and Cooperation Agreement with the EU provided a governance framework for the energy relationship, there has been little progress on this, in view of disagreements about the Northern Ireland Protocol, and unless renewed, these provisions will fall into abeyance in June 2026. 

As the UK is now outside the EU’s IEM, which would previously have ensured reciprocal supply security, security of physical supply cannot be taken for granted, especially if there are external disruptions. 

The Department for Business and Energy has ambitions for the UK to become a net exporter of renewable energy into Europe, but in the future, as a ‘third country’ in the eyes of the EU, the prospects for exporting to the EU’s IEM will be much less straightforward than they would have been during the UK’s EU membership. 

Climate change alternatives

The debate on how to reduce direct or indirect dependence on Russian fossil fuel supplies is taking place within the EU as well as in the UK, including plans to increase gas storage. Unfortunately, the UK is not well placed on gas storage.  In 2017, the UK government took the decision not to intervene to prevent the closure of the Rough energy storage facility off the Yorkshire coast, owned by Centrica, which previously provided 70% of the UK’s gas storage.

The EU is also currently negotiating a raft of new climate change policies, including targets to expand renewable energy. These proposals would cut EU reliance on gas by 23% by 2030.  They include more support for green hydrogen projects, biogas, new wind and solar energy projects.

In both the EU and the UK, the recent problems of the nuclear industry do not provide confidence that this will deliver an increase in baseload electricity any time soon.  Only one new plant, Hinckley Point C, is currently under construction in the UK.  If no other new plants are built, the UK’s nuclear capacity in 2050 will be a third of what it is today.

Moving to net zero?

UK government ministers are now considering restarting fracking of UK gas as a solution to the energy price crisis. However, as the New Statesman has made clear, it is by following through on the government’s ‘Net zero by 2050’ policy (which still lacks a coherent strategy) that we will achieve both energy and climate security in the long term. 

There currently seems to be no consensus within government about prioritising net zero.  The threat of future price rises led to Chancellor Sunak proposing a £200 reduction in consumers’ energy bills later this year, but this is to be repaid over the next five years.

As with the EU plans, we need a massive government-sponsored programme, along the lines of the North Sea gas conversion programme of the 1960s and 70s, but much larger, to “insulate Britain”.  This should include help consumers to decarbonise, along with government-supported investment in onshore and offshore wind, and ‘green hydrogen’ which can be produced offshore by electrolysis. 

These steps, along with investment in other renewables such as solar power, are needed urgently.  They could help us to meet our net zero targets and prevent widespread fuel poverty and hardship throughout the UK in the coming years.

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