Dash for Gas

Yesterday’s Autumn Statement confirmed the Chancellor’s dabbling in energy policy with his ‘dash for gas’ proposals. He has approved over 30 new gas-fired power stations with a capacity of up to 26 gigawatts (GW) of electricity by 2030, a net increase of 5GW. But there was still no announcement on whether drilling for shale gas would be allowed to continue, despite the announcements on potential tax incentives for the fledgling industry.

The Energy Secretary also announced a package of measures to encourage investors in gas. He argued that because gas produces half the emissions of coal it could plug the gap until more wind and nuclear comes on-line in the 2020’s.

However, David Kennedy, chief executive of the Committee on Climate Change, said: “Early decarbonisation of the power sector should be plan A – and the dash for gas Plan Z”. A report by Cambridge Econometrics, finds that, compared to a more gas-dependent future, with large-scale investment in offshore wind:

  • GDP would be 0.64% higher by 2025, rising to 0.82% higher by 2030;
  • There would be 100,000 additional jobs by 2025, falling to 70,000 additional jobs by 2030.

The report also challenges the claim electricity produced by gas-fired plants will be much cheaper indefinitely, pointing out that, by 2030:

“…electricity prices in the WIND scenario are only 1% higher than in the GAS scenario in 2030; a very small difference compared to possible variation in relative prices caused by other factors such as changes in gas prices.

The New Economics Foundation (NEF) goes further arguing that the cost of gas is rising, with and is the main factor driving up energy bills. Ofgem estimates that of the £150 average energy bill increase last year, £100 of this was due to the rising cost of gas.

The Chancellor claims: “We don’t want British businesses and families to be left behind as gas prices tumble on the other side of the Atlantic”. However, NEF points out that the ECC’s recent report that said shale “will not be a ‘cheap’ source of gas and there is unlikely to be a repeat of the US experience”? All of the evidence says that, while the advent of shale gas may have brought down gas prices in the US, this could not happen in the UK. Instead, it is the costs of renewables that are declining.

The dash for gas is therefore likely to increase fuel poverty.

  • Posted in: Gas

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