22nd March, 2022

Is abandoning Net-Zero the cost for energy independence?

Negotiators at the end of the COP26 climate summit in Glasgow in November 2021 felt a fragile sense that real progress had been achieved as the final deal between 197 countries contained an agreement to draw down fossil fuel subsidies. Despite a fierce argument over whether coal should be phased down or phased out, the direction of travel was clear, said COP26 President Alok Sharma, who hailed that “the end of coal is in sight.”

Four months on, the global energy picture has shifted significantly; and not completely in the direction sought by Sharma and other COP negotiators. The monumental shift by western allies away from their previous Russia-reliant policies and towards new energy strategies puts their individual Net-Zero policies at risk.

The questions now are whether such a shift can happen rapidly enough to allow the world to meet its tenuous climate goals — and if the economic instability of the Ukraine war will prove to be a long-term setback, rather than an incentive towards a green transition.

As things stand, the US and the UK have both announced bans on Russian oil imports, while the EU has published a plan for more gradual independence from Russian fuels – cutting its reliance on Russian gas by two-thirds by the end of this year. Responding, Russian Deputy Prime Minister Alexander Novak warned that Western countries risk oil prices of $300-plus per barrel if they follow through on cutting off Russian supplies.

The UK Government is poised to announce its new energy supply strategy, which would make the UK more independent in its energy supply, in the ‘coming days’. The strategy will be a real watershed moment – determining whether the conflict has lent a new sense of urgency to the task of transitioning away from coal, oil and gas or, alternatively if fossil fuels are here to stay, as long as they’re not sourced from Russia. There have, for example, been calls for renewed North Sea exploration and exploitation, as well as a U-turn on fracking. Additionally, UK Prime Minister Johnson is currently lobbying United Arab Emirates and Saudi Arabia to increase oil production and attempt to secure major investment in green energy.

Johnson has already announced that the new strategy ‘maximises [the use of] renewables’. However, figures from the Department for Business, Energy & Industrial Strategy shown that the UK’s reliance on Russian gas has doubled in the past four years. Although this only represents 4% of the UK’s total energy supply, it is still a step in the wrong direction.

At this stage, it seems reasonable to assume that the UK will increase energy production from a variety of sources, including gas and oil, but to start a new era of energy policy, the Government could look to pull the levers at its disposal that would set in motion full-scale system transformation. Each of these can help to secure the UK’s future energy security, shield consumers from the worst energy price volatility as a result of foreign influences, whilst further strengthening the UK’s low carbon credentials. Some of these have already been pulled, including the ramping up of renewable energy through schemes like annual contracts for difference, but there are real opportunities to go further.

Gas heating of homes remains one of the UK’s biggest sources of emissions, with 85% of residential buildings connected to the gas grid. Although costly, any Government decision to improve domestic energy efficiency and untangle ties to the European gas markets intrinsically linked to Russia would result in tangible benefits for both the UK and hard-pressed consumers over the longer term and help to offset the seemingly unavoidable rise in fossil fuel production. A rapid scale up of other sources that makes use of the UK’s existing renewable credentials – such as the gradually increased deployment of hydrogen – or a delay to the planned closure of several nuclear power stations would also considerably reduce the pressure on the system.

In the immediate term, there are increasing suggestions that the UK Treasury – led by Chancellor Rishi Sunak – will have to produce COVID-scale market interventions to, first, save the UK from an energy crisis and, second, markedly soften the associated ‘cost of living crisis’ for British voters.

More broadly, the energy-related challenges facing the British Government are more serious than at any time since the oil crisis of the early 1970s or the year-long miners’ strike of the mid-1980s. Reducing emissions already represented a huge task, but now the Government needs to increase, simultaneously, the UK’s energy independence. The challenge will be enormous – but the opportunities for renewable energy providers could be equally huge. The ‘dash for gas’ is certainly over; a sprint for additional solar, nuclear and wind-power (including, significantly, onshore) seems certain to begin.

To discuss this issue further, please email our consultant Dani Schmidt-Fischer  and Milo Boyd on and