We must not put ourselves into turmoil for a short-lived upper hand on Russia
Since Russia’s invasion of Ukraine, the security of our energy supply – already volatile over the last few months – has taken on a renewed urgency.
It is not a new concern—the “energy gap” has been a hot topic for at least the last decade—but the prospect of disrupting, suspending or severing entirely our economic relationship with Russia has brought it into sharp focus. Russia is a major supplier of gas to Europe, though less so to the UK, and the price of gas has already risen to record levels. Last December it hit 322.5p per therm, and the spike in prices saw 26 energy suppliers go out of business.
The economic implications of geopolitics are obvious. Longer memories are haunted by the energy crisis which followed the Yom Kippur War of 1973; the Arab nations in OPEC introduced an oil embargo on the West and prices rose by some 300 per cent, causing an energy crisis which disfigured policy for most of the decade.
The government will this week unveil a new energy security strategy. It has some bold measures: the UK will phase out imports of Russian oil (currently 8 per cent of our total) during 2022, and may seek to do the same to the 4 per cent of UK gas supplied by Russia.
While the business secretary, Kwasi Kwarteng, has talked about increasing cooperation with the US, the Netherlands and allies in the Gulf, there is also likely to be a renewed focus on domestic production. This means more exploration in the North Sea.
In politics as in life, nothing is simple. Greater exploration of North Sea oil and gas will complicate relations between the Scottish government (which has the support of the Green Party) and the administration at Westminster; it is also not prima facie consistent with our net zero strategy.
At the same time, perennial bandwagon-hunter Nigel Farage has selected climate activism as the next target for his baleful focus: he intends to campaign for a referendum on the government’s net zero ambitions. It is not clear that the notion of letting climate change rip will provide Farage with the leverage that he desperately seeks, but he is underestimated at our peril. Certainly his intervention complicates the demanding business of long-term policymaking.
There are two tentative conclusions to be drawn from this mixture of circumstances. The first is that we are now by necessity moving in the direction of energy self-sufficiency. This does not represent a huge shock to the system: although we have interconnectors to the Republic of Ireland, France and the Netherlands, we import less than a tenth of our electricity, for example.
But it will shine a light on already-heated debates between those, like Caroline Lucas of the Green Party, who believes that now is the time to push harder on renewables, and others, especially on the right of the Conservative Party, who think we should accept reality and explore fracking and other fossil fuel reserves.
Despite hosting last year’s UN Cop26 meeting in Glasgow, the government has not really managed to set out a clear and persuasive narrative on energy and climate change, beyond headline commitments to net zero, and the policy area remains a battlefield.
The other, more short-term but more surprising, effect of this strategy to abandon imports from Russia is that we have given away an important part of our leverage in the current conflict in Ukraine. If we are determined to forswear Russian oil and (possibly) gas anyway, our influence over Russia—short of direct military action—is that much weaker. In the long run, economic sanctions will ravage Russia’s weak economy, and UK sanctions are an important part of that. In the short term, however, we are left shouting from the sidelines.
The government’s energy security policy will be expected to answer a lot of questions, not just about the immediate crisis with Russia but more widely.
Kwarteng is a minister with an interesting mind and sharp free-market instincts: let us hope he takes the opportunity to set out some determined markers for the future: to bridge the gap between fossil fuels and renewables; to move us towards our Net Zero targets; but also to make sure that we have an energy supply which is both secure and affordable.