Energy bill crisis: Renewable energies offer a solution to soaring gas prices, so why are some asking for green taxes to be reduced? – Dr Richard Dixon


A group called “Net Zero Scrutiny Group” is calling for a reduction in support for green energy, an increase in oil and gas extraction in the North Sea and a revival of hydraulic fracturing.

Initially claiming to have the support of more than 50 MPs, their letter to the Sunday Telegraph was only signed by 19 Tory MPs and a peer. Group leader Steve Baker is a director of the long-standing and long-discredited Global Warming Policy Foundation.

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Their predictable demands have received a lot of publicity at the moment due to the rising cost of household energy bills. But the logic of their claims is backwards.

The main reason bills are rising – which are expected to be 50% higher by April – is because global gas prices are rising.

Gas prices are set by fluctuations in the global market and increased use during the cold winter of Europe last year, the impact of Hurricane Ida on supplies in the United States and increased usage in China means wholesale gas prices in the UK are now seven times higher than they were last spring.

Electricity prices closely follow gas prices as many countries, including the UK, use gas to generate a significant portion of their electricity. In this case, Scotland is being hit hard, as gas produces almost none of the electricity we use here, with the booming renewables sector providing the equivalent of all of our electricity demand last year. .

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Scottish energy producers ‘unfairly penalized’ by Westminster

Renewable energy is helping to keep energy prices low (Photo: William Edwards / AFP via Getty Images)

Clearly, immediate action is essential, but it should not come at the expense of the long-term solution. The best way to ensure that people’s energy bills are manageable is to continue on the path we’re on – moving away from fossil fuels and their volatile prices and moving from heating and transportation to renewables, which we can do. here.

While the cheapest electricity energy companies can produce or buy now comes from renewables, changing the system requires investment, hence the green taxes that customers pay on energy bills.

The response to a short-term crisis cannot be to abandon or seriously delay long-term measures that would ensure that this crisis cannot occur again in the future.

Labor has proposed a one-off tax on North Sea oil and gas producers, removing five percent VAT from national energy bills for a year and increasing support for poorer households. The Lib Dems have also called for a one-off tax on oil and gas companies.

What they both realized is that the oil companies are selling their gas and oil for much higher prices right now, when their costs haven’t really changed at all, so they are heading. all towards record profits.

Of course, the oil industry receives so many tax breaks and subsidies that the taxpayer ends up paying some rather than taking money out of the treasury, so any one-off tax should be more than just one. simple increase in corporation tax. levels.

We are heading towards an energy bill crisis, but we must ensure that the necessary short-term solution does not come at the expense of the permanent solution.

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