The aims and results of UK energy policy
Energy policy since the 2008 Climate Change Act has pursued several goals: reducing carbon emissions, maintaining energy security, keeping bills affordable, and building a domestic clean energy industry.
It can claim some successes. The UK has made striking progress in decarbonizing electricity. Coal has been almost entirely eliminated from the grid, and renewables, wind in particular, now regularly supply the majority of electricity. Emissions from power generation have fallen dramatically since 2012.
The UK has become a world leader in offshore wind capacity, with genuine industrial and export benefits. And UK territorial greenhouse gas emissions are roughly 50% below 1990 levels, one of the steeper falls among large economies, though some of this reflects the decline of heavy industry rather than policy alone.
There has been some progress towards energy independence. Significant investment in North Sea production and domestic renewables has reduced, though not eliminated, import dependence.
Despite these gains, there have been some glaring failures. An obvious one has been affordability. Energy bills rose sharply, culminating in the 2021-23 cost-of-living crisis partly driven by gas price spikes. The government's price cap and support schemes cost around £40 billion. Critics argue the UK's dependence on gas for heating was never adequately addressed.
Domestic heating remains overwhelmingly gas-dependent. Heat pump rollout has been very slow, far behind government targets, and the policy framework, including the now-scrapped boiler upgrade scheme changes, has been inconsistent.
Decades of indecision have left the UK with an ageing stock of nuclear power stations and few replacements. Hinkley Point C is massively over budget and delayed. Small modular reactor policy is still nascent. Meanwhile, the US is rapidly increasing its nuclear capacity, focusing heavily on Small Modular Reactors, which are modular, smaller, and cheaper to build. Many such projects are in the pipeline.
The UK’s North Sea licensing has been beset by controversy. The decision to issue new North Sea licences has divided opinion, with defenders citing energy security, and critics arguing it undermines climate commitments.
Energy policy has been criticized for reducing Britain’s industrial competitiveness. High energy costs have been blamed for deindustrialization and driving energy-intensive businesses abroad, undermining the ‘green industrial strategy’ ambition.
And grid infrastructure improvement has been half-hearted. The planning and connection system for new renewable projects has been slow, creating a significant backlog.
The UK has a good record on power sector decarbonization and deserves credit for it. But the broader energy transition, including heating, transport, industrial energy, has been patchier, and affordability has been a serious failure for millions of households. Policy has also suffered from stop-start consistency across governments, with frequent target and subsidy changes undermining investor confidence.
Madsen Pirie