How is the cost of living crisis affecting net-zero policies?

Rising energy prices have sparked calls to scale down UK decarbonisation policies, as well as to resurrect extraction of shale gas by fracking. But public support for pursuing ‘net-zero’ carbon emissions remains high; and the transition will bring benefits from health improvements to green jobs.

As a cost of living crisis bites, some politicians and commentators are turning against the agenda to pursue ‘net-zero’ emissions of carbon dioxide and other greenhouse gases. Recent months have seen decarbonisation labelled as anti-democratic and too expensive in an era of rising energy bills.

Despite public concerns about the environment reaching record highs (YouGov, 2021), these claims should be taken seriously. Those supporting the pursuit of net zero need to present it as key to bringing down energy bills, creating new jobs and improving livelihoods across the country, alongside the goal of reducing our reliance on fossil fuels.

What does the evidence tell us about net zero in a cost of living crisis?

Households in the UK are currently facing the biggest decline in real incomes since the mid-1970s (Corlett and Try, 2022). Inflation had reached its highest rate in decades even before the Russian invasion of Ukraine. Wages are stagnating and tax contributions are increasing.

Rising gas prices also caused 25 energy companies to go bust between September and December 2021 alone. Ofgem – the UK’s regulator for electricity and gas markets – has removed the energy price cap, meaning that bills are likely to increase by 54% from April.

This has become an era of rising food prices, panic-buying petrol and prohibitive energy bills. Worryingly, this is likely to get worse in the autumn – with Russian aggression in Ukraine dramatically changing who supplies gas and how much is paid for it.

A new energy strategy is needed. The UK government argues that decarbonisation is a key policy and an important part of its post-Covid-19 economic strategy. But recent months have seen increasing dissent about these policies. In parliament, an informal Net Zero Scrutiny Group has been formed by some Conservative MPs.

Prominent members include Craig Mackinlay MP (a former deputy leader of the UK Independence Party, UKIP) and Steve Baker MP (who chaired both the European Research Group and the Covid Recovery Group). There is a possibility that net zero will be dragged into a new culture war that may derail decarbonisation (Taylor and Horton, 2022). This is an emergent narrative, but three claims are currently evident:

Net-zero policies are too expensive, particularly in a cost of living crisis: Rising energy prices are blamed on net-zero policies; the scale of decarbonisation is questioned; and energy efficiency measures are presented as disproportionately affecting poorer households.
Net-zero policies are undemocratic: Former UKIP leader Nigel Farage has launched a campaign called ‘Power not Poverty’, calling for a referendum on net zero.
The UK should start extracting its own fossil fuels: Many have called for a resurrection of fracking of shale gas in the UK. Others have called for the expansion of drilling for oil and gas in the North Sea. Boris Johnson has hinted at the possibility of the latter.

Such claims are questionable for several reasons. First, high energy bills today are mostly the result of higher prices – caused by cold winters, increased demand and ever higher wholesale prices. In fact, these prices are likely to have increased further as a result of previous governments’ slowing decarbonisation and scrapping climate policies. These policies are estimated to have increased total energy bills by £2.5 billion since 2013 (Evans, 2022).

Second, the Conservative Party’ 2019 election manifesto pledged net zero by 2050. It was elected with 43.6% of the vote (and over 13.9 million votes). In that election, Channel 4 hosted the first climate change election debate – attended by the leaders of Labour, the Scottish National Party, the Liberal Democrats, the Green Party and Plaid Cymru. Neither Nigel Farage nor Boris Johnson took part.

Support for decarbonisation is not limited to certain political constituencies either – over two-thirds (69%) of those living in ‘red wall’ seats, which supported Brexit in 2016 and voted Conservative in 2019, support net-zero policies (Conservative Environment Network, CEN, 2021).

Third, the fracking industry is likely to provide only a quick fix, rather than growing large enough to have a meaningful impact on energy bills (Bradshaw et al, 2014). The installation of new oil rigs in the North Sea is the opposite: it can take years from lease to production.

What does this mean?

Popular support for net zero remains high – with 53% of those polled wanting the government to do more to tackle climate change (CEN, 2021). Yet as decarbonisation accelerates, new fault lines appear.

The phasing-out of petrol and diesel cars from 2030 onwards has been labelled as ‘Stalinist’, and there was noisy opposition to low-traffic neighbourhood schemes in cities last summer. Rural communities, which are reliant on cars to get around, will be hard hit by petrol prices going up. Indeed, the gilet jaunes movement in France that began in 2018 stems from just such a challenge (Mehleb et al, 2021).

Decarbonisation is a complex case to make to citizens – asking for dramatic change today for outcomes that many of us may not see. In a cost of living crisis, it pits two key priorities against one another. The economy and the environment are two of the top three policy priorities for the UK public, along with health (YouGov, 2021). Rising prices and energy insecurity will increase the tension between the two.

Popular support for net zero could be shored up. Net zero is not Brexit. In the 2016 referendum on the UK’s membership of the European Union, over-65s were twice as likely to vote ‘Leave’ than those under 25 (Moore, 2016). Today, while climate guilt and anxiety are emotions primarily felt by younger generations (Swim et al, 2022), belief in climate change is rising at similar rates across all age groups (Milfont et al, 2021). Nor is net zero a partisan issue: 77% of Conservative voters voice concerns about climate change (CEN, 2021).

The government needs to invest in energy efficiency measures rapidly and dramatically. Addressing the current crisis should not just be about expanding energy production, but also about addressing energy demand – and in particularly leaky, energy-inefficient homes. The UK has some of the least energy-efficient housing stock in Europe.

Rising energy bills will hit those on the lowest incomes the hardest: they spend up to three times as much of their earnings on energy bills as the richest households in the UK (Resolution Foundation, 2021). Fuel poverty has a particular geography, with many of the homes affected found in the Midlands and the North of England (Energy and Climate Intelligence Unit (ICIU), 2022).

Politically, these households are significant: many of the areas that will suffer most from this gas crisis – due to energy-inefficient homes – were marginal seats in the 2019 election (Grenville, 2022).

Investing in energy efficiency makes people’s lives better and warmer. They will be able to have the heating on for longer at lower cost. Households may see savings of up to £500 from better insulation (Energy Efficiency Infrastructure Group, EEIG, 2022).

Other benefits include improved air quality, reduced respiratory and heart illnesses, improvements to mental health and a reduced number of winter deaths (International Energy Agency, IEA, 2022).

This will also transform local economies. For the energy efficiency industry to change this may come to support over 140,000 jobs in England alone by 2030 (Local Government Association, LGA, 2020). These jobs will be highly important in regions where jobs are at risk from decarbonisation – such as in the Yorkshire and Humber region where up to 360,000 jobs are currently based in carbon-heavy industries (Diski, 2021).

The UK government has dedicated some funds to energy efficiency – including the green homes grant (which was scrapped after six months) and funds for improving energy efficiency in public buildings and social housing. This is merely the start.

Urgent climate action is still required for the UK to meet its net-zero target (Authority of the House of Lords, 2022). While some would have us believe that net zero is the cause of our problems and has no place in a cost of living crisis, the opposite is true. Far from abandoning net zero, it should be expanded and accelerated to allow for warmer homes and new jobs, and to end our dependence on fossil fuels.

Where can I find out more?

Carbon Brief has analysed how the slowing of decarbonisation policies has added £2.5 billion to energy bills in the UK.
The Energy and Climate Intelligence Unit has published a report showing how households facing energy poverty – and the impacts of the energy price crisis – are disproportionately found in the North of England.
The International Energy Agency has detailed the multiple benefits of energy efficiency programmes.
Recent reporting by Helen Horton and Matthew Taylor in The Guardian provides important details on the politicians currently opposing net-zero policies.