UK spent £50 billion additional on fuel since Ukraine invasion, say analysts

The UK has spent greater than £50 billion additional on fuel since Russia’s invasion of Ukraine, a brand new evaluation suggests.

Wholesale fuel costs exploded after the invasion and have been in a unstable state ever since, with many British households now burdened with a lot greater payments.

The evaluation, carried out by the Power and Local weather Intelligence Unit (ECIU), estimates that the UK paid between £50-60 billion extra for wholesale fuel in 2022 than in a typical pre-pandemic yr.

British households have been hit more durable by the present disaster than in every other western European nation, in keeping with the IMF, due to the UK’s dependence on imported fuel.

Fuel is used to provide round 40% of the nation’s electrical energy in addition to to warmth 85% of British properties, that are among the many least power environment friendly in Europe.

Analysts at ECIU mentioned the influence would have been much less extreme if the UK was additional forward with its net-zero insurance policies of enhancing power effectivity in properties, constructing extra onshore wind and putting in extra warmth pumps.

Dr Simon Cran-McGreehin, head of research at ECIU, mentioned: “Because the IMF has identified, the power disaster hit UK households more durable than these in different western European international locations as a result of as a nation we’re extremely depending on fuel. The worth of fuel is basically set by worldwide markets, so the one strategy to shield your self is to make use of much less.

“The onshore wind ban has been one of many boundaries to this. We’re additionally operating behind locations like Sweden, Poland and Estonia on putting in electrical warmth pumps. As renewables and warmth pumps proliferate, much less imported fuel is required, which in flip advantages our stability of funds and power safety.”

ECIU’s evaluation used information from the Division for Enterprise, Power and Industrial Technique to estimate non-domestic fuel prices.

Whereas wholesale costs have fallen in current weeks, client costs are nonetheless excessive as a result of they’re primarily based on trades made final yr at very excessive costs and are unlikely to return down quickly as a result of analysts are nonetheless cautious of market volatility.

Alethea Warrington, power campaigner on the charity Attainable, mentioned the most cost effective and quickest strategy to cut back folks’s power payments outdoors of a windfall tax can be to vary the planning legal guidelines round onshore wind.

The Authorities is presently consulting on native assist after lifting David Cameron’s 2015 ban on subsidies.

Ms Warrington described the Authorities’s reliance on fuel as “silly” and “unhelpful”, and mentioned lots of people assist onshore wind and the necessity to obtain net-zero.

She mentioned: “It’s irritating that the Authorities is kind of prepared to provide these enormous tax breaks to corporations that wish to drill for extra oil and fuel however they’re not prepared to let communities – which have already achieved the native outreach and bought folks on board – have proposals for tasks that will be being useful to the local people.

“They’re not capable of go forward with them as a result of they’re simply type of snuggled up in a planning system that’s not match for objective.”

Labour has mentioned it might rip up the planning legal guidelines round onshore wind and shadow local weather change secretary Ed Miliband has beforehand criticised the Authorities’s goal of putting in 600,000 warmth pumps a yr by 2028 as “approach wanting the place they must be”.

Octopus Power CEO Greg Jackson mentioned in an interview with the Telegraph final week that the corporate has designed a warmth pump which could be put in for a similar value as a fuel boiler.

Warmth pumps are a substitute for fuel boilers and use a community of water pipes to channel warmth from underground into properties.

Dr Matthew Trewhella, CEO of warmth pump producers Kensa Group, mentioned: “Heating is accountable for a 3rd of the UK’s greenhouse fuel emissions.

“Presently, 24 million properties within the UK are heated by fuel boilers, and this quantity continues to be rising. With beneath 27 years to take away fuel boilers in keeping with internet zero targets, new fuel heating methods have to cease being put in now and get replaced with low-carbon heating alternate options on the charge of 1 million per yr.

“Warmth pumps supply far larger efficiencies than fuel boilers, which means you get extra warmth for the power used. Fuel boilers use round 1.2 models of power, typically imported, for each unit of warmth they produce.

“Whereas Floor Supply Warmth Pumps can produce 4 models of warmth for every unit of electrical energy used and produce no carbon emissions if mixed with a renewable electrical energy supply.”