Energy Companies Defend Net-Zero After Report of U.K. Wavering

(Bloomberg) -- Companies are defending Britain’s net-zero plans as the best way to resolve the energy crisis in the long term, after a report that close advisers to the prime minister are warning that a rethink of the policy is needed.  

Chief executives of SSE Plc and the U.K. arm of Siemens AG said that a faster pivot toward renewables is the best way to cut exposure to volatile natural gas markets. The Telegraph reported Friday that a number of ministers are advocating a slowdown of the net-zero plans because households are paying for it through a green levy on their rising energy bills.  

“Net-zero, and the investment required to get there, is part of the solution, not the problem,” SSE CEO Alistair Phillips-Davies said. “Investing now will not only reduce our future exposure to gas markets but it will also support jobs and growth.”

The U.K. is facing a cost-of-living crisis that’s only set to get worse. Regulator Ofgem on Thursday announced a 54% increase in energy bills from April and Chancellor Rishi Sunak followed with a 9 billion-pound package to help alleviate some of the burden on households. Forward markets show high prices will continue into next winter.

The wholesale price of gas in the U.K. has more than quadrupled in the past year, driven by perilously low storage levels in Europe. The region has been starved of gas from top supplier Russia since last summer and prices have been volatile as regional geopolitical tensions over Ukraine bring the risk of interrupting energy flows. 

Still, strong liquefied natural gas imports over the last few weeks, as well as milder weather in Europe, have brought consumers some relief, with prices more than halving from December records.

The U.K.’s target to reach net-zero emissions by 2050 is enshrined in law, and would require a vote in parliament to revoke it. The government aims to reduce greenhouse gases by 68% in the four decades to 2030 -- rising to 78% by 2035.

“Far from scaling back on our net-zero ambitions, soaring energy prices for both homes and businesses just serves to highlight why we need an integrated net-zero energy strategy in the U.K.,” said Carl Ennis, U.K. CEO of Siemens.

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