IET responds to potential future gas crisis within the UK

Craig Lucas, Energy Policy Panel Chair, says: “The situation we are currently experiencing is exceptional, as we emerge from COVID, and the global gas market rebounds. 

However, there is no cause for complacency. The gas market globally is undergoing a structural shift – some marginal oil and gas production was shuttered during the COVID pandemic, and Asian economies increasingly set the global price. 

“In this volatile global market, we need to redouble our focus on the resilience of our own energy system. We are, as a nation, highly dependent on gas to heat our homes, and more and more reliant on imports from a market where prices are set by others. 

We’ve had nuclear outages, low wind, and we’ve run down and closed our national gas storage. We have an increasingly unpredictable climate, which makes predicting the demand, and supply of renewables, more challenging.  

In the next few years, we will be retiring much of the generation capacity which can balance periods of low wind (coal and nuclear) on the tacit assumption that gas-fired generation can provide the flexibility we need as we transition to a Net Zero energy system.

“The recent combination of electrical plant outages and gas price spikes is arguably a ‘black swan’ situation, but we must plan for a more uncertain future. 

This situation only underlines the urgency of progressing measures like energy efficiency and low carbon heating with more vigour, which not only save carbon but, long term, help to protect citizens and consumers. 

In addition, it underlines the pressing need to have a balanced low carbon energy generation mix, with the right incentives for storage investment. 

The UK Government has allowed us to run down our strategic gas storage because the judgement was that the global markets were sufficiently deep and liquid that we were not at the mercy of one producer nation.

“The fertiliser plant problem is a separate issue. The UK already has some of the highest energy prices for industrial consumers in Europe, partially because of long-term policy choices about how costs are shared.

It is therefore unsurprising if global producers prioritise production elsewhere. CO2 is a by-product of making fertiliser and clearly, the economics of the global fertiliser supply chain dictate decision making.”

Olivia Carpenter-Lomax, Energy Sector Panel Chair, says: “It is not a new thing to say that the energy sector in the UK – and across the world – is at a time of great change.

The vitally important decarbonisation of energy supplies is necessitating a mammoth transition of the way we do things, right across the technical, commercial, and governance domains.

If this is going to take place with minimal disruption to the supply of energy that is needed by modern society, we must be able to rely on resilient, whole systems and cross-sector thinking and action across the energy sector and the Government.

This involves truly understanding the interdependencies, leveraging opportunities, and mitigating risks so that systems work together positively rather than against each other destructively.  

“The current situation, which is being called a ‘crisis’, is a clear sign that there is still a lack of effective cross-sector and whole systems coordination.

This should be seen as a wake-up call to not only tackle this specific situation, but also to build in resilience and agility to be able to adapt to the requirements of a decarbonising energy system, and to the changing climate itself.

“The IET has been working in this space for some time. Our work on Future Power Systems Architecture describes the need for true ‘whole systems’ thinking and for agility, transparency, and inclusivity to be designed into the systems we create.

We are currently drafting work on the resilience within interdependencies of systems, which we hope will help policymakers and businesses in future crises.

But we call for real action and change – from both industry and government – off the back of these discussions if we are going to meet the energy needs of society while protecting the planet.”   

ENDS

Notes to editors

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Hannah Kellett
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