UK energy crisis: causes, effects and solutions
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This panel discussion provides guidance about the energy crisis in the UK and Scotland, contextualising the issues, and exploring what the pros and cons are of the main solutions that are under discussion.
Several recent events have created a very unexpected and worrying energy crisis. Prices for consumers have shot up and are expected to continue to rise fast, creating a severe burden for the less well-off and the vulnerable in society. The phenomenon of ‘fuel poverty’ has spread and acquired a new challenge for public policy. At the same time, the causes of this crisis are unclear. For some, the energy crisis is a signal that we need to accelerate the shift to different kinds of energy, away from fossil fuels. For others, it is about changing the international links we have to other countries. Others think that its effects can be reduced by imposing a windfall tax on energy providers. This panel discussion is intended to provide guidance to inform the public about the issues, what lies behind them, and what the pros and cons are of the main solutions that are under discussion.
This event is being run in collaboration with the Scottish Government as part of their Evidence in Policy theme.
Please note transcripts are automatically generated, so may feature errors.
Professor Peter Cameron 00:03
Good morning, everyone. So let me let me introduce Louise Scott from the Scottish Government to to set the scene for this series of evidence in policy seminars. Louise.
Louise Scott 00:24
Thank you very much, Peter. Well, welcome, everybody. Good afternoon. My name is Louise Scott, and I’m the deputy chief social researcher at the Scottish Government. So this event this afternoon is part of the Scottish Government’s evidence in policy series. And we’re delighted to be teaming up with the Royal Society of Edinburgh to open up this event to members of the public for the very first time. Evidence in policy is an annual series that we run in Scottish Government. And it’s designed to demonstrate the important role that good quality evidence plays in decision making, ultimately, to improve outcomes for Scotland and its people. So we hope you enjoy the session. The views you will hear are not necessarily the views of ministers. But we really do hope that this experience will demonstrate the links between understanding evidence and improving outcomes. So enjoy the session. And thanks again to our colleagues at the Royal Society of Edinburgh, and the panel for their time and expertise. So I’ll hand you over now to our chair, Peter Cameron.
Professor Peter Cameron 02:14
Thank you, thank you Louise. Welcome from the Royal Society of Edinburgh. I’m Peter Cameron. I’m the chair of this meeting. I’m a professor of energy law at the University of Dundee and also the director of its Center for Energy Law and Policy. I’m very happy to be introducing this event here this afternoon to you. The ideas that we’re going to try and unpack the energy crisis for consumers, those of us who have been paying these quite extraordinary high energy bills in the last last few months. The idea is also to provide a guide that informs you about these issues, what lies behind them, what the pros and cons are, of the main solutions that are under discussion. So that’s the general the general idea. Now in doing that, let me just explain the process, we’re going to be encouraging you to submit questions through the throughout the event using the Q&A function. Now, we’ve got quite a few speakers distinguished speakers here this afternoon. So let me just ask each of them to give a brief introduction. And maybe some comment on their own background is relevant to this area. So let me pass on to first of all, to Professor Stuart Haszeldine of the University of Edinburgh. Go ahead, Stuart. Hello.
Stuart Haszeldine FRSE 04:16
Well, that’s me. I’m Stuart Haszeldine, and I’m a geologist by background. So I’m well accustomed to how fossil fuels are extracted from the ground. But I’ve also been working in energy more generally since the early 2000s. So I’m also very familiar with the rise of renewables and the move towards net zero, which is what I’m spending most of my time on just now.
Professor Peter Cameron 04:41
Next, thank you. Thank you, Stuart. Thank you. I wonder if maybe we could now move to Louise, Dr. Louise Reid.
Dr Louise Reid 04:51
Hello, everyone. Nice to see you all. And I’m Louise. I’m a senior lecturer at the University of St. Andrews in the School of Geography and sustainable development. I’m also a member of the RSCs Young Academy of Scotland. And my research is really about understanding sustainability in everyday life.
Professor Peter Cameron 05:11
Thank you. Thank you. And now Dr. Esther poppies.
Dr Esther K. Papies 05:18
Hi, good afternoon, everybody, and good to see you all. My name is Dr Esther Papies. I’m a social and health psychologist by training. And I’m social so I’m a social psychologist studying the implications of behavior change at the University of Glasgow and mostly in the domains of health and climate change related behaviors. And today I will be talking about the health and wellbeing implications of the energy crisis.
Professor Peter Cameron 05:47
Thanks, Esther. Well, let’s, let’s move on to our last or last speaker. Last but not least, is Stew Horne who’s the head of policy at the Energy Saving Trust. Stew?
Stew Horne 06:02
Hi. Yes, I’m Stew, I’m head of policy at Energy Saving Trust. We’re an independent, impartial organization focused on the net zero transition. We’re an appliance provider. So one of the things that we do is deliver the Home Energy Scotland service. We’re also a program deliver. So we deliver programs, which are delivering energy efficiency, renewables, or sustainable transport across the UK. And we’re also research and insight organization. And I’m going to be focusing on some of the high level ways in which energy efficiency is one of the main routes out of this crisis, but also talking about the acute need of supporting people who are struggling with high fuel costs at the moment.
Professor Peter Cameron 06:45
Well, thanks to you, I’m guess there must be quite a few people out there that are interested in having advice. So it’s good to know that we’ve got you on on board here. Well, let’s, without more ado, since there’s a fairly concentrated agenda for this afternoon. Let’s move on straight away to try and get an image of the on overview of the of the macro issues. You know, what’s what’s caused this crisis? How did it come about? Why are we where we are now. And we’re not going to spend the whole time on these macro issues. But we do need to have an idea about how we got here. So who better to ask than than Stuart? Stuart, you’re in the hot seat now, if you can. It doesn’t get much hotter than this. So you could go ahead and try and enlighten us to that. How did we get here?
Stuart Haszeldine FRSE 07:37
Okay, thanks, Peter. I’ll try and explain. If I could have a slide, please, that would be good. I’ve got three or four slides to show. And the root of this crisis is that we are as a society, we’re still very linked in to using fossil fuel for a lot of, in fact, most the vast majority of our energy. So although the UK in Scotland in particular has moved out of coal, a lot, the rest of the world still uses coal, we still use about 3% of our energies from coal, we use lots and lots of oil and gas. And we have an increasing amount of renewables, wind, tide, and solar. As you’ll see in a minute, the dominance is overwhelmingly oil and gas. So the price we’re experiencing at the moment, is due to the additional costs we’re having to pay, because there’s an overall shortage of production of oil and gas in the world at the moment. So if we look at the sources of energy in the UK, shown on this pie diagram, and this is labeled by type of fuel, oil, gas in yellow, coal in green, and then bioenergy, surprisingly large amount, and then nuclear power plus all renewables in here. And it’s important to realize that this is all of the energy in the UK. So this is energy for heating energy for homes, energy for industry, energy for transport, energy for agriculture, and of course, it includes electricity. Very often, you’ll find people talking about just electricity when they talk about power. And, of course, we’ve achieved a great deal in the past 15 years changing our electricity generation away from coal into renewable wind power, wind and tide and solar, that are all energy, particularly gas is dominated by fossil fuel. And in 2021, before all this crisis started in its present form, Russia is the world’s largest gas owner. Russia has enough gas to supply for 100 years, and Russia was supplying 40% of gas into Europe. Only 3% of the UK, but Europe as a whole, that’s Germany, France, Netherlands, Denmark, and Italy 40% of that. And that interruption in that gas supply is very, very significant for Europe and also significant for the world. It’s about, you know, several percent 10% of world’s supply. Next slide. Next slide, please. And it’s important to realize then that we are exposed to that world market in gas, and world market in oil and world market in coal. Because we often think we’re an energy exporting country in Scotland, we’ve got a richness of the North Sea, oil and gas, and before that, we had a vast richness of coal. But if we look at our energy, imports or exports, the amount of our energy supply which is imported, was 50%, back in the 1970s, then from 1980, through to 2005 or so we are an energy exporter. But then since about 2004 2005, we’ve been an energy importer again, and roughly about 40% of our energy is imported. Okay, and that’s imported from buying in electricity from wires across the channel to other countries imported by buying lots of gas from Norway, and by shipping gas in by tanker, and nowadays, and also by buying in lots of oil. And so although renewables count for a large, almost half of our electricity, that purchase, that buying on the open market, is what controls our price. Next slide, please. And if we look about where that gas comes from, on the next slide, we can see this global map of gas flows in 2020. Okay, so this is not totally up to date, because the situation has rather changed. But the the point I’m making is that Europe, and particularly the UK is a net importer of gas, a lot of our gas comes by pipeline from Norway, maybe about 20% of our 30% comes from the southern North Sea, our own domestic gas production. But the remainder comes from Qatar, here in the Middle East, comes from now now right now comes from the USA, bringing in shale gas. It comes from Nigeria, in West Africa. It comes from Algeria in Northern Africa. And so that’s part of the problem that there is a world market looking to purchase gas from these ships going across the ocean. And in particular, the rise of the far east economies for China, Japan, and South Korea, are using huge quantities of gas now. And that is competing in price. For when a ship comes out from Qatar, does the ship turn west to head towards the UK? Or does the ship turn east to head towards the Far East? And it’s that shortage of gas supply, which is now driving price higher and higher. We basically have to outbid other countries in the world to have those those ships arrive in the UK. And people often ask, How long will this last? Well, I see at the moment, unfortunately, very poor reasons to be optimistic because of the Chinese economy has been moving slowly during virus times in the past two to three years, that’s now restarting. So we’ll have a bigger demand for gas in 2023. Japan has to decide if it wants to restart its nuclear reactors, which are still many of which are still closed after Fukushima. If they do not restart, Japan will have a continuing very high demand for gas in 2023 and South Korea is obviously continuing to have a booming economy and manufacturing and big industry that has a huge demand for gas. So will the world market flooded with gas to make everything cheaper and cheaper? I don’t see much chance of that during 2023 and maybe not even for two or three years after that. Next slide, please. And I think that maybe it. Oh, no. Right. And the key thing, which I think is where we could do strategically in the UK, is to increase our storage of gas and fuel. In the old days. Here’s long Ganic power station on the first floor is now demolished. But we used to literally store a one year’s worth of coal outside those power stations so we could see what we had with stored for 12 months. If we look at what’s happening nowadays, countries in Europe store gas methane gas underground. Other countries in Europe like Germany, Netherlands, Belgium, store literally three months worth of gas supply underground, there took a season through the very high price spikes in the winter and to supply extra gas in the winter. If we look at the UK, ranking in Europe, on this right hand column, you can see Germany, Italy, Netherlands, France, again, as I say, literally two to three months of supply, the UK would come in here, with about three days worth of supply. So what we should be strategically doing, and as a failure of government during the past 12 to 15 years, we should be building much more supply for gas storage methane. And if we move to hydrogen, we’ll be reusing that for low carbon hydrogen storage in the future as well. Then, of course, as well as storing gas and getting through the peaks, we need to think about how we price those markets. At the moment, the market for selling gas is priced on the last gas to come in the highest price gas, whereas clearly, we could be pricing our domestic production and our domestic electricity from renewables as a social price tariff much, much lower. But those are political decisions, not for me. So I think that’s it. Just check the next slide. I don’t think there is one yet. That’s me over to the next person.
Professor Peter Cameron 16:14
Okay, okay. Thank you very, thank you very much, Stuart, what I’m hearing is short term thinking, is dominant here in policy, and has been dominant for a very, very long time. That’s, I think, a problem. And other thing is just to be clear to people who are listening. Electricity is a secondary source of energy. So Stuart’s talking about gas, because gas is a primary source of energy, renewables also wind, solar, both primary, so the electricity comes from another source. And it whatever it is. It’s that that other source and the price there off that that’s the key. And what we’re seeing is a big shortage on the international market. The way of getting in the way of dealing with this import problem that sort of the Stewart’s mentioned, is you buy it in, you buy it in from where you buy in on long term contracts, which tend to be more expensive, because there’s a security premium or you buy in on the on the spot market, or the spot market, or at the moment, you can have to pay a big premium, because everybody else is competing for that available gas. So there we are. Big problem. Not not a pattern, not a terribly optimistic conclusion from Stuart, but we’ll be hearing back from him later. Maybe when we hear from the other speakers, we’ll get into a more optimistic mood. Okay, Louise, over to you.
Dr Louise Reid 17:37
Thank you. I think Stuart beautifully set out the wider context for where we get our energy from, what I want to do is talk a little bit about what we do with that energy once we have it. And so I’ll be drawing mostly on kind of the Scottish picture and the Scottish context for doing that. Sort of I could have my slides, So what I want to talk about today is about the idea of energy demand. And when I’m talking about demand, I mean, the consumption of energy that we use that supports our everyday life. And understanding demand is really important because this helps us to answer some key questions such as who uses energy? What energy do they use when they use it, and it allows us to understand how we can intervene and shape that consumption. So the graph on this slide here is from Scottish Government data was published last year, and it shows the amount of energy demanded in Scotland, between 2007 and 2020. And what you can see from from the image there is that over that time, overall demand for energy fell, in part that’s because of improved efficiency and fuels in industrial processes in the buildings that we use, also comes down to kind of the impact of economic cycles, energy price raises weather patterns, they can all have an influence in shaping energy demand. So Scottish government set a target to reduce final energy consumption by 12% by 2020, from 2005/2007 baseline. And that’s marked by the orange dotted line there at the bottom of the slide. And you can see from the graph, that consumption actually remains below 12%, which is around 18.7% lower than the baseline. So this is good news. Overall, we’re on track to meet the target and we’re actually consuming less energy. But that type of graph only tells us part of the story, if you can move to next slide, please. If we dig into these data a bit further, and we can explore how total energy consumption in Scotland is derived from different sectors, so from industry, from commerce from domestic and transport sectors, and you can see from the image on this slide that according to the figures on the blue on the right hand side there total energy consumptions dropped by 5.9%, from 2019 to 2020. Most of that decrease was driven by a reduction in demand for transport about 21%, as fewer people traveled during the pandemic, you can also perhaps see a change in the share that other sectors contributed to overall demand. And I just want to draw your attention to the thinking about the domestic sector. And you can see that even though overall energy demand fell for the domestic sector demand actually increased by 2.6% over this period, and I’ve indicated it, they highlighted it hopefully with a red arrow for you to see. Of course, probably the most sensible explanation for this is that people stayed at home more during the pandemic. But this fits with a wider picture around domestic energy demand, which has been has proven quite tricky to reduce overtime. And that’s been the case for many years, we need to investigate this further, not least because of the current crisis and how it’s impacting on people’s energy bills at home that’s very well known in the public domain. So I said earlier that much of the reduction in demand comes from improvement in energy efficiency, and that is also true of our homes. So things like the age of construction, the dwelling type heating and hot water systems in use the extent to which a home is well insulated. That all affects the energy efficiency of this of our homes in our everyday lives. And that has many consequences. Move on to the next slide, please. So it’s great that energy demands decreased. Overall, that’s good news for the environment. However, that reduction in demand has been quite uneven. And part of the reason for that is the quality of our housing stock. And that helps to explain some of the challenges that we’ve had in tackling domestic energy consumption. So the last publicly available from the Scottish household conditions, Dolby was published in 2020. And you can see some of those data on the slide now. And that shows what this image on this slide shows is how energy efficient our homes are. And it uses this, what’s called an energy performance certificate rating. So like any ratings, you will see, when you’re buying a new electrical appliance homes are awarded a rating A to G – A being for the most energy efficient, and G for the worst performing. What you can see on the slide here is that rating for homes in Scotland between 2010 and 2019, the right hand side of the image plots, the median rating for the APC over this time, I’ve put a red rectangle there, just so you can make room see it really clearly, you might be able to see a slight improvement in the score. In fact, in 2019, over half of all Scottish dwellings were rated 69 or better. This means that they fell into band C or above. And that’s the first time and we’ve we’ve achieved that. So more of our homes in Scotland are in better condition. But of course, these are just median scores. And there are homes that fall fall below the C rating around 9% performance in Scotland. But we can’t overlook the fact and we shouldn’t overlook the fact that demand for energy is as much about the way we want to live our lives and the society we live in than about the fabric of our buildings. For example, the size of homes has implications for the amount of space that we need to heat – larger dwellings require greater inputs and costs more to heat. So average space per person in UK Homes has increased by about four square meters over the last 15 years. Homes are getting larger, societal expectations have changed and changing demographics such as the increase of people living alone and living longer is also changing the nature of demand at home for empty. So understanding demand is yes about efficiency and about how where we live in the types of homes that we live. But we also need to ask wider questions about how as society what we see as desirable the types of homes we want to live in, and the types of futures we want to see. That’s me. Thank you.
Professor Peter Cameron 24:44
Thank you very much, Louise, thank you for pointing out about these reductions in domestic demand and above all, the social side of all of this which is enormously important and ever present, even if it’s not explicitly referred to. I think, Esther, you want to build on that and deal with some of the, the impacts of this this crisis on on on mental health, for example. So we’d really like to hear, you know, and maybe you could enlighten us about these issues. Thanks Louise.
Dr Esther K. Papies 25:23
Thank you, Peter. So indeed, I will focus on the health and wellbeing implications of today’s energy crisis. And if I could have my slides up, I will present data in a slightly different than maybe somewhat unusual format. I will read to you two potential alternative letters from the future. And these letters could be written by an anonymous government official, on the 3rd of March 2031, to her grandson, Andrew, who is 12 years old. And if we could start with the first letter, so I will read them out, but there’s no need to read along unless you want to. Dear Andrew 2023 was a really difficult year. We were in a full blown energy crisis. Huge numbers of families were driven into poverty. We were told another round of austerity was inevitable. And like before, it reduced life expectancy by two years. People got ill in cold homes and from lack of food, we saw rises and depression palpable violence suicide. University sent us report after report on the effects of deprivation. Even when the economy started growing again, productivity was low. The NHS could not be saved patients now have to pay people with money started using private health care. At the same time, emission sort we hit 1.5 degrees of warming very soon after. really unpredictable weather followed extremely harsh winters snow in April, extremely hot summers. massive flooding happened several times a year, we had no money in the coffers to prepare, or really help communities. So many people lost everything. Crop yields were tiny and moldy shop started running out of food. It was really scary. We saw nature around us disappear, trees dying, no more Birdsall rivers became toxic brown sludge. We weren’t allowed to water our gardens. But maybe the saddest thing was what the young people had to go through. They were so frightened, and blamed us for not taking them seriously. So many dropped out of university because they just did not see the point of studying. When society as we knew it was starting to fall apart. They marched and called for system change, not climate change. But really, there was nothing we could do for them. The prison started overflowing with activists, many of them just out of school. It was very sad. I was lucky that I had early retirement. But I’m so sorry, we didn’t do more when we have the chance. If I could have the second letter. So this is the alternative letter. And it’s up to us to decide which letter may get written. Dear Andrew 2023 was the real turning points. We were in a full blown energy crisis. People were ill from cold and hunger, another round of austerity was simply not an option. It would cost so many lives. We knew that now. But we weren’t sure how to turn things around. And then some of us started seeing it separately at first. And then we started talking suddenly, it seemed so obvious. We were doing this all wrong. Look at the energy system, it was making people were ill with pollution get many could not afford to heat their homes at all. And on top of that, it was destroying the climates. The food system was the same and was making people ill with unhealthy foods, yet many could not afford to eat at all. Plus, it was destroying ecosystems and the climate. What Magnus? The answer was simple. Wellbeing had never been the goal of the economy. The goal had only been GDP growth. But nobody could explain why. This needed to change. Surely the goal of any economy must be to use and distribute our resources for people’s well being. At first, we were shocked. And then we were excited by the opportunity. We got together a team and we work 24/7 To produce a plan. We actually took a lot of the ideas from the Scottish climate assembly that way, we knew that people would accept them. And of course, the rest is history. We finally ended all subsidies for fossil fuels. And we use the money for public services. Instead, we insulated homes, put solar panels on every school hospital home, we started growing food for people, not for cows. We made cities full of trees, people started sitting under them to have lunch on the streets. Soon we had psychopath and free light rail in all big cities, people loved it. Many local streets are now used for cafes, and community gardens. People started working less and enjoying more time and their families and communities. Honestly, I’ve never seen Scotland so happy. This is my legacy. I know I shouldn’t say it, but I’m actually so proud. Next slide, please. So what I’m suggesting today is that we should see the energy crisis as part of the social economic climate and public health crisis. And to address it, we need to put human needs and wellbeing first. And to engage society with that I think we really need to communicate a positive vision for getting out of this crisis, with clear well being benefits. Thank you.
Professor Peter Cameron 31:19
Good, thank you so much. Thank you very much, Esther, for injecting that mood of optimism, and also reminding us of the importance of individual choice in addressing all of these matters. Well, we’re moving on briskly to the final speaker, Stewart Horne and you’re going to be dealing with some of them or some of the practical issues that you’ve been experiencing. Thanks for so much, Esther. Thank you.
Stew Horne 31:52
Great. Thanks, Peter. So I think the other speakers have done a really good job of setting out sort of what the what the context is, and why we’re why we’re in the situation that we’re in, in the current crisis. And I’m going to talk very much about the process of trying to support people and helping them to cope with with these higher fuel costs, and also with the changes that people need to make in their homes. But I want to start off as it was zooming out a bit and thinking, well, this is as the other Stuart said, this is a fossil fuel lead crisis. And actually one of the, with a sort of look to some optimism, the way out of this is by divesting from fossil fuels in the long term. So lowering people’s bills, making people’s homes warmer through energy efficiency, moving to using more renewables, low carbon heat moving to more sustainable and largely electrified transport. So that’s what we’ve got to do that how we do that is really difficult. So that’s, that’s easy to say, it’s much more difficult to do. One of the things that we do at Energy Saving Trust is we deliver the homogeneous Scotland service. And that’s one of the main ways in which people can get advice and support in Scotland to help them cope with or tackle their higher energy bills that they’re seeing, to help them make changes in their home. And also to get advice on some ongoing behavioral change issues that help to save energy. And that’s what I’m going to talk about for the next couple of minutes. So 300 years Scotland, we help people from all types of tenure. So people in owner occupied homes, people who are renting, also people in social housing. We help people across Scotland, so it’s a it’s a, it’s a service for everyone across Scotland. And we’ve seen demand go up significantly on our on our services over the last 12 months in particular. But that’s actually continuing a longer trend of an increase in increase in demand for advice going on over the since the start of the pandemic. So actually, we’ve seen quite a long term increase in demand and need from people for support. So in the year 21-22, our demand rose by 26%. And we’ve seen another increase in this year. So the thing is that we’re, we’re helping people with: So we see people come to us, and they say, I need help, because my bills have gone up or I want to make my home warmer, or I want to understand how to make make changes in the way that I use energy within the home to help me useless. The way that we do that is through very specific person centered advice. So we don’t and particularly this is important when people are trying to make changes to their home, we use essentially a mesh of big datasets to provide house by house advice for what types of measures and what kind of changes might be suitable. We also help batch people with the kind of funding that’s available from Scottish Government through the warm homes program. And because this is person centered, a specific information that’s, that helps cut down what is can be quite complex, confusing number of choices about the different types of insulation measures, or the different types of low carbon heat that might be suitable for different types of homes. Everyone’s home is different. And that’s why it’s such a complex area. The way that we do that, we do that over the phone, we do it in person, or by video call where that’s appropriate. So we have a specific scheme called the Energy carers program, which is about helping people in the most acute circumstances. And we help people through our website. So the first thing I’d say to anybody who’s who’s watching the webinar today is that if you’ve, if you’ve got questions about saving energy, or lowering your bills, go to HomeEnergycotland.org And that’s the place to start, we can start help you from the point that you land on that webpage. So energy efficiency is really important. But we’ve seen people with really acute problems in terms of affordability. Fuel poverty has gone from being was difficult before energy crisis has been really, really difficult now, because just because costs have gone up so much and a bit of perspective, the government hasn’t, the Westminster Government has an Energy Price Guarantee in place, which has locked the average bill at 2500 pounds. That still means that bills have doubled over the last two years. And that’s put an unbelievable amount of pressure on household costs. So the types of support we can help people with helping people get access to the warm homes discount, which is 150 pounds a year available via suppliers, and helping people redeem their PPN vouchers. So people on prepaid meters don’t get automatic discount for their bill. So they have to do that through a voucher and getting access to that voucher and redeeming it’s really important. Getting access to the crisis funds that are made available through Scottish Government, that’s really important, and also helping people to access fuel bank vouchers. We also help refer people into other local services, where that’s where that’s appropriate, or so that could be a local service, or it might be another income support service, depending on depending on people’s needs. So that’s a lot of helping that we’re doing. Um, during this period, where we know we know people are going through some really difficult times actually did, the amount of support we’ve provided has gone up the amount of capacity that we’ve put in place to provide that support has gone up. And Scottish Government’s also been responding by providing more funding for support services, and providing more funding for the warm home Scotland service, which helps make those fabric changes with the wind within people’s homes. And it’s also broadened the criteria for a warm home service as well. So that that has helped to mean that more people have access to that support. In two ways, one by helping people with with income support, but secondly, with with energy efficiency, there are, there are some really simple things actually, energy efficiency is so important because within the home actually some quite simple things can can make a big difference to bills, so but behavioral things, using devices in your home or different ways switching things off when are on standby, these, these can be quite small impacts on the bills, but when you add them up all together, actually, they can make a big difference. And actually some of the some of the smaller fabric changes. So for example draught proofing or cavity wall insulation or loft insulation, if these things hadn’t been done within the home, actually, they can still have a fairly significant impact on bills. And then thinking about why this is so important overall, so not just about individuals. But overall, in terms of the energy crisis that we’re seeing. Across the hole of Great Britain, if we got every home to EPCC, that’s currently below EPCC, we’d collectively save 8.1 billion pounds a year and reduce our gas imports by 15%. So Stuart’s graph showing how important that is, in terms of the amount that rely on gas imports, at the moment, actually, energy efficiency plays a really should, we’ll be paying a really massive role in doing that. And we can go further than that through rolling out low carbon heat. So switching out fossil fuel systems for for heat pumps. So heat pumps are super efficient, they use typically a third of the amount of energy that the other heating heating systems need. So actually that that’s the further still help to remove the amount of gas that we need to import or use in our system. So I’m going to stop there, but hopefully you can see that we’re going through a period where people have really acute needs and that the amount of support that collectively we need to provide has just really gone through the roof. And it’s really important because of the issues that people are saying.
Professor Peter Cameron 39:53
Thank you very much do Thank you. We’re now moving into the Q&A part of the the today’s meeting, the q&a with the panel. So we do have a few questions that have appeared on the on the chat. And I’ll deal with those in a moment. It does seem to me that from from listening to the various presentations, that there’s a linkage between the solutions that we’ve been talking about, and on a timeframe that Stuart has recently just been taught telling us about the immediate problems, but also sketching out some of the longer term ways of addressing that and trying also to put into a kind of box, what the what, what the problem is, in a way that’s helpful. Esther has been been emphasizing that we can do it make changes that there’s no no need to be fatalistic. And indeed, know that that would be a completely wrong conclusion to draw from any of this. The power to do to make changes light does lie with us. And then Louise was was pointing out some of the longer term social implications of this, which need to be which need to be addressed. And indeed, that fitted very well with what what Stuart was saying that this is a long term problem. This is this is not likely to go away. But I’m listening to it listening to Stew, I’m just thinking, Well, one way of dealing with it would be just reduce the gas demand, reduce the demand for for the product that is becoming so difficult, and modify your, your, your regulatory system so that you’re not so dependent on it influencing the electricity prices. But anyway, there we are. Let’s, let’s we’ve got one one question that maybe I’ll kick off with, which has come in from Lynn, there are government supported schemes for House Energy improvement, like the LA flex scheme, but councils for example, Fife, are not signing up to them? How do we encourage councils to use these schemes to improve the housing in their areas? And another another question is, maybe we’ll take two of them together, about petrochemicals, and also about the countries that the UK has to buy their oil and gas from those probably are for Stuart to deal with. But maybe I could put that first question from Lynn out in a more general way. I’m not sure. Whether whether Louise or Esther wants or or Stew want to want to comment on that?
Dr Louise Reid 42:55
Well, I mean, I kind of it’s not what local authorities do is and isn’t necessarily something I get involved in. But my when I saw that question, I think my first response is well, why understanding why they’re not signing up in the first place. And it’s, it’s not clear to me why that is the case. I think if you want to develop a solution to something, you might need to understand why that phenomenon happens in the first place. So that would be my take on it. But you know, it’s not, it’s not something I have any experience in, huh, anybody else?
Dr Esther K. Papies 43:31
I guess one approach could simply be to indeed engage with the council directly right as citizens right to them up to your local counselor, get to help with your MSP, for example. People like hearing from their constituents. And reaching out in person has been shown to be one of the most effective ways to to influence your local representative. So asking them why they’re not signing up showing your interest or in your engagement with this topic for both health climate and equity reasons might be a really good starting point to to encourage your council to engage constructively in this space. And indeed, also to understand as Louise points out why they’re not signing up to schemes that the government has put in place.
Professor Peter Cameron 44:14
Thanks. Stewart, do you have any any comment to make on the role of councils in this? So nobody’s asking you to be prescriptive, but definitely not about the council in Fife. We don’t know the background of this. So they may be completely, they may have other priorities. Who knows?
Stew Horne 44:32
Well, I suppose what I would say is that local authorities can be extremely effective at identifying the priority areas in particular particular areas that need the most attention so that the housing stock that is a priority for upgrading or being aware of areas where there are high rates of fuel poverty, that needs attention. It’s quite quite a lot of focus on area based delivery as a result is a highly effective way of improving homes but also improving outcomes for people. So I agree with the other speakers absolutely, absolutely essential to try and use every lever to influence your local authority if they’re not using some of the funding streams that are available. But I don’t know what the reason is in this particular circumstance.
Professor Peter Cameron 45:22
Yeah, well, I think there are probably a whole host of these specific problems about how to, or challenges about how to address an immediate or short term and veryshort term response to a completely unexpected problem that these councils never planned for. I mean, they might have just finished the planning for the pandemic and now suddenly they get involved in something else that’s must be challenging their finances quite remarkably. We’ve got a couple of other questions. They’re, they’re a little bit little bit vague, but maybe Stuart, you can get some something out of these questions about the petrochemical dimension. And I think you answered in one of your slides, which countries the UK is buying most of its gas from? You’re on mute. I think.This happens to us all.
Stuart Haszeldine FRSE 46:20
Yes it’s being older than 21. Mike Vickers question, what about petrochemicals? Too To whichI take it to mean, you know, is there a shortage of petrochemicals. So my understanding is that petrochemicals, which I take to be plastics, pharmaceuticals, paint, those sorts of things, that uses about 5or 7% of ouroil and gas supply. So it’s not a Houston is by no means a huge demand. And we get a huge value out of the usage of those materials, we obviously need to solve the the recycling problem a lot better. But again, that’s part of a global market. So if we take our local very large oil refinery at Grangemouth as an example, then that brings in some of the oil and gas direct from the North Sea by pipelines down from St. Fergus in the Northeast or piped into Grangemouth. And because it was geared up to make lots of ethylene, then it also used a particular strand of those chemicals from the North Sea, which has now run out because the North Sea is depleting. So people who live in the East of Scotland may have seen dragon boats, so called Dragon boats, large shipping tankers, which in Ineos, the owner of the petrochemical refinery built to bring shale gas in from the United States. So those boats and bringing in hydrocarbon from the United States to feed into that oil refinery to make petrochemicals to make jet fuel to make basic ingredients, such as pellets of polythene, which then get exported to other countries to make plastic turn that basic plastic material into plastic shapes. So again, this is a global industry is huge value in terms of what it gives to society. But that can be both decarbonized – Ineos are changing to hydrogen instead of gas fuel- and the feedstocks can gradually be made more biological. So there’s a large movement to try and use recycled carbon from recycled hydrocarbons and also to use biological carbon rather than first cycle fossil fuels. So that can be that can be that is and can be being tackled, but it only goes slowly. You know, it’s going to take 15, 20, 30 years to fully decarbonize and change those really, really big industries.
Okay, Stuart, then let me let me just quickly move on. We’ve got a few questions coming in. Now. Let me move on maybe to Stew, Stew Horne. This question is coming in from Chris Martin. Are there particular forms of support to improve the energy efficiency of homes that are rented? And as a follow up to that there are a number of practical barriers to improving older housing stock, and particularly flat stock, how do we improve the energy efficiency of these types of homes? Anybody else who wants to come in but let’s let’s start with Stew.
Stew Horne 49:35
Yep. So thanks for Chris’s question. Chris. So I suppose two primary forms of support so – forms of support for tenants in terms of the changes they can make within within the home themselves and support that’s available from the Scottish Government. So that could be behavioral changes to lower bills and provide income support for a start. But also we provide, we also provide advice for landlords. And we, there’s a finance and I think I think loans although I’d have to go and double check available from the warm home Scotland program to help landlords to make changes to to their homes, which will improve the outcomes for tenants. In terms of housing stock, so there is a lot of variability in the housing stock, older housing stock is more challenging. We have through through programs that we’ve delivered in Scotland in conjunction with an organization called Warm Works, actually, we’ve we’ve improved all sorts of homes, including some really challenging home scenarios, single walled hundreds of years old properties in the north of Scotland. So there are solutions that will suit all types of homes. But there’s a lot of variability. Flats in particular are challenging, and they’re challenging for two reasons. One, you don’t have as many measures that are suitable for upgrading flats as you do for for houses, just because of the type of building but also the, the collective arrangements. So differences in ownership or collective responsibilities can also throw up quite a few complications. So that that that’s really one of the main driving reasons for the flats being more complex.
Professor Peter Cameron 51:29
Okay Stewart, so Louise, I know you’ve been working on housing stock, but maybe you want to add to that.
Dr Louise Reid 51:34
Yeah, well, just to add to what Steve said that, um, so in Scotland, we’ve actually had some regulations around energy efficiency for renting for quite a while now, it depends on what type of renting so there’s social renting, and there’s private renting. And those are regulated by two different to the regulated in different ways. So we’ve had something called EESSH, which is the energy efficient standard for social housing in Scotland since around it was introduced around 2014. And currently am registered social landlords. So some of your big housing associations, they are required by December 2032, to meet EESSC 2 standards, and basically what that means is that they need to move they need to improve the energy efficiency of their stocks, so that they fall into that EPC and B rating that I talked about earlier. So there are there has been quite a lot of headway made around social renting to improve where it’s big landlords, big social landlords around improving the energy efficiency of those. For the private rented sector, you can imagine by the nature of that tenure by very more landlords operating at different scales, that has been a much trickier area for intervention. So that is something I mean, there have been reforms, and they’ve been consultations, there’s legislation. So that’s a bit of a different area. And that’s definitely been much more challenging around regulating energy efficiency in that. So hopefully, that adds a little bit to some of what Stew was saying.
Professor Peter Cameron 53:01
Thanks very much. And I think I think Stew you’re you’re you’ve responded to one of the questions, but you just know that was specifically addressed to you. Thanks very much, Louise. That’s great. Well, we’re next. Maybe we can switch to Stuart. I don’t know if there was some questions coming up about storage. That you I don’t know if you’ve seen them on the chat: Gas Storage seems like a reasonably quick way to improve our resilience, sensible, why haven’t we started increasing the storage capacity earlier? And what the barriers barriers to doing that I was reading in the Financial Times today that the recent discussions with Centrica have collapsed. So storage remains a big a big problem. Are we going in a good direction or not?
Stuart Haszeldine FRSE 53:46
We seem to be ignoring it, I suppose, is my simple answer. And so we used to have some methane gas storage operated by Centrica in a, an offshore gas field called a rough gas field that gradually fell into disuse. Because of the pricing structure, which is imposed by OFGEM as the national regulator. The pricing structure didn’t allow enough profit to be made, because all these things in the UK system are run for profit rather than for public service, which is, of course, a strange thing to do. So Centrica have been trying to reopen the rough gas field that could reopen in a matter of weeks to months to provide gas storage for two or three more days, effectively doubling the amount of gas storage we’ve got in the UK, but nowhere near what Germany or France might have, but it would be a help. And so the answer lies in, I think, making this the responsibility of OFGEM to provide sufficient storage to help the country operate on a lease on a less cost basis. Because if I compare the price increases in Europe, for countries which have got a lot of gas storage, then there’s about a 20 or 30% difference between them and the UK who has no gas storage. So just in a very simplistic way we could lessen, but not eliminate the impact of the global pricing by improving our gas storage, but somebody needs to be given the responsibility. And I think overall, that has to be charged into the system in the same way that the electricity wires or the gas pipes are charged as a responsibility of the system to make that worthwhile commercially.
Professor Peter Cameron 55:41
Thanks. That’s, that’s helpful. Just very briefly, I wonder, Esther, do you something rather different? From your experience in dealing with the psychology of all this? Is there anything we can learn from other countries? I know Declan Brennan is talking here about a specific approach that was adopted in South Africa? Is there anything that in your experience, you think we could we could pick up on that other people have got right, maybe we could learn from?
Dr Esther K. Papies 56:11
Yeah, I think what Declan suggested here is an extremely interesting idea, both to make the system more equitable, and also more sustainable for the future, and then protect everybody’s health and everybody’s children’s and grandchildren’s health and survival, right. So what we see is that the most well off in society use extraordinary amounts of energy compared to those least well off. So if you introduce them a progressive pricing system, where basically the least well are protected in their basic usage, to heat their homes and have their basic services, and needs met, then other people who can afford it can can be asked to pay progressively more for basically, luxury consumption, right. And those are basically needs-based models that I think are really the future in terms of economic thinking, where we organize our economic systems, not around capital accumulation and growth per se, but around meeting human needs. On that should come first and everything else could be luxury on top. So I think those are really interesting proposals, and really warrant wider discussion within society, such that we consider what do we want to do for society as a whole? How do we want to organize ourselves? And I think those those kinds of ideas point in the right direction. And there’s a lot of economic modeling, and supporting that those approaches can be can be successful, they can be implemented, and they’re usually popular when they’re implemented. I think there’s a lot of positive signals to go on there.
Professor Peter Cameron 57:44
Thank you, Esther. Thank you. I think I’m going to have to, I’m going to have to end the discussion now before we because we’re just about coming up to the the witching hour. And so thank you for the various questions that have come in, or the number of a number of ones that you can perhaps serve the speakers can deal with offline there’s one on the merit order. For example, has there been any progress on that? And some clarification from Ian Stewart sort on the energy demand from 2017 to 2020? So I think for the Scottish Government, the message is that the there’s a mix of short and long term solutions required to deal with this problem. But the the previous approach of dumping the of dumping any long term approach and focusing only on the short term approach seems to be something that that’s no longer an option. And steps to deal with the vulnerable are very much still something that we have to give a priority to. But in the very long term, it’s the solution seems to be to take us off from fossil fuels the winners of fossil fuels. Thank you to everybody who all our panelists who have been who’ve been here, Stuart Haszeldine and LouiseReid, Esther Papies and Stewart Horne who stood in short notice. And also to Dr. Louise Scott, Philipa Watkin, the wider Scottish Government team and to all the participants for attending and not least Talia, West Christina Clopot and our colleagues at the RSE and our interpreters, so Anne Marie Murray, and Greg Cahoun. Thank you, all of you.