Truss announces plan to cap energy prices and end fracking ban

Cap the costs of energy bills at £2,500 a year, make the UK a net exporter of energy by 2040 and end the ban on fracking. These are the three main guidelines of the aid package announced this Thursday, September 8, in Parliament, by the new Prime Minister of the United Kingdom, Lizz Truss.

In the midst of the war in Ukraine launched by Russia, the main exporter of gas and oil to the Old Continent, which in recent days has cut off and limited supply, various NGOs have warned that millions of households would face poverty this winter if allows the cap on average energy prices to increase by 80% next October and in the months after.

“A prime minister has to do whatever is necessary to resolve the situation and guarantee the energy supply,” the prime minister said Thursday in the House of Commons.

The relief package pushed by Truss is expected to cost more than £115,000. However, the leader of the Government indicated to the parliamentarians that they will not know the figure of their energy plan until the declaration of the Treasury at the end of this month.

Both Conservatives and Labor and the minority political parties recognize the need to put a brake on the prices of energy bills. However, Truss’s reluctance to tax windfall profits made by companies in the sector has sparked strong criticism from the Labor Party, which accuses her of favoring the country’s right.

With winter just around the corner, energy costs rising by the day, accompanying inflation, and the pound sterling falling this week to its lowest levels in decades, Truss faces the most daunting challenges for a incoming leader in UK post-war history.

Limit the cost of energy in homes to £2,500 per year

To mitigate the direct impact of the problem on the pockets of British families, the newly elected Prime Minister proposes to freeze energy costs.

Liz Truss announced the price guarantee, limiting bills to £2,500 a year for two years.

The government leader assures that on average a household in the country will save about 1,000 pounds sterling every 12 months, through this measure paid for with loans.

This figure takes into account the removal of green levies – worth around £150 per household – and will replace the existing price cap.

The aid will reduce the cost of living by 5 percentage points compared to what it would be if the measure were not taken, Truss said.

While the plan is expected to cool inflation, which at 10.1% is already the highest among major economies, the announced package will add more than 100 billion pounds to UK borrowing. A situation that will put more pressure on public finances.

Businesses are also at risk. Many have received new energy bills that threaten the continuity of their businesses.

“Today I am announcing that, with the Bank of England, we will put in place a new scheme worth up to £40bn to ensure that companies operating in the wholesale energy market have the liquidity they need to manage price volatility. This will stabilize the market and lessen the likelihood that energy retailers will need our support like they did last winter,” he stated.

According to the Labor leader, increasing supply, boosting the economy and increasing liquidity in the market will “significantly” reduce the cost of this government intervention.

Other companies and public institutions such as hospitals and schools will also receive support, but for six months instead of two years.

These provisions will come into force as of October 1, as stipulated in the plan.

Make the UK a net exporter of energy by 2040

During her speech in the Legislative on September 8, the leader of the ‘Tories’ insisted that it is not only necessary to provide an immediate solution to high energy costs, but also to guarantee that the country has its own energy resources.

Truss went further by ensuring that he wants the British territory to become “a net exporter of energy by 2040.”

“(Vladimir) Putin is exploiting this situation, using as a weapon any way to legalize the war in Ukraine (…) I am announcing that we will use these next two years to make sure that the UK is never in this situation again, without global damage. for the actions of dictators,” Boris Johnson’s successor said before Parliament.

The prime minister said that London has long ignored the need for energy security, but that her administration will address it.

In fact, the UK was a net exporter of energy from the late 1980s until 2004, following the development of the North Sea oil and gas fields. However, production has steadily decreased since 1999.

Currently, the country is a net importer of all major fuel types, government data shows.

UK government to end fracking ban

As part of the package announced in the last few hours, Truss also said he will approve more oil drilling licenses in the North Sea and lift the ban on fracking. All in an attempt to increase the national energy supply.

Experts say plans to increase energy production through fracking will not provide any short-term relief, because it typically takes five to 10 years from initial exploration to oil and gas production in a field. .

Fracking, a process of extracting shale gas from rocks by breaking them up with water and chemicals at high pressure, will require extensive planning especially as it remains unpopular with many communities.

Truss says London remains committed to achieving net zero CO2 emissions by 2050

The political leader also affirmed that she will work to guarantee energy resources in the long term without neglecting the commitment assumed by her country to reach zero net carbon dioxide emissions by 2050.

First, there will be a review of energy regulation. And second, an assessment of how the government can achieve net zero “in a way that is business-friendly and growth-friendly,” he said.

A huge challenge to be led by Chris Skidmore, the MP and former Energy Minister, is one of the Conservative lawmakers most committed to achieving the stated goal of mitigating the devastating consequences of climate change.

The UK has dramatically increased the amount of energy supply from wind power in recent years.

However, Truss confirmed in his speech that he plans to build more nuclear power plants. Both this measure and fracking are strongly condemned by environmentalists, who worry that the new prime minister will not be able to meet the UK’s legally binding commitment to reduce carbon emissions.

With Reuters and local media