Energy security is becoming increasingly important for countries in the Western world. Recent trends and global events have driven home the importance of securing supply. The UK, post Covid-19 needs to create jobs, provide more UK-based energy and meet net zero.
2019 saw a significant shift from Norwegian gas imports to LNG imports, partially as a result of maintenance and technical issues. However, in the first six weeks of the UK lockdown, there was an unprecedented further shift to LNG. LNG supplies have increased (mainly from the US, Russia and Qatar) from the 2019 high of 21% to just over 40% of consumption with a further increase in pre-combustion carbon emissions
At the end of Q1 2020, the net import dependency of oil was 26.6 per cent, gas 50.4 per cent and electricity 7%.
Increasing energy imports has a big impact on the country’s balance of payments which, in the absence of UK economic growth, will need to be funded by further borrowing and therefore a restriction on future growth. We estimate that by 2050, the UK will spend in excess of £12bn per year just on gas imports, with a resultant 65% increase (11m tonnes) in pre-combustion carbon emissions.
An economic standpoint
By harnessing renewable energy, countries can localise their energy sources and become less reliant on international markets.
There are many economic benefits:
- Many of the new technologies that harness renewable energy are competitive with fossil fuels.
- Oil prices rise when there are threats of supply disruption.
- Geothermal energy is infinite and is not affected by weather or external market conditions.