Summary

• Energy is a fundamental input into a modern economy. There are no rich countries which have low levels of energy consumption.


• Unfortunately, a vast array of legislation and regulations, designed to achieve net zero carbon emissions by 2050, has led to a constrained energy supply, high energy prices and a rising regulatory burden.


• Over the last 20 years, Britain has pursued policies that have left us with the highest industrial electricity costs in the developed world. While it is fashionable to blame the UK’s high electricity costs on the price of gas, UK gas prices are marginally below the International Energy Agency median.


• Though gas prices do have an impact on electricity prices, renewables subsidies, taxes on hydrocarbons and hidden backup, grid balancing and expansion costs have been major structural factors behind rising costs.


• High energy costs and regulation have contributed to a dramatic drop in consumption. Overall, UK energy consumption is down 29.2 per cent from its peak in 2005, and domestic electricity generation is down 26.5 per cent from its peak. Industrial energy consumption has fallen even more rapidly and is now 45.3 per cent lower than it was at its peak in 2004.


• Any analysis of the UK’s growth slowdown that does not factor in higher energy costs and lower consumption is bound to be woefully incomplete.