London freezes energy tariffs and wants to boost oil and gas extraction

London freezes energy tariffs and wants to boost oil and gas extraction

Liz Truss, Britain's new Prime Minister, unveiled her plan on Thursday to ease the energy shock.

Liz Truss announced on Thursday, two days after her arrival in Downing Street, a massive relief package for households and businesses in the face of soaring energy costs, complete with an ambitious all-out drilling policy with a revival of hydraulic fracturing and a review of the trajectory towards carbon neutrality.

Bills for an average household are going to be capped at 2500 pounds ($3785) per year, a saving of 1000 pounds ($1514) per year compared to what they would have had to pay without government intervention.

Companies and public institutions such as schools will receive equivalent aid for six months.

This is a time during which you have to be bold. We are facing an energy crisis […] and these interventions will have a cost, acknowledged the leader before Parliament.

The support measures, which also include a temporary waiver of energy taxes to fund the transition to carbon neutrality, will cost tens of billions of pounds.

The figure will be announced later this month by the Minister of Finance, with several media citing 150 billion pounds (226 billion Canadian dollars).

It's a radical shift compared to Truss's campaign, which described direct aid as band-aids incapable of solving the underlying problems.

But the pressure was becoming untenable in the face of the cost of living crisis, with economists, NGOs, unions and even energy companies warning of a humanitarian disaster if nothing was done.

The United Kingdom is very dependent on gas prices, which have increased sevenfold over one year, in particular because of supply tensions since the start of the war in Ukraine.

Funding for the measures announced Thursday is expected to be borrowed from the financial markets, which risks adding to debt already soaring during the pandemic.

Liz Truss also announced set up, with the Bank of England, a 40 billion pound ($60 billion) fund on Thursday to ensure that energy suppliers do not lack liquidity in the face of volatility global markets.

The cocktail of massive direct aid and tax cuts is frightening the markets, which fear a new serious slippage in public finances after the pandemic.

But the government hopes that the freeze energy bills, which have doubled over a year, will calm the galloping inflation, which exceeds 10% and is expected to climb further.

For Paul Dales, of Capital Economics, this should reduce inflation and limit the depth of the recession, but will lead to higher interest rates and higher government debt.

The new government's plan also includes lifting the moratorium on hydraulic fracturing and the possible extraction of shale gas and oil in the country, a highly controversial technology with disputed consequences.

The previous Prime Minister Boris Johnson had himself questioned the impact of fracking on energy prices with renewable energies now cheaper than hydrocarbons.

While the previous government's strategy already included a revival of exploration in the North Sea, with energy security having eclipsed the climate emergency since the war in Ukraine, the plan presented by Ms Truss hopes for 100 new exploration licenses. x27; exploration and drilling.

Downing Street also wants to increase the share of nuclear power and open new plants in the wake of what the Johnson government already wanted.

Liz Truss also confirms that she wants to review the 2050 carbon neutrality target by the end of the year to ensure that it does not carry over. too heavy a burden on businesses and consumers. She said on Tuesday that she refused to extend a tax on the huge profits of the oil giants.

Labour leader Keir Starmer recalled having pleaded for the freezing of energy bills for several months and asked once again: who is going to pay?.

He accuses Ms Truss of protecting [the giants'] oil and gas profits and forcing people to foot the bill through the x27;tax for decades.

A drilling spree in the North Sea and hydraulic fracturing in our countryside will do nothing to lower energy prices, but will boost [the oil giants] profits while triggering more heat waves, droughts and storms, adds the NGO Greenpeace.

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