In the Energy Transition, You Cannot Have Your Cake and Eat It, Too

Only three months ago, the U.K. helped convince the world at the COP26 climate change summit to give up “inefficient fossil fuel subsidies.” For the green movement, it was a longed-for victory. Not just because subsidies support coal, oil and gas consumption, but also because — for the first time at a United Nations climate summit — the communique actually mentioned the elephant in the room by name: fossil fuels.

On Thursday, the British government decided to have its cake and eat it, too. In an effort to cushion a 54% hike in retail gas and electricity prices from April onward, it rolled out what, in all but name, are energy subsidies. Rishi Sunak, the Chancellor of the Exchequer, carefully dressed up a package — worth 9 billion pounds ($12 billion) in between direct aid and zero-interest loans backed by the government — as a “discount” and a “tax rebate.” Technically, he may be right on the labels, but the result is undeniable: the U.K. is supporting demand of fossil fuels.

“Energy bills are rising because it is more expensive for the companies who supply our energy to buy oil, coal, and gas,” Sunak told parliament. “But what we can do is take the sting out of a significant price shock for millions of families by making sure the increase in prices is smaller initially and spread over a longer period.”