The plan by British Prime Minister Rishi Sunak’s predecessor to spend billions of pounds importing foreign gas in order to influence the world energy markets has been scrapped.
Former PM Liz Truss’ Energy Supply Taskforce (EST), which was established in September, has reportedly been disbanded, according to sources.
The energy supply initiative was established to negotiate long-term agreements aimed at enhancing Britain’s domestic energy security. It was led by Madelaine McTernan, who previously served as director-general of the government’s COVID-19 Vaccine Taskforce.
It happened after the cost-of-living crisis was exacerbated by the energy market turmoil brought on by Vladimir Putin’s invasion of Ukraine, which led to record prices for British customers.
This past weekend, industry insiders claimed that Mr. Sunak’s team had rejected the idea of committing taxpayers to long-term contracts that may run up to 20 years at the present high pricing.
The EST had “begun negotiations with domestic and foreign suppliers to establish long-term contracts that cut the price they charge for energy and strengthen the security of [UK] supply,” according to a statement released by Ms. Truss’s government at the beginning of September.
At the time, Ms. Truss’s staff referred to it as a hallmark change that demonstrated her commitment to solving the UK’s energy crisis.
Midway through October, it was reported that Whitehall representatives had been in contact with several US-based businesses, including Cheniere and Venture Global, two major players in the liquefied natural gas market.
According to an insider, the administration had discussions with “a broad variety” of prospective providers.
However, Ms. Truss’ disastrous premiership came to an end only a few weeks later, leading her successor to reevaluate her decision to interfere in the energy markets.
“While the government is continuing these efforts and remains completely committed to strengthening our energy resilience, we have concluded that direct purchases of gas are not the best intervention in the market,” a government spokesman said this past weekend.
The UK-US Energy Security and Affordability Partnership, a project both governments stated would concentrate on lowering dependence on Russian energy exports, was introduced earlier this month by Mr. Sunak and US President Joe Biden.
Despite the fact that it made sense for the previous administration to explore these contracts in September, a Whitehall source said on Saturday that winding down the taskforce was the best course of action because locking in long-term contracts while gas prices are this high “just doesn’t make sense.”
Additionally, there are many additional steps being taken to increase the UK’s energy resilience, such as a new $1 billion energy efficiency programme, financial support for Sizewell C, and a new introduction of the Energy Security Bill to parliament.
However, the decision to abandon Ms. Truss’s plan will resurrect concerns about the nation’s long-term energy security.
According to figures British LNG imports made up 17% of the gas delivered to the UK through production and imports last year.
In recent months, the government has also admitted that it has been exploring long-term agreements with foreign nations, including Qatar and Norway, raising concerns that Britain might pay a “security premium” in exchange for supplies that would be assured.
The chancellor, Jeremy Hunt, is rumoured to be considering extending energy bill subsidies past the planned March deadline when the decision to dissolve the energy taskforce is made.
Businesses across a wide range of industries, including the hospitality industry, have lamented how rising energy costs, general inflationary pressures, and deteriorating customer mood have put them in danger of going bankrupt.