Energy Boss Says High Prices Are Here to Stay Thanks to Net Zero and Windfall Taxes
Energy bills will remain higher for years, the boss of one of Europe’s biggest gas companies has warned.
Equinor Chief Executive Anders Opedal told the BBC that the cost of governments’ attempt to reach “net zero” Price drops will be difficult due to emissions targets and windfall tax on energy firms.
Norway’s Equinor is one of the biggest producers of gas in the world, and supplies much of Europe’s energy needs.
The current energy crisis has seen bills for the average British household rise from around £1,300 ($1,586) to £2,500 ($3,050).
The UK government’s energy support package has capped the prices at relatively low levels. Without the support, the average annual household energy bill would have been £4,279 ($5,222) in the last three months of 2022.
Opedal indicated that prices will remain high for years to follow, but they will fall from an extreme level as the market changes.
He said: “We see a rewiring of the whole energy system in Europe in particular after the gas from Russia was taken away. We require huge amounts more renewables. The industry must be done in a completely new way. This will require hydrogen and other such things.
“This will require a lot of investment and these investments need to be paid. So I would assume that energy bills will maybe be slightly higher than in the past, but not as volatile and high as they are today.”
The energy boss also added: “I think we need to treat energy as something that is not abundant. It actually has a value. I think we’ve had a lot of cheap energy in the past and we’ve probably wasted some of it. So, to make sure that we are making the right investments everyone wants to use as little energy as possible.”
Net Zero Plans are expensive
The UK has adopted a policy of net zero by 2050. This was enacted by the Conservative government. “Build Back Greener” To decarbonize all parts of the UK’s economy.
According to estimates by the UK’s Climate Change Committee in 2019, the annual cost of achieving net zero could increase over time and reach around 1 to 2 percent of GDP in 2050.
The UK’s National Audit Office (NAO) said in December 2020 that the government’s commitment to achieving net zero by 2050 is a “colossal challenge” That could be. cost hundreds of billions of pounds.
According to a YouGov poll, November 2022 saw a decrease in the number of people who exclude them. “don’t knows,” Respondents wanted a 62 percent referendum on UK’s net zero policy Compared with 58 per cent who were asked the exact same question in 2021, just before the COP26 climate summit.
Car26, a group which commissioned the poll is currently campaigning for a referendum to net zero and a pause on carbon-related regulations, until such a ballot can be held.
Car26 reported that in all demographics there was more support for a referendum than opposition.
An online survey was conducted between Nov. 21-22 and asked 1,661 respondents “To what extent do you support or oppose holding a national referendum to decide whether or not the UK pursues a Net Zero Carbon policy?”
Excludes “don’t knows,” 66 percent of 2019 Labour voters backed a survey, compared to 60 percent of Liberal Democrat voters or 56 percent of Conservative voters.
Only 15% of Lib Dem voters were most interested in the election. “don’t knows,” Comparable to 25 percent for Labour, and 24 percent for Tories
Remainers and Leavers voted for a net zero referendum with 58 percent and 61%, respectively. Both sexes supported the net zero referendum with 62 per cent support.
Windfall Tax
Charges for a windfall tax Another factor that influences prices over the long-term is energy companies
Opposition parties proposed the idea of a windfall income tax on energy companies. energy prices Following the Russian invasion Ukraine in February 2022, markets rose significantly.
Rishi SunakThe then chancellor at the Exchequer, Jeremy Sullivan, initially opposed the idea, warning of the negative impact it would have on future investment.
But he was later forced to impose the tax to fund a £15 billion emergency support package to tackle the impact of energy inflation on British households.
On May 26, 2022, Sunak announced a 25 percent profit levy on oil and gas giants, which the government expected to generate £5 billion in tax revenues.
After Sunak became prime Minister, Chancellor Jeremy Hunt increased Sunak’s windfall tax to 35% and imposed a 45% levy for electricity generators. In the autumn budget, Sunak also reduced the allowance for investment by energy producers.
At a meeting held in Edinburgh on Dec. 9, UK energy producers complained to the chancellor that the government’s extension of the Energy Profits Levy was “a tax too far.”
Hunt stated that he needed to make “difficult decisions” Those with broad shoulders were asked to pay more.
Owen Evans and PA Media contributed this report.
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