UK government backs renewables push amid energy crisis

Speaking at the Pensions UK Investment Conference in Edinburgh this morning, UK pensions minister Torsten Bell backed the country’s energy transition as a provider of energy security.

The minister began his speech by addressing the context of energy price shocks that have followed the conflict in the Middle East. “The big lesson is that resilience matters”, he said.

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Speaking to an audience of pension funds and the wider industry, Bell outlined the ‘bigger picture’ which he said comprised of electrification on the demand side being met through a renewable energy rollout on the supply side.

Home grown clean energy (including nuclear energy), he noted, was a ‘de-risking’ tool to protect British households from price shocks from imported natural gas.

In recent days, following the closure of the Strait of Hormuz, natural gas prices have risen to three year highs according to Energy Intelligence, an information provider.

Minister Bell stressed that the government’s climate commitments were aligned with building the country’s energy security and protecting domestic consumers from energy price volatility.

Pensions investment

The Minister’s address was preceded by a debate between former Green Party leader Caroline Lucas and Michael Gove, a former environment secretary with the Conservative Party.

The debate organised by Pensions UK was centred around identifying whether environmental strategies have a future. Lucas began by addressing the question itself. “If they don’t, neither do we”, she said.

While consensus over climate change being a threat with anthropogenic causes was quick to emerge, the two former politicians diverged on the role of pension schemes in addressing it.

Lucas held the view that addressing a systemic risk such as climate change is aligned with the fiduciary duty of pension schemes. She cited recent research from the UK’s Institute and Faculty of Actuaries showing the scale and severity of climate-driven financial losses facing pension funds.

Gove on his part made the case that it is primarily the task of governments to address climate change. He warned against the risk of ‘guilt tripping’ funds into making climate-driven investment decisions.

“If you accept the principle that pension schemes should have their investment strategies penalised by the state, where does it end?”, he asked.

Gove also questioned the link between economic growth, higher returns for members and climate-driven investment decisions.

“There is an economic logic to the green economy”, said Lucas in response. “There is no dilemma here that by doing the green thing you’re not doing the growth thing", she added.

Ahead of the debate, the audience was polled on whether pension funds in the UK were doing enough on climate change. Two-thirds felt they were not and a third felt they were. This split between audience members remained constant following the debate, when the poll was repeated.

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