Blog: ISR in conversation with…Arjan Geveke on energy intensive industry's future

On 17 May 2023 Arjan Geveke (Director, Energy Intensive Users Group) joined the UCL Institute for Sustainable Resources (ISR) for a conversation on the challenges facing energy intensive industry, including the energy crisis, decarbonisation and the move to Net Zero.   

Arjan began by sharing a figure of the rising energy price for wholesale gas, which increased significantly from 2 p/kWh in February 2021 to a peak in August 2021 of 20 p/kWh. Wholesale gas prices on the forward market in May 2023 remain three times higher than February 2021 levels. This rise in gas prices was associated with Covid-19 pandemic, the economy, and Russia’s invasion of Ukraine. In addition, rising energy prices were caused by Governments buying stock in case of an energy emergency.

Compared to other countries, the UK, according to Arjan, has the highest energy prices for four reasons: a) the electricity mix is dominated by gas, which sets the wholesale price; b) the unilateral carbon tax on top of the energy price; c) the network charges are relatively higher in UK than Europe; and d) the policy mix. Arjan noted, 

“Gas generators set the electricity price 98% of the year, despite making up only 40% of our electricity supply – we need to reform electricity markets to give consumers direct access to cheap, reliably priced power.

Despite various Government relief initiatives to reduce energy prices, they remain high, and have a disproportionate impact on individuals already in fuel poverty – with levies increasing the cost of energy – and industrial consumers who use large amounts of energy.

The need for Industrial Decarbonisation is essential for the UK to remain competitive with other countries. Arjan presented three technology options to decarbonise UK industry – hydrogen, carbon capture and storage, and electrification. However, all will be energy intensive, and will need to consider relative costs to EU responses.

In response to Arjan, the ISR’s Phil McNally reflected on UCL ISR’s collaboration with the Aldersgate Group to map out reform of energy markets and explained the key proposal of a 'Green Power Pool'. Phil explained that the Green Power Pool has been put forward by ISR as a means of allowing consumers to directly access cheap, reliably price renewable electricity, removing the possibility of windfall profits for these generators in future and aligning incentives to encourage faster deployment of these clean technologies.

The conversation was broadened through questions asked by the audience, such as: what is the value for renewable generators for joining a Green Power Pool?; in a world of regulatory competition, how do we keep energy intensive industries in the UK?; what are the repercussions for workers in industry from decarbonisation?; how do members of EIUG play the UK against the EU?; and, what information is available on industrial demand profiles and response of the sector?

To join the conversation on building a sustainable future, book your ticket for our next 'ISR in Conversation with...' event on 21st June, featuring Erling Holden and Kristin Linnerud from the Norwegian University of Life Sciences discussing sustainable development gaps. More details can be found here.