British Prime Minister Liz Truss is facing an economic crisis of the likes not seen since her idol Margaret Thatcher became prime minister in the late 1970s, driven primarily by a surge in gas and electricity prices following Russia’s invasion of Ukraine this year. Inflation hit a 40-year high of 10.1 per cent in July, in part because of eye-watering energy price rises. Thousands of small businesses, including pubs and corner shops, have said they are not sure if they will make it through the winter. Millions of consumers could be pushed into poverty because of an inability to pay their energy bills. As part of a more than £60 billion (US$66 billion) package to try to ease the pain of energy price hikes and stave off a recession, Truss has vowed to increase offshore oil and gas production, controversially lift a moratorium on fracking in Britain and remove a green levy on energy bills, which helps fund energy-efficiency programmes. Truss is not alone. Leaders in Austria, France, Germany and the Netherlands are restarting mothballed coal plants to keep the lights on this winter. Some have questioned whether Western leaders are putting too much reliance on fossil fuels in the near term and suggested such a policy shift – even if temporary – could delay, if not derail, global climate efforts. “The energy crisis Europe is now facing is only the latest chapter in the long, shameful saga of global injustice and instability caused by fossil fuels,” said Greenpeace EU campaigner Thomas Gelin. “What clearly needs to happen is to end the fossil fuel era for good, and to get serious about cutting energy waste, for example with a massive home insulation programme, and reducing the overall level of energy demand so that we have a chance of withstanding the havoc of the climate crisis in Europe and around the world.” China, the world’s biggest carbon emitter, has questioned the climate commitment of some European countries during the crisis. “The climate policies of some European countries have shown a ‘backswing’, and it is hoped that this is just a temporary stopgap,” Chinese lead climate negotiator Xie Zhenhua told his European counterpart in a video meeting last week, according to Reuters, which cited a government readout of the meeting. China, which has pledged to reach net-zero emissions by 2060 and has said its low-carbon plans are on track, has ramped up its own coal production to guarantee its energy security this year and increased its imports of cheap Russian oil by nearly 28 per cent year-on-year in August. Coal supplied about 55 per cent of China’s total energy consumption in 2021, down from 70 per cent two decades earlier, according to the US Energy Information Agency. At the same time, the International Energy Agency (IEA) and the International Renewable Energy Agency have warned that “radical and immediate action” through greater global collaboration is needed to attack climate change in the near term, or net-zero goals could face decades of delays. “We are in the midst of the first truly global energy crisis, with devastating knock-on consequences across the world economy, especially in developing countries,” said Fatih Birol, executive director of the IEA. “Only by speeding up the transition to clean sustainable energy can we achieve lasting energy security.” The British government’s renewed focus on increasing domestic oil and gas production is a sharp policy contrast to October 2021, when then-Prime Minister Boris Johnson called for more aggressive action to address global warming at the UN Climate Change Conference known as COP26, in Glasgow. “The longer we fail to act, the worse it gets and the higher the price when we are eventually forced by catastrophe to act because humanity has long since run down the clock on climate change,” Johnson said. “It’s one minute to midnight on that doomsday clock and we need to act now.” The year before, electricity production from renewable sources of energy, such as solar and wind, surpassed production from fossil fuels in Britain for the first time ever. And oil and gas production was on the decline. However, few could have anticipated that Russia would invade its neighbour Ukraine in February, sparking a surge in energy and commodity prices and causing Western governments, particularly in Europe, to move to curtail their reliance on Russian oil and gas. The events have forced many governments to rethink – at least temporarily – their love affair with fossil fuels. Germany has restarted several coal-fired power plants and scrambled to source natural gas from countries other than Russia, but still faces the possibility of rolling blackouts this winter. Nearly a third of the electricity generated in Germany in the first half of the year came from heavily polluting coal-fired plants, according to data from the country’s Federal Statistical Office, or Destatis. That compared with 27.1 per cent in the first half of 2021. In France, President Emmanuel Macron has called on the public and businesses to curtail their energy use and has capped electricity and gas prices, announcing this month a maximum price increase for households of 15 per cent next year to avoid a doubling in rates. The government is also converting gas-fuelled power plants to burn oil to cut the country’s reliance on Russian natural gas. In Britain, Truss and her Conservative allies have embraced the idea of ramping up production in the North Sea and from shale. Even though it is the second-biggest producer of oil and gas in Europe after Norway, Britain’s economy is particularly sensitive to rising gas prices. About 85 per cent of consumers use natural gas boilers to heat their homes and 40 per cent of the nation’s electricity is produced by gas-fired power plants, according to the climate science website Carbon Brief. The country has been a net importer of energy since 2004, consuming 6.8 quadrillion British thermal units in 2020, while producing about 4.9 quads of energy, according to the US Energy Information Administration. Truss has pledged to make Britain a net exporter of energy by 2040, in part through the use of renewables and nuclear power. However, few details have emerged about the government’s plan for renewables – other than a promise to bring offshore wind planning “in line” with other infrastructure – and nuclear plants remain controversial in Britain. In September her predecessor, Boris Johnson, bypassed community opposition and pledged £700 million to help build Britain’s first power plant in a quarter of a century – a project that will not be online before 2035 at the earliest. Johnson – and now Truss – have said eight new nuclear plants could be built by 2050. In the near term, Truss’s government instead plans to accelerate oil and gas production in the North Sea, with more than 100 new licences likely to be awarded. “The UK cannot address this crisis solely by increasing its production of natural gas,” John Selwyn Gummer, chair of the Committee on Climate Change, and John Armitt, chair of the National Infrastructure Commission, wrote to the prime minister in a letter on September 6. “Greater domestic production of fossil fuels may improve energy security, particularly this winter. But our gas reserves – offshore or from shale – are too small to impact meaningfully the prices faced by UK consumers. “Energy security and reducing the UK’s exposure to volatile fossil fuel prices requires strong policies that reduce energy waste across the economy and boost domestic production of cheap and secure low-carbon energy.” Even with government caps in place, electricity prices in Britain rose by 54 per cent in the 12 months ended August. Gas prices rose by 95.7 per cent in the same period, according to the Office for National Statistics. At the same time, the Truss government is focused on boosting growth in the British economy, announcing the largest series of tax cuts in five decades and a massive amount of borrowing as part of a mini-budget described by officials as a “fiscal event” on September 23. China says Europe must take ‘positive action’ on climate change That came a day after the Bank of England raised interest rates to 2.25 per cent in a bid to slow inflation and said the British economy may already be in a technical recession. The British pound crashed to a record low against the dollar on Monday, following the announcement of the government’s tax-cut-and-spending plan. However, it recovered much of its losses in Friday’s Asian trading session, ending a topsy-turvy week for the British currency. Much of the debate on how to address the energy crisis has focused on energy security and how to keep a cost-of-living crisis from derailing the economy, rather than efforts to make homes and businesses more energy efficient. Truss’s government has said it will cap energy prices for households at £2,500 a year – the cap had been set to nearly double to £3,549 annually in October – and would cap prices for businesses, charities and public sector groups, such as schools, for six months. “We are cutting off the toxic power and pipelines from authoritarian regimes and strengthening our energy resilience,” Truss said during a speech at the UN General Assembly on September 21. “We will ensure we cannot be coerced or harmed by the reckless actions of rogue actors abroad.” However, critics have argued the government needs to focus on increasing energy efficiency in homes to cut costs, rather than further drilling. Better insulating homes in Britain and switching to more energy efficient heat pumps could inject an additional £6.8 billion a year into the economy by 2030 and create nearly 140,000 new jobs, according to a report by Cambridge Econometrics. “The recent and highly damaging rapid increases in fossil fuel prices have fundamentally altered the economics of the transition,” said Jon Stenning, head of environment at Cambridge Econometrics. “Improving the quality of the UK’s housing stock and switching to low-carbon heating technologies can bring down household bills immediately, and remove struggling households from having to choose between heating and eating this winter, while also delivering greater economic growth and substantial carbon emissions savings in the long term,” he said. #Fracking Experts say: * it's totally unsuitable to the geology of the UK * it's too expensive * it'll take decades to extract & doing so harms communities & the environment most of the cabinet oppose it 👇👇 https://t.co/DzH6s7VLop So why does @Jacob_Rees_Mogg want it? — Extinction Rebellion UK 🌍 (@XRebellionUK) September 22, 2022 Greenpeace UK, which commissioned the report, is calling on the British government to create a £7 billion programme to make homes more energy-efficient. More controversially, the government lifted a 2019 moratorium on fracking, with Business Secretary Jacob Rees-Mogg revealing on BBC Newsnight recently that the limit on seismic activity as a result of fracking would be increased. The moratorium on fracking was a key plank of the Tory party manifesto that year, but Truss now expects fracking operations to begin within six months in Britain. “Giving fracking the green light is a hideous mistake. If the purpose is to tackle bank-busting gas prices, it’s an exercise in futility,” said Tom Fyans, director of campaigns and policy at countryside charity CPRE. Ed Miliband, the shadow climate and net zero secretary, has called fracking a “dangerous fantasy”. “It would do nothing to cut energy bills, costs more than renewables, and is unsafe,” Miliband said in a tweet .