THE horse-trading for a coalition government produced Chris Huhne as the man in charge of the UK’s energy policy. Now we await the practical implications of that choice. At one level, this was a pretty obvious bone to throw to the Lib Dems, given their preoccupation with energy and the environment. Perhaps, however, it was a little too obvious – and therefore mistaken.
Britain needs its share of green energy policies. We can all agree with that. But it also needs security of supply, affordability and a level of real-worldliness which is not Mr Huhne’s most obvious attribute. For example, I was curious to note a section of the coalition agreement which promises that our trade promotion agency, UKTI, and ECGD, the credit agency which helps facilitate exporting, will no longer support “dirty fossil-fuelled energy production” as opposed to “innovative green technologies”.
So what does that mean – if, indeed, it means anything?
The obvious interpretation is that neither UKTI nor ECGD will, in future, be soiling their newly manicured hands with anything to do with the oil&gas industries – which is not great news for the hundreds of exporting companies that have spun out from the North Sea.
The other possibility, of course, is that these are just apple-pie words, required for the purposes of forming a coalition, which will have no practical impact at all. But early clarification would be helpful. Certainly, the words about nuclear power were carefully chosen in order to protect Liberal Democrat sensibilities.
The coalition agreement declares: “We will implement a process allowing the Liberal Democrats to maintain their opposition to nuclear power while permitting the Government to bring forward the national planning statement for ratification by parliament so that new nuclear construction becomes possible.”
Well, if being allowed to oppose something that the Government they are part of is getting on with implementing keeps delicate Lib Dem consciences happy, then so be it. But it strikes me that the amount of wriggle-room in both directions on this issue is still a hostage to fortune.
If Mr Huhne remains hellbent on stopping the construction of new nuclear power stations, perhaps by imaginative interpretation of the words “no public subsidy” – which the coalition agreement also contains – then the potential for mischief is considerable. Potential investors need certainty, not coalition word games.
As one would expect, carbon reduction and renewables get big licks in the coalition agreement. “We will seek to increase the target for energy from renewable sources”, the partners declare, as well as “supporting an increase in the EU emission reduction target to 30% by 2020” – although even the existing 20% target is going to be missed.
I am all in favour of encouraging renewables, but it has to be as part of a coherent approach rather than as a substitute for it. There is no foreseeable prospect of renewables delivering security of supply, and so it is essential that the other sources of generation – “clean coal” and nuclear, in particular – are not treated like pariahs, with consequences that will have to be lived with long after Mr Huhne is gone.
The other issue that tends to get brushed aside in the coalition agreement is cost. Yet chairing a session at the All-Energy event in Aberdeen last month, I was really struck by the way in which “cost reduction” is becoming a priority for the renewables industry itself.
There is a realisation, which was not present a couple of years ago, that virtue alone is not enough. In order to get their share of the energy market, even with the very generous assistance provided by ROCs (renewable obligation certificates), renewable technologies need to get their costs down to within acceptable parameters, and most of them are a long way from achieving that.
Consumers will eventually bridle at the requirement to pay through their electricity bills for the ROCs system. Incidentally, one of the coalition commitments – to create greater transparency in people’s electricity bills – is likely to contribute to that outcome sooner rather than later.
But it is ironic that, while the renewables industry itself is waking up to the danger of its product simply being too expensive, there is absolutely no reference in the coalition agreement to the question of affordability. At this stage, its energy policy is nothing more than a green wish list.
The centrepiece of the Energy Bill, we are told, is to be a green investment bank from which householders will be able to borrow in order to fund domestic renewables such as solar panels, small wind turbines and ground-source heating. It is an idea borrowed from the outgoing Government and is fine as far as it goes.
However, it is a long way removed from the big questions of energy policy, which involve meeting the three sacred criteria of affordability, security of supply and carbon reduction.
Mr Huhne may be very committed to the third, but someone will have to remind him occasionally of the other two.
Recommended for you
