The long-awaited Energy Bill will be published at the beginning of November and will give Ed Davey a unique opportunity to prove that Lib Dems are the greenest of the main political parties. But in the innermost circles of the Coalition Government a battle royal is currently being played out over crucial details of the text.
This bill will establish the Electricity Market Reform (EMR) that will shape UK energy policy for decades to come. It therefore offers a once-in-a-generation opportunity to set the parameters for tackling climate change, the greatest challenge of the twenty-first century. The bill also offers a real opportunity to get the British economy back on track by fostering green growth and jobs and slashing the billions we pay annually to countries likeQatarandRussiafor oil and gas imports.
The green economy is already responsible for 8 per cent of UK GDP, more than either the telecommunications or the car industries. Uniquely, the green economy has continued to grow even in the current recession and accounted for more than a third of all UK growth last year. It has created almost a million jobs in the UK, most in regions of high unemployment outside London and the South East.
But what the industry urgently needs in order to build on this great record is long-term policy certainty. This is the message UK energy companies stressed to Ed Davey over and over again during the Brighton Conference. Therefore it is crucial that the Energy Bill includes a binding 2030 target for decarbonising the power sector. Such a target would make companies secure in the knowledge that low carbon generation was here to stay – and would thereby make the sector very attractive to investors. It would also boost confidence for supply chain manufacturers and for infrastructure developers such as port authorities, for whom 2030 is tomorrow in terms of making decisions about expansion.
The Government’s main expert body on climate change, the Climate Change Committee, endorses the need for a decarbonisation target and has said that it needs to be 50g of CO2 per kWh. Lib Dems also endorsed a target in the range of 50 to 100g of CO2 per KWh at the Brighton Conference in September.
The decarbonisation target, if put into primary legislation, will ensure that the UK stays committed to its climate obligations and becomes a world leader in low carbon technology. For the greenest government ever there is no other option.
* Fiona Hall is Leader of the UK Liberal Democrat Delegation in the European Parliament and MEP for the North East of England.
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11 Comments
Many questions! How would a target be included in an effective way in the bill? Are you suggesting that prices be rigged in some way so that companies who do not achieve the target are penalised? Or will you cost the damage caused by carbon and charge the cost to consumers who use carbon-based power? Can we also put a cost to dependency on oil and gas imports in terms of their deleterious political effects? Will there be guarantees of financial support for research, and would any of these measures be counter-productive since less private investment would then be needed to achieve a given research volume?
Agreed, Fiona, as far as it goes. You propose a target of 50 to 100g of CO2 per KWh, but you don’t say how we’re going to get there, or how many KWh we are expecting to need. Nuclear? Lib Dems are against it, and no-one wants to build them for us anyway. Drastically reducing the 370 TWh of power annually consumed in the UK? We need to be far more specific about how far this can be achieved. Clean coal? The storage and sequestration technology’s not yet commercially available. Renewables? We can certainly increase our renewable powergen from its current 10% share to something closer to the EU average of 20%, or Spain’s 32%. But the cost per KWh will be higher and this will generate further fuel poverty than the 4.5m households already there. Severn Barrage? Probably, particularly given the need for energy security when we import so much of it. New 50% thermal efficiency coal fired plant using ultra-critical boilers? Or more and more gas-fired power deploying CCGT plants running at 60% thermal efficiency? No-one is saying. In the meantime, we urgently need a joined up policy, not a simple insistence on one part of it.
“Binding targets” sounds good but there are problems with both the ‘binding’ and the ‘target’ bits of it.
‘Binding’ means little because parliament cannot mandate or restrict its own future actions in any way. Is there any serious doubt that a future government led by the likes of Osborne would abandon any green targets in a flash after suitably preparing the PR ground by rubbishing the need for a target and/or its affordability? I think not so the “binding” bit is purely hot air – useful presentationally for the general public perhaps but likely to inspire little confidence in the companies that must decide whether to invest or not.
We should also ask why we think targets (binding or otherwise) are a sensible way to run the economy. If the right other factors are in place new generating capacity will be built, if they are not in place it will not be; targets are mostly used as a stick to prod someone into doing something that will not otherwise happen. Why isn’t it happening? That’s complex but there is a hint in what Geoff Crocker (undoubtedly reflecting a widespread view) says, “Nuclear? Lib Dems are against it, and no-one wants to build them for us anyway. He’s right of course – but that ‘can’t do’ attitude wasn’t how our Victorian forebears started the industrial revolution and got the railways built. All we can apparently do is set a target (and moreover one that is sufficiently distant that it can’t possibly bite any of the current lot on the bum).
Liberal Eye, I only wrote that Lib Dems are (officially) against nuclear power, not that they should be against, or that I am against it. I’m only pointing out the ease of being against everything and in favour of nothing, of demanding lower emissions without solving the power strategy. Meanwhile the lights go out. I share your optimism for human endeavour but not your total faith in laissez-faire markets when you write ‘If the right other factors are in place new generating capacity will be built, if they are not in place it will not be’ although you could be offering a simple tautology here? UK actually has no nuclear powerplant construction capability, and those who do have pulled out (Eon, RWE) leaving us nearly wholly dependent on Electricite de France.
I have written so much on the subject of improvments in homes to save energy, and still things are not changing. Decent Homes for social housing, The Energy Revolution Bill, it goes on and on.
It all goes nowhere.
It goes into the minds of all your readers, Helen. There it is processed and joined with other things and so becomes part of something new, perhaps growing stronger, and this gets communicated somewhere else, and so on. There are many people in the population, but this does not mean it is all in vain. There is a chance that this process grows sufficiently that something is eventually done.
Geoff Crocker – I wasn’t picking up on the nuclear power bit (on which we may very possibly agree) but on the second part of that sentence – namely that we have become so limply dependent on others. If there is a problem – which there is – then why don’t we set to and solve it. After all a problem is also a business opportunity. As it stands right now we may have left ourselves too little time to develop a domestic capacity for new generation but that doesn’t make the supine attitudes sit any better.
As for what we need to do, my solution is emphatically NOT laissez-faire markets which have clear failed abysmally. Creating a pseudo-market in electricity is exactly in the wrong direction as even Cameron is having to admit on the retail pricing front. Rather I was thinking of what government can and should do which is providing, inter alia, strategic leadership which might for instance involve ensuring that there is a domestic technological capability and that we are not dependent on unreliable overseas suppliers for fuel. Unfortunately, strategic leadership is what their neoliberal philosophy tells them they shouldn’t do. I doubt that the present RP-heavy lot have the managment or technical skills in any case even if their economic theory was better.
Liberal Eye, I almost totally agree with you. I wish I could agree though that we could re-create UK technology leadership. But we’ve lost GEC (whilst France’s Alstom, Germany’s Siemens, and Swiss ABB go from strength to strength), and we opted for the wrong AGR nuclear technology which is now dead beat. There’s no return I fear, no way of making the quantum leap needed to get back. It’s the same in automotive. We can at least be pleased that in aerospace with Rolls Royce engines (one of only 3 world lead producers), wings and landing gear for Airbus, we do have sectoral competence. I think LDV is running a piece I wrote on energy import dependency later today.
I am a great believer in what I once saw described as corporate aikido – using your oponent’s strength against him and this makes me an optimist. I think energy is on the verge of a massive transformation as legacy technologies are replaced by newer ones. If I am right and if others are locked into various legacy technologies (like EdF’s PWRs) then this provides the perfect setting for such a move – but it can only happen if we first ditch the destructive neoliberalism. We no longer have the firms to lead so it must be led by government.
I am about to leave for a long w/e with no Internet connection but will llook forward to your post on energy inport dependency.
We could start with the Severn Barrage 🙂
for Richard Dean, I think that your comments are more positive than most. It is correct so much is being written on what we should do, but it has to be done. Energy bills rise again, I feel all the technology that has been produced , we should be thinking in real terms that one small step is better than nothing at all. Decent affordable homes for all. What a thought. In the future our lives may need to change in other ways too, firstly though, saving our money on needless waste, warmer homes to live in, and even better, stop production of all this carbon.