Over at the Telegraph, Lib Dem secretary of state for energy and climate change Chris Huhne argues that the UK needs to unlock private investment in its energy market on an unprecedented scale, and ensure the low-carbon revolution at the lowest cost to consumers. Here’s an excerpt:
… on Thursday the Coalition begins a consultation on a reform that would reshape this market more fundamentally than at any time since the 1980s, when the Lawson reforms were the pioneer of Europe’s deregulation. Since then, we have acquired an overlay of instruments – notably the renewables obligation – that has provided a piecemeal response to the need for more secure, low-carbon electricity. By forging a comprehensive response, we can unlock investment in a broader range of low-carbon electricity generation. By providing greater certainty, we can encourage new market entrants and investors, reduce the cost of capital, and provide low-carbon electricity at lower cost than under present policies. Our mix of four inter-locking policies should give greater assurance of decarbonisation and lower bills. … These reforms can unlock private investment on an unprecedented scale, and ensure the low-carbon revolution at the lowest cost to consumers. It is time to get off the fossil fuel hook and on to clean, green electricity.
You can read Chris’s article in full here.
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9 Comments
There’s a typo in the first line: “Crhis” Huhne.
Not a patch on the BBC’s wonderful “Christ Huhne” moment though 🙂
One of the things that most discomforts me about this Coalition is it’s shameful hyperbole. This is yet another example from Chris Huhne.
After reading his full article, I’m still left wondering “what is it you’re actually proposing to do then?”
To my eyes – it seems to be nothing more than producing financial incentives for more private sector companies to enter the market.
Nothing wrong with that per se – but the screaming headlines?
Some great points and great plans. I do wonder if the decision on no subsidies for nuclear is driven by his personal anti-nuclear opinions. I firmly believe (and speaking as someone who works in the energy industry) that nuclear must be part of the energy mix to ensure the continuity of supply. Perhaps some enticement would be useful in persuading companies to begin building new nuclear stations sooner rather than later. But I aplaud that the decisions have been made so quickly. These are decisions that Labour delayed making for many years. Now the market can adjust and get on with decarbonisation quickly.
@Scott Walker
Unfortunately there is a massive subsidy for nuclear in the form of state insurance underwriting. If nuclear power had to fund its own public liability insurance there would be a more level economic playing field – and very likely no nuclear power.
The Chris Huhne cleaner and greener electricity consultation, to be on stream over the next winters, are crucial to respond to the growing rise to over 50% of the current demand.
It is time `to get off the fossil fuel hook’ in the UK but the heavy carbon coal is conversely increasing in China,Indonesia and in Australia where coal is mined and exported in response to the satiated demand led global market.
There must be a new concerted international agreement to prevent the current market increase of dirty carbon coal electricity from those Countries set on sale and trade in personal health pollution and hell-bent on increasing world population exposure to `Global Warming’.
The concern I have is that having difficulty paying for heating bills now are people going to be able to heat their homes with the increases that are going to happen when incomes are set to fall especially for those on welfare?
This is one of the best documents that has come out of the coalition government. It’s got a clear understanding of what is required and it sets out the steps that are needed to achieve it.
How different from some of the “heroic” and dangerous stuff that has come from some of the Tory Ministers such as Gove and Lansley and the cavalier behaviour of Pickles.
Tony Greaves
Chris Huhne describes his plan as “forging a comprehensive response…” [to the Lawson reforms that were the pioneer of Europe’s deregulation at the end of the 1980s.]
Well, yes. But this is a remarkably understated way of putting it; perhaps he is being polite to the Tories for the sake of Coalition cohesion. The underlying reality is that their 1980s policy has failed, and failed big, and this is about as big a U-turn as it could possibly be.
For one thing, to describe the Lawson reforms as ‘deregulation’ is essentially spin. When the old Central Electricity Generating Board was split up into in many pieces – generators, National Grid and Regional Electricity Companies – the only way that the whole ramshackle arrangement could be made to cohere was by making regulations to create a market that didn’t exist naturally. To describe it as ‘differently regulated’ would be nearer the mark.
The Tory theory was that by getting away from a state-owned monopoly and creating a market efficiency would increase and costs would decrease – it would sort out everything leaving it ‘untouched by politician’s hand’ so to speak.
The reality was that the players gradually reorganised the industry to suit themselves but not necessarily the public so that we now have an industry that is decidedly oligopolistic and where the key player is a French public utility.
It also turned out, contrary to the Tories’ market theory, that the new structure did not generate investment in new capacity never mind the development of new low-carbon generation techniques. The result is firstly, that we now face a big catch-up spend to build capacity that should have been built over many years and secondly, that key low carbon technologies have to be imported from countries like Germany that provided a stable business environment in which they could be profitably developed.
For example the Tories adopted the Renewable Obligation – supposedly a market-based solution – to promote renewables while the Germans went for feed-in tarrifs – a less overtly market solution. And of course it’s the feed-in tarrif that turned out to be the winner. It has given German industry such a huge headstart that it’s essentially uncatchable – which is why we will import many key componants even as politicians fantasise about building a green supply chain.
The wider lesson I draw from this is NOT that markets are a Bad Thing – I am a strong believer in the value of markets. Rather it is that simple-minded and fundamentalist views about them are generally wrong and government has a role.
People at the petrol pumps aren’t interested in Huhne’s weasle word apologia for his volte face on Lib Dem nuclear policy. With Petrol prices soaring and domestic heating oil being considered for rationing, people want to know when Huhne is going to insist that the Tories stick to their promise of introducing a fuel price stabiliser, which they feted before the general election. The stabiliser ensures that when the oil price is high the fuel duty is lowered and vice versa, and would therefore be very welcome to millions during this period of appalling weather and hiking oil and petrol prices. So where is it? Where’s our stabiliser? Or is it just another another broken promise from this shameless coalition?