An Unsustainable Energy Policy
Crispin Blunt MP
Shadow Minister for Energy (2002-2003)
If you aren’t sure exactly what the Government’s energy policy is you could be forgiven. It is very complicated and highly unlikely to achieve its objectives.
Our current energy strategy leaves Britain without a coherent energy strategy just when clarity and decisiveness are most needed. The Government have a series of targets, some watered down into aspirations, and an “ambition” to double the amount of energy generated by renewable sources. These aspirations are rather like yours and mine to aspire to a new car or a foreign holiday; they will stay as aspirations without a delivery mechanism.
The Government have challenging ambitions for renewables. There is no point hiding exactly how challenging these aspirations are, particularly when many renewable projects are quite properly rejected by planning departments as they try to find the balance of environmental advantage. Their task is made more difficult as the Government have failed to deliver one overall mechanism for internalising the cost of greenhouse gases. Instead the Government intend to continue to rely on a wide range of complex policy instruments, each of which taken in isolation may have merit, but collectively are a muddle. Surely there must be a better way, where politicians produce the framework for energy investment rather than a complex menu of a la carte solutions for each part of the energy mix, including different renewable sources of energy.
The Government’s proposals for renewable energy sound Green. However the truth is that they are an expensive and inefficient way of saving Carbon, the overriding environmental priority. They will also contribute to energy insecurity as the wind cannot be guaranteed to blow, but wind farms are guaranteed to pollute the visual environment.
I believe that the Government’s responsibility in relation to energy policy should be to promote security of supply and deliver our environmental commitments in the most economically efficient way.
Britain must play its part in meeting internationally agreed targets to tackle climate change. That process originated under the Conservative Government at Rio. However unilateral British targets will not save the planet’s climate. Our approach must be a multilateral one, in particular getting the non-Kyoto players to take part. What happens in the USA, China and India is of more significance than anything Britain does unilaterally. It may be that our greatest contribution to the climate could be gifting China carbon sequestration technology. In any event we are going to have to be imaginative and innovative to make multilateral progress. This area remains the greatest challenge for policy makers, but we must be prepared to say that this is not something we will impose on ourselves alone if the world fails to make progress together.
The most hopeful area of government policy is on emissions trading where the Government currently have a consultation paper on a national allocation Plan for an EU Emissions Trading Scheme which would run from 2005-2007. There is a growing body of opinion that sees emissions trading as the most effective and economically efficient way of internalising the environmental costs associated with energy production. However there are some serious flaws with the way policy is being developed, that will work against sustainable clean energy. This area might represent the biggest missed opportunity of all.
The proposed EU scheme itself is not comprehensive and will only apply to the big fixed point emitters thus missing by the DTI’s own admission over 50% of emissions, development of policy is also beset by vested interests protecting their position. The EU has produced a policy that will be based on an allocation i.e. on “grandfather rights”, national allocation plans are now being drawn up which have to be submitted to the European Commission by the end of March 2004. The result will be to reward existing emitters with valuable emission rights. This cannot be right. The distorting effects of this are already being shown in the UK where SOX emissions policy is working against clean coal plants such as Drax.
A truly sustainable energy policy should be based on a comprehensive emissions trading programme that applied to all sectors. It would also not reward existing polluters. It could also serve to deliver emissions targets by emissions permits only being issued to the national limit the Government has prescribed. This “cap” should represent the level of emissions the Government has agreed to with other countries in international negotiations. The price of these permits would reflect the success or failure in achieving carbon dioxide and other GHG reduction targets. They could also be tradeable between countries who had signed up to the targets.
At the moment Britain and the EU are making a limited advance in this area. It is not enough and it will reward existing emitters making it more difficult for carbon free renewables to enjoy their proper advantage. Comprehensive emissions trading can provide the one overarching economic instrument to effectively and efficiently price in the cost of GHG emissions.
Government should also provide a framework for internalising the environmental costs of new nuclear generation so potential investors can make an assessment of the economics of new stations. The absence of leadership on this issue may make the UK even more dependent on imported gas and even less likely to achieve our climate change targets.
Britain now faces the most acute energy challenges for a generation, meaning that the Government's actions and, more particularly inactions, will have effects in the years to come. Lack of clear policy has all the hallmarks of a hospital pass to a future energy minister who will be responsible for the power cuts that may ensue.
Dodging the difficult decisions today may mean the lights will go off tomorrow. The only certainty in current policy is further uncertainty. Aspirations may make us feel virtuous but of themselves they do not keep the lights on or contribute to improving our environment.
