Image Credit : Carbon Brief
After Gordon Brown MP, the UK’s former Prime Minister, was involved in several diplomatic missions around the time of the oil price spike crisis in 2008, and the G20 group of countries went after fossil fuel subsidies (causing easily predictable civil disturbances in several parts of the world), it seemed to me to be obvious that energy price control would be a defining aspect of near-term global policy.
With the economy still in a contracted state (with perhaps further contraction to follow on), national interest for industrialised countries rests in maintaining domestic production and money flows – meaning that citizens should not face sharply-rising utility bills, so that they can remain active in the economy.
In the UK, those at the fringe of financial sustainability are notoriously having to face the decision about whether to Eat or Heat, and Food Banks are in the ascendance. Various charity campaigns have emphasised the importance of affordable energy at home, and the leader of the Labour Party, Ed Miliband MP has made an energy price freeze a potential plank of his policy ahead of the push for the next General Election.
The current Prime Minister, David Cameron MP has called this commitment a “con”, as his political counterpart cannot determine the wholesale price of gas (or power) in the future.
This debate comes at a crucial time in the passage of the UK Energy Bill, as the Electricity Market Reform (EMR), a key component of this legislation has weighty subsidies embedded in it for new nuclear power and renewable energy, and also backup plants (mostly Natural Gas-fired) for periods of high power demand, in what is called the “Capacity Market“. These subsidies will largely be paid for by increases in electricity bills, in one way or another.
The EMR hasn’t yet passed into the statute books, so the majority of “green energy taxes” haven’t yet coming into being – although letters of “comfort” may have been sent to to (one or more) companies seeking to invest in new nuclear power facilities, making clear the UK Government’s monetary commitment to fully supporting the atomic “renaissance”.
With a bucketload of chutzpah, Scottish and Southern Energy (SSE) and Electricite de France’s Vincent de Rivaz blamed green energy policies for contributing to past, current and future power price rises. Both of these companies stand to gain quite a lot from the EMR, so their blame-passing sounds rather hollow.
The Daily Mail and the Daily Telegraph have seemed to me to be incendiary regarding green energy subsidies, omitting to mention that whilst the trajectory of the cost of state support for renewable energy is easily calculated, volatility in global energy markets for gas and oil – and even coal – are indeterminable. Although “scandal-hugging” (sensation equals sales) columnists and editors at the newspapers don’t seem to have an appreciation of what’s really behind energy price rises, the Prime Minister – and Ed Davey MP – have got it – and squarely placed the responsibility for energy price rises on fossil fuels.
The price tag for “green energy policies” – even those being offered to (low carbon, but not “green”) nuclear power – should be considerably less than the total bill burden for energy, and hold out the promise of energy price stabilisation or even suppression in the medium- to long-term, which is why most political parties back them.
The agenda for new nuclear power appears to be floundering – it has been suggested by some that European and American nuclear power companies are not solvent enough to finance a new “fleet” of reactors. In the UK, the Government and its friends in the nuclear industry are planning to pull in east Asian investment (in exchange for large amounts of green energy subsidies, in effect). I suspect a legal challenge will be put forward should a trade agreement of this nature be signed, as soon as its contents are public knowledge.
The anger stirred up about green energy subsidies has had a reaction from David Cameron who has not dispensed with green energy policy, but declared that subsidies should not last longer than they are needed – probably pointing at the Germany experience of degressing the solar power Feed-in Tariff – although he hasn’t mentioned how nuclear subsidies could be ratcheted down, since the new nuclear programme will probably have to rely on state support for the whole of its lifecycle.
Meanwhile, in the Press, it seems that green energy doesn’t work, that green energy subsidies are the only reason for energy bill rises, we should drop the Climate Change Act, and John Prescott MP, and strangely, a woman called Susan Thomas, are pushing coal-fired power claiming it as the cheaper, surer – even cleaner – solution, and there is much scaremongering about blackouts.
John Prescott on why it’s coal power to the people
12 Oct 2013
We can’t just stand back and give these energy companies money to burn.
It’s only 72 days until Christmas. But the greedy big six energy companies are giving themselves an early present. SSE has just announced an inflation-beating 8.2 per cent price rise on gas and electricity.
The other five will soon follow suit, no doubt doing their best to beat their combined profit from last year of £10billion.
Their excuse now is to blame climate change. SSE says it could cut bills by £110 if Government, not the Big Six, paid for green energy subsidies and other environmental costs, such as free loft insulation.
So your bill would look smaller but you’d pay for it with higher taxes. Talk about smoke and mirrors.
But Tory-led governments have always been hopeless at protecting the energy security of this country.
It’s almost 40 years since Britain was hit by blackouts when the Tories forced the UK into a three-day week to conserve energy supplies.
But Ofgem says the margin of security between energy demand and supply will drop from 14 per cent to 4 per cent by 2016. That’s because we’ve committed to closing nine oil and coal power stations to meet EU environmental law and emissions targets. These targets were meant to encourage the UK to move to cleaner sources of energy.
But this government drastically reduced subsidies for renewable energy such as wind and solar, let Tory energy ministers say “enough is enough” to onshore wind and failed to get agreement on replacing old
On top of that, if we experience a particularly cold winter, we only have a reserve of 5 per cent.
But the Government is committed to hundreds of millions pounds of subsidies to pay the energy companies to mothball these oil and coal power stations. As someone who negotiated the first Kyoto agreement in 1997 and is involved in its replacement by 2015, it is clear European emissions targets will not be met in the short term by 2020.
So we have to be realistic and do what we can to keep the lights on, our people warm and our country running.
We should keep these oil and coal power stations open to reduce the risk of blackouts – not on stand-by or mothballed but working now.
The former Tory Energy minister John Hayes hinted at this but knew he couldn’t get it past his Lib Dem Energy Secretary boss Ed Davey. He bragged he’d put the coal in coalition. Instead he put the fire in fired.
We can’t just stand back and give these energy companies money to burn. The only energy security they’re interested in is securing profit and maximising taxpayer subsidies.
That’s why Ed Miliband’s right to say he’d freeze bills for 20 months and to call for more transparency.
We also need an integrated mixed energy policy – gas, oil, wind, nuclear and, yes, coal.
Bills have risen to pay for policy changes
Tuesday 8th October 2013
THE recent Labour Party pledge to freeze energy bills demonstrated how to have a political cake and eat it. The pledge is an attempt to rectify a heinous political mistake caused by political hubris and vanity.
In 2008, the then energy minister, Ed Miliband, vowed to enact the most stringent cuts in power emissions in the entire world to achieve an unrealistic 80 per cent cut in carbon emissions by closing down fully functioning coal power stations.
He was playing the role of climate saint to win popularity and votes.
I was a member when Ed Miliband spoke in Oxford Town Hall to loud cheers from numerous low-carbon businesses, who stood to profit from his legislation. I was concerned at the impact on the consumer, since it is widely known that coal power stations offer the cheapest energy to consumers compared to nuclear and wind.
So I wrote to Andrew Smith MP at great length and he passed on my concerns to the newly-formed Department of Energy and Climate Change that had replaced the previous Department of Energy and Business.
This new department sent me a lengthy reply, mapping out their plans for wind turbines at a projected cost to the consumer of £100bn to include new infrastructure and amendments to the National Grid. This cost would be added to consumer electricity bills via a hidden green policy tariff.
Some consumers are confused and wrongly believe that energy companies are ‘ripping them off’.
It was clearly stated on Channel 4 recently that energy bills have risen to pay for new policy changes. These policy changes were enacted by Ed Miliband in his popularity bid to play climate saviour in 2008. Energy bills have now rocketed. So Ed has cost every single consumer in the land several hundred pounds extra on their bills each year.
SUSAN THOMAS, Magdalen Road, Oxford
[ Turned off: Didcot power station’s closure could lead to power cuts. ]
Labour’s power failures will cost us all dear
THE Labour Party’s pledge to freeze energy bills is an attempt to rectify a horrible political mistake. But it might be too late to dig us out of the financial black hole caused by political vanity.
In 2008, then Energy Minister Ed Miliband vowed to enact the most stringent cuts in power emissions in the world to achieve an unrealistic 80 per cent cut in carbon emissions by closing down coal power stations. He was playing the role of climate saint to win votes.
I was in the audience in Oxford Town Hall that day and recall the loud cheers from numerous representatives of low-carbon businesses as his policies stood to make them all rather wealthy, albeit at the expense of every electricity consumer in the land.
I thought Ed had become entangled in a spider’s web.
I was concerned at the impact on the consumer as it’s widely known that coal power stations offer the cheapest energy to consumers.
I contacted the Department of Energy and Climate Change and it sent me a lengthy reply mapping out its plans for energy projects and wind turbines – at a projected cost to the consumer of £100 billion – including new infrastructure and national grid amendments.
It explained the cost would be added to consumer electricity bills via a ‘green policy’ tariff. This has now happened and explains the rise in utility bills.
Some consumers wrongly believe the energy companies are ripping them off. In fact, energy bills have risen to pay for policy changes.
The people to benefit from this are low-carbon venture capitalists and rich landowners who reap subsidy money (which ultimately comes from the hard-hit consumer) for having wind farms on their land.
Since Didcot power station closed I’ve suffered five power cuts in my Oxford home. If we have a cold winter, we now have a one-in-four chance of a power cut.
The 2008 legislation was a huge mistake. When power cuts happen, people will be forced to burn filthy coal and wood in their grates to keep warm, emitting cancer-causing particulates.
Didcot had already got rid of these asthma-causing particulates and smoke. It emitted mainly steam and carbon dioxide which aren’t harmful to our lungs. But the clean, non-toxic carbon dioxide emitted by Didcot was classified by Mr Miliband as a pollutant. We are heading into a public health and financial disaster.
SUSAN THOMAS, Oxford
CEOs demand reform of EU renewable subsidies
Companies ask the EU to stop subsidising the renewable energy sector.
The CEOs of Europe’s ten biggest energy companies called for the European Union and member states to stop subsidising the renewable energy sector on Friday (11 October), saying that the priority access given to the sector could cause widespread blackouts in Europe over the winter.
At a press conference in Brussels, Paolo Scaroni, CEO of Italian oil and gas company ENI, said: “In the EU, companies pay three times the price of gas in America, twice the price of power. How can we dream of an industrial renaissance with such a differential?”
The CEOs said the low price of renewable energy as a result of government subsidies is causing it to flood the market. They called for an EU capacity mechanism that would pay utilities for keeping electric power-generating capacity on standby to remedy this problem.
They also complained that the low price of carbon in the EU’s emissions trading scheme (ETS) is exacerbating the problem…
Well said, Sir Tim
Days after David Cameron orders a review of green taxes, which add £132 to power bills, the Lib Dem Energy Secretary vows to block any attempt to cut them.
Reaffirming his commitment to the levies, which will subsidise record numbers of inefficient wind farms approved this year, Ed Davey adds: ‘I think we will see more price rises.’
The Mail can do no better than quote lyricist Sir Tim Rice, who has declined more than £1million to allow a wind farm on his Scottish estate. ‘I don’t see why rich twits like me should be paid to put up everybody else’s bills,’ he says. ‘Especially for something that doesn’t work.’