Opinion Articles


The Energy Bill - tinkering while the planet burns?


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Writing in The Guardian in May 2008, Gordon Brown described the escalation in the price of oil as the 'third great oil shock of recent decades'. The Energy Bill 2007-2008, due to recieve Royal Assent in the autumn, is the latest result of the Government's thirty-five year search for a UK energy policy, which began with the first of those shocks in 1973. With oil prices escalating, and climate change worries deepening, there is no question that we need to sort out our energy policies, and the UK Government has certainly produced plenty of target-based proposals over the years. But critics fear that ambitious targets are not enough. We also need detailed policies and programmes, particularly in renewable energy sources - and legislative backup. However, the latest Energy Bill - basically a rag bag of adjustments to existing programmes and regulations, along with some new ones - falls short of this need, once again.

The Energy Bill covers a wide range of issues: some of it deals with fossil fuels, and it includes proposals for strengthening the regulatory framework for the Offshore gas supply infrastructure, the creation of a regulatory framework to enable private sector investment in Carbon Capture and Storage (CCS) projects, and there are also new regulations covering decommissioning of old offshore oil and gas installations. Some of it addresses the thorny issue of nuclear waste and decommissioning financing - seeking to ensure that the operators of any new nuclear power stations accumulate funds to meet the full costs of decommissioning and their full share of waste management costs. And there are also provisions to allow the Secretary of State to modify electricity and gas distribution and supply licences to require the licence holder to install, or facilitate the installation of 'smart meters' to different customer segments, which should help reduce energy waste.

Finally, the new Bill provides the legislation needed to modify the Renewables Obligation (RO) which commits the electricity producers to firm targets in renewable energy sources. In the new Energy Bill, one example of the change in support for renewables is that the RO be subdivided so that each technology gets differentiated support - more for some of the newer options, less for some of the older more developed options. The hope is that this will speed up the process of deployment of renewables - a process begun in the UK in 1974. At that time, Sir Jack Rampton, Under Secretary of State at the Department of Energy, stated that 'We must look for alternative sources of energy…' Failure, he warned, would produce consequences 'the world would find hard to face'.1 To that end, the Government established the Energy Technology Support Unit (ETSU) in 1974 to coordinate the development of renewables. However, the support for renewables in the UK was always constrained by the unshakeable belief at the heart of Government that nuclear energy would be the answer to all our energy problems. In 1974/5 ETSU received £200,000 in funding - whilst the UK Atomic Energy Authority had an R&D budget of around £70m.

In the 1970s, as a UK energy policy was formed, inspired by Lord Rothschild's Central Policy Review Staff, the key driver was the price of oil, and the solution that policy was built on was nuclear power. The facts of climate change, although known to scientists, were uncertain and certainly underestimated. In 2008 we face an altogether different situation. Climate change is accepted as the single greatest threat to the planet. Energy policy should reflect and address this fact. Will the new Energy Bill be enough? It certainly makes sense to look at ways of cleaning up fossil fuel use, as interim option, but critics fear that this could mean that resources and money will be diverted away from renewables, which are the only really long term solution. Similarly for nuclear- the cost of dealing with the existing nuclear plant and waste legacy has now been revised upwards - to £83bn. That cost will fall on the taxpayer. And, if we are to build more nuclear plants someone has to pay for the clean up and wastes - the Government says it wants that to be the private sector (which in the end means the consumer). But should we be going down the nuclear path once again?

In its policy on renewable energy the Government seems loath to replace the Renewables Obligation, which has been far less successful than the guaranteed price Feed- In Tariff (FIT) system used in most of the rest of the EU. Germany, which operates the FIT system, now has over 22 gigawatts of wind capacity in place compared with only 2.4GW in the UK - which has a much better wind regime. The history of renewable energy in the UK shows that the Government has been always been far happier spending vast sums of public money on nuclear power rather than on developing safe and sustainable energy sources. The new Energy Bill continues to favour market-led option of the RO for the development of renewables - even amid the dire predictions of climate change science - as once again nuclear energy is becoming the only game in town.

1. Department of Energy, 'Energy: the key resource', Energy Paper 4 (HMSO: London, 1975)

Please note: Views expressed are those of the author.

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