Thursday, 29 November 2012

Energy policy, what energy policy....

After months of backroom negotiations between George Osborne and the Liberal Dems the government has announced its renewable energy policy. It has decided to wait until 2016, after the general election, and make a decision then.

a failure that barely raised eyebrows. Tories were unhappy because the government was effectively agreeing to a subsidy for wind farms. Lib Dems were unhappy because the government had given up on decarbonising its economy.

we were looking for a coherent policy, just any policy would do!!! a target, something to aim at!!!

Osborne's negotiations with Lib Dems - specifically with energy and climate change secretary Ed Davey - focused on gas. Davey wants full decarbonisation by 2030. Osborne wants natural gas to play a role in Britain's energy mix past 2030.

"It's not realistic to try to get off gas," Glyn Davies, Tory MP for Montgomeryshire

parliamentarians have plenty of reasons to be uneasy about a 2030 decarbonisation target too.

Companies there have major challenges as far as emission are concerned, but at the same time they work together to create carbon capture and storage projects. We need government to step up to the plate and help them do that.

Eventually Osborne and Davey came to a deal. Firstly, they would ignore the 2030 goal until after the election (an Osborne victory). Secondly they would announce a gas strategy which would be unveiled on December 5th, alongside the autumn statement, backing new gas-fired power stations (another Osborne victory). Finally, they would significantly raise the cap on how much energy companies can charge consumers to invest in renewable forms of energy (a Davey victory).

EDF Energy are happy - plans two nuclear reactors at Hinkley Point in Somerset, said it was a "very positive step".

By 2020 energy companies can add £7.6 billion to household bills to pay for new power plants, wind farms and the like. Consumers are currently paying about £20 a year into this fund. By 2020 that will rise to about £110, although the majority of the increase comes towards the end of that period. Presumably the government is hoping it can go up when household budgets are less tight.

The financial situation for consumers probably sounds worse than it is. The government expects to reduce bills by £94 a year by 2020 as it limits our dependency on gas. Gas has been driving up bills throughout the year, as rising prices whack another £100 on consumer's debit cards. That will probably get worse, with the International Energy Agency forecasting a further 40% rise in gas prices by 2020. But regardless of the long-term picture, many consumers are dreading the rise in already exorbitant energy prices.

Against that backdrop, the government is hardly boosting confidence. "It's a government department where the secretary of state has to take legal advice to establish whether his own minister is acting in the greater interest of green economy," Cunningham says. "There's no policy at all. It's just a muddle. You give a bit, I'll give a bit and all you get is nonsense."

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