Energy Bill May Drag Britain Into A Dark Age
‘Even without the amendment, the long-term consequences of the Energy Bill will be horrible,’ said Professor Gordon Hughes of Edinburgh University, one of Britain’s leading experts on energy economics. He issued a strong warning the ‘surreal’ amendment could spell the end of British industry. ‘It’s a recipe for deindustrialisation,’
Like all MPs, Tim Yeo is paid £65,000 a year. But he never has to make do with just that. Last year alone, three ‘green’ companies paid the Conservative MP for South Suffolk £135,970.
For this, he usually did just a few hours’ work a month. Yet he may be the firms’ most valuable asset, as Mr Yeo is chairman of the Commons Select Committee on Energy and Climate Change, and so plays a key role in shaping the green economy in which his sometime employers – AFC Energy, Eco City Vehicles and TMO Renewables – operate.
And he may be about to perform his most valuable service yet.
Mr Yeo has moved an extraordinary amendment to the Energy Bill that would set a crippling and binding target for the amount of carbon dioxide emitted by generating power in 2030. It would transform the electricity industry and bring huge benefits to the business sector, which has so generously rewarded Mr Yeo.
For the rest of us, however, the effects will be very different. It will cause already high energy bills to soar further and could lead to more power cuts. The effect on business is likely to be even more dramatic.
Yet despite the considerable drawbacks, the amendment is likely to be passed into law. Following intense campaigning by an alliance of dozens of green pressure groups and renewable-energy firms, the move has won the support of Labour, many backbench Liberal Democrats and some Tories, which may be enough to push it through Parliament.
‘Even without the amendment, the long-term consequences of the Bill will be horrible,’ said Professor Gordon Hughes of Edinburgh University, one of Britain’s leading experts on energy economics. He issued a strong warning the ‘surreal’ amendment could spell the end of British industry. ‘It’s a recipe for deindustrialisation,’ he said.
Prof Hughes thinks the choice is stark: ‘Either we get rid of this obsession, or we give away our future to the rest of the world. The question is whether we’re serious about our economic future or not.’
But for supporters of the amendment, cutting Britain’s carbon dioxide production is more vital.
Q: WHAT’S THE BILL’S PROBLEM?
The Lib Dems love low-carbon energy. This helps explain to why the Bill will double the number of onshore wind farms by 2020, while subsidies for offshore farms will rise 16-fold.
On paper, the amendment looks innocuous: it merely requires the Government to set a target to reduce the carbon dioxide emitted by the power sector by 2030 and to take advice from the Committee on Climate Change, the official body chaired by Lord Deben, the former Tory Minister John Selwyn Gummer.
But the level repeatedly recommended by that committee is that just 50g of carbon dioxide (CO2) should be emitted per kilowatt hour of electricity generated. The number may be meaningless to the lay person, until you realise that currently that figure is between 450 and 500g, meaning a cut of 90 per cent.
Even a member of Lord Deben’s committee, Professor Sam Fankhauser, believes this is an ‘unbelievably aggressive target’. Yet supporters of the amendment, including Labour MP Barry Gardiner, who tabled it with Mr Yeo, claim this will promote growth.
Q: HOW WILL IT AFFECT ME?
The Government admits that the Energy Bill, even without the amendment, will add about £100 a year to household bills – on top of the approximately £100 already being paid in subsidies for renewables.
But the real economic cost is likely to be much higher.
First, the Government could be hostage to its own policy. Already the Department for Energy and Climate Change (DECC) is wrangling with French energy giant EDF over two planned nuclear power plants, which emit no carbon. EDF wants the Government to agree to pay £100 per megawatt hour for their output for at least 40 years – well over double the market price – before it will start to build them. If EDF gets its way, this will heap yet further charges on to consumers.
Then there are the indirect costs. Steel giant TATA has already said it may pull out of Britain because of high energy prices and other firms seem certain to follow.
There is also a question of the reliability of low-carbon electricity.
Prof Hughes said the amendment would give multinational companies more reason not to invest in British factories as its effects become felt.
‘If you were thinking of building a new car plant, you could get to 2018 or so and find yourself either having your power cut off because of the shortfall in generating capacity, or paying through the nose for your power,’ he said. ‘Firms are not going to run those risks.’
The absence of economic growth caused a downgrading of Britain’s AAA credit rating on Friday and critics of the Bill say that continuing to increase energy prices to levels far higher than our competitors’, while failing to guarantee supplies, is a sure way to prolong the slump indefinitely.