Matt Ridley: Green Energy Or Cheap Energy? Ed Can’t Have Both
It is breathtaking hypocrisy for the architect of expensive renewables to call for a price freeze
Hypocrisy can be a beautiful thing when done well. To go, as Ed Miliband has done, within four years, from being the minister insisting that energy prices must rise — so uncompetitive green energy producers can be enticed to supply power — to being the opposition leader calling for energy prices to be frozen is a breathtaking double axel that would make Torvill and Dean envious.
Remember this is the very architect of our current energy policy, the man who steered the suicidally expensive Climate Change Act through Parliament; the man who even this week pledged to decarbonise the entire British economy (not just the electricity sector) by 2030, meaning that nobody will be permitted to heat their house with gas.
Has he checked the price of electric heating versus gas recently? The gap is due to grow greater. By 2030 much of the electricity will, in theory, come from offshore wind, which is being promised three times the price that gas-fired power stations get for making electricity. So Mr Miliband is telling us to treble, and freeze, our heating bills at the same time.
“There is not a low-cost energy future out there,” Mr Miliband the Energy Secretary said in July 2009, insisting that we learn to live with higher energy prices. “We can work together on the basis of this price freeze to make the market work in the future. Or you can reinforce in the public mind that you are part of the problem not the solution,” Miliband the Opposition Leader threatened energy companies yesterday.
In a prescient paragraph entitled “And guess who gets shot?”, a Liberum Capital report in April suggested that when the energy-price crisis came, the government of the day would heap most of the financial pain on to investors by insisting that they cut profits. That day has arrived early. Mr Miliband has effectively admitted that he will try to delete investors’ return on equity rather than take any blame for the huge bills that will drive people into fuel poverty.
Liberum estimated that to deliver the current Government’s low-carbon energy policy, which Labour thinks is too wet, would require £161 billion to be spent by 2020 and up to £376 billion by 2030. That will be passed to consumers. Much of the discussion on the Energy Bill in the House of Lords this summer was about how to make sure the subsidies were generous enough to entice such large investment. Liberum calculated that “if the investment does take place we see electricity bills rising by at least 30 per cent by 2020 and 100 per cent by 2030 in real terms”.