Public demand answers to energy omnishambles
YouGov has spoken. 68% of the public on average, including 52% of Conservatives, want energy companies run in the public sector. If affordable, secure and low carbon energy is the aim, then this week’s shambles includes: Big Six energy firms accused of profiteering, after their profits per customer last year rose by 77% – from £30 in 2011 to £53 per household. The European Commission’s head of energy research telling MEPs yesterday that there was “no business case for carbon capture technology in Europe today” because of the collapse in the market price of carbon. RWE cancelling a £4bn wind turbine project in the Bristol Channel because the economics do not stack up. And reports that fuel poverty levels and Excess Winter Deaths are lower in Sweden despite they have much longer, colder winters.
The question isn’t energy market reform, but how radical? Dieter Helm’s advice for Labour on energy markets argued that nationalisation was a “politically contaminated” concept. He stepped neatly away and proposed instead a powerful single Energy Agency with the twin objectives of security of supply and decarbonisation.
Sorry Dieter, but hands to the fire. Here are a few radical ideas.
First, the national grid must be in public ownership. It delivers electricity and gas into our homes and is meant to ensure the lights stay on and industry’s furnaces glow. Network Rail is already publicly owned.
If action is what’s needed, Dieter Helm’s Energy Agency should commission the National Grid to provide a rolling programme of essential low carbon investments:
- Carbon capture & storage networks in at least three industrial regions, let’s say the Aire Valley, the North East and North West, linking coal and gas fired power stations with CO2 capture technology. Heavy industry carbon emitters like steel, cement and chemical plant gain access to the system, and it provides an outlet for our few remaining coal mines.
- Major renewable energy/offshore windfarm building programme through to 2030. This will attract European turbine plant makers like Siemens, with new factories on Hull docks, a city where 16 people chase every vacancy. At present, UK content of wind industry manufacture is around a third, it should be far higher.
Second, public sector led investment in homes insulation. According to the Energy Bill Revolution over the course of this Parliament fuel poverty funding will have decreased by 20% and energy efficiency funding for fuel poor by 20%. Energy efficiency funding for fuel poor hit a low mark last winter, decreasing by 50% as Warm Front was axed. Over 90 organisations supported the EBR’s letter to the Chancellor:
“Making homes highly energy efficient should be a priority UK infrastructure investment. This expansion could best be paid for by recycling carbon revenues from the Carbon Support Price and European Emissions Trading Scheme back into a home energy efficiency programme which is far more ambitious. It could make over half a million homes ‘super energy efficient’ every year.
Local authorities should take the lead. They estimate that a national programme would boost the UK’s economy by £8bn, through helping people to save on energy bills and job creation. They called for minimum annual targets for solid wall insulation, and maximum targets on easier-to-treat cavity walls.
Finally, reform energy supply. The current energy industry structure is hidden from view. It’s not delivering innovative investment, low prices, decarbonisation nor security of supply. The Energy Agency should oblige them to sell their electricity into a pool, as Helm recommended, where the price would become the base price for retailing energy.
Is this radical enough? Will Hutton argued recently that “the quid pro quo is that energy companies have to accept that their cost of capital is lower because the risk element has been withdrawn – a new compact between the energy sector and government. They are, after all, utilities – a crucial part of our social as well as economic landscape.”
When German-owned RWE pulled out of the £4bn Atlantic Array, it was said that, “Uncertainty surrounding the current energy framework in the U.K. is widening the time gap between investors announcing their intentions and taking action.”
It’s worse than that, for a failure to act now on secure, affordable and low carbon energy has consequences that the public, at least, recognise as a collective, social responsibility.