There has been much speculation that, not least of all on this site, Chris Huhne’s resignation as Secretary of State for Energy and Climate Change will lead to more realistic, less flawed and less costly energy policies. Mr Huhne was widely seen as a “green fanatic” and, significantly, his departure has been much mourned by the green movement. George Monbiot tweeted “I’m sad to see Chris Huhne go. He’s been one of the few voices of (relative) sanity in the Coalition”. And he added “…with Huhne gone, climate change deniers in Coalition will be emboldened. Kind of ironic that it’s about speeding.” Ironic indeed.
Ed Davey, his successor, has come from BIS and should be more attuned to the needs of business. He has already homed in on the impact of high energy costs for households, where green policies add a 15% “stealth tax” to electricity prices. One can only hope his concerns will extend to the impact of high energy costs on businesses, where the “stealth tax” is over 20% and rising.
The damage to businesses, especially energy intensive manufacturers, of the extra electricity costs is well documented. Last November for example Rio Tinto Alcan announced the closure of their aluminium smelter in Lynemouth, Northumberland. RTA could not have been clearer in their reason for closing the plant. They said “…it is clear the smelter is no longer a sustainable business because its energy costs are increasing significantly, due largely to emerging legislation”. As high energy costs close plants here the work, along with attendant carbon emissions, goes elsewhere.
The Government has acknowledged the problem. We remember the Chancellor’s conference speech last October which suggested that British companies would not be sacrificed in the race to build a greener economy. He said Britain would move “no slower, no faster than our fellow countries in Europe” and “we are not going to save the planet by putting our country out of business”. Reflecting these concerns, he announced some compensation for energy intensive users in the Autumn Statement, but not enough to offset the extra “green energy” costs coming down the track.
But we are only at the foothills of trying to correct, or offset, the flaws in our costly energy policies. Perhaps the new Energy and Climate Change Secretary could consider reforming three policies which underpin our energy policy for “starters”.
Furthermore as Tony Lodge has recently written: “…importantly, the carbon price floor will not reduce EU carbon emissions. This new floor price will have no impact on the total number of permits available in the EU. Every tonne of carbon that is ‘priced out’ of the UK will simply be emitted elsewhere in Europe at lower cost”.
So these are my three concrete “starter” suggestions for a more rational approach to energy policy. I shall be watching developments with interest.
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And as a postscript let us note that the world is tiring of climate change policies and politics. They flourished in more economically flourishing times. Only last week Tesco, an early champion of the green revolution, announced that it would ditch its plans to emblazon all its products with a carbon footprint label. Be thankful for small mercies.