REGULAR readers may remember my report in May on the Government’s failure to respond to the devastating critique of government energy policy by Dieter Helm, Britain’s foremost energy economist.
The Secretary of State for Business, Energy and Industrial Strategy, Greg Clark, has finally responded, thirteen months after the Cost of Energy Review was published.
His response shows that he is utterly complacent about high energy prices.
Helm, Professor of Energy Policy at the University of Oxford, had been commissioned by the government to review the cost of energy, delivering on a major pledge in the 2017 Conservative manifesto.
He concluded that the government’s approach would ‘continue the unnecessary high costs of the British energy system, and as a result perpetuate fuel poverty, weaken industrial competitiveness, and undermine public support for decarbonisation’.
These findings were so damning that Clark took the unusual step of issuing a ‘call for evidence’ to the energy industry over Helm’s recommendations. This was in effect a review of the review, and the rent-seeking renewable energy lobbyists duly piled on in defence of the sordid status quo.
You will not be surprised to learn that the green blob has once again triumphed, with Clark kicking all of Helm’s recommendations into the long grass.
In a speech entitled After the trilemma, Clark accepted Helm’s core argument that ‘picking winners’ is a mistake and that ‘wherever possible we must make use of market mechanisms’. It was all the more disappointing, then, that he refused to follow through, and has instead put green ideology ahead of the welfare of families and the competitiveness of British business.
Attempting to justify the continued subsidy of immature and uneconomic technologies, Clark implied this was necessary to fulfil ‘the insurance principle’. Picking winners then, but with a new name.
This attitude is particularly hypocritical when the government is busy undermining security of supply by opting for unreliable technologies such as wind and solar. These are risks we could very easily avoid.
Clark’s speech repeatedly praised the Lawson reforms of the 1980s, which saw the energy sector liberalised, without ever grasping the relevance of those principles to the challenges of today.
Lord Lawson Responds to Energy Secretary
Lord Lawson was quick to respond to what he saw as a shameless misrepresentation of his views, and made the following statement:
‘Greg Clark is repeating all the mistakes of the 1950s, 1960s and 1970s. As Dieter Helm’s excellent report shows, government planning, picking losers and second-guessing the market is a disaster in the making.
‘Mr Clark has rejected Helm’s recommendation of carbon pricing on the grounds that it needs border adjustments to avoid, in his own words, decimating our important industries. As Mr Clark well knows, the costs of decarbonisation haven’t gone away and his green energy policies impose a higher shadow carbon price, making these industries even more uncompetitive and accelerating their rundown.
‘In particular I take exception to Mr Clark’s shameless misrepresentation of my views to falsely assert that high energy costs are good for business competitiveness. Mr Clark admits that British businesses face the highest energy costs in Europe. Mr Clark’s energy policies are the real threat to their continued survival.’
The urge for governments to regulate and control has always been powerful, and rarely more so than in the energy sector. Only the most robust Conservative governments have been able to resist this temptation, and this administration is not one of them.