Last week the House of Lords’ Economic Affairs committee revealed that appalling confusion and complexity is deterring vital investment in Britain’s energy industry. Today Lord Lawson of Blaby, who sits on that committee, tells The Times the coalition is not merely misguided on energy but “doesn’t have an energy policy” at all.
His remarks will irritate ministers, as well-aimed criticism often does. For years now, this and previous governments have postponed the tough decisions needed to secure Britain’s energy supply for the future and make it affordable for business as well as domestic customers.
What passes for a coalition energy policy is in fact a tangle of regulations, subsidies and incentives that is delaying investment, driving up prices over the long term and making blackouts a real possibility by as soon as next year. Britain’s lack of a coherent energy strategy is an emergency that will not go away just because of a short-term outlook of warm weather and long summer evenings. It is, as Dieter Helm, of Oxford University, told the Lords’ committee, a “very slow-motion car crash” that is already happening.
Like Heathrow airport, Britain’s power generation system is operating at close to capacity. The country has a capacity margin of just 2 per cent. Ofgem warns this could shrink to zero by the winter of 2015-16 if predicted gains in the efficiency of power usage are not realised.
With zero margin for error, power cuts are virtually inevitable. Britons are in fact becoming more efficient in their use of energy. Overall consumption has fallen slightly since the 1970s and markedly since 2005. A crisis looms despite this trend because of steadily declining North Sea output and the planned obsolescence of ageing power stations. [….]
The coalition […] has sown confusion with its varying commitment to expensive renewables subsidies, which have a direct effect on household bills but also on industry’s appetite for investment in new gas-powered generating capacity. It has given the competition and markets authority far too long (two years) to report on the pricing strategies of the big six domestic energy suppliers. Above all, it has failed to recognise the potential of shale gas.
America’s shale gas revolution has delivered gas prices two thirds cheaper than those paid by British consumers. British shale gas output may never approach America’s, but the Bowland basin with Sheffield at its centre is one of the world’s largest reserves of its type. Even so, not one new fracking application was received by the Environment Agency in the year after the government’s decision to allow the process to proceed. The reasons are clear. A screen of red tape deterring commercial fracking has been created by multiple agencies, chief among them the department for energy and climate change, the health and safety executive and the environment agency.