From fuss to farce to crisis - welcome to the UK energy show
You have to feel for Ed Davey, the UK’s Secretary of State for Energy.
Davey – a Liberal Democrat minister in the coalition government – arrived at a press conference yesterday where he wanted to discuss details of the government’s Energy Bill and instead spent a good deal of time deflecting questions about the energy views of his Conservative Cabinet colleagues, notably the Prime Minister David Cameron and Chancellor George Osborne.
On Wednesday, Cameron announced – out of the blue as far as energy firms were concerned – that customers should be given the cheapest possible tariff for their gas and electricity, while on the same day it was reported that Osborne privately refers to the green lobby as “the environmental Taliban”.
Cameron’s knee-jerk statement came in response to price hikes from four of the UK’s so-called ‘Big Six’ energy companies, but Osborne’s remark, while clearly inflammatory, also highlights the gulf in thinking between the Chancellor and Davey, who it’s fair to say are probably not on each other’s Christmas card lists.
Davey skirted directly commenting on Osborne’s remarks, instead saying that environmental non-government organisations had “campaigned effectively” for a low carbon economy and they were “important for a civil society”.
“We should celebrate the fact that Britain is a hotbed of ideas,” he added. “We have to change the relationship with climate change.”
Osborne would probably agree, but many believe he wants to change it in a very different way – shunt it off the power generation agenda completely and get on with building gas power stations and lots of them.
UK energy policy is in a mess. It shouldn’t be, but it is. Just 18 months ago there was a momentum in the sector that was driving investment into all forms of generation. Now, as Tim Fox, head of energy and climate change at the Institution of Mechanical Engineers, told me, that momentum “has almost vaporised to the point that we are in complete hiatus”.
Neil Bentley, Deputy Director General of the CBI, agrees, believing that the UK energy sector is at risk of falling victim to “paralysis by analysis”. He told Davey yesterday: “Stop arguing about the energy mix and start attracting investment. Energy investment is as much about growth as it is about low carbon power.” He demanded a “unified message” from the government on energy policy.
Everything hangs on the publication of the Energy Bill, due next month. If the devil in the detail proves to be a godsend of clarity, then investment will pick up and stalled projects get moving again.
If not, investment, jobs and skills will go overseas and the UK could find itself buying back those resources at a very high price.