Greg Clark is the UK’s shadow secretary of state for Energy and Climate Change. He entered Parliament as MP for Tunbridge Wells in 2005, having previously worked for the Boston Consulting Group. With opinion polls pointing to a Conservative Party victory in the upcoming general election, widely expected to be held on 6 May, Deputy Editor Tim Probert caught up with Clark at Westminster.

 

PEi: If the Conservatives are elected to power this spring, what would be your first act as secretary of state for Energy and Climate Change?

Greg Clark MP: UK shadow secretary of state for Energy and Climate Change
Clark: To implement a package of measures to keep the lights on by 2017. We would inherit a situation where not enough has been to done to secure the UK’s required electricity capacity.

We need to get on with building carbon capture and storage (CCS), as we will not give consent to new coal plants without the ability to demonstrate it. We will have at least four CCS plants. The government’s CCS competition has been far too long running, so we would get on with direct negotiations to be able to allow that CCS demonstration to happen.

With regards to nuclear, EDF says that it will able to bring new nuclear plants online by 2017 and the government needs to make sure that there are no bureaucratic delays to push it back. The planning process is a problem; we believe that there is vulnerability within the government’s planning policy for nuclear power.

The National Policy Statement for nuclear has not been ratified by Parliament so any opponent, no doubt, would look to use judicial reviews as a means to delay or stop progress. The government’s Infrastructure Planning Commission is a means of streamlining and accelerating the planning process by creating an independent secretariat and by ensuring local enquiries remain about local issues, not about national energy policy.

To that extent it is right, but it has practical flaws that could delay investment and we also think it is flawed in principle in that there is not enough democratic scrutiny. To have a national planning regime for nuclear power stations that Parliament was merely informed about, and did not debate, would create legal loopholes.

So we would have an immediate vote in the House of Commons to ratify the national planning statement for nuclear to make it absolutely clear that it is the will of Parliament. We would also change the planning process so that the final planning decision rests with the secretary of state rather than a non-elected official.

We would also accelerate the ‘smart grid’ by bringing forward the required roll-out of smart meters to 2017 rather than the end of 2020. The current timeframe is hopelessly inadequate; it is a reflection of the continuing resistance within government towards smart meters. If we really want to move towards a more resilient energy infrastructure to balance demand and supply through better demand-side response, we need smart meters.

PEi: The power utilities sector in the UK has been described as a ‘cartel without the cigars’. Do you think there is enough competition in the UK?

Clark: There are authorities to opine on that matter. The statutory regulator Ofgem and the Office for Fair Trading keep an eye on competition. The Conservative Party has no plans to cause the divestment of generation assets, as the Guardian newspaper suggested last year. I have no idea where they got that from, but it was completely inaccurate.

PEi: Most of the UK’s ‘Big Six’ utilities are foreign-owned, and some even state-controlled. Would you act to prevent the takeover of British Gas (Centrica) from, for example, Russia’s Gazprom?

Clark: Any takeover of British energy firms triggers the normal process of scrutiny to see if it would be to the detriment of the public interest. These are long-standing mechanisms to prevent individuals opining and speculating on what they would like to happen. We have a rigorous framework for competition policy and takeover policy, and I think that is very important.

PEi: Are you concerned that there is already another ‘dash for gas’ underway in the UK and that it will be increasingly reliant on imported fossil fuels to meet its energy needs?

Clark: We should be clear that gas is an important source for electricity generation going forward. We should not pretend otherwise – it’s an important transition fuel to get us to a world in 2050 where we have 80 per cent cuts in carbon dioxide (CO2) emissions – and because things have been left late, there is little choice.

It’s too late for nuclear to take up the strain, it’s clear that renewables will be insufficient and CCS is not ready to replace the lost coal fired generation. As it happens, the new sources of gas – shale gas, liquefied natural gas (LNG) – mean that the diversity of sources is increasing.

I think it’s important that we take further steps to make sure the UK has dependable sources of gas. The market is not so perfect that we can rely for all time on supplies not to be interrupted, as happened in the Ukraine.

In terms of supply through pipelines, the UK is literally at the end of the line and even though we now have LNG terminals there is no guarantee that those molecules [sic] will actually arrive in the UK – we could be outbid for those tankers. So it is important that we have more resilience in the system through more gas storage and long-term supply contracts.

PEi: How will this affect the UK’s ability to meet its carbon emissions reduction targets?

Clark: We have got very challenging targets, and we are legally obliged to meet them. But we shouldn’t be starting from here.

PEi: Are you happy with the Labour government’s support mechanisms in place for renewables?

Clark: If one was to start from scratch, then something more like a feed-in tariff would probably be better than the Renewables Obligation (RO). But we have to bear in mind that government policies are not experiments and that we would inherit a certain set of arrangements.

The question is not whether if these are ideal but whether a disruption in the arrangements is worth the prize that comes from a more optimum set of arrangements.

The broad view of the industry is that to change the system very radically would probably not be in the interest of investors. In any case, recent changes to the RO’s banding and some of the proposed changes by the government make it look more like a feed-in tariff than previously.

PEi: The Scottish National Party has been calling for changes to the transmission charges regime for British power plants, as it discriminates against long-distance transmission. This issue could jeopardize the building of offshore wind farms and other renewable projects. Would you be open to this?

Clark: The Scots want to have a uniform price and at the moment that’s not part of the system. During a recent energy security debate I said that I couldn’t give any undertaking to have a uniform price.

The first thing to do is get the cables built, and then settle the issue over charges later. We want to get on with mandating National Grid to build an offshore network of DC cables off the east and west coasts of Britain so that offshore wind farms can be built without the need for tortuous negotiations for each grid connection. We would give National Grid the right incentives and the right procurement mechanism so that the terms on which they build the infrastructure offer value for money for the taxpayer.

Wind power like the offshore farm at Kentish Flats will play an increasingly large role in the UK’s energy mix

PEi: The Conservative Party is generally portrayed as being less than fully supportive of onshore wind farms, mainly because several proposals in Conservative-controlled areas have been derailed by local opposition. What would you do to encourage the construction of onshore wind farms in Britain?

Clark: My view is that we need to see a more diverse supply of energy sources, that includes onshore wind, but we would take a very different approach from the government. Ed Miliband [the incumbent secretary of state for Energy and Climate Change] is seeking to demonize opponents by saying that it is morally unacceptable to oppose wind farms. That is counter-productive.

It seems obvious to me why local residents may be nervous about wind farm proposals in their community. They imagine that wind turbines in their locality will look appalling and will put people off from visiting their area, or that they are noisy, or have a damaging visual flicker, or will negatively impact the value of their homes. There is nothing said on the other side.

In Denmark, for example, there is far more community ownership of wind farms and in many cases they get cheaper electricity. If communities were allowed to share in the benefits of wind farms in the UK, then the conversation at a local planning level immediately changes.

We have made a firm commitment that the first six years of business rates paid by the wind farm operator will stay in the community citing the development, rather than going straight to the Treasury. This could be worth hundreds of thousands of pounds a year. Another proposal, through our Green Development Bank, would make it easier for communities to own wind turbines, so that they get the revenue generated.

We are also exploring with some of the energy companies as to how communities can get reduced bills. People contribute towards renewables though the RO certificates scheme on their bills – one might argue that people hosting wind farms are discharging their obligation.

We believe these measures will unblock the planning process rather than contributing, as the government seems to be doing, to a tight stand-off where no one will give ground.

PEi: There have been some doubts as to whether the Conservative Party is ‘wobbly’ over the need for nuclear power stations in the UK.

Clark: We think that nuclear power ought to be part of the mix if it’s economically viable. Everyone in the nuclear industry absolutely understands that our position is to be at least as enthusiastic as the Labour government.

PEi: Would you introduce any mechanisms to facilitate new nuclear build, such as a carbon price floor under the European Union Emissions Trading Scheme (EU ETS)?

Clark: We are clear that we wouldn’t offer a direct subsidy for nuclear power and, to be fair, the industry hasn’t asked for one.

One of the shared disappointments across the industry, and indeed across governments, about the EU ETS is that the price of carbon, in the initial years, has been very volatile and hasn’t offered a firm a base for investment decisions.

It was intended to uncover an economic variable that needed to be part of decision-making, but far from providing a source of stability that investors could count on, its very volatility has done the opposite. The EU ETS has deterred investment in low-carbon [technologies]. Even fossil fuel investors have had their decision-making impaired by the guesswork that has to be entered into as a consequence of the carbon price.

There is a shared view at the Department of Energy and Climate Change to move to a way in which investors have a more dependable price of carbon. However, we need to be sensitive as to how we translate that desire into a policy instrument as the ETS, and therefore the carbon price, is pan-European.

And it is right to be so because a tonne of carbon emitted in London has the same environmental consequence as that emitted in Poland. We wouldn’t want to introduce carbon market distortions because it is hoped that the EU ETS will eventually link up with other carbon trading systems around the world.

Furthermore, we have to be careful that we don’t disadvantage UK companies to the point of causing carbon leakages, locating in another country, producing the same volume of carbon, just because we have a different regime. The challenge for policymakers is to act on the very widespread desire for the EU ETS to be more stable and dependable in a way that doesn’t give rise to leakages and distortions as a result of reckless actions.

If we are able to do something on the carbon price, and we haven’t specified whether that’s possible yet, then it needs to be done as a means of establishing a true economic reflection of the cost of carbon, rather than trying to support one particular technology.

 

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