UK climate and energy policy at a crossroads

 

Energy Secretary Amber Rudd announced today that UK coal power stations will be phased out by 2025, favouring new gas-fired power stations to take their place in the country’s energy mix. The news has been seen by many as the latest in a string of controversial energy policy decisions taken by the Conservative government that have the potential to undermine climate targets. Alyssa Gilbert, Head of Policy and Translation at the Grantham Institute, takes a closer look at recent policy changes and the road ahead.

This year has been a pretty exceptional one. Having worked on energy and climate policies for over 15 years, I witnessed a rapid-fire dismantling of a suite of the UK Green policies over a very short space of time. After reeling from the initial shock of the apparent change of tack from a Conservative party that has claimed to be firmly behind efforts to tackle climate change, it is time to take stock.

All policies are not equal. It is certainly true to say that I shed no tears for the removal of the ineffective Green Deal. And, there was some good news for electric vehicles. However, the choice to remove the no-cost zero carbon homes policy seems to make no sense and the extension of the Climate Change Levy for carbon fuels to non-carbon electricity generators makes even less sense.

Most confounding of all is really the lack of a clear rationale behind these policy decisions. As observers we are left with two options. Either, the government has a rationale – good. Or not. In which case, cause for concern.

Yet again, if there is a rationale, this rationale could (either explicitly or implicitly) be in line with the UK’s mitigation goals – again good. Or not. Not good.

Mixed signals

The government’s recent choices in relation to the decarbonisation of the power sector were as confused as the overall picture. There has been a premature cut to the money that new wind and solar generation facilities can receive, an expensive commitment to new nuclear facilities and a very top-down approach to the development of shale gas.   These choices send a mixed message to business and public alike, combining the vilification of certain low-carbon energy sources (solar, wind etc.), with a glorification of other energy sources (nuclear and shale gas).

This mixed message and lack of policy certainty is really the cause of greatest concern. If we want to tackle climate change as cheaply as possible we need to deploy our existing low carbon technologies, as quickly as possible. This deployment will require subsidies, especially for the more expensive technologies, up to 2025 or so.

The majority of the money that will go into the new power generating facilities of the future will come from the private sector, and investors will only come if the policy landscape going forward is certain. The UK government have already done themselves a disservice by making such rapid decisions so quickly. It is fine to cut subsidies over time, just provide a warning.

Putting policy back on track

Dr. Rob Gross, at the Centre for Environmental Policy here at Imperial, has provided some pointers to UK policy-makers as they look ahead. His recommendations are well-timed and do not require a huge revamp of the existing policy framework:

  • Provide policy certainty
  • Make well-considered investments in the necessary power infrastructure at the system level, not at the level of individual generators
  • Act effectively at the sensitive point where good technology needs to be deployed at scale, so-called innovation; and
  • Recognise what a carbon price can, and cannot deliver in this arena.

(Read more: Energy system crossroads – time for decisions: UK 2030 low carbon scenarios and pathways – key decision points for a decarbonised energy system [pdf])

The challenge will be to combine the flexibility of market-orientated approaches with the need to plan infrastructure investments well-ahead of time and make these investments at least cost. In deciding where to strike this balance, my plea to government would be to keep a clear line of communication open with businesses – both the well-established and the power businesses of the future.

Follow Alyssa Gilbert on Twitter

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