Why I agree with Nick
Posted on Wednesday, May 5th, 2010

So that’s it. Tomorrow we troop to the polling stations with almost no discussion of the most critical issue: energy. The last best hope of any meaningful exposure was lost when the final leaders’ debate focused overwhelmingly on immigration and the economy. But this is short sighted in the extreme: immigration will become a massive problem if we don’t fix climate change; and any economic recovery will be fleeting without the right policies to deal with the oil supply crunch now widely expected by the middle of the decade. Yet we’ve heard as little about energy as the yawning deficit, and perhaps for the same reasons.

The problems are simpler than sometimes suggested. As the graphs show, for the climate the single most important task is to decarbonize the electricity supply. For peak oil it is principally to electrify ground transportation. Both require the construction of large amounts of zero or low carbon generating capacity on top of 20GW of new capacity we already need to stop the lights going out over the next decade, as coal and nuclear power stations close due to decrepitude and EU directive. Major improvements to public transport, demand management in both transport and power, and localization, are also essential. There is obviously much more to it than this, but if we fail to make rapid progress on these core tasks, we are in deep trouble.

CO2 emissions by sector. Source: IEA WEO 2009

Oil consumption by end use. Source: ITPOES 2010

On this basis, the Conservatives ought to get my vote. Of the three main parties their energy policy contains the clearest recognition of peak oil and of electric transport as a key response, along with policies to secure the necessary investment. Their recent energy green paper Rebuilding Security outlines a number of dry but important technical measures to ensure sufficient reserve generating capacity is built to deal with the intermittency of renewable generation, and to allow power companies to invest in EV charging points ahead of demand. But most important is their commitment to establish a floor for the carbon price.

I have argued for some time that properly implemented, a carbon floor could be single simplest, most effective way to shift investment decisively away from fossil fuels and towards low carbon energy. The arguments between a carbon tax or a carbon price are now sterile. The EU ETS has lurched from crisis to crisis, and the carbon price languishes at around €16, which most observers believe is completely inadequate. But we are where we are. Putting a floor under the carbon price – even if only in this country – would now be the quickest way to get results. So full marks to the Tories for adopting the policy.

But then they go and spoil it. After the Guardian energy hustings last month I quizzed Greg Clark, Shadow Energy Secretary, about the Tories’ plans (listen here).

NB Some listeners have reported problems with podcasts using Quicktime, but they seem to play perfectly well on RealPlayer and Windows Media Player.

Mr Clark said they want a carbon price that ‘bites’, but refused to say what that meant in terms of price, and went on to explain that this would be set by consultation with the industry. Call me an old cynic, but asking industry how much it would like to pay and then sending them a bill for that amount does not seem likely to achieve a carbon price that ‘bites’. Any floor clearly needs to be decisively higher than the current EU ETS price. For reference, in its ‘450 Scenario’, which is intended to ‘avoid too drastic a rise in the global temperature’, the IEA assumes a carbon price of $50 per tonne of CO2 in 2020, rising to $110 by 2030.

But at least the Conservatives would establish a floor in Britain. The Lib Dems oppose the idea, and say they would work to raise the carbon price within the EU ETS. But given the history of the scheme so far, good luck with that. When I spoke to the Lib Dems’ spokesman Simon Hughes after the Guardian hustings (listen here), it became clear that their opposition to a carbon floor was at least partly reverse-engineered from their opposition to nuclear power, which is perverse.

The Lib Dems’ claim that nuclear would crowd out renewables financially is simply an untested assertion. With a €50 carbon price, there would be plenty money to go round because investment would shift from fossil to low carbon generation. And even then, if the nuclear industry had to shoulder the entire costs of decommissioning and waste disposal, I am still not sure it would wash its face. Again, I’m with the Tories on this one: nuclear yes, but only if the industry will invest without any industry-specific subsidy (Labour weasles on this).

For the government, Energy Secretary Ed Miliband refused to conduct an interview. But Labour source who looked extraordinarily like him accused the Tories of choosing the ‘easy option’ with the carbon floor, which is astonishing given the government’s record on energy policy. From the invasion of Iraq to the blatantly temporizing white paper in 2003 to the panicky ‘consultations’ on new nuclear during Blair’s last throes, Labour’s approach to energy has usually been too little, too late, plain wrong or badly delivered.

Look where we are: emissions are falling but nothing like fast enough, and most of the reduction since 1990 is down not to Labour policy but the previous Tory government’s ‘dash for gas’ and last year’s recession; Britain trails in Europe on renewables; the yawning, 20GW ‘energy gap’ in power generation was entirely predictable, avoidable, and the government’s fault. In the short term that gap is likely to be filled with new gas fired power stations, further raising British dependence on imported gas as our North Sea output continues to slide, yet Britain has derisory levels of storage to buffer against short term interruptions such as when Russia cuts off Ukraine.

The government has persisted with bad ideas (Renewable Obligation Certificates, the Renewable Transport Fuel Obligation, the utter shambles of the Low Carbon Buildings Programme) for years, while denigrating obviously good ones like the Feed in Tariff, until a recent U-turn, and the carbon floor. Even when it has a good idea, delivery is grindingly slow, mired in endless consultations: the carbon capture competition for coal was launched in 2007 but still without results; the Renewable Heat Incentive won’t come in until next year, with potentially serious impacts on waste and biogas for decades to come; and we have to wait until 2020 for all houses to be equipped with smart meters despite the fact that National Grid has already developed the technology. All this as we stare down the barrel of peak oil in 2015 or thereabouts.

I clearly can’t vote Labour, but why choose Lib Dem if I think they’re wrong on key issues like the carbon floor and nuclear, and why not Tory if I think they are closer to being right? First, I’m not convinced the Conservatives will deliver a meaningful carbon floor, their technical policies are eminently adoptable by the other parties, and some of their other commitments are vague. Second, while important, carbon pricing and nuclear are not the only issues, and the Lib Dems do have a handful of other good ideas: shifting investment from road to rail; road pricing; shifting aviation duty from people to planes; investment in shipyards for offshore wind turbine construction; and inverse energy pricing, so the thousandth unit you consume costs more than the first. Third, and crucially, while the Lib Dem’s energy policy is weak in many ways – total energy-related spending commitments amount to just £1.3bn as far as I can see – voting for them is the only way to secure better ones in future – through electoral reform.

You could construct a decent energy policy from elements of all the main parties’ manifestos, stiffened with greater ambition borrowed from smaller parties like the Greens. But this will never happen under the current system. Much as I like some of the Greens’ ideas – though far from all of them – they will remain an irrelevant wish-list without a reformed voting system. In my constituency (Hampstead, a Labour-Lib Dem marginal) voting Green this time would be an indulgence, but voting Lib Dem could help produce an electoral system that changes that.

So my vote for Ed Fordham could end the grotesque binary ‘choice’ between two parties that both supported the invasion of Iraq. It might lead to a less ideological and more technocratic decision-making process. It wouldn’t necessarily produce a better energy policy, but it could hardly deliver worse results. And it would also get rid of the ghastly Glenda Jackson.

One Comment on “Why I agree with Nick”

Shaun Chamberlin Says:
May 6th, 2010 at 1:24 pm

Seems to me there’s a widely unrecognised tension at the heart of present energy/climate policy discussions – the desire to raise carbon prices while keeping energy prices low.

The market-based mantra for addressing climate change is that “we need to make fossil fuels more expensive”. In my opinion, such ‘rationing by price’ is actually undesirable – what we need is to guarantee a fair entitlement to the available energy, not ration it by the depth of people’s pockets.

Unsurprisingly, it’s pretty hard to get popular buy-in to raising the cost of living by raising the price of fuels, but once you guarantee people a fair entitlement, in line with a declining cap which secures our future, government and society can then collectively focus on keeping the price of energy as low as possible, which is a simply-understood task that everyone can buy into with enthusiasm.

This recognition that reducing the quantity of carbon emissions can be best achieved by means other than a high price is worked through in David Fleming’s TEQs system, which I know you highlight in your book, David.

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