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Secret agenda of coalition energy policy
Posted on Friday, May 14th, 2010

There is much to welcome in the new coalition’s energy policy. In particular, the commitment to a “huge increase” in anaerobic digestion; raise renewables targets; the “full establishment” of feed-in-tariffs; shifting aviation duty from people to planes; and not only to scrap Heathrow’s third runway but also block new ones at Stanstead and Gatwick.

Some policies are little different the previous government’s (smart meter roll-out, green investment bank, no new coal without CCS), and some lack detail so far (provision of home improvement paid from savings in energy bills, measure to encourage marine energy etc) but are welcome nontheless. The Tories got their way on nuclear – yes, but without public subsidy – and Lib Dem Chris Huhne landed the ticklish job of fronting this policy as the new Energy and Climate Change Secretary.

In his first TV interview in post, Mr Huhne toed the coalition line, but maintained that no new nuclear stations had been built without subsidy for decades, clearly hoping the industry would walk away, whereas early reaction from power company bosses suggests the contrary. But the coalition has also committed to establishing a floor under the carbon price in Britain – which I support – and this may well be the territory on which the nuclear issue is fought out by proxy.

The UK carbon floor is Tory policy, and the Lib Dems oppose the idea precisely because they fear it will make nuclear economically viable, despite the fact it would also help renewables. The argument over the level of the carbon floor will probably now be thrashed out in private, but if you encounter the curious spectacle of the Tories arguing for a higher carbon price – making their friends in business squeal – and the ‘radical’ Lib Dems arguing for lower, what they’re really fighting about is nuclear.

In a previous post I criticised the Tories for saying they would establish the carbon floor by consulting industry, arguing that the resulting level would be low and ineffective. But perhaps I was wrong; it depends on which bit of industry they listen to hardest. If their real agenda is to make new nuclear happen while maintaining the façade of no public subsidy, they will give greater weight to EDF than, say, Sainsburys, and a higher carbon price will be set. It may be a fix, but it would be good for both nuclear and renewables.






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