Tim Yeo is right to challenge Osborne's anti-green agenda

The Lib Dems need to resist the Chancellor's short-term thinking.

Tim Yeo, Conservative MP and chair of the energy and climate change select committee, has issued a stinging rebuke to George Osborne’s Treasury for their meddling in the design of the government’s flagship energy bill. He has called for Ed Davey’s department to "escape the control of the Treasury" which "has never been signed up to the green agenda".

Yeo’s select committee publish their pre-legislative scrutiny of the draft energy bill today. The report highlights the battle that Davey and DECC are losing to Osborne and the Treasury. Three major concerns are highlighted.

First, the proposed "contracts for difference," which are meant to encourage investment in low-carbon energy production, are criticised as "unworkable". Writing in today’s Financial Times, Yeo outlines how the simple, long-term contracts underwritten by the Treasury which were proposed in DECC’s original consultation "rang alarm bells in the Treasury". As a result they were "struck out of the draft bill" and replaced with "an alternative contract system so complex and confusing it may not be legally enforceable".

The committee go on to set out related concerns around the contractual regime. These include concerns that:

  • The reforms may squeeze smaller independent companies out of the electricity market resulting in even greater levels of market concentration;
  • A cap on green levies imposed by the Treasury may result in higher costs for consumers; and
  • The proposed process for setting the guaranteed price that nuclear generators can expect to receive for creating electricity "lacks sufficient transparency"

Second, Yeo’s committee says that the government should "set a clear target to largely decarbonise the electricity sector by 2030, giving investors certainty about the direction of energy policy." This follows pressure from a number of NGOs and think tanks, including IPPR, which submitted evidence to the review. The government’s advisory body, the committee on climate change, had stated that "the carbon intensity of power will need to fall from around 500g/kWh today to 50g/kWh in 2030". But the draft energy bill reduced this ambition by stating only that ‘power sector emissions need to be largely decarbonised by the 2030s’ with carbon emissions intensity at 100gCO2/kWh.

In our submission we stated that:

“The bill should be explicitly tied to the carbon budgets by setting a target to r educe the carbon intensity of the grid to 50gCO2/kWh by 2030. This is the most important step the government can take to provide certainty to industry about the direction for the energy market.”

The select committee has adopted our suggestion and recommends that:

“The Government should set a 2030 carbon intensity target for the electricity sector in secondary legislation based on the recommendation of the Committee on Climate Change.”

In a leaked letter, Osborne has explicitly called for Davey to reject this recommendation on grounds that it would be "inefficient" and "inflexible" and, instead, support polluting, "unabated gas" up to 2030 and beyond. Davey must reject his advice and heed Greenpeace’s warning that "the 2030 goal is the most significant test of the Lib Dems energy and environment credentials. If they cave in now they will be judged to have failed."

Third, the select committee report says the draft bill is "fundamentally flawed by the lack of consideration given to demand-side measures, which are potentially the cheapest methods of decarbonising our electricity system." They estimate that current policy is only delivering around one-third of the potential reduction in energy demand that is needed by 2030. Among other ideas they call for "the draft Bill to provide the Secretary of State with powers to introduce a Feed In Tariff for energy efficiency, if this cannot be achieved through existing legislation."

Yeo’s outspoken attack on the Treasury, which refused to give evidence to the select committee, shows that concerns about Osborne’s role extend deep within the Conservative party. But the report also shows that, once again, the Lib Dems are losing out to the Tories in Whitehall. To step out of the shadow of his predecessor, Davey must go back to the drawing board and develop proposals which will keep energy bills down, improve competition and encourage essential investment, rather than deferring to the short-term thinking of Osborne.

Conservative MP Tim Yeo said the Treasury had "never been signed up to the green agenda". Photograph: Getty Images.

Will Straw was Director of Britain Stronger In Europe, the cross-party campaign to keep Britain in the European Union. 

Photo: Getty
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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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