Miliband's new energy policy could be a vote winner

A greener and cheaper approach would have significant appeal.

A Hackgate-galvanised Ed Miliband has picked a new Goliath to aim his slingshot at. In a little-noticed newspaper interview, the Labour leader pledged to demolish the Big Six energy suppliers' control of the domestic electricity and gas market: "Six energy companies control 99.9 per cent of the consumer market. This cannot be right and we must take action to open up the market over the coming months," he said. Household bills will fall as result, he claimed.

The phone-hacking scandal has provided Team Miliband with some traction. His story of the powerful-versus-the-powerless is gaining momentum. Attacking what he sees as the unfettered interests of the over-powerful started with banks, and flourished with newspaper proprietors. The energy companies are now firmly in his sights.

It was a carefully-chosen political target. A recent poll by Populus found that 63 per cent of 2,000 respondents were "very concerned" about rising gas and electricity prices. The issue is nearly twice as important to the British public as the state of the NHS, unemployment rates and public sector cuts, which have all received far greater media attention. Miliband, reacting quickly to recent energy price rises, has grabbed a topic that wouldn't normally attract attention until the autumn, when the weather turns colder.

In his zeal to keep bills down, Labour's leader must not ignore the cost of green policies in higher energy prices. Currently climate policies add around 14 per cent on to household electricity prices (and 4 per cent on gas prices), according to government figures. By 2020, policies will increase electricity prices by more than 30 per cent. For businesses, the percentage rise is around 40 per cent.

This is tricky political territory for Miliband, who ran the Department for Energy and Climate Change before last year's election. However, his new focus on protecting people's pockets should lead to a fresh look at wasteful policies.

Top of the list should be the EU's 2020 Renewable Energy Directive, which needlessly commits the UK to meeting 15 per cent of its total energy needs from renewable sources by 2020. This move was driven by a desire for a catchy European green slogan rather than hard-headed economics. By forcing the UK to decarbonise by installing expensive offshore wind rather than cheaper alternatives like improving energy efficiency and more nuclear power, this sloganeering will cost UK bill-payers at least £12.5 billion. In addition, the Coalition's proposed overhaul of the electricity market will unpick a major public policy success of the last 30 years, and risks further unnecessary price rises. The confusing jumble of carbon prices that the current policy mish-mash has created should also be overhauled (Policy Exchange has called for the CRC Energy Efficiency Scheme to be scrapped as part of a much-needed tidy up and replaced with mandatory carbon reporting).

A clearer carbon price, backed by contracts, will ensure the cheapest possible emissions cuts are made first. At the same time, finding long-term, low carbon technologies that are cheaper than coal and gas requires a smarter focus on research and development.

Reaching carbon targets will increase household and business energy prices. Politicians must be up front about that. However, the government -- and Miliband -- should maintain an unrelenting focus on ensuring that any move to becoming greener is as done as cheaply as possible.

Guy Newey is a senior research fellow for environment and energy at Policy Exchange.

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Brexit will hike energy prices - progressive campaigners should seize the opportunity

Winter is Coming. 

Friday 24th June 2016 was a beautiful day. Blue sky and highs of 22 degrees greeted Londoners as they awoke to the news that Britain had voted to leave the EU.  

Yet the sunny weather was at odds with the mood of the capital, which was largely in favour of Remain. And even more so with the prospect of an expensive, uncertain and potentially dirty energy future. 

For not only are prominent members of the Leave leadership well known climate sceptics - with Boris Johnson playing down human impact upon the weather, Nigel Farage admitting he doesn’t “have a clue” about global warming, and Owen Paterson advocating scrapping the Climate Change Act altogether - but Brexit looks set to harm more than just our plans to reduce emissions.

Far from delivering the Leave campaign’s promise of a cheaper and more secure energy supply, it is likely that the referendum’s outcome will cause bills to rise and investment in new infrastructure to delay -  regardless of whether or not we opt to stay within Europe’s internal energy market.

Here’s why: 

1. Rising cost of imports

With the UK importing around 50% of our gas supply, any fall in the value of sterling are likely to push up the wholesale price of fuel and drive up charges - offsetting Boris Johnson’s promise to remove VAT on energy bills.

2. Less funding for energy development

Pulling out of the EU will also require us to give up valuable funding. According to a Chatham House report, not only was the UK set to receive €1.9bn for climate change adaptation and risk prevention, but €1.6bn had also been earmarked to support the transition to a low carbon economy.

3.  Investment uncertainty & capital flight

EU countries currently account for over half of all foreign direct investment in UK energy infrastructure. And while the chairman of EDF energy, the French state giant that is building the planned nuclear plant at Hinkley Point, has said Brexit would have “no impact” on the project’s future, Angus Brendan MacNeil, chair of the energy and climate select committee, believes last week’s vote undermines all such certainty; “anything could happen”, he says.

4. Compromised security

According to a report by the Institute for European Environmental Policy (the IEEP), an independent UK stands less chance of securing favourable bilateral deals with non-EU countries. A situation that carries particular weight with regard to Russia, from whom the UK receives 16% of its energy imports.

5. A divided energy supply

Brexiteers have argued that leaving the EU will strengthen our indigenous energy sources. And is a belief supported by some industry officials: “leaving the EU could ultimately signal a more prosperous future for the UK North Sea”, said Peter Searle of Airswift, the global energy workforce provider, last Friday.

However, not only is North Sea oil and gas already a mature energy arena, but the renewed prospect of Scottish independence could yet throw the above optimism into free fall, with Scotland expected to secure the lion’s share of UK offshore reserves. On top of this, the prospect for protecting the UK’s nascent renewable industry is also looking rocky. “Dreadful” was the word Natalie Bennett used to describe the Conservative’s current record on green policy, while a special government audit committee agreed that UK environment policy was likely to be better off within the EU than without.

The Brexiteer’s promise to deliver, in Andrea Leadsom’s words, the “freedom to keep bills down”, thus looks likely to inflict financial pain on those least able to pay. And consumers could start to feel the effects by the Autumn, when the cold weather closes in and the Conservatives, perhaps appropriately, plan to begin Brexit negotiations in earnest.

Those pressing for full withdrawal from EU ties and trade, may write off price hikes as short term pain for long term gain. While those wishing to protect our place within EU markets may seize on them, as they did during referendum campaign, as an argument to maintain the status quo. Conservative secretary of state for energy and climate change, Amber Rudd, has already warned that leaving the internal energy market could cause energy costs “to rocket by at least half a billion pounds a year”.

But progressive forces might be able to use arguments on energy to do even more than this - to set out the case for an approach to energy policy in which economics is not automatically set against ideals.

Technological innovation could help. HSBC has predicted that plans for additional interconnectors to the continent and Ireland could lower the wholesale market price for baseload electricity by as much as 7% - a physical example of just how linked our international interests are. 

Closer to home, projects that prioritise reducing emission through tackling energy poverty -  from energy efficiency schemes to campaigns for publicly owned energy companies - may provide a means of helping heal the some of the deeper divides that the referendum campaign has exposed.

If the failure of Remain shows anything, it’s that economic arguments alone will not always win the day and that a sense of justice – or injustice – is still equally powerful. Luckily, if played right, the debate over energy and the environment might yet be able to win on both.

 

India Bourke is the New Statesman's editorial assistant.