Renewable energy to save consumers between £25 and £100 billion

A new government report outlines the economic case for renewable energy, writes RenewableUK’s Gordon Edge.

An official report published today on the dangers of failing to invest in renewable energy represents a timely call for the Government to set clear long-term policies to boost the deployment of wind, wave and tidal power. The independent and highly authoritative study makes it clear that hard-pressed British consumers’ bills have shot up due to the UK’s dependence on imports of fossil fuels, and it therefore recommends measures to encourage investment in domestic low-carbon sources to bring the cost of electricity under control.

The official body which advises the Government on this issue, the Committee on Climate Change, says investing in low-carbon technologies between 2020 and 2030, such as wind and marine energy, will save UK consumers at least £25-£45bn over the lifetime of those projects, rising to £100bn if international gas prices continue to escalate.

The Committee says one of the best ways to stimulate investment in renewables is to set a carbon reduction target in the Energy Bill now going through Parliament, specifying a reduction to 10 per cent of 1990 levels by 2030 (from 500 grammes per kilowatt hour to 50g/kWh). MPs are due to vote on this issue in early June.

It also recommends that the Government should specify how much financial support will be available for low-carbon energy between now and 2030 – at present, the long-term vision for the power sector only goes as far as 2020. The report highlights the need to develop a specific strategy for the development of offshore wind, including ways to attract new sources of finance.

This thorough research by the most authoritative body in its field provides compelling evidence that investment in British renewables is cost-effective, whereas an unhealthy addiction to foreign fossil fuels is excruciatingly expensive, as well as being deeply irresponsible. RenewableUK’s own figures show that combined onshore and offshore wind are generating £2.5bn a year for the UK, and as such are one of the single biggest sources of investment into our economy – surely an opportunity we cannot afford to ignore. And with DECC’s own figures showing that 74 per cent of people are concerned about the UK’s reliance on imported fossil fuels, this is an issue the vast majority of the country is united on.

The Committee on Climate Change is also right to highlight the fact that the current lack of a long-term political vision is jeopardising investment in renewable energy projects – including the development of the supply chain which could create tens of thousands of jobs in wind and marine energy, with turbine factories opening around the UK.

Earlier this week the European Parliament voted in favour of setting a binding 2030 renewable energy target, to provide long-term clarity. The UK should be sending out similarly positive signals, so that we can maintain Britain’s global lead in the offshore wind, wave and tidal sectors, as well as maintaining our success in onshore wind which is the most cost effective way to generate large amounts of low carbon electricity to power our homes.

Photograph: CCC

Dr Gordon Edge is RenewableUK’s Director of Policy.

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What is the EU customs union and will Brexit make us leave?

International trade secretary Liam Fox's job makes more sense if we leave the customs union. 

Brexiteers and Remoaners alike have spent the winter months talking of leaving the "customs union", and how this should be weighed up against the benefits of controlling immigration. But what does it actually mean, and how is it different from the EU single market?

Imagine a medieval town, with a busy marketplace where traders are buying and selling wares. Now imagine that the town is also protected by a city wall, with guards ready to slap charges on any outside traders who want to come in. That's how the customs union works.  

In essence, a customs union is an agreement between countries not to impose tariffs on imports from within the club, and at the same time impose common tariffs on goods coming in from outsiders. In other words, the countries decide to trade collectively with each other, and bargain collectively with everyone else. 

The EU isn't the only customs union, or even the first in Europe. In the 19th century, German-speaking states organised the Zollverein, or German Customs Union, which in turn paved the way for the unification of Germany. Other customs unions today include the Eurasian Economic Union of central Asian states and Russia. The EU also has a customs union with Turkey.

What is special about the EU customs union is the level of co-operation, with member states sharing commercial policies, and the size. So how would leaving it affect the UK post-Brexit?

The EU customs union in practice

The EU, acting on behalf of the UK and other member states, has negotiated trade deals with countries around the world which take years to complete. The EU is still mired in talks to try to pull off the controversial Transatlantic Trade and Investment Partnership (TTIP) with the US, and a similar EU-Japan trade deal. These two deals alone would cover a third of all EU trade.

The point of these deals is to make it easier for the EU's exporters to sell abroad, keep imports relatively cheap and at the same time protect the member states' own businesses and consumers as much as possible. 

The rules of the customs union require member states to let the EU negotiate on their behalf, rather than trying to cut their own deals. In theory, if the UK walks away from the customs union, we walk away from all these trade deals, but we also get a chance to strike our own. 

What are the UK's options?

The UK could perhaps come to an agreement with the EU where it continues to remain inside the customs union. But some analysts believe that door has already shut. 

One of Theresa May’s first acts as Prime Minister was to appoint Liam Fox, the Brexiteer, as the secretary of state for international trade. Why would she appoint him, so the logic goes, if there were no international trade deals to talk about? And Fox can only do this if the UK is outside the customs union. 

(Conversely, former Lib Dem leader Nick Clegg argues May will realise the customs union is too valuable and Fox will be gone within two years).

Fox has himself said the UK should leave the customs union but later seemed to backtrack, saying it is "important to have continuity in trade".

If the UK does leave the customs union, it will have the freedom to negotiate, but will it fare better or worse than the EU bloc?

On the one hand, the UK, as a single voice, can make speedy decisions, whereas the EU has a lengthy consultative process (the Belgian region of Wallonia recently blocked the entire EU-Canada trade deal). Incoming US President Donald Trump has already said he will try to come to a deal quickly

On the other, the UK economy is far smaller, and trade negotiators may discover they have far less leverage acting alone. 

Unintended consequences

There is also the question of the UK’s membership of the World Trade Organisation, which is currently governed by its membership of the customs union. According to the Institute for Government: “Many countries will want to be clear about the UK’s membership of the WTO before they open negotiations.”

And then there is the question of policing trade outside of the customs union. For example, if it was significantly cheaper to import goods from China into Ireland, a customs union member, than Northern Ireland, a smuggling network might emerge.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.