Future of energy mired in government contradictions

New white paper fails to set out the radical overhaul required, leaving families at the mercy of ene

 

In the autumn of 2009, four hundred people converged at Ratcliffe-on-Soar to protest against the development of coal-fired power in the UK. E.ON, the Germany company operating the plant, unsurprisingly went on the media offensive. To keep Britain's lights on, E.ON argued, meant investing in coal-fired power. The UK faced an energy "trilemma" whereby affordability, reliability and carbon output needed careful balancing. E.ON had the solution: clean coal.

Cut to 2011 and the sorts of contradictions epitomised by E.ON's "clean coal" concept prevale. Last Tuesday, secretary of state for energy and climate change Chris Huhne launched the Electricity Market Reform (EMR) white paper, setting out how the Department of Energy and Climate Change (DECC) expects the UK to meet the demands of cost, carbon and continuity of supply - the "3C energy trilemma" no less.

Cue Huhne:

To achieve our goals, we need to take decisive action now to increase low-carbon electricity generation.

What was hailed by DECC as a radical overhaul of energy policy is in fact anything but. In his speech to the House of Commons, Huhne insisted that we need major investment in the UK's crumbling energy infrastructure - as much as £200bn by 2020 according to government estimates. Not only is such investment necessary, it will be cost-saving over the coming years.

What's startling is the lip-service paid to green initiatives versus the actual reforms outlined. DECC's desire to incentivise the construction of new gas-fired power stations is overwhelmingly evident, as exemplified by the new emissions performance standard. The EPS restricts the amount of carbon dioxide that can be emitted from power stations. As it stands, the threshold announced will have a restrictive impact on the future of coal but has been set at a level that facilitates the ongoing pursuit of gas without significant limitation. Huhne makes it clear that the government is not cracking down on fossil fuel development across the board:

we are sending a clear signal that we do want new gas.

Environmental concerns aside, gas is expensive. Earlier this month, British Gas shocked consumers when it announced it was putting up prices of the fuel by 18 per cent on top of the seven per cent increase only months before. Gas prices have risen by 84 per cent since 2004, with domestic energy bills more than doubling over the same period. Power companies put these soaring energy prices down to the rise in the cost of wholesale gas.

A separate report out last week, somewhat ironically also published by DECC, reveals that one in four families are now officially living in fuel poverty, with single parents and working-class families particularly hard hit.

Ann Robinson of uSwitch.com:

The impact on family budgets will be huge, but it will be particularly hard on those living on fixed incomes, and I would urge both suppliers and the government to start thinking now of how they can provide some support.

Far from providing support, Huhne is encouraging growth in the gas market. From the power companies' point of view, gas is attractive for several reasons, particularly the ease and relative low cost of building gas plants. With the EMR white paper coming into effect in 2013, energy firms now have even more incentive to invest in gas and are responding accordingly with a rapid surge in planning-application submissions.

At the unveiling of the energy white paper, Huhne attempted to reassure the public that the government is committed to their well-being:

I am absolutely convinced that what we are doing is the best possible solution for the British consumer.

Evidence suggests otherwise. Unless we radically overhaul our current energy production system and put the brakes on the dash for gas, households will be paying the price for years to come.