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Enough is enough: this dash for gas has gone too far

Osborne's dogmatism will keep Britain hooked on expensive foreign imports and do nothing to tackle high fuel bills.

Chancellor George Osborne. Photograph: Getty Images.
Chancellor George Osborne is pushing for the government to restrict future investment in clean energy. Photograph: Getty Images.

"Enough is enough", energy minister John Hayes proclaimed last week as he propelled himself into the headlines and a full-blown war of words over the future of British wind power. But unhelpful as his intervention was, his very public tussle with the Energy Secretary, Ed Davey, was a mere sideshow compared to murky dealings over energy policy going on behind closed doors in Whitehall, with the ministerial "quad" – David Cameron, Nick Clegg, George Osborne and Danny Alexander – expected to meet again soon.

This anti-wind rhetoric obscures another government agenda: a new dash for gas that will keep Britain hooked on expensive foreign imports and do nothing to tackle high fuel bills. This week, Friends of the Earth revealed that the coalition is preparing to write a blank cheque for the gas industry to build new gas plants. Outrageously, it’s exempting back-up gas power stations from the Levy Control Framework, a set of Treasury rules which restrict public spending on energy. The result is likely to be a huge rash of investment in gas, funded by taxpayers, which could see more gas power stations being built than are needed.

Friends of the Earth accepts that we need some gas as a back up while the UK makes the shift from fossil fuels to renewable energy, and this includes a small amount of unabated gas – without Carbon Capture and Storage – to be maintained as back-up capacity. But pledging unlimited sums of public cash for this end is madness. In effect, you and I could end up paying for gas power plants that, if run at full whack, risk busting our targets to tackle climate change. In fact, we could end up paying for them not to run at all, when the penny finally drops that too many have been consented, and all we’re left with is stranded assets.

So why are they doing it? The Treasury has pressed hard for these gas power stations to be exempt from the rules, and the Department of Energy and Climate Change (DECC) appears to have conceded without a fight. Nervous ministers may be listening to scare-mongering about renewable energy making the lights go out. But I suspect it has a lot more to do with the Chancellor, hell-bent on moving the government away from its green commitments at any cost to the economy, against the wishes of senior politicians and business including the CBI.

Let’s not forget the long string of free lunches that Osborne has handed to the gas industry over the past year. First came the announcement from the Energy Secretary in March that made green groups despair: "we can’t take our foot off the gas for some time yet". Davey was allowing new gas plants to pump out carbon at 450gCO2/kWh until 2045, which, given most modern gas plants emit just under 400g, was effectively a free permit to pollute for the next three decades.

I strongly suspect the decision was made by a novice minister under pressure from Osborne, without enough briefing from civil servants. It was accompanied by a pledge to develop a Gas Strategy, the rationale for which officials have privately conceded to be ‘because the gas industry felt left out’.

Then, in July, came news of a leaked letter to from the Chancellor to Davey, demanding the government issue "a statement which gives a clear, strong signal that we regard unabated gas as able to play a core part of our electricity generation to at least 2030". Cue a dutifully trotted out press release from DECC, the wording of which appeared to be practically lifted from Osborne’s letter. A few days later, the Chancellor’s father-in-law Lord Howell was exposed as an influential oil and gas lobbyist. The pieces of the jigsaw were slowly falling into place.

September saw more tax breaks for North Sea oil and gas, and an announcement that Osborne would consult over a new tax regime for shale. Then came Davey’s assurances to the gas industry in October that he expects 20GW of new gas to be built between now and 2030 – completely at odds with the Committee on Climate Change, which sees just 6.5GW of new gas by the same date.

It’s not hard to see who’s pulling the Energy Secretary’s strings. Taken together, these concessions add up to a covert strategy of support for gas by a Chancellor who appears in hock to the fossil fuel industry, whose economic calculations are frighteningly short-termist, and who sees green policies as a burden instead of an opportunity for growth.

The Treasury is lobbying hard to restrict future investment in clean energy through the upcoming Energy Bill, expected in Parliament this month. This is a once-in-a-generation opportunity to change the way we source our power for the next 20 years – and our booming green economy is at stake, which now accounts for almost a million jobs.

Enough is enough. It’s time for Cameron to stop the dash for gas in its tracks and urgently lay down a clear pathway for clean British energy.

Guy Shrubsole is energy campaigner at Friends of the Earth

4 comments

BillOhara 's picture

Enough is not enough. In fact, the dash for gas has just begun. If you were truly a friend of the Earth, you would open your eyes to the good this will do for the environment. Look at how the dash for gas here in the US has reduced our carbon emissions. The UK may very well have more gas/acre than we have in the States and you want to ignore this resource? There are a lot of doubters in the UK just as there were in the US a few years ago. But the fact remains that you have an enormous resource that can be tapped economically, that can help your country become more energy independent, and can help improve your emissions profile, and you want to pretend it's not there? I can tell you that if you go down this road you will be assured of putting your economy at a competitive disadvantage for decades and forcing your citizens to pay high prices for their energy usage.

Dash for wind's picture

This debate would be improved if groups like Friends of the Earth would give up their bizarre obsession with wind power, which will do nothing to stop climate change and won't even reduce carbon emissions very much as most wind farms are built on peat (carbon stores) in Scotland. Governments will be happy to build a few turbines as window dressing but they obviously need some serious methods of generating electricity. Surely environmental groups should be making realistic suggestions if they don't want oil and gas lobbyists to have all the influence?

Havana's picture

Climate is way too complicated to be controlled by turning carbon emissions up or down, as if opening or closing the throttle on your lawn mower.

CO2 is one minor factor among thousands that may be able to affect climate. Reducing human output of this trace gas would barely change the trace proportion of the gas in the atmosphere, and, anyway, we have no idea if any overall reduction would actually slow or change the direction or speed of climate change. Yet, in spite of total ignorance of any possible consequences, and the fact that we already know we'll never be able to make any significant reduction in overall atmospheric CO2, our political leaders have created "targets" that are hugely expensive, destructive, and pointless.

Start tracking now. At least we'll be burning our own gas.

anonymous coward's picture

The problem the government face is that we have been investing strongly in a broken form of power generation - wind power, without investing in forms of energy generation that work reliably - coal, gas, oil and nuclear. Something needs to be done urgently otherwise we are at risk of unreliable supply of electricity and the quickest solution is gas. This exxposes us to expensive and potentially unreliable sources of foreign gas but if we encourage fraking it may be a strategy that makes sense.

Anything is better than sticking to the current fantasy policy of relying on wind power. An immediate cessation of all wind subsidies, encouragement of efficency/conservation and a rapid nuclear program would be sensible but unlikely.

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