Is Ed Davey’s energy bill really turning Blue, Green?

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Open letter to Ed Davey on Draft Energy Bill

Open letter from SGR to Ed Davey, Secretary of State for Energy and Climate Change, on the Draft Energy Bill and wider UK energy policy. The letter makes four main criticisms: insufficient curbs on greenhouse gas emissions of fossil fuel plants; favouritism towards the nuclear industry; inadequate support for the renewable energy industry; and failure to prioritise energy conservation.

First posted on 19 July 2012

Rt. Hon. Edward Davey, Secretary of State
Department for Energy and Climate Change
London

Dear Sir

Open letter on Draft Energy Bill and wider energy policy

We write on behalf of Scientists for Global Responsibility (SGR), a UK organisation with 1000 members drawn from across the science, design and technology professions, and with a concern for peace, social justice and environmental sustainability.

We wish to add our voice to the widespread criticism of the Draft Energy Bill, published in May, and also highlight our broader concerns about current UK energy policy. In summary, our concerns are the following.

• Insufficient curbs on greenhouse gas emissions of fossil fuel plants. We note with considerable disappointment that the Bill has set an Emissions Performance Standard for new electricity generating plant at the unambitious level of 450 g/kWh, and that such power stations would be subject to the level until 2045 (Section 36). We are also very concerned by loose wording regarding exemptions for projects intending to use Carbon Capture and Storage technology (Section 37), which we firmly believe could be used to side-step restrictions for new unabated coal-fired plant. Both these factors are highly likely to undermine attempts to meet carbon reduction targets under the Climate Change Act. As the Committee on Climate Change (CCC) has recently noted,1 such shortcomings could be remedied by including an explicit target for a reduction in carbon intensity in the electricity sector – of no more than 50 g/kWh by 2030. We strongly urge you to insert such a target in the Bill.

• Favouritism towards the nuclear industry. The system of proposed incentives for building new low carbon plant is, in our view, strongly geared towards supporting new nuclear power over renewable energy technologies, and creating ways to side-step the commitment not to subsidise nuclear power. We have numerous concerns about nuclear power, but perhaps the most pertinent to the current situation is the poor progress being made with current new nuclear plant construction in Western countries – specifically, Olkiluoto in Finland and Flamanville in France (both many years behind schedule and massively over-budget) – coupled with spiralling estimates of build costs, more generally.2 Government cost estimates – and indeed those quoted by the CCC – do not seem to reflect such real world experience and we strongly urge the government to reconsider such support mechanisms. The key problem in our view is the current proposal for Feed-in Tariff with Contracts for Difference (FiT-CfDs). While a strong case may be made for support mechanisms for new technologies as they move towards commercialisation, to use such a mechanism for established technologies such as nuclear power seems deeply illogical – as well as being a clear breach of the coalition government’s commitment not to subsidise nuclear power. And for these mechanisms to lock the consumer into supporting such technologies for as much as 25 years (compared with only 15 years for renewable energy projects) is high risk. Coupled with numerous other measures which benefit only the nuclear industry – not least favourable insurance conditions and fixed unit pricing for radioactive waste disposal – this mechanism as currently planned has, in our view, little to justify it. We therefore call on the government to exclude nuclear power from the FiT-CfD system.

 Inadequate support for the renewable energy industry. There is a distinct lack of ambition shown by the government for the expansion of renewable energy in the UK. We have an enormous indigenous resource base – especially wind and marine – and costs are falling rapidly – especially in technologies such as onshore wind and solar photovoltaics. Employment opportunities in these areas are large and growing. The government is aware of all of these factors and yet has responded recently with over-zealous and poorly organised cuts to solar energy tariffs and with such lukewarm support for wind power that Vestas has cancelled its plans for a wind turbine factory in Kent which would have employed nearly 2,000 people. In general, the control framework set up for DECC spending on renewables is too restrictive3 – especially when compared with the generosity shown to the nuclear industry. Given the transitional nature of the financial support needed as these technologies move towards a more competitive position – unlike that for nuclear power – we strongly urge the government to shift its position and provide significantly more financial support to key renewable energy industries.

• Failure to prioritise energy conservation. We have been very disappointed by the government’s proposed Green Deal, which in our view is also unambitious. While improvements have been made recently, it still seems very unlikely to exploit the enormous potential for reducing domestic energy demand in the UK. Indeed, compared with existing energy efficiency schemes, analysis suggests that it will be markedly less effective.4 Two key flaws in our view are a low level for the ECO subsidies, and a lack of timeliness in issuing documentation to allow the businesses expected to deliver the scheme to forward plan. However, we believe that the problems with policy on energy conservation run much deeper. Here we wish to endorse the call from a recent WWF-co-ordinated study5 that argued that energy conservation be put at the heart of UK energy policy, rather than added as an afterthought. Only a fundamental shift of this nature will, in our view, deliver the combined goals of providing energy security, reducing greenhouse gas emissions and tackling fuel poverty.

In summary, we do not understand the government’s position. The development of a low carbon economy offers the UK a real opportunity to create long term jobs through sustainable improvements of households and businesses across the UK. Government support and stronger regulation would drive a strong regeneration of the economy. In our view, there is a powerful argument to use what would amount to a small proportion of the sums for quantitative easing (which currently stand at £375bn) for direct support of a large-scale UK-wide insulation and business premises upgrade programme. Recent studies show that such a programme would pay for itself at commercial interest rates, provided funding of the order of £5-10bn can be secured for major city regions such as Leeds, and that this activity could be scaled up across the UK.6 We are aware that such proposals have been put directly to government by both CCC expert advisors in the economic sphere, and by other senior advisors to government, and we think that this is an opportunity that should be grasped for the benefit of the UK economy, our world standing as a climate change leader and would have support of the public.

Sincerely

Dr Stuart Parkinson, Executive Director
Dr Philip Webber, Chair

Cc:
Rt. Hon. Charles Hendry, Minister of State, Department for Energy and Climate Change
Rt. Hon. Gregory Barker, Minister of State, Department for Energy and Climate Change
References

1. CCC (2012). Meeting the Carbon Budgets: 2012 progress report to parliament. http://theccc.org.uk/reports/2012-progress-report
2. For example:
The Times (2012). May 7. http://www.thetimes.co.uk/tto/business/industries/utilities/article3406852.ece
Toke D (2012). May 5 (updated June 21). http://realfeed-intariffs.blogspot.co.uk/2012/05/edfs-nuclear-plans-are-more-expensive.html 
Toke D (2012). July 16. http://realfeed-intariffs.blogspot.co.uk/2012_07_01_archive.html
3. DECC (2012). Control Framework for DECC levy-funded spending. http://www.decc.gov.uk/assets/decc/11/funding-support/fuel-poverty/3290-control-fwork-decc-levyfunded-spending.pdf
4. For example:
Goodall C (2011). http://www.carboncommentary.com/2012/01/03/2230
5. WWF et al (2012). Securing the UK’s power supplies.http://www.wwf.org.uk/research_centre/research_centre_results.cfm?uNewsID=6074
6. Gouldson et al (2012). The Economics of Low Carbon Cities. University of Leeds.http://www.cccep.ac.uk/Events/Past/2012/April/EconomicsLowCarbonCities-mini-stern-review.pdf

About Scientists for Global Responsibility: 

Unlike the ‘technological optimists’ SGR recognises that science, design and technology are indeed part of the problem; but, unlike those who are indifferent or even hostile to science, SGR also recognises the enormous contributions that science, design and technology make to our civilisation and wellbeing. The new problems, as well as those that have always been with us, such as starvation, drought and illness, require a combination of new scientific, economic and political solutions.

If social justice, care for the other species of this planet, and a concern for future generations have their rightful place as fundamental values, then science, design and technology can be much more part of the solution than part of the problem. Here are just a few programmes that deserve much more science, design and technology funding …

  • the clean, sustainable production of energy, and its efficient use
  • the development and application of biological and medical knowledge to the benefit of all
  • the study of social and economic affairs with the aim of improving the lot of all
  • the development of clean, efficient transport systems, in a social setting which provides needed transport for all but inhibits unnecessary travel and freight-miles
  • the use of information technology to increase energy efficiency, reduce the need for transportation, eliminate unnecessary labour, and promote access for all to humanity’s pool of knowledge
  • the design and construction of energy efficient and zero energy building.

Cut out Cuts – Leave the Eton Mess Behind

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Jim Grundy

The 0.7% second-quarter fall in GDP in 2012 brings a calamitous verdict on George Osborne’s policy, with the UK economy now smaller than it was in 2010, and double-dip recession longer than in the 1970s.

The latest bad news on the economy will surprise no-one (I hope, other than your average BBC journalist). Isn’t it time that we adopt the line that all the talk of cutting spending to lower borrowing, to cut the deficit and lower the national debt was, and remains, a simple lie? Who in their right mind could fail to see that sucking billions out of the economy could have any other impact than shrinking the economy, lowering revenue from taxation and increasing costs through higher welfare payments (even if these are being cut)? And what do we see now – rising borrowing, a deficit that is not being cut and debt that is not being paid off!

In 1997 Labour inherited a national debt (as a % of GDP) lower than that seen in 2010, so the narrative that “all the money has gone” was always nonsense. It was and remains a simple pretext for the demolition of the public sector, the NHS, pensions, welfare programmes, anything and everything that has been gained through struggles going back generations. The Tories are our ‘Tea Party’ who are capable of delivering one thing and one thing only – blind ideological obedience to the interests of large corporations.

The “cutting too fast and too soon” line has won us no friends – quite the opposite, I would argue. It’s time we put the case for investment, for growing our economy, for delivering the new jobs, homes and for better public services so desperately needed now more than ever. To do anything else risks the unkindest cut of all – a reduction in voter turnout and growing voter antipathy to the whole process. And we all know whose interest that serves.

It’s time to change the record. Cuts are not the answer – well, they are but the question is not how we make sure we can live in a fair society, where people pay their way, get support when it’s needed and the interests of the many come way ahead of the private profits of a few. Time to leave the Eton mess behind. Time to give people hope that a real alternative exists.

Sue Davies adds:

We are fed a lot of nonsense about ‘there being no money left’.  This is a complete misunderstanding about the fundamentals of money and taxation. There is no limit to government spending other than in its capacity to cause inflation if the UK is operating on full throttle .. but at the moment, the real fear is of deflation, and there is plenty of spare capacity in the economy with the current high levels of unemployment.  This lack of inflationary effect is evidenced by the fact that £325 billion of QE has had little impact.

Labour should be aiming for full employment, not only by investing in a new green deal but also by lowering the pension age and shortening the working week.  A new green deal could be aimed at reducing energy demand and boosting renewable energy production. This would create new jobs, apprenticeships, new manufacturing, which in turn would cut the benefits bill, raise tax receipts, create demand and reduce the structural deficit. 

The UK desperately needs more social or council housing to be built, and this offers the perfect opportunity to provide sustainable homes, with heat/water conservation measures and the capacity for the microgeneration of renewable energy. Furthermore, a mass insulation programme of the existing housing stock would cut ordinary people’s heating bills and, with the declining cost of renewable energy, their electricity bills.  It would reduce cold-related illness/deaths, cut climate-changing gases and mitigate oil dependency.  On a political level, it would usefully break the power of the big six energy companies, who currently hold government to ransom over the development of renewable energy sources.

Steve Keen’s debt jubilee is an ingenious solution because it would both massively curtail the casino arm of the banks whilst also relieving the enormous debt problems of individuals/small businesses and creating demand in the economy.

Labour must abandon ‘too far and too fast’.  There is no rational argument for even a partial programme of austerity.  It doesn’t make any sense.

As Michael Meacher writes:

So why is this madness still continuing?   When the IMF, not normally a trendy lefty organisation, says the UK government must kickstart the economy with a boost to spending and increased investment in order to avoid a long depression and a “permanent loss of productive capacity”, even this bunch of far-right Tory ideologues should take notice and discover they have a reverse gear.  

 So why not?   Saving Osborne’s face?   Never under-estimate politicians’ vanity, but no Cabinet will hang on to a loser.   But caught between the markets still demanding death-defying cuts and the IMF now on the side of growth, Osborne can still Houdini-like find a way through.   With no increase in public borrowing, launch a big jobs and growth programme, funded by taxing the near-half trillion pounds amassed by the top 1% in the last 3 years.  

 http://www.michaelmeacher.info/weblog/2012/07/are-osborne-co.-insane-deluded-or-just-suicidal/

We need investment in a new green deal, in new housing, to create employment and to fully nationalise (at least) the bailed-out banks.

Think Left April 2012: Double Dip Recession: Don’t say you weren’t warned George

Think Left: How to End the Recession: A Modern Jubilee (CJ Stone)

Think Left: Gordon Brown did not spend all the money – the Banks did

Ed Balls Responds

Larry Elliot: Guardian: Osborne’s Blundering Incompetence made UK sicker

BBC: UK Recession Deepens after 0.7% Fall 

The Independent Shock as GDP shrinks by 0.7% 

Guardian in worst UK Recession for 50 years