20/1/2015

TheGuardianviewonUKenergypolicy:thelimitsofthemarket|Editorial|Commentisfree|TheGuardian

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TheGuardianviewonUKenergypolicy:
thelimitsofthemarket
Governmenthasavitalroleensuringthatgreengoalsandsupply
needsarebothmaintained
Editorial
TheGuardian,Sunday4January201518.53GMT

Eggboroughpowerstation,Selby,NorthYorkshire.'Insteadofencouraginganewgenerationofgas
firedpowerstationstoenterthemarket,twothirdswillcomefromexistingcapacity,whichmeansthat
nearlyafifthofthesupplywillcomefromdirtycoalandcontentiousbiomass.'Photograph:John
Giles/PA

Lastyearwasaroughonefortheclimatechangesecretary,theLibDemsEdDavey.The
biggovernmentofferin2010ofaclear,marketdrivenenergypolicyturnsouttohave
beeneasiertopromisethantodeliver.Thatispartlythefaultofcoalitionpolitics.
Energybecamethebattlegroundforthemostfundamentaldifferencesbetweenthetwo
partners.Asaresult,apolicyareathatdemandslongtermthinkinghasbeenmiredin
uncertainty.Thecaseforgreenenergyhasbeenwidelyunderminedbymisleading
accountsofitscosttotheconsumer.DavidCameron,themanwhousedtosayvote
blue,gogreen,nowtalksofcuttingthegreencrap.
Inthemidstofthepoliticalsquabbling,theDepartmentofEnergyandClimateChange
(Decc)haslurchedbetweencrises.Lastmonth,facedwithwarningsfromthepower
generationindustrythattheywereworkingatsomethingclosetofullcapacity,witha
marginofaslittleas2%attimesofpeakdemand,MrDaveysdepartmentlookedfora
castironguaranteethatthelightswouldstayon.Althoughmanyindependentobservers
arguedthatthe2%marginwaslikelytobebreachedonlyinanextremewinter,andthen
onlyforaveryshortperiod,lastmonththeNationalGridheldthefirsteverauctionfor
capacitycontractswhichcanensurethelightswillnotgoout.Thegenerators
guaranteedtheywouldhavepoweravailableand,inreturn,wereguaranteedsalesata
pricethat,whenitcomesonstreamthreeyearsfromnow,willcostconsumersabout
1bnayear.
http://www.theguardian.com/commentisfree/2015/jan/04/guardianviewukenergypolicylimitsmarket/print

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20/1/2015

TheGuardianviewonUKenergypolicy:thelimitsofthemarket|Editorial|Commentisfree|TheGuardian

ThisdealisduetobeapprovedbyMrDaveyonMonday.Therearetwoparticularly
contentiousaspectstoit.First,ithasturnedouttobeasubsidytogeneratorsfordoing
somethingthattheywoulddoanyway.Second,insteadofencouraginganewgeneration
ofgasfiredpowerstationstoenterthemarket,twothirdswillcomefromexisting
capacity,whichmeansthatnearlyafifthofthesupplywillcomefromdirtycoaland
contentiousbiomass,whileEDF,themajornuclearpoweroperator,willgeneratea
further16%.
Meanwhile,theDecchasrebootedthestrugglinggreendeal,theflagshipprojectto
encouragehomeownerstoinvestinenergyefficiency.Besetbycomplexity,attheendof
itssecondyearin2013,greendealhadattractedfewerthan4,000takers.Ithasnow
beenrebrandedasthegreendealhomeimprovementfund,andextendedtoallow
consumerstoborrowupto6,000toinvestinmoredifficultprojectslikesolidwall
insulation.Theexperienceofthegreendealhomeimprovementfundhasbeenthe
reverseofitspredecessor.Itssosuccessfulthatitsacompletesellout.
Reshapingenergypolicywillinevitablybealonghaulproject.Thepoliticalrightargues
that,withwelldesignedmarketincentives,innovativetechnologieswillemerge.
Incentivescertainlyhavetheirplace.But,overall,thisistoobigachallenge,asMr
Daveysexperiencehasshown,torelyexclusivelyonincentivising.Moreover,inmoral
terms,thisisachallengethatcannotbeleftwhollytothemarket.Atitsheart,energy
policygeneratesconflictingrights.Onlythestatecanensurefairnessbetweenthem.
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