July 23, 2012

The Treasury Has Made UK Energy Policy Unworkable

Those aren't my words. they are a slight paraphrase of the words of the MPs on the Energy and Climate Change Committee.  Following on from last week's criticism of the UK government's failure to deliver the renewables obligation numbers, today the UK Parliament web site reports that:

The proposals in the Government’s draft Energy Bill could impose unnecessary costs on consumers, lead to less competition and deter badly needed investment.

Commenting on the draft bill Tim Yeo MP, Chair of the Energy and Climate Change Committee, said that :

The Government is in danger of botching its plans to boost clean energy, because the Treasury is refusing to back new contracts to deliver investment in nuclear, wind, wave and carbon capture and storage.

It was originally anticipated that the new "contracts for difference" designed to provide energy companies with a guaranteed price for low-carbon electricity would be underwritten by the State. Now however it seems that:

The new model for contracts will spread the liability across various energy companies instead; raising concerns that the plans are now too complex and possibly not legally enforceable.

According to Tim Yeo once more:

The Government must provide investors with more certainty about exactly how much money will be available. Community owned energy projects and small independent generators are in danger  under the current plans of being squeezed out.

In conclusion the Select Committee states that:

The Government must rethink its plans urgently so that the investment that is needed to replace the UK’s aging power stations, cut carbon emissions and maintain energy security can be delivered.

It looks like a long hot summer is metaphorically in store for the legislators and the Treasury, although unfortunately not literally for the rest of us.

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