Monday, 1 April 2013

We need a renewables target not a carbon floor price

The vultures are circling above the Treasury's plan to increase the carbon floor price - and a good thing too. We should be demanding that the money be precisely targeted at renewable energy and energy efficiency instead. The carbon floor price gives revenue to the Treasury (that's the best argument for it!) but is unlikely to lead to ANY new investment in either renewable energy or energy efficiency, or, indeed, nuclear power. If they are to risk their money investors and banks are going to need a lot more than tenuous government commitments to keep up and continue raising taxation levels. Investors in green energy need legally binding contracts. Instead, under a carbon floor price, a large part of the increase in energy prices that the carbon floor price generates goes straight into the pockets of EDF who run the (old) nuclear power stations in the UK.

The carbon floor price is currently being targeted by an anti-green energy subsidy lobby along with money being spent to support renewable energy and energy efficiency schemes. They want these things scrapped, or reduced. We must defend the renewable energy and energy efficiency support schemes, but let's hang loose on the carbon floor price. Not only is it hardly worth saving, but the increase in prices that it generates would be much, much, better spent on direct support for renewable energy and energy efficiency schemes. Let us put our efforts into demanding targets to be set for the achievement of specific objectives - renewable energy and energy efficiency - not see consumers money frittered away into corners that do little or nothing to advance green energy objectives.

A now much quoted critique of the carbon floor price is Reg Platt's report published by the IPPR: 'Hot Air: The carbon price floor in the UK', see . Indeed, I wrote to the Guardian on this theme in June 2010 when the proposals were being mooted:

Ironically, in their pre-election energy policy statement, the Conservatives said, of their carbon floor price proposals,

'We intend that this reform should provide incentives primarily for

future generating capacity, rather than penalise existing

capacity (page 16).


So why are the Government persisting with this device? Well, partly it is because the carbon floor price is a revenue generator for the Treasury. It does appear that the conservative establishment  at DECC effectively did a deal with the Treasury at the time of the General Election that the Treasury could have the carbon price tax revenue so long as DECC could have nuclear power subsidies through the ‘contracts for differences’ (CfD) arrangements. The carbon floor price would be a good cover for nuclear power which would, in effect,(or so they thought)  require no net subsidies from the CfD arrangements. This was to be the justification for the Government’s story that there would be no ‘subsidy’ for nuclear power. However, this story has, as we know, become unstuck.

 The expectation, I have been told, was that nuclear power would be no more expensive than the wholesale electricity price produced after the imposition of the full level of the carbon floor price. Only renewable schemes which were cheaper than nuclear power (not very many, they thought) would be, in effect, allowed. Of course the establishment were drunk on their own perennially over-optimistic hopes of finding the elusive holy grail of ‘cheap’ nuclear power. Now we know, of course, that most forms of renewable energy are actually cheaper than nuclear power.

 Green campaigners have recently been focussing their efforts on getting the Government to build in a decarbonisation target to the Energy Bill. Now, I support such efforts, but I doubt if they are substitutes for specific targets for renewable energy and energy efficiency. The UK is reducing its carbon consumption anyway with use of more natural gas and (in current and recent times) non-existent economic growth (to be maintained in future, no doubt, by oil price spikes). So if we are going to see increases in installation of real green energy equipment, such as wind power or solar power or external wall insulation, or more fuel efficient motor vehicles, new low energy buildings etc etc we need specific targets, regulations  and funding programmes to achieve improvements over and above what otherwise will be made.

 The EU is discussing setting a EU-wide renewable energy target of 30 per cent by 2030. We ought to be supporting such plans. Currently there is no renewable energy target for the UK beyond 2020. Farcically, many of our leading scientists and institutions are still clinging to the idea that after 2020 nuclear power will provide the main increase in low carbon energy supplies. It is time that the green movement fight off this nonsense and campaigned for renewable energy targets instead of the carbon price support mechanism.

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