Energy Policy

The Energy policy needed by Britain and Europe must meet the following four objectives

1)      Ensure we build enough energy capacity.

Here in Britain, because of the utter incompetence and dithering of the last Labour government, we are at serious risk of major power cuts in this decade and the next one. We need new generation capability built, and we need to get going fast. Even if this is achieved the risk of power cuts before 2020 will have been mitigated rather than eliminated.

2)      Maximise our energy security.

We cannot afford to be dependent on the goodwill of Vladimir Putin to keep the lights on and our businesses working

3)      Minimise damage to the environment. 

All types of energy have an impact on the environment, but some do much more damage than others.We can't entirely eliminate that damage, but we must keep it under control.

4)      Maintain stable energy prices

The price of energy should be high enough that the above aims can be met, but not so high as to impose yet another severe financial burden on individuals, homes of businesses in Britain of the rest of Europe at a time of grave economic difficulty.

Put these objectives together and there is an overwhelming case for a diversified energy policy which supports investment in as many forms of power supply as possible. The more types of energy we have, the less we are dependent on any one source.

I have always been a strong supporter of a new generation of nuclear power plants. John Prescott famously once asked of new nuclear plants the question “Would you want one in your constituency?”

I live in a constituency where the overwhelming majority of voters would answer “Yes.” There would be opposition to new nuclear build on a greenfield site but most voters in West Cumbria would support building a new nuclear power statioon at Sellafield. You would get a similar local response to proposals for new build on existing nuclear sites in several other parts of the country.

Britain needs new nuclear build, replacing the existing nuclear plants which are due to be phased out, in order to maintain the diversity of our energy supply, and on environmental grounds. Nuclear power is the only proven form of low carbon and low emission energy, other than hydro-electric power, which provides a steady supply of electricity 24 hours a day regardless of the weather.

Britain also needs more gas generation plants, preferably with carbon capture, and more renewable energy, though it is high time to take our foot off the accelerator with respect to onshore wind turbines. We don’t want too much of our generating capacity tied up in a source of energy which doesn't work when the wind isn’t blowing at the right speed, and the North West has quite enough onshore wind turbines already.

I'm guardedly in favour of making more use of shale gas, which has been of immense value to the USA, provided we are very careful about the environmental and safety implications of "fracking." Britain is a much smaller and more densely populated country than America.

 

Under the present system the European Union has a significant impact on our energy policy, which it might be difficult for any future negotiations on the future of Britain's relationship with the EU to unpick, through the role the EU plays in the "price of carbon" e.g. the cost iof licences to release carbon into the atmosphere.

 

This is a massively important and very difficult issue, because the four objectives which I set out at the beginning of this post can conflict. In particular, the first three objectives I gave argue for a higher "price of carbon" but the fourth objective argues for the opposite. A few months ago there was a very close vote in the European Parliament about carbon prices.

The parliament voted, by a narrow margin, to reject EU commission proposals for what is called "backloading" of carbon emission rights, which would have reduced the number of carbon emission allowances on the market and therefore probably have increased their price.

There are certainly too many allowances on the market, and there are good reasons why we don't want the price to be too low. But we don't want to suddenly send it upwards fast enough to create price shocks, either.

If the price of carbon emissions is too low, there will not be enough incentives to move power generation in the right direction for either energy security or to reduce damage to the environment. Indeed, for this very reason, the British government has promised to work to ensure that the price of carbon does not drop below a certain minimum "floor" level. If the price of carbon is too low, we will not get new nuclear build, and for the reasons explained above I think new nuclear build should be one of the important elements of Britain's energy policy.

However, if the price of carbon is too high, and particularly if it is suddenly shoved upwards, there could be a damaging rise in the cost of energy, impacting on the price of fuel, heating and light to homes and businesses at just the wrong moment for our economy. Britain cannot afford to put a brake on economic recovery in that way, and neither can the rest of Europe.

Therefore I favour a policy of gradually reducing the number of carbon emission licenses and increasing their price, in a phased way, slowly enough to avoid causing energy price shocks.