Westminster MPs on the Energy and Climate Change Select Committee may have hit the nail squarely on the head when they accused the Treasury of making the government's clean energy revolution unworkable and creating the risk of higher household bills. Rightly in my opinion they said Treasury changes to the draft Energy Bill will increase the risk of borrowing for investors.
MP’s noted that it would put up the cost of renewable and nuclear power, with customers bearing the extra cost. Somewhat naturally a Treasury spokesman said the aim was to achieve government goals while protecting businesses and consumers. The suggestion is that the Treasury has clearly intervened in the draft Energy Bill in a way that will put up bills to consumers and put off investors by increasing their risks, which just happens to be exactly opposite of what the Treasury officially says that it wants.
Chancellor George Osborne for, in his view, trying to undercut subsidies to onshore wind - potentially the cheapest option of expanding the UK's renewable energy portfolio. MPs wanted Treasury ministers to attend the Committee to answer questions about their influence on energy strategy, but they declined. On-shore wind is not the real issue, this is about Westminster and Whitehall trying to weaken the commitment to green renewable energy period - so that the nuclear option (their favourite option) becomes to only game in town.
A Treasury source stated that it would be inappropriate for ministers to be questioned at this stage in parliamentary proceedings. The committee has major worries about the finance department's impact on the draft bill, including the long-term contracts for developers who are being asked by the government to plough billions in the UK's low-carbon infrastructure.
The Department of Energy and Climate Change (Decc) originally said the government would guarantee the contracts, thereby reducing the risk for investors and allowing them to borrow large amounts at a low rate of interest, but, the Treasury has since ruled that the government will not be the guarantor.
MPs are also concerned about the ongoing consumer subsidy to renewable and nuclear power generators, which are needed for the UK to meet its legally binding targets. The Treasury says the subsidy will be limited to hold down the cost to consumers - but it won't reveal the size of the future cap.
The UK Chancellor is under pressure from right wing backbench Tory MP’s to make major cuts to the support for onshore wind, which could seriously damage the renewable energy industry. I have real and significant concerns about the impact of, the ownership of on-shore wind developments and the flawed nature of the planning process – thanks to the 50 MW rule - here in Wales.
The Con Dems and the Treasury while being more than happy to allow massive land based windfarm developments in Wales appear to be wholeheartedly indifferent when it comes to encouraging community-owned and community beneficial energy schemes. This is where a local community builds a small solar, wind, hydro etc plant in their area, and members of the community have a stake (e.g. hold shares) in it.
Such installations would earn payments from the Government's Feed-in Tariff scheme for 20 years or more, and could pay for themselves in around 10 years. This means that potentially local community share holders could be in profit after 10 years, not to mention the added benefit of reduced energy bills.
Mind from a pro-Nuclear Treasury point of view the last thing they would want are ordinary citizens, community activists, councillors, local landlords, farmers, etc reaping their own rewards from small scale energy generation projects because over the medium to longer term the big boys profits would reduce along with post civil service and post Westminster jobs for the boys and girls in Westminster and Whitehall.
Showing posts with label Energy and Climate Change Select Committee. Show all posts
Showing posts with label Energy and Climate Change Select Committee. Show all posts
Wednesday, 1 August 2012
Monday, 16 May 2011
COME CLEAN ON NUCLEAR COSTS
The Con Dem Government has claimed that our taxes won't be used to subsidise nuclear power. Yet the new Energy Bill that's being debated opens the way for public bailouts if the cost of dealing with nuclear waste spirals. Instead of risking a nuclear bailout, the Government should set this money aside for nationwide energy saving and investment in renewable power.
Now MPs have called for ministers to come clean and admit they are tacitly subsidising nuclear power despite promising that the industry would not receive such support. MP's on the Energy and Climate Change Select Committee have reported that Ministers are attempting to disguise the Nuclear subsidy and are distorting reforms of the energy market. They have also warned that unless the issue was resolved, the UK would fail to get the low-carbon energy system it needs.
The Select Committee's report focuses on the Con Dem government's plans to shake up the energy market.The shake up is needed to ensure the provision of affordable electricity without compromising the UK's climate change targets.
At the present, the current energy market exists to supply plentiful (allegedly) cheap electricity, but makes little provision for ensuring that any energy supplied has lower carbon emissions. MP's and some energy experts have complained that the UK Government is failing to attract enough investment in the infrastructure needed to meet energy needs.
The Con Dem coalition agreement allows the construction of new nuclear power stations "provided that they receive no public subsidy". At the moment the nuclear industry is refusing to build new power stations unless their are further inducements, Con Dem ministers have proposed threat the energy companies that build nuclear power plants get long-term contracts at a guaranteed price for energy produced by their nuclear power.
To make life even more complicated there is the problem of the low price of carbon credits in the EU emissions trading market. UK ministers now plan to introduce a minimum price below which carbon permits will not be allowed to sink with any shortfall will be covered by revenue raised by taxation.
This is intervention in the free market (such as it is) to an amazing degree from a Conservative dominated government. The Con Dems have said that both these policies will benefit renewables too, yet, this ensure that electricity prices remain higher than they would have been without this blatant intervention to favour nuclear industry. This "one size fits all" policy barely disguises what is a subsidy to the nuclear industry, as has rightly been noted by MPs.
For many years, the UK nuclear industry has lived quite happily off massive subsidies from UK taxpayers, at the same time cleaner renewable forms of energy have been starved of cash and investment. Potential sustainable energy suppliers and developers have had to face a less than subtle pro nuclear bias from UK Government departments and agencies, something that has seriously slowed the development of secure and sustainable energy supplies in the UK.
Back in 2002 British Energy (BE) became virtually bankrupt, so the European Commission quietly approved the UK Government's decision to bailout the private nuclear power generator. Under the restructuring plan drawn up to save the company, the UK government agreed to indemnify the company against any shortfall in the nuclear liabilities fund which meets its clean up costs.
BE in return contributes 65% of its net cash flow to the fund, the National Audit Office says this uncertainty "places a significant risk in the hands of the taxpayer", effectively leaving the taxpayer according to NAO facing "a large and uncertain liability". It gets better, BE’s liabilities, all taxpayer subsidised, have risen to £5.1 billion, an increase of more than 30%, since 2003. The amount the taxpayer has to pay will depend on the company's future financial performance.
Now the UK Government plans to build new reactors in the UK (something initiated by Tony Blair and supported by Gordon Brown) and runs the risk of fatally binding the UK to nuclear power for decades, something that will continue to divert vital investment away from clean, renewable energy. It's time for the UK Government to finally come clean about the costs (financial and environmental) of the UK nuclear industry.
Back in 2008, Gordon Brown’s cabinet rubber stamped Tony Blair’s decision to back the nuclear option to solve the UK energy needs was both disappointing and short-sighted, but, was not unexpected. By making nuclear power its priority the failing Brown Government effectively abandoned any serious attempts to conserve energy, and significantly undermined its own commitments to tackling climate change. So far the Con Dems have brought little to the debate...
When it comes to power generation there are real job opportunities that need to be fully grasped; the renewable energy sector can play an immensely important role in creating more green energy jobs. We need to create a decentralised power generation system which can include a community owned and community beneficial sector which will create sustainable long-term jobs for local people, not damage the environment and contribute to providing our local communities with a long-term viable economic energy future.
Now is definitely the time for control of energy policy to be devolved to the National Assembly and time for some original non nuclear thinking and a fundamental sea change in attitude from all levels of government in Wales towards energy policy.
Now MPs have called for ministers to come clean and admit they are tacitly subsidising nuclear power despite promising that the industry would not receive such support. MP's on the Energy and Climate Change Select Committee have reported that Ministers are attempting to disguise the Nuclear subsidy and are distorting reforms of the energy market. They have also warned that unless the issue was resolved, the UK would fail to get the low-carbon energy system it needs.
The Select Committee's report focuses on the Con Dem government's plans to shake up the energy market.The shake up is needed to ensure the provision of affordable electricity without compromising the UK's climate change targets.
At the present, the current energy market exists to supply plentiful (allegedly) cheap electricity, but makes little provision for ensuring that any energy supplied has lower carbon emissions. MP's and some energy experts have complained that the UK Government is failing to attract enough investment in the infrastructure needed to meet energy needs.
The Con Dem coalition agreement allows the construction of new nuclear power stations "provided that they receive no public subsidy". At the moment the nuclear industry is refusing to build new power stations unless their are further inducements, Con Dem ministers have proposed threat the energy companies that build nuclear power plants get long-term contracts at a guaranteed price for energy produced by their nuclear power.
To make life even more complicated there is the problem of the low price of carbon credits in the EU emissions trading market. UK ministers now plan to introduce a minimum price below which carbon permits will not be allowed to sink with any shortfall will be covered by revenue raised by taxation.
This is intervention in the free market (such as it is) to an amazing degree from a Conservative dominated government. The Con Dems have said that both these policies will benefit renewables too, yet, this ensure that electricity prices remain higher than they would have been without this blatant intervention to favour nuclear industry. This "one size fits all" policy barely disguises what is a subsidy to the nuclear industry, as has rightly been noted by MPs.
For many years, the UK nuclear industry has lived quite happily off massive subsidies from UK taxpayers, at the same time cleaner renewable forms of energy have been starved of cash and investment. Potential sustainable energy suppliers and developers have had to face a less than subtle pro nuclear bias from UK Government departments and agencies, something that has seriously slowed the development of secure and sustainable energy supplies in the UK.
Back in 2002 British Energy (BE) became virtually bankrupt, so the European Commission quietly approved the UK Government's decision to bailout the private nuclear power generator. Under the restructuring plan drawn up to save the company, the UK government agreed to indemnify the company against any shortfall in the nuclear liabilities fund which meets its clean up costs.
BE in return contributes 65% of its net cash flow to the fund, the National Audit Office says this uncertainty "places a significant risk in the hands of the taxpayer", effectively leaving the taxpayer according to NAO facing "a large and uncertain liability". It gets better, BE’s liabilities, all taxpayer subsidised, have risen to £5.1 billion, an increase of more than 30%, since 2003. The amount the taxpayer has to pay will depend on the company's future financial performance.
Now the UK Government plans to build new reactors in the UK (something initiated by Tony Blair and supported by Gordon Brown) and runs the risk of fatally binding the UK to nuclear power for decades, something that will continue to divert vital investment away from clean, renewable energy. It's time for the UK Government to finally come clean about the costs (financial and environmental) of the UK nuclear industry.
Back in 2008, Gordon Brown’s cabinet rubber stamped Tony Blair’s decision to back the nuclear option to solve the UK energy needs was both disappointing and short-sighted, but, was not unexpected. By making nuclear power its priority the failing Brown Government effectively abandoned any serious attempts to conserve energy, and significantly undermined its own commitments to tackling climate change. So far the Con Dems have brought little to the debate...
When it comes to power generation there are real job opportunities that need to be fully grasped; the renewable energy sector can play an immensely important role in creating more green energy jobs. We need to create a decentralised power generation system which can include a community owned and community beneficial sector which will create sustainable long-term jobs for local people, not damage the environment and contribute to providing our local communities with a long-term viable economic energy future.
Now is definitely the time for control of energy policy to be devolved to the National Assembly and time for some original non nuclear thinking and a fundamental sea change in attitude from all levels of government in Wales towards energy policy.
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