UK Energy Polices In The Front Line




This will be the first of a possible two feature articles detailing the various parties' energy policies. This first article will give an overview of the main policies of note. Should more details of note come out following the seven-party debate and the release of the manifestos then a second article will follow which may also provide more detailed analysis.

Introduction

The last PMQs of this parliament are done, Ed Miliband and David Cameron are no doubt recovering from last night's grilling from a typically pugnacious Paxman and on Monday parliament will be dissolved and allow the parties to officially kick-off their campaigns. Therefore, in time for the beginning of the campaign we will take a look at some of the parties' most important energy policies.

Many are hailing the General Election in May as one of the most open in years. With neither Conservative nor Labour likely to gain enough seats to form a majority government on their own there are a wide range of possibilities of who could end up ruling with multi-party or multi-national coalitions possible, or even minority governments ruling with issue-based consensus. Therefore, a number of the parties could have an influence on future energy policy.

Energy Policy

Currently, at the heart of energy policy is three key objectives - keep the lights on as cheaply and as decarbonised as possible. These three aims are often, and currently, in conflict with one another. Therefore, any policy promulgated is likely to elevate one at the expense of the other. It must also balance what is best for the now with what is best for the future.

When formulating energy policy, smaller parties have a more of a remit for radical policies as they will not get into power and do not actually need to consider how they would implement or fund the policy. Whereas in theory, larger parties will be more inclined to advance policies that can be implemented as they will be subject to more scrutiny from opposition parties and may well lose credibility with the electorate should they continually run on policies that they do not put in place.

Conservatives

Whilst in opposition the Conservative Party released a 'green paper' entitled Rebuilding Security: Conservative Energy Policy For an Uncertain World. This document was around 30 pages long and had 12 actions to rebuild security [1]. Whilst being in Government likely prevents the publication of such papers there is a still a noted sparseness of pronouncements on energy policy. There are a number of possible implications here. It could be that energy is an issue they do not wish to talk about, one they have relegated to 'second tier', or as Baroness Verma has stated that the party is taking a 'long-term view' and doesn't want to make 'silly headlines' and constant policy changes which could affect investor confidence in the industry. Whilst the latter statement may have some truth, this Tory government has not exactly been praised for its creation of certainty in the market, with its words often seeming to contradict its actions.

Due to the lack information there is not much new that we know about Tory energy policy. The document referred to above, some of the policies referred to have already been implemented, albeit with mixed success, such as the carbon price floor, the facilitation of nuclear power, although contrary to the initial policy claim Hinkley Point C will be subsidised by the taxpayer [2], the Green Deal and the creation of a Green Investment Bank. Whilst this article is intended to be a look at future plans and not an analysis of the Government's performance it should be noted that some policies have not really taken place, such as the acceleration of CCS, or roll-out of smart metering,

In truth, but for the odd exception, Tory policy does appear to be what is in effect a slightly simplified version of that set four years ago; a focus on energy security, encouraging investment in infrastructure, that neither bets the farm on renewables nor completely dismisses them. This type of policy has come in for some criticism as despite rarely ruling anything out, but neither does it provide the market with the direction that is sometimes needed for widespread investment. This is perhaps typified by a recent quote that claimed, "We want to keep energy bills as low as possible whilst guaranteeing our energy supplies are secure and meeting our international climate change obligations. We're backing renewable energy and progressing towards a cleaner future. But we will only do this in a responsible way that preserves our green and pleasant land." This is to be taken in the context that the party effectively wants to put an end to onshore wind farms (significantly cheaper than their offshore counterparts) whilst remaining in favour of shale.

Labour

During its spell in opposition, the Labour Party, whose leader Ed Miliband previously had a spell as Energy Secretary during the Labour Government, has been busy formulating all sorts of policies that it would implement.

Its flagship policy is the much-documented plan to freeze (although in light of the recent fall in prices it has since been declared a cap) prices until January 2017, a policy already covered in a previous MZINE [3]. This controversial policy that will be a feat to implement, has already been the subject of much legal speculation [4] , as well as economic, and has been greeted with as much enthusiasm from the public as apathy from the energy firms, who, along with many in the industry, have suggested the plans will discourage investment at a critical time and increase the possibility of blackouts. Ultimately, it appears to be prioritising short-term gain at a high risk. Additionally, many in the industry have noted that policy may actually hinder competition as only the 'Big Six' will be able to deal with the policy.

Labour has also vowed to reform the market whilst the price is frozen. This will involve ring-fencing supply and generation businesses within vertically integrated companies, a policy that may not actually achieve much in improving competition. It will also introduce an open pool in the electricity market and abolish Ofgem and create a new energy watchdog with more powers.

It also has plans for energy efficiency, including offering a million interest-free loans to insulate homes, which would in effect be a larger-scale version of the Green Deal, and offer more powers to the Green Investment Bank. Additionally, it is also eager to commit to a 2030 power sector decarbonisation target to encourage renewables as well as commit to CCS.

Labour appears committed to reforming the market but much in the same way the Tories must be careful of too little market intervention (or at least too little positive) Labour must be careful of too much intervention. Its policies are certainly interesting but ultimately the effect of any of them will likely be judged by the success of the prize freeze. The worry is that the policies will not work together. It wants to improve competition but the freeze may actually hinder it. Additionally, it seems hard to encourage investment whilst prices are capped.

Liberal Democrats

The Lib Dems' main focus is on making energy environmentally friendly. This is a fairly obvious continuation of its previous energy policies and has always been a key area of focus for the party.

It recently released plans for 5 new laws to protect the environment that will form a key part of its manifesto. These include targets for clean air and water, an end to 'dirty coal' power stations, an ambitious decarbonisation target for the electricity sector, a heating and energy efficiency bill that will build on the Green Deal seeking to raise energy efficiency standards and boost renewable and district heating programmes. It also wants to encourage green transport, which would include only allowing low emission vehicles on the roads from 2040.

With further information fairly limited, a detailed analysis is not possible. Nonetheless, it seems fairly straightforward that the party obviously prioritises decarbonised electricity and seeks to encourage investment in infrastructure. This would clearly favour renewable energy over other forms, which presently would likely come at a greater cost, but would clearly see the country progress towards decarbonisation at a quicker rate than the other parties (bar the Greens).

Scottish National Party

The possibility of the SNP having a say in a future government has been particularly well documented - not least of all by the Tories who may well see SNP as the biggest threat to their chances of re-assuming power.

The main SNP policy of relevance is their wish to fully devolve energy policy to Scotland. Currently, it is largely dealt with by Westminster, although certain parts are already devolved. Although it seemed as though devo-max was proposed in the run-up to last year's referendum that was not quite the case. This does leave areas where clearly the SNP do not agree with elected Parliament.

Interestingly, devolution of energy could work well for both countries and be an area that could see Labour and SNP (SNP have stated they have no intention of working together with Conservatives) find common ground easily. It could potentially see the benefit of cross-border co-operation, which is important financially - Scotland benefits significantly from renewable energy subsidies - whilst allowing Scotland to develop its own policy.

Other SNP policies that could work in conjunction with the above, or alone, are its ambitious renewable energy visions - 100% renewable, and its anti-nuclear position. The latter is completely at odds with UK government policy. The SNP is against new nuclear although previous reports have suggested they would be open to extending the life of stations, so where they stand is unclear.

Best of the Rest



[5]
Figure 1 UKIP Energy Views

Lastly, although unlikely to have much sway on policy and really have an effect on forming government the Greens and UKIP - polar opposites in almost everything - are both fairly outspoken on energy policy. Unsurprisingly the Green party is heavily in favour of renewable energy, it is anti-nuclear and anti-shale. It would also advocate state-involvement in large-scale renewable plants. In contrast, as gleamed from its recent successful EU campaign, UKIP is anti-carbon tax and seemingly pro-coal, nuclear and gas - presumably at the right price. It would also abolish DECC and scrap green subsidies and repeal the Climate Change Act 2008.

April 2015


Footnotes

  1. https://www.conservatives.com/~/media/Files/Green%20Papers/Rebuilding-Security.ashx
  2. Hinkley Point C still awaits Final Investment Decision which is said to be possible in the next few months
  3. http://www.mjmenergy.com/MZINE/2013/october13art.html
  4. http://www.ukipmeps.org/uploads/file/energy-policy-2014-f-20-09-2013.pdf
    http://openeuropeblog.blogspot.co.uk/2013/09/is-ed-milibands-energy-price-freeze.html
    http://www.itv.com/news/2013-09-24/labours-energy-price-fix-could-be-challenged-by-courts-or-european-commission/
  5. http://www.ukipmeps.org/uploads/file/energy-policy-2014-f-20-09-2013.pdf

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