Comment: For Huhne the bells toll

Wednesday, 28 July 2010 12:00 AM

In his '2050 Pathways' statement, energy and climate change secretary Chris Huhne has issued a clarion call for rapid transformation into a renewable energy future. To carry on as we are would "risk having a dead economy, lagging behind those with the foresight to grab a share of growth in green industries".

By Alan Simpson

This is a brave call, but not a new one. In the last administration, Ed Miliband tried to do the same; only to find himself surrounded by the forces of darkness, masquerading as the only ones capable of keeping the lights on.

So far Huhne has been really canny. He continues to hold the nuclear delusion at arms' length; insisting that the industry is free to expand as it wishes, so long as there is no public subsidy. So that's nuclear stuffed.

The sector knows it cannot pay its own insurance, waste disposal or research costs. Now it is also looking for a hidden subsidy, in the form of a guaranteed 'floor price' for carbon within the European casino of emissions trading. Huhne knows that the costs of nuclear could completely empty his budget. Moreover, he knows that even the nuclear zealots accept they will have no new electricity coming on-stream until the 2020s. By then, Britain will be well into the energy supply crisis that will kick in by 2015.

Huhne's first task is to fend off the energy companies, ringing at his door with demands for fresh state handouts. These are the companies who have bumped up our energy bills by 125% in the last six years. These are the companies who promised that privatisation would drive Britain into a secure energy future, only to indulge themselves in short-term competition and big time bonuses. These are the companies who left Britain at the bottom of the European 'renewables' league. The road towards a dead end economy? Too right.

Britain may no longer have cheap options out of this mess. It can, however, end the era of the corporate free lunch. Off-shore wind may well need £30 billion of new investment, to deliver a quantum leap in electricity supplies by 2015. But if the taxpayer (or bill-payer) is to contribute to this, why not make it in the form of a public stakeholding rather than a free handout?

Pension funds, local communities and local authorities could all be included in the broader ownership of our future energy assets. After all, this was where our original energy companies came from in the 19th century. Since it chimes so well with the coalition government's decentralisation ambitions, why not apply the original thinking to deliver a new era of Britain's (renewable) energy security?

Last month the UK submitted its 'Action Plan' to the European Commission, detailing how we would meet 15% of UK energy needs from renewable sources by 2020. The plan hinges around three key undertakings; cutting back on the energy our buildings waste, raising renewable electricity generation to 38% of UK supply, and delivering 12% of our heat from renewable sources. As with the '2050 Pathways', the practical task is to say how it will be done.

The most progressive parts of Europe are all doing so by changing the rules in their energy markets; particularly in requiring energy companies to pay citizens (and communities) for the clean energy they produce themselves. Energy companies, who prefer sending out bills than cheques, hate it. Citizens love it. So too do the banks.

A study by Deutsche Bank in late 2009 pointed out that this approach made it much easier for banks to assess risk in new energy projects. A guaranteed income stream of up to 20 years brought transparency, longevity and certainty (TLC) to their investment planning. Presumably this also contributes to the lower interest charges to be found in Europe rather than the UK.

The cherry on the German cake, however, was in the discovery that these tariffs reduce energy costs rather than increase them. Deutsche Bank estimated that, by avoiding the extra cost of fossil fuel production, the scheme saved ?800m in the previous financial year alone. This was before you factored in the 300,000 jobs the policy shift has created.

Britain is now paddling in the same direction. Against the lobbying of civil servants, energy companies and the Treasury, the last government introduced a limited scheme for renewable electricity tariffs and the promise to put a 'renewable heat incentive' (RHI) in place by April 2011. The same vested interests that opposed feed-in tariffs are now vexatiously lobbying to delay the RHI.

Huhne is being warned that the sky will fall in if he supports an RHI scheme that could add £70 to household energy bills by 2020. The same siren voices are also saying he has no choice other than to throw ten times the RHI cost at energy companies, to persuade them to do what they should have been doing for a decade.

How he deals with these choices will be a measure both of Huhne's mettle and of his imagination. Avoiding the 'dead end economy' scenario also involves an imaginative leap into new energy thinking. In Hamburg, rather than building a new power station, they are planning to install 100,000 CHP boilers in homes, offices, schools, etc around the city. These will have a central control unit that synchronises electricity generation with the wind turbines around the city. Whenever your own unit is used to meet citywide energy needs the system credits (and pays) you. The plan is to run the system, as far as possible, from bio-methane from the city's own waste.

Could Britain go down the same path into a more creative era of renewable (and more decentralised) energy systems? Certainly. It all depends on which door Chris Huhne decides to open when the bells ring.

Alan Simpson is sustainable energy advisor to Friends of the Earth. He stood down as a Labour MP at the 2010 general election

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