Still no consistent energy policy? Well, nothing new there then

Ten years, a dozen energy ministers, a handful of energy and nuclear reviews, rising carbon emissions, and still no consistent energy policy. Nothing new there then.

In the 1950s, coal was king; nuclear power was seen as a mechanism for maintaining our coal reserves. In the 1960s, the CEGB launched a programme of oil-burning power plants, since obviously oil was going to be cheap forever. In the 1970s, we discovered that world oil prices were volatile, and we were glad we still had coal.

In the 1990s, North Sea gas was cheap, getting cheaper, and was obviously going to be cheap forever, so we let the market rip, shut down coal mines, and ended up in the new century with electricity 40 per cent dependent on gas. Then we discovered that our cheap gas was not going to last forever.

Energy policy is a mess. The vaunted independent electricity market system has not delivered price stability, long-term reliability or environmental gains. And the policy morass is most evident over nuclear power, where the government has fallen into a deep pit of its own making.

The pit was dug with the energy review of 2003, which made the quite unnecessary commitment to ‘fullest possible consultations’ in the future for any further nuclear construction.

Never mind what ‘fullest possible consultations’ actually meant. With the speed of ministerial change at the DTI, it was never going to be Patricia Hewitt’s problem.

Why was this condition unnecessary, as well as dangerously drafted? Consultation arrangements already existed for new nuclear plant proposals, and British Energy and its predecessor sat for seven years on a permission to build nuclear plant at Hinkley after an exhaustive inquiry.

Barely a year after the 2003 energy review, oil prices, and consequently gas prices, started to soar well beyond the ‘high scenarios’ envisaged by the energy wonks in the DTI. Suddenly nuclear energy was looking more attractive.

So a new review was held in 2006. This yielded some very obvious, and some very odd, conclusions. It concluded that there was an absence of ‘appropriate incentives’ and a ‘lack of motivation’ amongst consumers for energy efficiency initiatives.

The problem of security of energy supply, which had been dismissed as soluble by freer markets in the 2003 review, now appeared in a different light. ‘We could be importing as much as 90 per cent of our gas needs by 2020 compared with 10 per cent now’, and ‘gas is now largely supplied into regional markets and constrained by access to pipelines which may cross many countries’.

Presumably the standard maps of the European gas supply network had not been available to the 2003 review team.

On the nuclear side the view had shifted. ‘Our assessment is that higher projected fossil fuel prices and the introduction of a carbon price to place a value on CO2 have improved the economics of nuclear as a source of low carbon generation’ and ‘we have concluded that new nuclear power stations would make a significant contribution to meeting our energy policy goals.’

There’s nothing like a doubling of wholesale gas prices to clear the mind.

While the 2006 review made it plain that it would be entirely a private sector affair to initiate, finance, build and run any new nuclear plant, it was far from a wholehearted message of support, and there was no implicit subsidy as had been given to renewables.

There are many strategic areas in a democratically-based mixed economy where governments should make decisions which the market cannot make on its own. These areas include transport, environment, and services, including energy, where long-term decisions have to be taken and responsible politicians in these areas have to look beyond tomorrow’s headlines.

In France, it was the politicians who overruled the technocrats in the choice of France’s new nuclear build, ensuring a swifter, safer and surer route to affordable power.

If we are going to have new nuclear power in the UK, it is essential that the public are comfortable with the idea. That means they must be consulted, convinced and informed about waste disposal. By putting stress on the energy reviews, successive governments have left a major block in the way of the acceptability of nuclear renewal.

The Finns have shown a perfect model for acceptable long-term waste storage in a democratic society. While DTI has been in a 15-year quagmire over energy policy, DEFRA and its forebears have, up to 2006, culpably procrastinated over radioactive waste. Let us welcome David Miliband’s statement to the Commons on waste last October.

If the government wants to facilitate nuclear power, it must ensure that the procedure for granting construction licenses is transparent, and that consultation is genuine in the areas where construction is proposed. Government needs to demonstrate a commitment to accept nuclear power on its merits, and a determination to allow proper consultation site by site for future plants.

If it wishes to continue with the market structure it has to have carbon emissions priced at levels, and under a system, which will ensure that the best and most economic carbon free sources are profitable in the long term. It is clear that the European model of tradeable permits as it stands is not one which can guarantee quick results or incentives.

Politicians are our only legitimate source of public policy creation — and energy and environment choices are a core area for public policy. Simply fiddling with the plumbing of Whitehall — bolt this ministry to that one, break that one up — will not make problems miraculously disappear.

In recent decades some politicians may have been lulled into thinking that Whitehall can do most of their thinking for them. That is not the job of Whitehall, especially in difficult technical areas of great public concern. Whitehall has infinite capacity to delay — if politicians want to delay. But it also has full capacity to respond quickly, if politicians want — and are determined to get — quick action.

Adrian Ham is an international energy consultant. See ‘A Way Forward for Nuclear Power’ by Adrian Ham and Robert Hall, http://www.dti.gov.uk/files/file28276.pdf