Our response to climate sceptic Andrew Turnbull's piece in the FT in which he rails against renewables and investment in new energy technologies.
Andrew Turnbull, former Permanent Secretary to the Treasury, loses sight of the facts and objectives on energy policy in a column on the future of the Treasury in yesterday’s Financial Times.
He outlines seven ways to meet the challenges of the next Parliament. Number six says:
“The Treasury must retain its role as an economic department, arguing for better-functioning and better-regulated markets and defending the interests of consumers.
“It could start, for example, by exposing the hidden costs for UK electricity consumers of the huge expansion plans for offshore wind and challenging the high cross-subsidies imposed by the renewables obligation and feed-in tariffs.
“In pursuing this economic policy role, the Treasury should act as challenger of departments and not as the usurper of their policymaking function.”
With around 30 per cent of conventional electricity generation scheduled to close over the next 10-20 years the question is what type of generation does Britain invest in, not should there be investment. World fossil fuel supplies over the next period are set to decline, pushing up prices. This coupled with the EU Emissions Trading Scheme raising fossil fuel prices will make fuel-free technologies increasingly attractive in terms of cost and energy security.
Indeed Ofgem’s evidence shows that the cheapest option for Britain’s consumer bills is a green stimulus with investment in energy efficiency and low carbon energy as the country emerges from recession. Missing Britain’s commitment to producing 15 per cent of energy from renewable sources by 2020 could raise prices by 60 per cent by 2016.
Offshore wind power will be crucial to meeting Britain’s renewable target. Market forces alone will not achieve the necessary shift to a low-carbon energy mix. Like all more established technologies, new offshore wind power needs initial investment in infrastructure and research and development.
Turnbull’s comments belie the fact that coal, gas and nuclear technologies have all been given vast levels of government support over the past decades. Indeed, no nuclear power station has ever been built without massive subsidy. The Energy Bill currently being debated in Parliament will again confer huge subsidies to coal power stations with its proposed levy on consumer bills for carbon capture and storage demonstration projects. He must compare like with like.
He seems also to have missed in his assessment the potentially extraordinary economic benefits this technology could have for Britain. The Carbon Trust judge that this expansion of offshore wind power could create 70,000 new jobs over the next ten years. The offshore wind sector as a whole is projected to create 135,000 direct and 85,000 secondary jobs by 2050. Net economic benefit is projected to be up to £65bn by 2050.
Britain is world-leading in offshore and engineering skills and with early investment could gain enormous advantages by developing an export industry in offshore wind technology and skills.
The economic cost of inaction on climate change should not be ignored in this calculation. Lord Stern made clear in his 2007 Review of the Economics of Climate Change that the cost of inaction on climate change could be up to twenty times higher than the cost of taking effective action now.
It is not the role of the Treasury to usurp the role of other ministries but to provide support for low carbon industrial growth in line with evidence. One only wonders if his jaundiced view of Britain’s renewable energy future is anything to do with his position as a Trustee of Lord Lawson’s climate sceptic Global Warming Policy Foundation.
Our guest writer is Louise Hutchins
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