The key questions for the new Energy Bill

Shadow energy minister Huw Irranca-Davies MP poses some of the key unanswered questions for the government's new Energy Bill.

Huw Irranca-Davies MP (Labour, Ogmore) is the shadow energy minister

The Question of Energy:

“If a man will begin with certainties, he shall end in doubts: but if he will be content to begin with doubts, he shall end in certainties.” – Francis Bacon, Sr. (English Lawyer and Philosopher; 1561-1626)


Taking at face value the words of Francis Bacon Sr., now is the time to wrestle with any doubts over our energy future, so that we ultimately arrive at a certainty based on reasoned and intelligent argument. Let’s not have a cosy and lazy consensus for the sake of it, but stimulate instead a vigorous debate on the most basic assumptions of our energy future, as well as on the detail.

You might just call this “EMR Plus”, the Alternative Energy Debate, or – in a variation of the end-of-pier amusements – “what the minister didn’t see”.

Sometimes the pressure to rush at half-formed conclusions which will set the pace and direction of energy supply and demand for the next generation seems unavoidable: as the government hypnotically and relentlessly repeats the bogey-man truism of the “looming energy gap”; as the all-consuming EMR (Electricity Market Reform) bears down on us; and the cruel vagaries of international oil and gas prices hold us hostage at the petrol pumps and in the shops and at home.

Yet, as we seek in the UK to reconcile the inter-related aims of energy security, affordability and decarbonisation, we are failing to ask some pretty fundamental questions. We could end up with some good answers in the next few months, but to the wrong questions, and that could result in costly and ineffective energy choices which will bind future generations – and future ministers.

The government’s acceptance (after cabinet infighting followed by massive public pressure and a personal intervention by Ed Miliband) of the Committee on Climate Change’s recommendations in their Fourth Carbon Budget was largely welcome, as well as being utterly essential. I say largely welcome, because there is of course a giant get-out clause, and, for the first time ever, the recommendations have not been accepted in full.

But in accepting the carbon trajectory and this being subject to cross-party agreement, we can now focus on the questions relating to energy security and affordability.

So here are a sample of the key questions which remain largely unasked (let alone unanswered) in government thinking at the moment – short of the formulaic soundbites and photo-ops – as DECC ministers and officials rush to polish their next shiny new Energy Bill:

• How do we do much more to encourage new players, innovation and competition in energy supply, or do we accept that the post-privatisation dominance of the energy market by a few large utilities – the so-called “Big Six” – is right for our current and future energy needs?

• The current market structure lacks transparency and liquidity, putting up high barriers to new investors and preventing informed consumer choice. What radical surgery – as opposed to the cosmetic tinkering by Ofgem and DECC ministers – is needed to improve the market structure for both investor and consumer confidence?

• To give real certainty for energy investors and consumers, and to avoid the temptation for ministers to daily fiddle and fix, is there a role for an “Energy Agency” that can independently and transparently advise ministers (and parliament and the public) on energy affordability and security choices?

• How do we allow the voice of the consumer to be heard – industry and households – in the short and long-term direction of our energy policy and prices?

• What energy-mix options deliver the greatest benefits in domestic economic growth, export potential, skills and job creation: and where is the cross-government industrial strategy which pulls this all together and out of the silos of government departments?

• For the most cost-effective taxpayer investment in carbon reduction and affordable heat and energy, do we have the balance right between boosting new supply-side capacity, rigorous demand management, and energy efficiency?

• In the light of other leading EU nations setting far more ambitious programmes for energy efficiency and demand reduction, is our assumption of energy demand doubling in the UK by 2050 realistic, or – as importantly – even desirable?

• Should we be doing more to put power into the hands of people – literally as well as metaphorically – through determined decentralisation of heat and energy to communities, organisations and individuals?

It is good that we are now all are agreed on where we need to be heading in terms of our low carbon future, especially after signing off the Climate Change Committee’s Fourth Carbon Budget. But without answers to these fundamental questions there can be no long-lasting certainty.

EMR cannot succeed alone, but if the government can face up to these questions which underpin EMR, we will not be left wondering whether this “once-in-a-generation chance to rebuild our electricity market” (Chris Huhne, December 16 2010) was a golden opportunity missed.

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