“We do not have a shortage of energy; it is a question of harnessing that energy to our needs. If you use sun or if you use wind, it is expensive, but we can do it.”
This sentence illustrates an important point that often gets lost amidst the whirlpool of false facts, statements and counter statements that characterises the energy debate. We have the technology to develop a low carbon economy - the only barriers to doing so are political and economic.
Before you accuse me of blind optimism, this point came from Janusz Bialek, DONG Professor of Renewable Energy at Durham University. As the author of some 140 research papers and an adviser to the UK Government and European Commission, this optimism comes right from the top of the scientific elite.
The political and economic barriers to a green future are always characterised by short-term thinking. Indeed, we have a political system in which the party in government frequently appears unable to plan beyond the next election. Examples of such limited foresight in energy policy are numerous - just look at the solutions suggested by the Conservatives and Labour to the recent rise in energy bills.
David Cameron’s proposed remedy is to “roll back” green taxes; a policy that is representative of the worse kind of recklessness. We know he no longer cares about the environment – his green credibility is melting as fast as the Norwegian glaciers where he performed his ‘hug a husky’ stunt – but the extent to which he even seems to be ignoring carbon cutting targets that are enshrined in law is mind-boggling.
But let me strip away the emotion for a moment in favour of cold, hard facts. Of the £1,267 that the average household pays for gas and electricity each year, just £53 (9% of the total) goes towards subsidising low carbon energy development. The overall figure of £112 quoted by a number of media outlets includes money given to the poorest households to heat their homes, and is therefore an inaccurate representation of the price of green subsidies.
“If you look at electricity bills, about 50% of the bill is due to the wholesale price of energy,” says Professor Bialek. “The so-called ‘marginal’ fuel for electricity (which is the fuel that determines energy prices) is gas. So if the gas price goes up, as it is at the moment, then the final electricity price has to go up.”
In other words, the rising wholesale price of gas is the key issue, a factor that politicians would find hard – if not impossible – to manipulate. Blaming green levies, as David Cameron is currently doing, is representative of a failure of leadership. The long-term objective of developing a low-carbon economy cannot be substituted for the sake of a few digits on a bill sheet.
Yet the same short-termism is also at work in Ed Miliband’s promise to freeze energy bills if Labour win the next election. As I have already mentioned, retail prices are completely dependent on wholesale prices, and these are determined by world markets which UK politicians are unable to influence. Any savings that consumers might make during a freeze would effectively be fool’s gold, as the huge losses incurred by energy companies if they are unable to offset rising wholesale prices with profits from retail operations would deter vital investment.
