Hidden away in today's Autumn Statement – the Chancellor has decided to abandon government support for Carbon Capture and Storage.
That probably means the Peterhead project is dead. Government has messed about with this project for years and is now killing it. Removing any chance of the UK developing this vital technology.
“HM Government Statement to Markets Regarding Carbon Capture and Storage Competition
25 November 2015
Today, following the Chancellor's Autumn Statement, HM Government confirms that the £1 billion ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available.
This decision means that the CCS Competition cannot proceed on its current basis. We will engage closely with the bidders on the implications of this decision for them”
In addition the Department of Energy and Climate Change faces a 22% cut in its budget. The Treasury will also remove tax reliefs for all energy generation projects by excluding them from the venture capital schemes, to “ensure that they remain well targeted at higher risk companies”.
The Autumn Statement appears to signal that the UK government is abandoning any significant support for energy sector.
Given the short term thinking that bedevils much political thinking, we can be forgiven for looking cynically at government targets that stretch long ahead of the political cycle. However, sometimes they catch up with governments. One such legislative target is the eradication of fuel poverty in Scotland by November 2016.
This target is given some focus for me today, as I am chairing a session at the annual conference of the fuel poverty charity Energy Action Scotland. UNISON Scotland is affiliated to this campaigning charity that also delivers a wide range of practical actions to help alleviate fuel poverty.
Fuel poverty is defined as a household having to spend 10% or more of its income on energy to maintain a warm home. When I first got involved it was almost exclusively an issue for the elderly – no longer.
A recent report by Citizen's Advice Scotland told the story of a father of a two-week old baby who was left without any money for gas and electricity, after being told he had to wait two weeks for a Universal Credit payment. Another case in the east of Scotland involved a couple with a nine-month-old baby girl being left without any money for food or gas and electricity. Their benefit was stopped by the Department of Work and Pensions after it claimed a sick note had not been received – even though it had been sent the previous week.
According to CAS, the number of Scots in 'fuel poverty' has soared by 130% in the past five years, with shocking cases of struggling households being left for months without any means of heating or cooking. They dealt with 28,000 cases involving energy issues in 2014-15 – an increase of a third from the previous year and up 130% since 2011.
Energy Action Scotland's Director Norrie Kerr, has also said that they see a lot of younger people in fuel poverty who are on the minimum wage or less than the minimum wage, who are really struggling just to make ends meet: “It is not just about pensioners any more, it is about in-work poverty. When you are being squeezed like that there is the very real dilemma for people between heating and eating. In some cases foodbanks are being asked for food parcels that don’t require people to heat anything, because they are frightened to put on the cooker to boil a pan of pasta or heat a tin of beans.”
So, are we going to meet the legislative requirement to eliminate fuel poverty by November 2016? Based on what we heard at today's conference, almost certainly not. Are we making sufficient effort to try and reach this target? Again probably not.
One particular disappointment is the Scottish Government's decision to postpone a consultation on energy efficiency measures in private sector housing. This is the fastest growing housing sector and landlords need help and support, and tenants need protection against unjustified rent increases. CAS covered this issue well in their report 'Coming in from the Cold'.
Funds have been made available for fuel poverty, but it simply isn't enough. We heard about a some measures and more task groups and reviews. As with other policy areas we are very good in Scotland at analysing the problem – less good at making difficult decisions to solve them. Equally the UK government programmes are also inadequate, but as some are to be devolved, we have an opportunity to bring programmes together and do some things differently.
Energy efficiency is only one aspect of the measures needed to tackle fuel poverty. The other two are the price of energy and income support. Action on prices have been limited with the cost going up by 180% between 2002 and 2013. If prices had gone up with inflation fuel poverty in Scotland would be below 11% of households, instead of 39%. It has only been helped very recently by the drop in wholesale prices – rather than government action over the failed energy market.
Government's put great emphasis on switching supplier and there has been some increased take up recently. However, it is far from a smooth process. I recently switched supplier and was presented with an absurd estimated opening gas reading that was almost double my last bill. As a consequence I was presented with a bill for £3,600!
On income support, the U.K. Government's slashing of social security is having a devastating impact on low income families in and out of work. We should also not forget the cut in real wages over a decade or more. This is something the Scottish Government could do more on, including the living wage for care workers. As Jackie Baillie reminded us today, the £1300 cut in Tax Credits is the equivalent of the average annual fuel bill.
If the same number of people suffering from fuel poverty had an illness or disease we would be crying out for the government to take action by pouring resources into the NHS. It's time to treat fuel poverty with the priority it deserves.
The Scottish Parliament's Economy, Energy and Tourism Committee has published its report on energy security: 'Plugged-in Switched-on Charged-up: Ensuring Scotland’s Energy Security'.
Those looking for a blueprint for energy security will be disappointed, in fact there was some debate over what energy security even means. However, the Committee hopes, it will contribute to a debate on the future of something we tend to take for granted, but which powers our everyday plugged-in, switched-on, charged-up lives.
The focus of the report is on electricity supply. The reports asks: “Does Scotland need more generation or better interconnection? The Scottish Government appears to favour the former approach, National Grid the latter. Greater clarity is needed if we are to avoid policy deadlock.”
The Scottish Government's concerns are that UK capacity margins have declined from 15% in 2009 to as low as 2% in 2016. They cited the views of Sir John Arnott and Dieter Helm, who argued that it should be between 10 and 20%. Whether for Scotland or on a GB basis. They also argued that narrowing of the gap between supply and demand was likely to have a negative impact on consumers because as the capacity margin falls, prices inevitably go up.
Some may give a wry smile to these concerns, given that despite the Scottish Government claiming to be in favour of a balanced energy policy, their actions have been the opposite. In particular, the non-replacement of thermal, in the view of Professor Haszeldine, would mean Scotland becoming “more and more like Northern Ireland” – with no thermal generation of its own and reliant on Scotland and in Scotland’s case, for “large parts of the year”, on England. Transmission charges certainly are a disincentive to invest in Scotland, but so has Scottish Government energy policy.
The policy target of 100% from renewables is unlikely to be achieved anyway. Scottish Renewables has recently said the Scottish government's goal would not be achieved by the 2020 deadline without further investment from Westminster. Predictably, this resulted in more ranting from Scottish Ministers at Westminster.
A report from the respected Institute of Civil Engineers next month will say: “Scotland will transition from being a net exporter to being a net importer of electricity if the closures of Longannet, Hunterston and Torness are not replaced by new development.”
The Committee wants the Scottish Government (along with Ofgem) to look more closely at “demand-side response” and to produce a demand reduction strategy, either as part of a wider document such as the Electricity Generation Policy Statement or a strategy in its own right. They linked to this is district heating, and while the minister is keen to develop this, he doesn't appear to have a plan.
On consumer responses the report highlights the evidence of the CMA who found those customers generally engaging least with the energy market – by not switching supplier for example – and therefore “leaving most money on the table” were people on low incomes, of a poor educational background, with disabilities, or otherwise disadvantaged. Mindful of the November 2016 deadline for the Scottish Government's target to eradicate fuel poverty, the report asks the Scottish and UK Governments what can be done to address this inequity in the system.
Branding the committee report as “very poor”, Inverness-based economist Tony Mackay said that the committee’s choice of witnesses who provided oral evidence were “almost entirely” drawn from pro-wind farm bodies. Oral evidence was indeed narrowly drawn, but this is perhaps a little harsh. Mackay also says that forthcoming closure of Scotland’s two nuclear power stations at Hunterston and Torness are dealt with “very poorly” in the report. That is certainly true.
Back in the real world capacity shortages have hit home for real. For the first time a new tool to balance the energy system, Demand Side Balancing Reserve (DSBR), was used to help manage the peak demand time between 5pm and 6pm. This involved a small number of contracted large businesses being asked, under a commercial arrangement, to cut their electricity use.
The power shortage was caused by a number of factors including unexpected maintenance issues at ageing coal-power stations, which led to temporary shut downs at several power plants; low wind speeds, meaning wind farms were only able to produce 1 per cent of the UK’s required electricity, and no solar input, because the requirement happened when it was dark. All highlight the risk of relying on intermittent generation.
The ICE report next month will call for a national debate on how we, as a country, deal with changes to electricity generation to ensure that we have a resilient supply with sufficient capacity for the long term. Amen to that!
The monsoon rain that hit Scotland in recent days should be a stark reminder that we need to take responsibility for climate change. As today's Scotsman editorial elegantly puts it; “It’s time we stopped pillaging the earth’s finite resources to create short-term gain for the few at the expense of the many.”
The Met Office gave us a clear warning yesterday with global temperatures set to rise more than one degree above pre-industrial levels. This means the world is half way towards 2C, the gateway to dangerous warming. It is to be hoped that this new data will add urgency to political negotiations in Paris later this month aimed at securing a new global climate treaty. But I wouldn't hold your breath!
In Scotland, we have ambitious, world leading climate change legislation, but have yet to meet any of the interim targets. As my old gran used to say “promises butter no parsnips”. The climate change equivalent might be; “Ambition won't save the planet”.
The Stop Climate Chaos Scotland coalition has recently published a manifesto for next year's Scottish Parliament elections. We have been taking its proposals around the party conferences in recent weeks, with well attended fringe meetings and lots of interest from delegates. At each event party spokespersons have been broadly supportive, but more cautious when it comes to detailed action. All the party leaders have signed a commitment that their manifesto's will be consistent with the ambitions of Scotland’s Climate Change Act.
I was speaking at one of these events on one of the more challenging policy areas, transport. Transport accounts for a quarter of Scotland’s greenhouse gas emissions, but is the area of least progress, both in policy and in emission reductions.
We need to make a significant shift to public transport by disincentivising the car where alternatives exist. That's because cars are the largest source emissions, 40% of the total, and road traffic miles are forecast to increase by 25% between 2002 and 2020.
This is not just an environmental issue, it's also one of social justice. That's because supporting car use disproportionately benefits higher earners. 30% of Scottish households do not have access to a car, and 53% of Scotland’s poorest people do not have a driving licence. It's also a gender issue because nearly 40% of women in Scotland do not have a driving licence, compared to 20% of men
An active travel policy with greater emphasis on walking and cycling also has obvious health benefits. Not to mention the 2000 deaths per year from air pollution.
Then we have air travel. Air Passenger Duty is soon to be devolved and almost all the debate has focused on reducing it. Air travel is the highest emitter per passenger kilometre – domestic flights in particular. A 50% cut in APD would put an additional 60,000 tons of CO2 into the atmosphere.
Again, it's also a social justice issue because half the public don’t fly. They rely on other forms of transport that don't operate on a level playing field with air travel. Air travel is exempt from VAT and aviation fuel is tax free. Lower carbon train fares and bus fares are going up rapidly.
Credit to Kez Dugdale for highlighting the cost of cutting APD in her conference speech. Supporting low paid workers through tax credits, is a better use of the tax revenue than promoting more polluting flights.
The Met Office data means action on climate change is more urgent than ever. There will be no where else for our children to go once we have fried the planet to oblivion. We should make some big strides in Scotland next year by facing up to difficult policy change like transport. Not just for the environment, but for social justice as well.
P.S. Support Scotland's climate change march in Edinburgh on 28 November.
On the 50th anniversary of the opening of Cruachan Power Station, we should remember not just the amazing engineering achievement, but also the 36 men who died building it and many others who perished as a consequence of working there.
Cruachan Power Station, in which the power to top up the National Grid is stored, is celebrating its 50th birthday today. It's pumped storage system ensures there is also enough power at times of peak demand on the grid. A dam was built in a corrie on the summit of Ben Cruachan as a reservoir for turbines in a massive cavern excavated inside the mountain. At times of low demand the turbines act as pumps drawing water back from Loch Awe up to the reservoir.
If you drive down the main road to Oban you can easily miss this major power station, marked only by the visitor centre. This is ironic given the campaign against the scheme mounted by the Scottish Landowners Federation at the time. It also provides a fabulous, if challenging, walk over what is known as the Ben Cruachan Horseshoe – 8 hours to cover 8 miles with seven summits! It was many years ago that I walked it, but my muscles still twitch at the memory! There is a much shorter, but still pretty steep climb to the reservoir, on a path about 100 yards east of the visitor centre (OS Pathfinder Guide 31 – Walk 27).
A 4,000 strong workforce was drafted into Argyll to hand drill their way into the bowels of Ben Cruachan to construct the cavern – nicknamed the Tunnel Tigers.
ScottishPower took a small group of surviving workers back to the site for the anniversary. One of the workers, John O'Donnell now aged 76, described the conditions:
“Thirty six men died in the construction phase but many, many, many more died with illness afterwards, including my brother, who died from emphysema. There was no health and safety then, that is the reason I am wearing a hearing aid now, and we never had anything, no goggles, no oil skins, just a helmet.
The noise was unbelievable, for the first fortnight I was stone deaf, I couldn't talk, it was just sign language. We used sign language to tell people to get out of the way. You got stones overhanging and some of them could weigh over a tonne, everybody looked out for me, everybody saved my life, everybody saved everybody's lives.
Nobody was ever born in a tunnel, you had to learn. It was absolutely amazing that more workers weren't killed, because we were working with electrical detonators and we were drilling with water because we couldn't dry drill. I would imagine over 100 have died later from emphysema. We were all mad, you had to be. I would never go down today.”
There are a few lessons for today.
Firstly, this is the health and safety 'monster' culture David Cameron would take us back to by deregulating safety and slashing staff in the HSE – not to mention undermining safety representatives in the Trade Union Bill.
Secondly, the importance of planning and public ownership in the energy sector. The scale of hydro developments in the Highlands would not have been achieved in the so called energy market. It took a visionary Labour politician, Tom Johnston, to drive the plan forward. Despite the nimby's of his day!
Thirdly, in the context of immigration scare stories it is less well known that much of the labour force for the early hydro schemes were displaced persons. It is Germans, Poles, Latvians and many others that we have to thank for electricity in the Highlands.
So, let's celebrate a major engineering achievement, but also commemorate those who died in order that we can switch the kettle on at half-time.
There are a couple of books worth reading if you want to know more. My favourite is Emma Wood's, 'Hydro Boys', and also 'The Dam Builders' by James Miller which is well illustrated.
The Scottish Government has eventually bowed to internal and external pressure and put in place a moratorium on underground coal gasification (UCG) in Scotland.
This is separate to the existing moratorium on onshore unconventional oil and gas, including hydraulic fracturing – and comes as ministers have also informed Parliament that the Government will carry out a thorough and wide-ranging research process into the potential impacts of such onshore techniques.
Patrick Harvie, leader of the Scottish Greens, said: “Today’s announcement shows that consistent pressure on ministers from Greens, campaigners, communities and even members of the SNP is working.”
Labour’s environment spokeswoman Sarah Boyack said: “For months now the SNP has faced the accusation of being two faced on fracking and unconventional gas by campaigning in elections on anti-fracking platforms whilst reassuring big business behind the scenes that Scotland would be open for business. They can’t have it both ways but it looks like they’re going to try to until at least after the 2016 election.”
The moratorium has been widely welcomed, including by Ineos, which has bought up extensive fracking rights across central Scotland: “Ineos also welcomes the understanding that science based evidence gathering will also involve the need for physical testing during the moratorium”. Their support is unsurprising, as they probably wouldn’t have got further than test drilling during the moratorium period anyway.
The Scottish Government had previously refused to say whether test drilling would be allowed. It has said it would require planning consents and must take place “in collaboration” with an independent academic body with research as the “key driver”. Dr Richard Dixon, director of Friends of the Earth Scotland, said: “If companies end up paying research bodies to take part in test drilling, that would raise questions about the validity of the moratorium.”
The test drilling announcement spurred on protestors who joined hands along the Forth Road Bridge on Sunday. Signs with messages such as Don’t Drill Our Land and “Dinnae dae it Nicola, it’s no worth it,” were held aloft at both ends of the bridge.
All of this will ensure that the tensions between ministers like Fergus Ewing who supports fracking, and others who can see the political damage, will continue.
A £350m contract to provide water and wastewater to Scotland’s public sector has been awarded to a privatised utility firm in East Anglia. Confused?
Scotland has a public water corporation, Scottish Water that is accountable to Scottish Ministers and the Scottish Parliament. Scottish Water is responsible for the provision of water and waste water services to almost all domestic and non-domestic properties and for maintaining the public system.
However, there is competition in the provision of customer-facing activities such as billing, charge collection, meter-reading and complaints handling for non-domestic customers in Scotland. This means that Scottish Water levies a wholesale charge on licensed retailers for non-domestic customers. Licensed retailers can agree their own charges with customers, subject to them being no higher than a default tariff set by the Water Industry Commission Scotland (WICS). Scottish Water is also a retailer; through its own retail arm Business Stream, which provides a service to the vast majority of non-domestic customers in Scotland.
The market was created by the Water Services etc. (Scotland) Act 2005. The then Labour led administration was persuaded that this was the least they could get away with due to the provisions of the UK Competition Act 1998. The 2005 Act prohibited common carriage and household competition and put a licensing regime in place for non-domestic competition. UNISON Scotland opposed the legislation and would argue that it has simply created an unnecessary bureaucracy. The claimed savings are almost entirely down to water efficiency measures that do not require competition to implement.
As the public bodies are non-domestic customers they come under this system of retail competition and the Scottish Government, actually the then Infrastructure Secretary Nicola Sturgeon, put one big contract for public bodies out to tender last August. It could be argued that this was not the best way to organise this tender.
It appears that Anglian Water has submitted the lowest price bid in an evaluation that was 50/50 price and quality. The Scottish Government is not obliged to accept the lowest bid, but it would have to have a good reason for not doing so under the utilities procurement regulations. In fairness, the Scottish Government had few options because the system of retail water competition is the ultimate in market madness. £350m will be paid to Anglian Water in Huntingdon, only for most of that money to be repaid to Scottish Water in wholesale charges. The cost of this crazy system is picked up by the taxpayer. However, it was unwise to include savings from water efficiency measures that should be undertaken anyway to spin out the alleged benefits of the contract.
It would also be interesting to know if the evaluation panel took into consideration the risk that this bid was a loss leader to give Anglian Water a base in Scotland. This is important because contractors who do this squeeze a margin post-contract from quality.
The direct job implications are not likely to be huge, but significant for those impacted. Competition only covers the customer facing services i.e. call centre, customer service and transactional staff within Business Stream.
This procurement also highlights the importance of addressing tax dodging in procurement, an issue UNISON and other civil society organisations campaigned for during the passage of the Procurement Act. There should be pre-qualification disclosure of company taxation policies and public bodies should be able to evaluate a tender on the basis of which company pays tax or not. Assessment of bids could make use of the Fair Tax Mark.
The significance with this contract is that Anglian is one of a number of private water companies who are happy to take taxpayer funded public contracts, but less happy to pay corporation tax. A consortium called Osprey, made up of asset and pension managers in Canada and Australia, owns Anglian Water. Corporate Watch reported that Anglian paid £151 million to its private owners, but just £1 million in tax in 2012, after an operating profit of £363 million. It avoids millions in tax by routing profits through tax havens by way of taking on high-interest loans from their owners through the Channel Islands stock exchange.
Anglian Water was described as a “significant repeat offender” in an Environment Agency report on polluters and was fined for polluting five years in a row. Friends of the Earth said of the company: “Clearly, this company is a classic example of a company which sees pollution fines as a legitimate business expense and doesn't care about the environment”. It would be interesting to know just how much weight the evaluation panel gave to this in their quality weighting.
Non-domestic competition is not the only area of privatisation within Scottish Water. Last year the insider web site Utilities Scotland submitted FoI requests to ascertain the extent of privatisation in the delivery of the water and waste water capital programme. In the last four years, 92.5% of Scottish Water’s capital programme has been delivered by private contractors, 7.5% by Scottish Water staff. By any standard that is substantial privatisation. This is on top of PFI schemes run by a variety of privatised water companies.
We are also concerned about the impact the Transatlantic Trade and Investment Partnership (TTIP) could have for Scotland’s public service model. The greater the privatisation, the easier it will be for overseas corporate interests to challenge our public water system.
Scottish Water works well, is good value for money and water customers support the corporation staying in the public sector. While there were limited options for the Scottish Government on this occasion, we should be aware of the pressures for privatisation and the lessons to be learned for future procurement.
Drax pulling out of their Whiterose clean coal technology project is another sign that the UK government's energy policy, or lack of one, is crashing around their ears.
Drax operations director Pete Emery said: “The decision is based purely on a drastically different financial and regulatory environment and we must put the interests of the business and our shareholders first.”
Analysts said the decision to opt out of the project is “not a great surprise” given the regulatory uncertainty faced by companies reliant on green subsidies. Citigroup analysts said: “It doesn't come as a surprise that the company seems to be losing faith in the government's commitment to renewable targets.”
Former SSE CEO Ian Marchant added to the critics of government policy at a British Institute of Energy Economics event saying it is “institutionally incapable” of delivering policy which can support the UK’s security of energy supply. He said: “The question is: do we have an energy policy? And the answer is no. We’re defining policy by the word ‘no’. I haven’t heard any vision of what ‘yes’ might look like.”
Marchant’s criticism echoes others and follows months of government intervention in renewable energy support through cuts planned for both large and small scale renewables projects.
Scottish Renewables have also said that the early end to the Renewables Obligation puts 2GW of projects at risk: “These are projects that could bring around £3bn of investment and provide enough generation to meet the equivalent electricity demand of 1.2 million Scottish homes.”
Former Liberal energy minister Ed Davey has also questioned government claims that the levy control framework (LCF) has been overspent, branding the claims “misleading”. Davey said the Treasury department viewed the Department of Energy and Climate Change as a group of “provincial hippies who don’t know anything. We were able to win arguments using evidence – but the difference now is that he doesn’t need to debate his decisions.”
The Drax decision on the face of it might be seen as less competition for the Shell led Peterhead CCT project. However, successive governments have messed about with CCT for more than eight years, so the prospects for completion are not good. The factors influencing Drax, might also influence Shell and SSE, even if the UK government gets its act together.
Investor concerns also highlights another weakness in government energy policy – the reliance on the market. The security of our energy supply is too important to be left to market sentiment.
The prize for best campaign acronym must surely go to the SNP anti-fracking pressure group SMAUG.
The new group, SNP Members Against Unconventional Oil and Gas (SMAUG), has been set up with a view to persuading the party leadership to take a tougher stance on the issue. It is calling for Underground Coal Gasification [UCG], a technique which sees coal set alight under the sea bed, to be included in a Scottish Government moratorium before May's Holyrood election and said its longer term aim was securing an outright ban on all unconventional fuel extraction methods, which it believes are incompatible with tackling climate change.
Today's Herald reports that the SNP Government has blocked the full release of an account of a meeting between Nicola Sturgeon and Ineos chief Jim Ratcliffe, which took place while ministers called a temporary halt to fracking. In a lengthy submission to parliament on January 28 to announce the moratorium, the SNP energy minister Fergus Ewing made no mention that Ms Sturgeon was meeting with Scotland's leading champion of fracking at the same time. Mr Ratcliffe has since said he has received private assurances that the Scottish Government is not against fracking, despite the SNP presenting itself as opposed to the technique during the general election campaign.
A UK task force, funded by the fracking industry, has concluded that fracking for shale gas in the UK should be pursued as an alternative to the use of coal, in order to provide a bridge to a low-carbon future.
It also says shale gas should not receive public subsidy or tax breaks, and the tax revenues arising from its exploitation should be redeployed to develop renewable energy and other low-carbon innovations. Lord Smith, chair of the taskforce said:
“I can’t see any reason why the shale industry needs tax breaks. If the gas is there and is recoverable – and that’s still a big ‘if’ – the industry can derive revenue from extracting it. Shale gas is not the answer to climate change. That is a mixture of renewables, nuclear and energy efficiency and other low-carbon sources of energy. But we can’t simply wave a magic wand and say that will happen tomorrow. Shale gas provides a bridge.”
Lord Smith was also critical of the delays in developing CCS, “The government must get a move on, I don’t think the reason for the slowness lies in problems with the technology. It is a lack of political will”.
The taskforce view is contested by environmental groups. Tony Bosworth, at Friends of the Earth, said:
“Three-quarters of known fossil fuel reserves need to stay in the ground if we are to avoid catastrophic climate change. Fracking in the UK would just add to this unburnable carbon, while also bringing risks for the environment and health of local communities. The taskforce doesn’t say if or how we will get others to produce less gas if we start fracking.”
The credibility of any taskforce funded by the fracking industry is always going to be questionable, as an experienced politician like Chris Smith should realise. The bridging argument is perhaps the best argument yet deployed to justify fracking, but it is unlikely to convince the communities impacted by drilling. And certainly not those urging stronger action to tackle climate change.
Jeremy Corbyn’s energy policy proposals have caused some excitement in the sector, even if those reacting haven’t always read it properly.
The headlines scream that Jeremy Corbyn is in favour of the “big six” energy firms being taken into public ownership. They usually miss the caveat “in some form”.
He explained: “You can do it by majority shareholding; you can do it by increased share sales, which are then bought by the government in order to give a controlling interest“. This would eventually lead to nationalising the six companies: British Gas, SSE, Eon, Npower, Scottish Power and EDF Energy, and also the national grid. Or as Corbyn put it, “I would want the public ownership of the gas and the National Grid . . .I would personally wish that the big six were under public control, or public ownership in some form.“
His energy policy proposals are much wider than just public ownership. These are his Ten Energy Pledges
1) My over-arching commitment will be for Britain to take the lead in developing the clean Energy Economy of the future.
2) As leader I would establish an Energy Commission to draft a fundamental shift in UK energy thinking.
3) The Commission will be tasked to produce a route-map into tomorrow’s ‘smart energy’ systems that will:
• Deliver more, but consume less
• Use clean energy before dirty
• Put energy saving before more consumption
• Use smart technologies to run localised storage, balancing and distribution mechanisms
• Shift the costs of grid access and grid balancing from clean energy to dirty
• Be open, democratic, sustainable and accountable (in ways that today’s market is not).
4) The Commission will be charged with bringing new partners into energy policy making. These will include local authorities, communities, energy co-operatives, and ‘smart’ technology companies that are already working on tomorrow’s ‘virtual’ power systems and new energy thinking.
5) As leader I will conduct a root and branch review of energy market subsidies; moving away from the notion of everlasting hand-outs; instead, using public support as ‘transition funding’ that transforms Britain’s energy infrastructure.
6) I will expect the energy industry, not the public, to meet the costs of their own clean-up.
7) I will look to re-define of the roles of Ofgem, National Grid and the Competition and Markets Authority, to promote a more genuinely open, competitive and sustainable energy market; one in which there are more players and more clean energy choices than we have today.
8) I will examine ways to allow communities to be owners of local energy systems, with the right (as in other parts of Europe) to have first use of the energy they generate themselves.
9) We must socialise our energy supply and move toward breaking-up the failing energy cartel. Instead, I want to look at the role of the state as guarantor of last resort; with more direct responsibility for the nation’s back-up generation, high voltage grid and interconnectors; directly ensuring that Britain’s ‘lights never go out’.
10) I would commit Britain to binding international climate change commitments; making national targets, local ones too, and devolving both the necessary powers and duties to meet these obligations.
We can see from these pledges that far from being a Morrisonian model, he is talking about a much more decentralised energy system, engaging communities and local authorities.
Stephen Hall writing in The Conversation, gives us a sympathetic view of the proposals.
He argues that this is, “no aggressive nationalisation plan. What it is, is a manifesto for a more decentralised and democratically accountable system, inspired more by present-day Germany than 1980s Britain.”
Hall gives us four reasons to suspect his plan is more revolution than 1980’s throwback.
Introducing genuine competition. “Competition” in the UK energy market has left consumers bamboozled. His plan would encourage consumers to buy energy from municipal utilities or co-operatives. Some new consumer options are being seen in the UK. For example Nottingham City Council has set up its own energy company with a name that sends a clear message: Robin Hood Energy.
Help for smaller energy startups. The current grid setup creates barriers to innovation and is holding back new technologies. There is no technical reason why you shouldn’t be able to choose to buy energy from local sources. By creating local energy markets, smaller but still viable businesses can flourish.
Cheap access to green investment. The proposals commit to pursue energy investment through a National Investment Bank. While this model has seen success in Germany, what is less well understood is how important citizen banks (that we don’t have in the UK) have been in deploying this investment. Hall argues that it will be important to deliver this investment through the right institutions at the right level so citizen investment can complement state finance.
Democratising the energy sector. Essentially more citizen influence over the energy system – and not just through supposed consumer “choice”. There are good Danish and North American examples of this.
“It is clear from the manifesto that the energy policies of the Corbyn camp are anything but a throwback to monolithic state utilities. There is potential for more competition through more diverse energy business models, a clear willingness to make space for smart energy innovation, a call for different approaches to energy system finance, and a platform for more plural approaches to energy governance. Whether or not the reader agrees with these proposals, it should be clear that they are not “old solutions to old problems”, but provocative responses to increasingly urgent challenges.”
A more critical analysis comes from former the shadow energy minister, Tom Greatrex, in Utility Week.
He highlights some apparent inconsistencies in the proposals, but concludes that this is a calculated political strategy, he said; “Jeremy Corbyn’s statements about re-opening pits in South Wales might seem inconsistent with the document his campaign produced, but appealing simultaneously to Greenpeace members and former mining communities is a calculated move. As crude and simplistic as it might be, it also helps Corbyn justify his longstanding opposition to nuclear power and dismiss its low carbon baseload merits.”
However, even Tom accepts that the idea of nationalising utilities is popular with the public, he said: “This isn’t a surprise to energy companies, well aware that part of the recent legacy of rising bills, confusing tariffs and poor customer service is a nostalgia for public ownership.”
He also points out that the wider proposals are working with the grain of progressive energy policy. Widening ownership, more suppliers, a more competitive market, re-cast regulation, community energy, localised storage and demand management, local authorities and consortiums developing smart power systems – is a combination of previous Labour policy, an acceleration of what is happening as technology has advanced and the challenges large utilities face already.
As with much of the hysterical media reaction to Jeremy Corbyn’s campaign, his energy proposals are certainly not a throwback to the 1980’s. Yes, they are radical, but they are intended to offer practical, modern solutions to long standing problems. I might not agree with everything in the proposals, but it is refreshing to find a politician who is prepared to promote radical, and popular, solutions that rattle the vested commercial interests.