Grubby little energy market

What a grubby little energy market we have constructed in Britain.”

That’s the view of  Alan Simpson the former Labour MP for Nottingham South writing in the Morning Star. He argues that energy companies were starting to “game” the market with existing gas plants, and permissions to build new ones, were being put on hold. The argument given by power companies was that British energy prices were too low to keep gas stations running. His view is that we were being set up for an artificial crisis, and that this would come much earlier than 2015. He explains how:

Britain has some 11GW of older, mainly coal, power stations that will be closing by 2016, because they will not meet new European emissions standards. Companies not intending to clean up their power stations were all given coal quotas for production up to that date. This was where energy companies saw the space for an enormous scam. Use up your coal quotas as fast as you can, mothball gas plants, and you have a ready-made energy crisis that the government has to throw money at.”

The Energy Bill is designed to pay the ‘bribes’ for gas generation and subsidise nuclear. This, “could be the biggest act of corporate socialism in my lifetime – redistribution from the many to the futile”. Money that could be better used taking millions out of fuel poverty. Finally in contrasts our approach to that in Germany where “Smart technologies will drive their future energy systems far more than power stations.”

He is not the only one to question the UK Government’s approach in the Energy Bill. Dieter Helm giving evidence to the Energy Bill Committee argued for a return to a form of power ‘pool’, complemented with capacity payments under a single auctioned set of contracts. He argued that EMR was unnecessarily complex and risked unintended consequences.

 The big issue over the Bill remains the need for a target to decarbonise the power sector by 2030 to a level of 50 grams of carbon dioxide per kilowatt hour of electricity (i.e. 50gCO2/kWh) from 486gCO2/kWh at present. Britain’s legally binding commitment to cut its carbon emissions by 80% against 1990 levels by 2050 is based on decarbonising the power sector first. This has supporters across the spectrum from business to the trade unions including a new alliance of 35 organisations. The UK Energy Research Centre said,“The absence of a 2030 decarbonisation target in the Bill may not persuade investors of the need for new manufacturing assets in the UK, as there is a risk that these could be stranded after 2020 once the current targets have been met.”

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