An Oxford University Professor has torn the UK government’s energy policy to shreds in his appearance before the House of Lords Science and Technology Committee.
Speaking to the Lords yesterday, Professor Dieter Helm said that the “Miliband-Huhne-Davey” policy (referring to the last three energy secretaries), which is based on an assumption that fossil fuel prices would rise, was “dramatically wrong”. (h/t to Bishop Hill, where the full exchange of views can be seen).
The Lords Committee gathered to hear evidence from a range of energy experts including power companies and the National Grid to determine whether there was indeed a risk of the lights going out this winter, as has been widely reported (including on Breitbart London).
Opening the second session, Professor Helm gave his name and title, before delivering a short two minute speech lambasting the governance of energy policy in recent times.
“It is a quite extraordinary state of affairs for a major industrialised economy to find itself even debating whether there is a possibility that the margins may not be sufficient of electricity to guarantee supply,” he said.
“If it was achieving carbon objectives and if it was producing low prices there might be some consolation. The wholesale price in Great Britain is twice that of northern Europe and on a CO2 front we’ve been switching from gas to burn as much coal as possible, and our emissions are actually rising on a production basis and of course on a carbon consumption basis which is the basis that matters for decarbonisation.
“For a major industrial economy to fail on one of the three objectives is a serious problem. But to fail on security and on competitiveness of price, and on decarbonisation is a sad state of affairs. And it’s even sadder in the context of which the problem isn’t fundamentally particularly difficult.
“It’s ultimately about having enough power stations and enough wires to supply the needs of the population. It’s a problem that’s been with us for a century. Many other countries solve these problems and it’s, as I say, rather sad that we’ve got to this particular point.”
The Committee probed the professor on a range of aspects including “resilience”, which the Professor explained was a matter not just of physical capability, but also the price which people are asked to pay for the energy supplied. If prices rise above people’s desire or ability to pay, people simply “turn themselves off, as happened in California”, he pointed out.
“The kit is there. If the will is there to do it, and the expertise and capacity of the grid I think is up to it, they will manage to make supply equal demand. The question is: how much higher will the price go as a result, and how long will Britain carry on having such high wholesale prices with all the consequences there are for British industry and also consumers?” he asked.
When questioned about medium term threats to resilience, Prof Helm was particularly scathing. Pointing to the fact that “the commodity super-cycle is over” and that gas, coal and oil prices are all falling, he blasted energy secretary Ed Davey, saying “We have a policy with the secretary of state repeatedly reminds us is based on the idea that gas prices are rising and volatile. Well, they’re falling and the volatility is something that we don’t want to protect customers from. [That is, downwards volatility is good for customers who want the benefit of cheaper prices immediately].
“Should we worry about resilience of fuel supplies? No, I don’t think so. The world is awash with gas. Unconventional gas is popping up all over the place America is no longer importing, plenty of supplies around, plenty more being discovered.
“The one medium term ‘risk’ that I would pay much less attention to but clearly the government thinks they should pay much more attention to is whether or not we’ll get enough supplies of fossil fuels. We have enough fossil fuels in the world to fry the planet many times over.”
He then set his target wider, laying into the “Miliband-Huhne-Davey policy”, so called “because it’s very consistent through that period”, as a whole. Successive energy secretaries had based their policy on the assumption that fossil fuel prices would continue to rise, making renewables comparatively cheaper by the 2020s and allowing subsidies to fall away; an assumption that the professor said “[doesn’t have] any part in energy policy.
“That fossil fuel prices are going to go up. … That’s an outcome of the market, not a policy assumption to make. … If your bet turns out to be dramatically wrong, you’re going to have lots of technologies which are ‘out of the market’ for some considerable period to come. We will have to subsidise those technologies right through the 2020s and beyond.
“This knowledge that politicians have, that politicians know what the winners are, we’ve been there so many times before. It usually turns out badly and it has done this time.”