An editorial in today’s Guardian ends as follows:
And Whitehall’s own independent adviser says renewables bring household bills down, not up.
This is demonstrably false. After all if it was true why exactly are we paying wind farms above market prices for the electricity they produce. The “renewables are cheaper” narrative has little to do with renewables actually being cheaper – they aren’t now and it’s doubtful that they (or nuclear) will be in the near term – but more to do with the success of the Daily Mail and others to drive the agenda on renewable energy.
The “invest in renewables to keep bills down” narrative has evolved somewhat over the last year: beginning roughly with “invest in renewables to protect us from volatile gas prices” then on to “invest in renewables to shield us from rising gas prices” morphing slightly to “invest in renewables to protect us from expensive imported gas” and then into its final simple form: “investing in renewables will be cheaper than investing in gas”. All of these statements are dubious, or outright dishonest in some cases . But one thing is clear: the Daily Mail has won, and environmentalists have let them win.
This point very well by Duncan Clarke (if you haven’t read his book The Burning Question I recommend you do) in an excellent piece a year ago. Instead of spin about the cost of renewables and gas, Clarke provides sober analysis, a rare thing in this debate.
On the obsession with bills:
The environment world has a new obsession: energy bills. It’s manifesting itself everywhere. Greenpeace recently urged the prime minister to “take personal responsibility for protecting consumers from high energy prices” and delivered a giant energy bill to Centrica HQ. The shadow climate secretary has declared that we should frame global warming around “bills, not bears”. A new climate change direct action group spent their first interview bemoaning the monopolistic powers of the Big Six. Progressive campaign group 38 Degrees have even set-up a collective buying scheme to help people get cheaper gas and electricity. And a coalition of environment groups are focusing their campaigning efforts on using carbon taxes to tackle fuel poverty, promising warmer homes and lower bills.
On the risks of letting the Mail and George Osborne set the agenda:
My fear is that the Mail and Osborne have set the agenda and everyone else is dancing to their tune, inadvertently strengthening a very unhelpful paradigm: that energy should be cheap.
That could be risky, because while cutting carbon and avoiding climate change may make perfect economic sense in the long term, the awkward truth is that doing so will add to energy costs for a long time to come. Indeed, the single most important reason that we’re not yet making much progress on solving climate change globally is surely that politicians everywhere are nervous of adding to energy costs in the coming years by constraining fossil fuel use. Every nation is agreed that we should limit temperature rise and that the long-term future should be powered by abundant and inexpensive renewables, nuclear or CCS. But that doesn’t make it any easier or cheaper to leave the fossil fuels in the ground in the meantime – which is the only thing that matters to the climate.
A more honest appraisal of what the Committee on Climate Change says about bills (and perhaps more honest than some of the things the CCC itself has said recently):
If you’re not convinced, just take a look at the recent analysis of energy bills by the Committee on Climate Change. Greens usually cite this document to show that wholesale gas prices are behind recent bill increases – and also that efficiency measures could limit future rises. Those are both crucial points. But the analysis also contains a less comfortable message: that over the next decade, renewable subsidies and carbon taxes will add far more to energy bills than rising gas prices are expected to. Indeed, if ambitious efficiency measures get implemented as we hope, then by 2020 clean-energy subsidies and carbon taxes will most likely account for more than a fifth of domestic electricity bills (less if gas prices rise faster than expected, but more if gas prices end up lower than expected due to large shale discoveries or other factors).
On the need to recognise that renewables (and nuclear) are probably going to push up bills and that we must accept this, while pushing for anti-fuel poverty measures:
So the environment movement needs to perform a difficult balancing act. On the one hand it must defend environmental policies economically and show that it cares about rising bills. On the other, it needs to avoid adding yet more weight to the cultural expectation for – and political prioritisation of – cheaper energy. If that expectation is too great, then green policies will come under increasing stress in the coming decade as their costs increase, and anything that boosts gas supplies in the meantime (such as the EU’s plan to support gas as a low-carbon fuel)will be easier to justify politically.
Of course, whatever happens we’re going to need much more effort to combat fuel poverty. For as long as vulnerable people are suffering in freezing homes, we’re failing as a society. But solving that problem means targeted anti-poverty assistance – not lower bills for everyone, which would tend to incentivise more consumption across the board.
And a nice final touch, hinting at who really benefits from “cheap energy”:
Note: I wrote this blogpost weeks ago but didn’t get around to publishing it until I saw this tweet: “Energy ‘will be unaffordable in three years’ as bills soar … #energypoverty”. At first glance I assumed it was by one of the climate campaigners who dominate my timeline. On closer inspection, I realised it was written by a group for whom the cheap energy paradigm is a more comfortable fit: the World Coal Association.
If only every environmental commentator had Clarke’s level of common sense and honesty.