No one knows whether there is a green low-carbon economy waiting for us in the more distant future, but we can be confident that the current policies — the EU Renewables Directive, the Renewables Obligation, the Feed-In Tariff and the Green Deal — are most unlikely to deliver such an outcome. Indeed, they are probably counterproductive, since they insulate nascent technologies from competition and thus infantilise them.
But push is coming to shove, and as quotidian pressures make themselves felt, the green subsidies will be slowly reduced, and our short-term electricity needs met by patched-up coal and nuclear stations, and by older gas plants. A new generation of Combined Cycle Gas Turbines is likely, though build rate will not be of satisfactory scale or pace if government fails to restrain the growth of subsidised on- and off-shore wind power, which is damaging the investment case for all unsubsidised technologies.
Concerns over gas availability and price appear to be alleviated by the unexpected growth of global shale gas production, though there are residual anxieties that the UK may become overwhelmingly dependent on one fuel for reliable electricity. As a consequence, there will be pressure for nuclear and for high-efficiency super-critical coal after 2020.
There is a strong argument for steering into this skid, rather than looking away as the Coalition seems inclined to do. Britain could renegotiate a more realistic and equitable commitment under the EU Renewables Directive (one quarter of the EU-wide costs of the scheme fall on us), while the various renewables subsidy mechanisms could be wound down or cancelled retrospectively for those generators whose capital has been recovered. Instead, government could announce a combination of a carbon tax and a realistic set of emissions regulations. The emerging Emissions Performance Standard might be a basis, but will need revision if it is not to discourage any and all conventional generation.
Regulation and judicious tax could be used to specify the character that we wish to obtain of our electricity system, so that the energy sector can quickly find the most cost-effective way of realising that desire insofar as it is practical to do so. However, this would require significant improvements in the transparency of Britain's electricity market, which at present is far from truly liberal. Many of the costs imposed on the consumer are still concealed and there are areas in which relevant information is either difficult to obtain or simply non-existent, inhibiting new market entrants and preventing understanding of problems and system inefficiencies that might be solved by novel technologies. The government's forthcoming Electricity Market Reform could serve as the vehicle for such a radical programme, but it would require all of the PM's charm to overcome the objections of vested interests.
With current errors decisively corrected in this way it is just possible that we might see the beginnings of a self-supporting low-carbon economy that also generated sufficient wealth to fund adaptation to climate change, should that be necessary. By contrast, the present policies can only offer emissions reductions through further deindustrialisation and significant economic contraction, effects that are unlikely to be popular with the electorate whatever the weather.
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