The Energy Bill is expected to finally see the light of day this week, but as details of its contents were released last week the welcome it received from the renewable industry was matched only by the criticism from the green camp.
Key details included a commitment to renewable power which is expected to add up to £110 onto energy bills, and a delaying of the setting of carbon targets until 2016.
Speaking to The Guardian newspaper, the Energy Secretary Ed Davey explained what happened, from the public spats leading up to last week’s announcement to its contents.
The Energy Bill, John Hayes and renewables
The Energy Bill seemed to draw out some of the tensions inherent in the coalition, with the Liberal Democrat Ed Davey clashing most prominently with Tory Energy Minister John Hayes over the extent to which renewable energy generation – wind power in particular – would play a role in UK energy generation:
“Rather than have a continual battle and address it all issue by issue, I thought it was better to have a grand bargain, and address everything at once,” he said.
“Yes, it has taken a bit longer than I expected. It has been a bit more acrimonious than I expected in the sense that we had the statements by John Hayes, my deputy, which was never coalition policy. His behaviour probably made it appear more fractious than it was under the surface.”
“When he made his statements on renewables against coalition policy, I did think there was a question mark over whether he should even continue to have responsibility for renewable energy deployment.
“I asked the legal department here whether there was a danger John had prejudiced himself because he had made these statements, and they said there was a danger. They said they could not say it would end up in judicial review, and challenging decisions in which he was involved, but there was a greater potential danger.”
On energy bills
Following last week’s announcement, the headlines were dominated by the impact on household bills, with the Department for Energy and Climate Change’s own figures suggesting it would add £95 to household bills by 2020, with others putting that figure even higher:
“The impact on bills is that the costs will rise from today’s 2% figure on average bills, roughly £20, so that by the end of the decade it will gradually rise to 7% on average bills – just under £100. I have never hidden that this will have an impact. It’s what we have said will happen for many years.
“But equally, if you look at all our green policies, the help on fuel poverty and green efficiency, our estimate is that by 2020 the average bill will be 7% lower than it would have otherwise been – in today’s prices, £94. If we do the energy efficiency, this can be afforded.”
“What we have agreed does not hit the Treasury at all. You get the investment, construction, jobs and growth now, while the cost is spread over 25 years, and you only start paying when the power station is constructed and starts generating.
“It will only hit bills much later on, by which time the economy will hopefully be doing a lot better and when other policies designed to reduce bills take effect and more than offset the impact on bills.”
On failing to include a decarbonisation target
Another key feature of the Energy Bill is its failure to agree a decarbonisation target. As laid out under the Climate Change Act the UK has carbon emissions reduction targets for 2030, but the question of how to meet these targets has been pushed back to 2016, leaving it to the next government.
“This was the most difficult issue in discussion, and a genuine issue of disagreement. I think we have got a good compromise. We have agreed we will now take a power in the energy bill so the government is empowered to establish a decarbonisation target at a later date. That was not on the table when we started this negotiation.
“I wanted to set the decarbonisation target in 2013-14. The Conservatives wanted to wait, saying it should be done in 2016 at the same time as the fifth carbon budget covering the years 2028-2032.”
“We will be going into the election promising to set a decarbonisation target. I assume Labour will be and the question will be what the Tories do. The deal has more than kept the door open to a decarbonisation target.”
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