Ed Miliband is wrong. The greatest threat to climate action is not right wing billionaires buying up TV stations, as he said ahead of his conference speech today. It is expensive electricity.
Instead of tackling Britain’s world beating energy costs, Miliband used his speech to announce a ban on fracking – an empty gesture to block himself from something he had no intention of doing in the first place.
Britain does need more clean energy, but not at any price
The unfortunate reality is that Miliband’s sprint to get fossil fuels off the grid by 2030 will lock us into higher electricity prices and make it harder to decarbonise. Underpinning our future economic growth, and the thing that matters most for decarbonisation, is making electricity cheap and abundant. It is impossible to reach net zero without electrifying almost everything. From the way we heat our homes to how we get around town: there is no alternative to electrification. And businesses and consumers will only switch if we make it a cheaper and better option.
I say this not as an opponent of clean power. Far from it, when I advised Boris Johnson on energy, I encouraged him to be bold and to go big on clean power. The case then was strong.
In the weeks before Glasgow hosted COP26, Boris gathered his ministers. He set out four reasons why a Conservative government should make it easier to build clean energy. First: building new sources of British clean power at pace was the solution to the looming gas crisis. Second: the transition offered the best chance to renew those parts of the country once famous for heavy industry that the government had promised to level up. Third: the issue would only grow in electoral salience, and younger voters in particular wanted to know that the UK was doing our bit in the global fight against climate change. And finally: the small matter of avoiding worldwide environmental catastrophe.
When Russia launched its illegal and unprovoked invasion of Ukraine, gas prices soared by over 400 per cent and household bills shot up 235 per cent. At the same time the agreed price for offshore wind had fallen by 70 per cent since 2015, to just £37.30 per megawatt hour. Even taking into account the extra grid and backup costs, new deals for wind were saving billpayers billions.
The lesson seemed obvious: build more clean power at home, and we won’t be held hostage by global gas markets. Unfortunately high interest rates, high energy costs, and a supply chain crunch meant that 2022’s prices weren’t repeated in future auctions. The Conservatives failed to deliver a single new wind farm in their final auction, betting costs would keep falling. They didn’t – and now Labour’s commitment to deliver clean power by 2030 at any cost means Ed Miliband is set to sign a record number of contracts at the highest prices in a decade, and for longer terms. It is like volunteering to remortgage your house just as interest rates peak.
Why have prices risen? The world is scrambling to build turbines. Supply chains are stretched. Higher interest rates have pushed up financing costs. Some argue that wind, with higher operating costs, is fundamentally different to solar which continues to see cost reductions. But many of the new costs – like ports and grid upgrades – are one-offs. That’s why many energy experts expect prices to fall again when today’s crunch eases.
It’s why China – while also building new coal and new nuclear – is accelerating its rollout of renewables, building enough each year to power Britain several times over. In the US, Texas – not known as a bastion of green energy ideologues – is racing ahead with wind and solar. If renewables make sense in Beijing and Dallas, they can make sense here.
Which makes Labour’s policy even harder to defend. If you believe costs will fall again, why buy as much as possible at the top of the market?
There is a better way: focusing on making power cheap, not clean. Pause the next renewable auction so we don’t lock in today’s high prices for decades. And pull every lever to make it easier and cheaper to build clean power. The EU-derived Habitats Regulations are causing nightmares for offshore wind and new nuclear – yet Labour’s Planning and Infrastructure Bill does little to reform them.
Britain does need more clean energy, but not at any price. The rationale for clean power by 2030 is that it would reduce bills and cut emissions. Yet, when facts change and policies necessary to hit the target push bills up and lock us into a slower rate of decarbonisation in the 30s then they should be rejected.
The summer of 2022 showed the prize: cheaper bills, less reliance on imported gas, and a cleaner grid. Two years later, we are in danger of throwing that away. It’s time to rethink clean power 2030.
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