Ed Miliband has presented his plan to deal with the world’s energy crisis. Is he going to start drilling in the North Sea again? Is he going to finally cut energy bills by £300, as he promised? Is he going to make sure we have ample gas storage in the future? [some emphasis, links added]
Nope!
According to a government press release, they are going to go ‘further and faster’ in becoming energy secure. I’m not sure what he is going ‘further and faster’ than. Maybe a one-legged tortoise?
The press release says:
The Energy Secretary will today (Sunday 15 March) outline a package of measures to go ‘further and faster’ in the pursuit of national energy security as a response to events in the Middle East.
The Energy Secretary is today setting out an accelerated package of energy interventions to boost the UK’s energy security:
- Announcing that ‘plug-in solar’, low-cost solar panels that families can buy at supermarkets and put on their balconies or outdoor space, will be made available in the UK for the first time.
- Announcing that we intend to bring forward the Government’s next annual renewables auction to July, inviting renewables companies to invest in UK energy. The most recent round was the biggest ever, and alongside the previous auction, we have confirmed enough clean power to power the equivalent of 23 million homes.
- Following the implementation of the Fingleton Review into speeding up the building of nuclear power stations, confirmation that the Government will apply the lessons of the review to other infrastructure, such as renewables.
Yes, Ed, that will really solve the crisis!
Plug-in solar panels start at around £700 and produce negligible amounts of electricity, worth no more than tens of pounds a year. Does he think people have hundreds of pounds in their back pockets, ready to waste on his Net Zero nonsense?
Bringing forward the next Contracts for Difference round by a few months will not resolve the crisis either. It will be years before these wind farms are built, by which time the crisis will be over, and oil and gas prices will be back to normal.
If Miliband seriously wanted to reduce energy bills, he could do it at the drop of a proverbial hat by abolishing the UK Emissions Trading Scheme (UK ETS), aka Carbon Tax.
The ETS is a mandatory cap-and-trade system for greenhouse gas emissions from power generation and energy-intensive industries.
Gas power plants have to pay a tax for every ton of carbon dioxide they emit. The price for the allowances varies as it is market-based, but typically it adds around £28/MWh to the cost of gas generation.
Because the wholesale market price for electricity is generally determined by the price of gas power, and £28 gets added to nearly all electricity produced, not just gas power. (The exception is generation covered by Contracts for Difference subsidies, which makes up just over a tenth of electricity, as a guaranteed strike price is paid instead.)
As a result of higher wholesale prices, the carbon tax effectively adds £8 billion a year to energy bills. Cancelling the tax would cut bills by 10 percent overnight.
Crucially, the Government’s tax revenue from the Carbon Tax is only £3 billion – the other £5 billion accrues to renewable and other non-gas generators as windfall profit.
A typical example shows how this works out.
Take a wind farm, for instance. The wholesale price last year ranged around £80/MWh, but without the Carbon Tax, it would have been £52/MWh. An onshore wind farm is paid £80/MWh for its electricity, but in addition receives a subsidy of about £70/MWh via the Renewables Obligation Scheme.
In total, therefore, it is paid £150/MWh, three times what its electricity is really worth. Not only does the wind farm get a fat subsidy, but it also makes a windfall profit of an extra £28/MWh.
The higher the carbon tax, the bigger the windfall.
The ETS could quickly be abolished by secondary legislation laid before Parliament. But there is nothing to stop the Government from immediately flooding the market with cheap carbon allowances, which would drive the market price down to just pence.
All that is needed is the political will.
Of course, Miliband won’t do this, because the ETS is a critical part of the Net Zero enforcement mechanism, designed to make fossil fuels uncompetitive against renewables.
Read rest at Conservative Woman
