The energy industry needs to be clearer and more honest with the public about the costs of renewables, according to Shadow Secretary for Energy Security and Net Zero, Claire Coutinho.
Speaking after the Conservative Party conference, where opposition leader Kemi Badenoch pledged to repeal the Climate Change Act, Coutinho acknowledged that many think the pledge will create uncertainty.
This was definitely the consensus in the discussions earlier today at the Energy UK annual conference.
“What is especially destabilizing is an energy policy that places decarbonization at a higher legislative level than reducing energy bills,” Coutinho said, while, as the current government has done, “promising [bills] will be lower.”
“The problem with the Climate Change Act is that it tells us we have to continue decarbonizing while costs continue to rise.”
On hearing Badenoch’s pledge to scrap the Climate Change Act, Dhara Vyas, CEO of Energy UK, said: “The energy sector supports one in 25 jobs in Britain and almost £24 billion was invested in the sector last year alone. Treating the Climate Change Act as a political football is a surefire way to deter investors.”
Coutinho says that “to succeed, this country needs a lot of cheap, reliable energy.” This is what current Energy Secretary Ed Miliband promises as a result of Clean Power 2030.
Instead, the opposition approach will be to ‘abolish’ the carbon tax on electricity generation and end subsidies provided under the Renewable Obligation Subsidy Scheme, ‘because consumers cannot afford to pay’.
“These two policies alone would reduce bills by 20%,” Coutinho promised.
She did acknowledge that this policy was unlikely to be welcomed by the audience, populated by members of Energy UK, she was speaking about.
Securing business support
Countinho said Britain has the highest industrial electricity costs and the second highest domestic electricity costs in the world. Speaking about current policy, she said that if the argument is that renewables are cheaper, the full cost of the energy transition, including the system costs associated with Clean Energy 2030, should be presented to consumers.
If the argument were instead that renewables will reduce costs over time, Coutinho continued, then the upcoming Contracts for Difference (CfD) round is misleading. The strike prices for the upcoming allocation round 7 (AR7) will be higher than the previous round (AR6), which she called “the highest in a decade”.
For Coutinho, this option, locking in that price for the 20-year term of the CfD contract, is the equivalent of paying a premium for a fixed price, rather than sticking to the variable costs of fossil fuels priced on the global market. Her argument is that Britain’s focus on decarbonizing the country will drive away companies that will locate elsewhere, and that global emissions will ultimately be unaffected.
