In the 1980s Ronald Reagan had a clear view about the future: small government was the answer, he said. In the area of energy policy, he was a particular believer. He even took Jimmy Carter’s solar panels off the White House roof. When it comes to his roof, David Cameron is no Ronald Reagan. He has put a wind turbine on it.
But symbols of modernity are no substitute for substance. To understand whether his energy policy is right for this century, we have to go a bit deeper. With his speech at the Conservative Party conference last week, Mr Cameron has firmly put himself in Reagan’s sweeping, right-wing ideological tradition: whatever the issue, government is always the problem not the solution.
It’s the wrong approach to meet the challenges of 21st-century energy policy. We need to be pragmatic not dogmatic. We need to understand the role and limits of government, understanding where markets fail, where government can help, where it can’t. Government shouldn’t build power stations but it must set a clear framework so we get the energy we need. Government shouldn’t insulate your home but it should provide support.
The central challenge for energy policy is to deliver on climate change and energy security at the least cost. Last Friday the energy regulator Ofgem warned of the dangers if we don’t deliver on Britain’s commitment to renew our energy infrastructure. The Ofgem report contradicted the traditional view that you can deliver on climate change or energy security, but not both. It is the low-carbon, home-grown energy scenario that would give the best guarantee of energy security and the lowest price increases.
The reason is that our North Sea reserves are declining. A high-carbon future would mean we rely more and more on imported gas. Two thirds of the world’s reserves are in Russia and the Middle East and with rising demand from emerging economies, we could face significantly higher prices. And yet in the short term, gas-fired power stations are easiest and cheapest to build so without action from government, that’s what companies will do.
Our low-carbon transition plan published in the summer laid out how we can limit our dependence on gas imports over the next decade. But it requires us to do some difficult things. In particular, we need to deliver on the three alternatives to gas: renewables, clean coal and nuclear. In each case, we need significant government intervention.
All three require reform of the planning system so energy projects don’t get tied in knots. In the face of opposition from the other parties, we are establishing an Infrastructure Planning Commission to speed decision making. We should respect local concerns but just saying no will fail the country. And that’s what many local authorities do. Sixty per cent of wind turbine applications to Conservative councils are rejected. Yet the Shadow Energy Secretary refuses to say that anything should change. It’s business as usual, as the opposition of the minority trumps the needs of the majority.
Take carbon capture and storage, the technology that can make coal clean. This week Britain will be hosting governments from 20 countries in London to discuss how government can support carbon capture and storage (CCS). This technology has the potential to cut emissions from coal by more than 90 per cent. When some countries rely on coal for 95 per cent of their electricity, this is a technology we cannot do without.
But CCS has been around for a long time without the investment to reach industrial scale. Business alone will not make that investment and while it doesn’t, it’s the environment that pays the price. Steven Chu, the US Secretary for Energy, understands the need for government to play an active role. His colleagues in China, Australia, Canada, the UK and many other countries also get it.
That is why we are planning a levy to provide financial support for CCS. The Conservatives’ only response is to spend money on CCS that the Treasury has already allocated to pay off the deficit.
On nuclear power, government needs to break down the barriers to delivering new stations. Again the Conservatives have opposed us, with Mr Cameron calling it a “last resort”.
With gas power stations and renewable sources being built, nuclear coming on stream and incentives for clean coal, we can be confident about our security of supply. It is true that in the next few years power plants generating 18 gigwatts will close. But we already have plants that can generate more than that under construction or with planning permission. E.On’s decision to delay its plans for a new coal-fired plant at Kingsnorth was made because it doesn’t think Britain will need the energy it would have supplied in the short term.
But to deal with climate change, Britain needs to be on a path to zero-carbon power. That could require even greater action. That is why my department is looking at what will be needed between 2020 and 2050, with our report due to be published in the spring. It is the kind of long-term planning that only governments can do.
So when people think about the politics of the coming years and how we keep the lights on and tackle climate change, it is worth considering whether government just getting out of the way is the answer. Do we really want to return to the philosophy of the 1980s? Either Mr Cameron didn’t really mean what he said or, even worse, he did.
With his speech last week, Mr Cameron is in danger of looking very last century. We found with the economic crisis that government had to step in to save capitalism from its worst excesses. Some things — and energy policy is one of them — just can’t be left to markets alone.
Ed Miliband, Secretary of State for Energy and Climate Change.